---------------------------
| OMB APPROVAL
|--------------------------
| OMB Number: 3235-0570
|
| Expires: Nov. 30, 2005
|
| Estimated average burden
| hours per response: 5.0
---------------------------
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 811-07148
---------------------------------------------
Schwartz Investment Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
3707 West Maple Road Bloomfield Hills, Michigan 48301
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
George P. Schwartz
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (248) 644-8500
----------------------------
Date of fiscal year end: December 31, 2002
---------------------------
Date of reporting period: December 31, 2002
---------------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
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. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
SHAREHOLDER ACCOUNTS CORPORATE OFFICES
c/o Ultimus Fund [AVE MARIA 3707 W. Maple Road
Solutions, LLC CATHOLIC Bloomfield Hills, MI 48301
P.O. Box 46707 VALUES (248) 644-8500
Cincinnati, OH 45246 FUND LOGO] Fax (248) 644-4250
1-888-726-9331
Dear Shareholder:
The Ave Maria Catholic Values Fund is gaining increased notice from Catholic
investors looking for good investment performance without abandoning the core
teachings of their Catholic faith. The Fund now has 1,100 shareholders from 45
states who have invested over $60 million dollars.
For the year ended December 31, 2002, the Ave Maria Catholic Values Fund was
down 9.8%, while the S&P 500 was down 22.1% and NASDAQ was down 31.6%. 2002
marked the third year in a row that the broad stock market finished down. This
hasn't happened in 60 years and only three times in the past two centuries. The
Dow Jones Industrial Average and the S&P 500 posted their worst losses since
1977 and 1974, respectively. With three years of declining stock prices, many
stocks are severely depressed, which has created the opportunity for those
shares to produce high returns in the future.
The investment performance of the Fund since its inception on May 1, 2001, is as
follows:
Since 5-1-01 Inception
thru 12-31-02
-----------------
AVEMX - 5.0%
S&P 500 -28.7%
This favorable comparison is the result of our disciplined, value-oriented
investment philosophy. In addition, no money was invested in companies that blew
up. We avoided all of the scandal-ridden companies like Adelphia, Enron, Tyco,
Conseco, Global Crossing, WorldCom, UAL, and K-Mart. This bit of good fortune
was not by coincidence. As a matter of investment policy, we simply don't
speculate on over-priced, debt-laden companies with questionable accounting
practices. The Fund's portfolio is composed of well researched, low-risk,
profitable, conservatively run companies. (Importantly, none violate the moral
guidelines established by our Catholic Advisory Board.) In managing the
portfolio, we sidestepped the landmines by avoiding the popular stocks, which
had become so overpriced. Buying what's popular can make for good cocktail-party
conversation, but it usually produces poor investment results.
Our investment management process involves searching for solid long-term
investments. We want strong balance sheets and good earnings growth prospects at
a reasonable price. Shareholders can take comfort in knowing that the Fund owns
portions of excellent companies and hasn't paid inflated prices. No effort is
made to outguess the near-term swings in the stock market. That sort of
speculation can't successfully
be done consistently, since short-term price moves are caused by unpredictable
shifts in investor psychology and by events that cannot be anticipated.
We were fortunate to augment our analytical staff during 2002, by hiring Scott
A. Goginsky, CFA from Atlanta, Georgia. As Senior Research Associate, he works
to uncover investment opportunities for the Ave Maria Catholic Values Fund.
Scott, along with the rest of our talented staff of investment research
specialists, analyzes numerous stocks before selections are made for the Fund.
Research is crucial to portfolio management success. As Warren Buffett says:
"The market, like the Lord, helps those who help
themselves. But, unlike the Lord, the market does not
forgive those who know not what they do."
The Federal Reserve's aggressive interest-rate cuts and the record number of
mortgage refinancings have led to increased personal disposable income, which
has allowed consumers to support the economy. Indications are that this will
continue in 2003. Accordingly, the portfolio is well represented with
high-quality retailers and consumer products companies such as Ross Stores,
Inc., Brookstone, Inc., and Coach, Inc. Sizeable industrial companies, including
Automatic Data Processing, Inc., Esterline Technologies Corporation, and DeVry,
Inc., which were added to the portfolio in recent months, should benefit from an
increase in capital and IT spending this year. In the financial sector, recent
additions include American International Group, Inc. and H&R Block, Inc. Both
are industry leaders with extraordinary management teams and are expected to
produce above-average growth in earnings and cash flow.
There are many reasons for optimism. The economy finally appears to be
responding to the Fed's stimulative monetary policy and corporate earnings are
improving. Valuations on equities are at the lowest level in years, and
improvements are being made in corporate governance. There is also the very real
possibility of changes in the tax code favoring equity ownership. Eliminating
the double taxation of dividends would have a very positive impact on capital
formation and indirectly reduce the capital-gains tax. The glass is more than
half-full for investors willing to look forward instead of backward. An
expeditious resolution of the impending war in Iraq could help fuel a bull
market in 2003. I am more favorably inclined towards equities than at any time
in the past 20 years. Investors may be surprised at how well the U.S. equity
market performs over the next few years from its current depressed level. The
well-selected value stocks in our portfolio, none of which violate the core
teachings of the Catholic Church, may do especially well.
With best regards,
/s/ George P. Schwartz
George P. Schwartz, CFA
President
January 31, 2003
2
COMPARISON OF THE CHANGE IN VALUE OF A
$10,000 INVESTMENT IN THE AVE MARIA CATHOLIC
VALUES FUND AND THE S&P 500 INDEX
Ave Maria Catholic Values Fund
Average Annual Total Returns (a)
1 year (b) Since Inception (c)
- --------- -------------------
(10.71)% (3.05)%
[GRAPHIC OMITTED]
12/02
------
Ave Maria Catholic Values Fund $9,496
S&P 500 Index $7,128
Past performance is not predictive of future performance.
(a) The returns shown do not reflect the deduction of taxes a shareholder would
pay on Fund distributions or the redemption of Fund shares.
(b) Return includes a contingent deferred sales charge of 1% on redemptions of
Fund shares made within one year of their purchase.
(c) Represents the period from the commencement of operations (May 1, 2001)
through December 31, 2002.
3
AVE MARIA CATHOLIC VALUES FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2002
MARKET
SHARES COMPANY VALUE
- ------ ----------------------------------- ----------
65,000 H&R Block, Inc. $2,613,000
135,000 Esterline Technologies Corporation 2,385,450
120,000 ProQuest Company 2,352,000
150,000 Brookstone, Inc. 2,169,000
85,000 Sears, Roebuck and Company 2,035,750
65,000 Genuine Parts Company 2,002,000
75,000 Hibbett Sporting Goods, Inc. 1,794,000
52,500 Coach, Inc. 1,728,300
45,000 Health Care Property Investors, Inc. 1,723,500
20,000 General Dynamics Corporation 1,587,400
4
AVE MARIA CATHOLIC VALUES FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
MARKET
SHARES COMMON STOCK - 99.8% VALUE
------ ------------------------------------------ ----------
AEROSPACE/DEFENSE - 10.4%
135,000 Esterline Technologies Corporation * $2,385,450
20,000 General Dynamics Corporation 1,587,400
60,000 Harris Corporation 1,578,000
9,000 Northrop Grumman Corporation 873,000
----------
6,423,850
----------
APPAREL & TEXTILES - 2.3%
40,000 Jones Apparel Group, Inc.* 1,417,600
----------
BUILDING MATERIALS & CONSTRUCTION - 6.6%
425,000 Champion Enterprises, Inc. * 1,211,250
350,000 Crown Pacific Partners, L.P.* 626,500
200,000 Fleetwood Enterprises, Inc.* 1,570,000
40,000 Monaco Coach Corporation* 662,000
----------
4,069,750
----------
BUSINESS & INDUSTRIAL PRODUCTS - 1.5%
7,500 3M Company 924,750
----------
BUSINESS SERVICES - 3.1%
25,000 Concord EFS, Inc. * 393,500
105,000 Neogen Corporation * 1,539,405
----------
1,932,905
----------
COMMUNICATION EQUIPMENT & SERVICES - 4.6%
17,500 Alltel Corporation 892,500
25,000 CenturyTel, Inc. 734,500
95,400 Hector Communications Corporation * 1,206,810
----------
2,833,810
----------
5
SCHEDULE OF INVESTMENTS (CONTINUED)
MARKET
SHARES COMMON STOCK - 99.8% (CONTINUED) VALUE
------ ------------------------------------------ ----------
CONSUMER PRODUCTS - DURABLES - 3.7%
70,000 Brunswick Corporation $1,390,200
40,000 Leggett & Platt, Inc. 897,600
----------
2,287,800
----------
CONSUMER PRODUCTS - NONDURABLES - 3.9%
52,500 Coach, Inc.* 1,728,300
15,000 Fortune Brands, Inc. 697,650
----------
2,425,950
----------
EDUCATION - 1.7%
65,000 DeVry, Inc.* 1,079,650
----------
ELECTRONICS - 1.4%
20,000 Littlefuse, Inc.* 337,200
64,800 Sparton Corporation* 511,920
----------
849,120
----------
ENERGY & MINING - 4.2%
10,000 Anadarko Petroleum Corporation 479,000
27,500 Exxon Mobil Corporation 960,850
15,000 Forest Oil Corporation * 413,400
75,000 Input/Output, Inc.* 318,750
20,000 Prima Energy Corporation * 447,200
----------
2,619,200
----------
ENVIRONMENTAL SERVICES - 1.0%
75,000 Layne Christensen Company * 615,000
----------
FINANCE - BANKS & THRIFTS - 4.6%
35,000 BB&T Corporation 1,294,650
27,500 SunTrust Banks, Inc. 1,565,300
----------
2,859,950
----------
6
SCHEDULE OF INVESTMENTS (CONTINUED)
MARKET
SHARES COMMON STOCK - 99.8% (CONTINUED) VALUE
------ ------------------------------------------ ----------
FINANCE - INSURANCE - 2.5%
17,500 American International Group, Inc. $1,012,375
12,500 American Physicians Capital, Inc.* 235,125
100,000 Unico American Corporation 315,000
----------
1,562,500
----------
FINANCE - MISCELLANEOUS - 4.2%
65,000 H&R Block, Inc. 2,613,000
----------
HEALTHCARE - 6.0%
37,500 Beckman Coulter, Inc. 1,107,000
30,000 Boston Scientific Corporation* 1,275,600
50,000 Eclipsys Corporation* 267,500
50,000 Manor Care, Inc. * 930,500
5,000 STERIS Corporation* 121,250
----------
3,701,850
----------
INDUSTRIAL PRODUCTS & SERVICES - 11.0%
20,000 AptarGroup, Inc. 624,800
10,000 Automatic Data Processing, Inc. 392,500
40,000 Dover Corporation 1,166,400
65,000 Genuine Parts Company 2,002,000
10,000 Graco, Inc. 286,500
20,000 Simpson Manufacturing Company, Inc. * 658,000
27,500 Snap-on, Inc. 773,025
10,000 Teleflex, Inc. 428,900
20,000 Waters Corporation* 435,600
----------
6,767,725
----------
INFORMATION TECHNOLOGY - 0.7%
20,900 Quality Systems, Inc. * 420,090
----------
7
SCHEDULE OF INVESTMENTS (CONTINUED)
MARKET
SHARES COMMON STOCK - 99.8% (CONTINUED) VALUE
------ ------------------------------------------ -----------
PRINTING & PUBLISHING - 4.9%
15,000 Courier Corporation $ 687,600
120,000 ProQuest Company* 2,352,000
-----------
3,039,600
-----------
REAL ESTATE - 5.1%
45,000 Health Care Property Investors, Inc. 1,723,500
55,000 Washington Real Estate Investment Trust 1,402,500
-----------
3,126,000
-----------
RETAIL - 15.7%
150,000 Brookstone, Inc. * 2,169,000
25,000 Dollar Tree Stores, Inc.* 614,250
75,000 Hibbett Sporting Goods, Inc.* 1,794,000
35,000 Ross Stores, Inc. 1,483,650
85,000 Sears, Roebuck and Company 2,035,750
30,000 TJX Companies, Inc. 585,600
100,000 Toys "R" Us, Inc.* 1,000,000
-----------
9,682,250
-----------
TECHNOLOGY - 0.7%
70,000 Cable Design Technologies Corporation* 413,000
-----------
TOTAL COMMON STOCK (Cost $62,947,294) $61,665,350
-----------
8
SCHEDULE OF INVESTMENTS (CONTINUED)
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS (1) - 0.2% VALUE
- --------- ------------------------------------------------------ ------------
$ 155,474 Fifth Third Bank, 0.35%, dated 12/31/02, due 01/02/03,
repurchase proceeds: $155,477 (Cost $155,474) $ 155,474
------------
TOTAL INVESTMENTS - 100.0% (Cost $63,102,768) $ 61,820,824
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.0%) (19,041)
------------
NET ASSETS - 100.0% $ 61,801,783
============
* Non-income producing security.
(1) Repurchase agreements are fully collateralized by U.S. Government
obligations.
See notes to financial statements.
9
AVE MARIA CATHOLIC VALUES FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2002
ASSETS
Investments, at value (cost of $63,102,768 ) (Note 1) $ 61,820,824
Cash 139,505
Receivable for capital shares sold 161,610
Receivable for securities sold 369,796
Dividends and interest receivable 63,014
Other assets 14,248
------------
TOTAL ASSETS 62,568,997
------------
LIABILITIES
Payable for investment securities purchased 580,390
Accrued investment advisory fees (Note 2) 133,135
Accrued distribution fees (Note 2) 13,239
Payable to affiliate (Note 2) 8,000
Other accrued expenses 32,450
------------
TOTAL LIABILITIES 767,214
------------
NET ASSETS $ 61,801,783
============
NET ASSETS CONSIST OF:
Paid-in capital $ 68,031,246
Accumulated net realized losses from security transactions (4,947,519)
Net unrealized depreciation on investments (1,281,944)
------------
NET ASSETS $ 61,801,783
============
Shares of beneficial interest outstanding (unlimited number of
shares authorized, no par value) 6,522,747
============
Net asset value and offering price per share (a) $ 9.47
============
(a) Redemption price varies based on length of time held (Note 1).
See notes to financial statements.
10
AVE MARIA CATHOLIC VALUES FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
INVESTMENT INCOME
Dividends and interest $ 712,630
-----------
EXPENSES
Investment advisory fees (Note 2) 525,983
Distribution fees (Note 2) 131,506
Administration, accounting and transfer agent fees (Note 2) 79,910
Trustees' fees and expenses 33,327
Legal and audit fees 25,884
Registration fees 20,107
Custodian fees 17,624
Advisory board fees and expenses 14,263
Postage and supplies 13,588
Reports to shareholders 12,282
Insurance expense 8,686
Other expenses 5,584
-----------
TOTAL EXPENSES 888,744
Fees waived by the Adviser (Note 2) (99,770)
-----------
NET EXPENSES 788,974
-----------
NET INVESTMENT LOSS (76,344)
-----------
REALIZED AND UNREALIZED LOSSES ON INVESTMENTS
Net realized losses from security transactions (4,937,741)
Net change in unrealized appreciation/depreciation on investments (2,301,756)
-----------
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS (7,239,497)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS $(7,315,841)
===========
See notes to financial statements.
11
AVE MARIA CATHOLIC VALUES FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
2002 2001(a)
------------ ------------
FROM OPERATIONS
Net investment income (loss) $ (76,344) $ 36,889
Net realized gains (losses) from security transactions (4,937,741) 20,943
Net change in unrealized appreciation/depreciation on investments (2,301,756) 1,019,812
------------ ------------
Net increase (decrease) in net assets from operations (7,315,841) 1,077,644
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income - (36,889)
From net realized gains on investments - (20,943)
Distributions in excess of realized gains - (9,778)
------------ ------------
Net decrease in net assets from distributions to shareholders - (67,610)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 46,588,060 23,627,011
Reinvestment of distributions to shareholders - 67,396
Payments for shares redeemed (1,423,248) (751,629)
------------ ------------
Net increase in net assets from capital share transactions 45,164,812 22,942,778
------------ ------------
TOTAL INCREASE IN NET ASSETS 37,848,971 23,952,812
NET ASSETS
Beginning of period 23,952,812 -
------------ ------------
End of period $ 61,801,783 $ 23,952,812
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 4,381,372 2,346,628
Shares issued in reinvestment of distributions to shareholder - 6,423
Shares redeemed (139,989) (71,687)
------------ ------------
Net increase in shares outstanding 4,241,383 2,281,364
Shares outstanding, beginning of period 2,281,364 -
------------ ------------
Shares outstanding, end of period 6,522,747 2,281,364
============ ============
(a) Represents the period from the commencement of operations (May 1, 2001)
through December 31, 2001.
See notes to financial statements.
12
AVE MARIA CATHOLIC VALUES FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Year Ended Period Ended
Dec. 31, Dec. 31,
2002 2001(a)
---------- ----------
Net asset value at beginning of period $ 10.50 $ 10.00
---------- ----------
Income (loss) from investment operations:
Net investment income (loss) (0.01) 0.20
Net realized and unrealized gains (losses) on investments (1.02) 0.51
---------- ----------
Total from investment operations (1.03) 0.53
---------- ----------
Less distributions:
From net investment income - (0.02)
From net realized gains on investments - (0.01)
In excess of net realized gains on investments - (0.00)
---------- ----------
Total distributions - (0.03)
---------- ----------
Net asset value at end of period $ 9.47 $ 10.50
========== ==========
Total return (9.8)% 5.3%(c)
========== ==========
Ratios/Supplementary Data:
Ratio of net expenses to average net assets(b) 1.50% 1.50%(d)
Ratio of net investment income (loss) to average net assets (0.14)% 0.39%(d)
Portfolio turnover rate 86% 44%(d)
Net assets at end of period (000's) $ 61,802 $ 23,953
(a) Represents the period from the initial public offering (May 1, 2001) through
December 31, 2001.
(b) Absent investment advisory fees waived by the Adviser, the ratio of expenses
to average net assets would have been 1.69% and 2.09%(d) for the peiods
ended December 31, 2002 and 2001, respectively.
(c) Not annualized.
(d) Annualized.
See notes to financial statements.
13
AVE MARIA CATHOLIC VALUES FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
1. SIGNIFICANT ACCOUNTING POLICIES
Ave Maria Catholic Values Fund (the Fund) is a series of Schwartz Investment
Trust, a diversified open-end management investment company established as an
Ohio business trust under a Declaration of Trust dated August 31, 1992. The Fund
is registered under the Investment Company Act of 1940 and commenced the public
offering of its shares on May 1, 2001. The Fund determines and makes available
for publication the net asset value of its shares on a daily basis.
The investment objective of the Fund is to seek long-term capital appreciation
from equity investments in companies that operate in a way that does not violate
the core values and teachings of the Roman Catholic Church. See the Prospectus
for more detailed information regarding the investment strategies of the Fund.
Shares of the Fund are sold at net asset value. To calculate the net asset
value, the Fund's assets are valued and totaled, liabilities are subtracted, and
the balance is divided by the number of shares outstanding. The offering price
and redemption price per share is equal to the net asset value per share, except
that shares of the Fund are subject to a 1% contingent deferred sales load if
redeemed within one year of their purchase.
The following is a summary of significant accounting policies followed by the
Fund:
(a) VALUATION OF INVESTMENTS -- Securities which are traded on stock
exchanges are valued at the last reported sale price as of the close of
the regular session of trading on the New York Stock Exchange on the
day the securities are being valued, or, if not traded on a particular
day, at the closing bid price. Securities that are quoted by NASDAQ are
valued at the last reported sale price, or, if not traded on a
particular day, at the mean between the closing bid and asked prices as
reported by NASDAQ. Securities traded in the over-the-counter market,
and which are not quoted by NASDAQ, are valued at the average of the
highest current independent bid and lowest current independent offer as
of the close of trading on the day of valuation. Securities (and other
assets) for which market quotations are not readily available are
valued at their fair value as determined in good faith in accordance
with consistently applied procedures established by and under the
general supervision of the Board of Trustees.
(b) INCOME TAXES -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated
investment companies. As provided therein, in any fiscal year in which
the Fund so qualifies and distributes at least 90% of its taxable
income, the Fund (but not the shareholders)
14
will be relieved of federal income tax on the income distributed. Accordingly,
no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income and 98% of its net
realized capital gains plus undistributed amounts from prior years.
For the year ended December 31, 2002, the Fund reclassified its net investment
loss of $76,344 against paid-in-capital on the Statement of Assets and
Liabilities. Such reclassification, the result of permanent differences between
the financial statement and income tax reporting requirements, has no effect on
the Fund's net assets or net asset value per share.
For federal income tax purposes, the cost of portfolio investments amounted to
$63,673,369 at December 31, 2002. The composition of unrealized appreciation
(the excess of value over tax cost) and unrealized depreciation (the excess of
tax cost over value) was as follows:
Gross unrealized appreciation $ 3,902,740
Gross unrealized depreciation (5,755,285)
-----------
Net unrealized depreciation $(1,852,545)
------------
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for the Fund is due to certain timing differences
in the recognition of capital losses under income tax regulations and accounting
principles generally accepted in the United States of America (GAAP).
As of December 31, 2002, the Fund had a capital loss carryforward of $4,376,918
for income tax purposes, which expires December 31, 2010. This capital loss
carryforward may be utilized in future years to offset net realized capital
gains, if any, prior to distributing such gains to shareholders.
The tax character of distributable earnings at December 31, 2002 was as follows:
Unrealized Capital Loss Total Distributable
Depreciation Carryforward Earnings
- --------------------------------------------------------------------------------
$(1,852,545) $ (4,376,918) $ (6,229,463)
15
(c) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recognized on the
accrual basis. Realized gains and losses on security transactions are
determined on the identified cost basis.
(d) DIVIDENDS AND DISTRIBUTIONS -- Dividends from net investment income
and net capital gains, if any, are declared and paid annually in
December. Dividends and distributions to shareholders are recorded on
the ex-dividend date. The tax character of distributions paid during
the periods ended December 31, 2002 and December 31, 2001 were as
follows:
Period Ordinary
Ended Income
---------------------------------------------
December 31, 2002 $ -
December 31, 2001 $ 67,610
(e) REPURCHASE AGREEMENTS -- The Fund may enter into repurchase
agreements (agreements to purchase securities subject to the seller's
agreement to repurchase them at a specified time and price) with
well-established registered securities dealers or banks. Repurchase
agreements are the equivalent of loans by the Fund. The Fund's policy
is to take possession of the underlying securities and, on a daily
basis, mark to market such securities to ensure that the value,
including accrued interest, is at least equal to the amount to be
repaid to the Fund under the agreement.
(f) ESTIMATES -- The preparation of financial statements in conformity
with 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES
The President of the Fund is also the President and Chief Investment Officer of
Schwartz Investment Counsel, Inc. (the Adviser). Certain other trustees and
officers of the Fund are officers of the Adviser, or of Schwartz Fund
Distributors, Inc. (the Distributor), the Fund's principal underwriter, or of
Ultimus Fund Solutions, LLC (Ultimus), the administrative, accounting and
transfer agent for the Fund.
Pursuant to an Investment Advisory Agreement between the Fund and the Adviser,
the Adviser is responsible for the management of the Fund and provides
investment advice along with the necessary personnel, facilities,
16
equipment and certain other services necessary to the operations of the Fund.
For such services, the Fund pays the Adviser a quarterly fee equal to the annual
rate of 1.0% of its average daily net assets. The Adviser has contractually
agreed, until at least May 1, 2004, to waive a portion of its advisory fees or
to reimburse the Fund's operating expenses to the extent necessary so that the
Fund's ordinary operating expenses do not exceed an amount equal to 1.5%
annually of its average net assets. For the year ended December 31, 2002, the
total of such waivers was $99,770. Any fee waivers or expense reimbursements by
the Adviser are subject to repayment by the Fund for a period of three years
from the end of the fiscal year during which such waivers or reimbursements
occurred, provided the Fund is able to effect such repayment and remain in
compliance with the undertaking by the Adviser to limit expenses of the Fund.
As of December 31, 2002, the amount available for reimbursement for fees that
have been waived by the Advisor is $157,040. Of this amount, $57,270 must be
recaptured prior to December 31, 2004, and $99,770 must be recaptured prior to
December 31, 2005, or the amounts are forfeited.
The Distributor serves as the principal underwriter for the distribution of
shares of the Fund. During the year ended December 31, 2002, the Distributor
collected $3,673 in contingent deferred sales loads on redemtions of Fund
shares.
The Fund has adopted a Shareholder Servicing Plan (the Plan), which allows the
Fund to make payments to financial organizations for providing account
administration and personal and account maintenance services to Fund
shareholders. The annual service fee may not exceed .25% of the Fund's daily net
assets. For the year ended December 31, 2002, the total expenses incurred
pursuant to the Plan were $131,506.
Pursuant to a Mutual Fund Services Agreement between the Fund and Ultimus,
Ultimus supplies regulatory and compliance services, calculates the daily net
asset value per share, maintains the financial books and records of the Fund,
maintains the records of each shareholder's account, and processes purchases and
redemptions of the Fund's shares. For the performance of these services, the
Fund pays Ultimus a fee, payable monthly, at an annual rate of .15% of its
average daily net assets, subject to a minimum monthly fee of $4,000.
3. INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales and maturities of investments other
than short-term investments, for the year ended December 31, 2002, were
$88,883,614 and $42,649,151, respectively.
17
AVE MARIA CATHOLIC VALUES FUND
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of Ave Maria Catholic Values Fund:
We have audited the accompanying statement of assets and liabilities of Ave
Maria Catholic Values Fund (the "Fund"), including the schedule of investments,
as of December 31, 2002, and the related statement of operations for the year
then ended, and the statements of changes in net assets and the financial
highlights for the year ended December 31, 2002 and the period May 1, 2001 (Fund
inception) through December 31, 2001. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2002, by correspondence with the Fund's
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Ave
Maria Catholic Values Fund as of December 31, 2002, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective periods stated above, in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
January 24, 2003
Columbus, Ohio
18
AVE MARIA CATHOLIC VALUES FUND
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS (UNAUDITED)
Overall responsibility for management of the Trust rests with the Board of
Trustees. The Trustees serve during the lifetime of the Trust and until its
termination, or until death, resignation, retirement or removal. The Trustees,
in turn, elect the officers of the Trust to actively supervise its day-to-day
operations. The officers have been elected for an annual term. The following are
the Trustees and executive officers of the Trust:
Length of Time
Trustee Address Age Position Held with the Trust Served
- ------------------------- ------------------------------------------- --- ----------------------------- --------------
* Gregory J. Schwartz 3707 W. Maple Road, Bloomfield Hills, MI 61 Chairman of the Board/Trustee Since 1992
* George P. Schwartz, CFA 3707 W. Maple Road, Bloomfield Hills, MI 58 President/Trustee Since 1992
Donald J. Dawson, Jr. 333 W. Seventh Street, Royal Oak, MI 55 Trustee Since 1993
Fred A. Erb 800 Old North Woodward, Birmingham, MI 79 Trustee Since 1994
**Bowie K. Kuhn 136 Teal Pointe Lane, Ponta Vedra Beach, FL 76 Trustee Since 2001
John J. McHale 2014 Royal Fern Court, Palm City, FL 81 Trustee Since 1993
Sidney F. McKenna 1173 Banbury Circle, Bloomfield Hills, MI 80 Trustee Since 1993
* Richard L. Platte, Jr., CFA 3707 W. Maple Road, Bloomfield Hills, MI 51 Vice President and Secretary Since 1993
* Timothy S. Schwartz 3707 W. Maple Road, Bloomfield Hills, MI 31 Treasurer Since 2000
* Gregory J. Schwartz, George P. Schwartz, Richard L. Platte, Jr. and Timothy S.
Schwartz, as affiliated persons of Schwartz Investment Counsel, Inc., the Fund's
investment adviser, are "interested persons" of the Trust within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940. Gregory J. Schwartz and
George P. Schwartz are brothers, and Timothy S. Schwartz is the son of George P.
Schwartz and the nephew of Gregory J. Schwartz.
** Bowie K. Kuhn is an "interested person" of the Trust by virtue of his
membership on the Catholic Advisory Board.
Each Trustee oversees two portfolios of the Trust: the Ave Maria Catholic Values
Fund and the Schwartz Value Fund. The principal occupations of the Trustees and
executive officers of the Trust during the past five years and public
directorships held by the Trustees are set forth below:
Gregory J. Schwartz is Chairman of Schwartz Investment Counsel, Inc., the Fund's
investment adviser.
George P. Schwartz, CFA is President and Chief Investment Officer of Schwartz
Investment Counsel, Inc. and is the portfolio manager of the Fund.
Donald J. Dawson, Jr. is Chairman of Payroll 1, Inc. (a payroll processing
company).
19
Fred A. Erb is the Chairman and Chief Executive Officer of Edgemere Enterprises,
Inc. (a real estate investment, development and management company) and Chairman
of D.I.Y. Home Warehouse (a retail building supplies company).
Bowie K. Kuhn is President of The Kent Group (business, sports and financial
consultant), and is the former Commissioner of Major League Baseball.
John J. McHale is retired as the President of the Montreal Expos (a major league
baseball team).
Sidney F. McKenna is retired Senior Vice President of United Technologies
Corporation (a major manufacturer of aircraft engines and other industrial
products).
Richard L. Platte, Jr., CFA is Executive Vice President, Secretary and Treasurer
of Schwartz Investment Counsel, Inc.
Timothy S. Schwartz is Vice President of Schwartz Investment Counsel, Inc.
20
AVE MARIA CATHOLIC VALUES FUND
CATHOLIC ADVISORY BOARD MEMBERS (UNAUDITED)
The Catholic Advisory Board reviews the companies selected by the Adviser to
ensure that the companies operate in a way that is consistent with the teachings
and core values of the Roman Catholic Church. The Catholic Advisory Board
evaluates companies using publicly available information, information from the
Adviser, and information from shareholders and other sources in making its
recommendations. The following are the members of the Catholic Advisory Board,
each of whom has held office since his or her appointment on April 26, 2001.
MEMBER ADDRESS AGE
------------------- ------------------------------------------------ ---
Bowie K. Kuhn 136 Teal Pointe Lane, Ponta Vedra Beach, FL 76
Thomas S. Monaghan One Ave Maria Drive, Ann Arbor, MI 65
Michael Novak 1150 17th Street, NW, Suite 1100, Washington, DC 69
Paul R. Roney One Ave Maria Drive, Ann Arbor, MI 45
Phyllis S. Schlafly 7800 Bonhomme, St. Louis, MO 78
Thomas J. Sullivan 401 Washington Ave, Avon-by-the-Sea, NJ 67
Bowie K. Kuhn is President of The Kent Group (business, sports and financial
consultant), and is the former Commissioner of Major League Baseball.
Thomas S. Monaghan is Chairman of the Ave Maria Foundation (a non-profit
foundation supporting Roman Catholic organizations) and Chairman of Domino's
Farms Corp. Prior to December 1998, he was Chairman and Chief Executive Officer
of Domino's Pizza, Inc.
Michael Novak is a theologian, author, columnist and former U.S. ambassador. He
is Director of Social and Political Studies of the American Enterprise
Institute.
Paul R. Roney is Executive Director of the Ave Maria Foundation and President of
Domino's Farms Corporation. Prior to December 1998, he was Treasurer of Domino's
Pizza, Inc.
Phyllis S. Schlafly is an author, columnist and radio commentator. She is
President of Eagle Forum (an organization promoting conservative and pro-family
values).
Thomas J. Sullivan is retired Executive Vice President of The McGraw-Hill
Companies.
Additional information regarding the Fund's Trustees, executive officers and
Catholic Advisory Board members may be found in the Fund's Statement of
Additional Information and is available without charge upon request by calling
1-888-726-9331.
21
(This page is intentionally left blank).
(This page is intentionally left blank).
AVE MARIA CATHOLIC VALUES FUND
a series of
Schwartz Investment Trust AVE MARIA
3707 W. Maple Road CATHOLIC VALUES
Bloomfield Hills, Michigan 48301 FUND
(248) 644-8500 A SERIES OF
SCHWARTZ
BOARD OF TRUSTEES INVESTMENT
Donald J. Dawson, Jr. TRUST
Fred A. Erb
Bowie K. Kuhn [GRAPHIC OMITTED]
John J. McHale
Sidney F. McKenna
George P. Schwartz, CFA ANNUAL REPORT
Gregory J. Schwartz, Chairman FOR THE YEAR ENDED
DECEMBER 31, 2002
OFFICERS
George P. Schwartz, CFA, President TICKER SYMBOL: AVEMX
Richard L. Platte, Jr., CFA, V.P./Secretary
Timothy S. Schwartz, Treasurer
Robert G. Dorsey, Assistant Secretary
John F. Splain, Assistant Secretary
Mark J. Seger, CPA, Assistant Treasurer
Theresa A. Minogue, CPA, Assistant Treasurer
Craig J. Hunt, Assistant Vice President
CATHOLIC ADVISORY BOARD
Bowie K. Kuhn, Chairman
Thomas S. Monaghan
Michael Novak
Paul R. Roney
Phyllis S. Schlafly
Thomas J. Sullivan
INVESTMENT ADVISER
SCHWARTZ INVESTMENT COUNSEL, INC.
3707 W. Maple Road
Bloomfield Hills, Michigan 48301
DISTRIBUTOR
SCHWARTZ FUND DISTRIBUTORS, INC.
3707 W. Maple Road
Bloomfield Hills, Michigan 48301
CUSTODIAN
FIFTH THIRD BANK
38 Fountain Square Plaza
Cincinnati, Ohio 45263
ADMINISTRATOR
ULTIMUS FUND SOLUTIONS, LLC
P.O. Box 46707
Cincinnati, Ohio 45246
AUDITORS
DELOITTE & TOUCHE LLP
155 E. Broad St.
Columbus, Ohio 43215
LEGAL COUNSEL
SULLIVAN & WORCESTER LLP
1666 K Street, NW, Suite 700
Washington, D.C. 20006
SHAREHOLDER ACCOUNTS CORPORATE OFFICES
c/o Ultimus Fund 3707 W. Maple Road
Solutions, LLC Bloomfield Hills, MI 48301
P.O. Box 46707 (248) 644-8500
Cincinnati, OH 45246 Fax (248) 644-4250
1-888-726-0753
[PICTURE]
SCHWARTZ VALUE FUND
Dear Fellow Shareowner:
2002 was clearly a challenging year for equity investors. The stock market
registered its third consecutive year of declines--something that has not
occurred in more than 60 years. For the year, the Dow Jones Industrial Average
fell 15.0% and the S&P 500 fell 22.1%, their steepest declines since the
mid-70s, while the Russell 2000 lost 21.6% and the NASDAQ Composite melted
31.6%. The defining characteristic of the 2002 bear was its non-discriminatory
temperament. Growth, value, high-tech, low-tech, small-cap, mid-cap, large-cap,
and foreign stocks all posted sizeable losses for the year. The average U.S.
equity mutual fund was down 22.4% in 2002. The Schwartz Value Fund was unable to
avoid the carnage, falling 14.9% for the year. It's painful to report on a
period when the market value of your investment in the Schwartz Value Fund
declined. There is no joy in pointing out that you lost less than the average
mutual fund investor.
The three consecutive years of stock market declines have wreaked havoc with the
popular averages (see below) but have not materially altered the long-term
results for the Schwartz Value Fund, which has averaged almost 11% annually for
19 years.
Compound Annual Rates of Return
for 3 years ended 12-31-02
--------------------------
Schwartz Value Fund + 6.00%
Dow Jones Industrials - 8.46%
S&P 500 -14.54%
NASDAQ -31.02%
Russell 2000 - 7.54%
If you want to know why the Schwartz Value Fund has outperformed the major
indices since 1999, it is mainly because the Fund had no money invested in
companies that blew up. We've avoided all of the scandal-ridden train wrecks
that have made headlines--Adelphia, Enron, Tyco, Conseco,
Global Crossing, WorldCom, UAL, and K-Mart. This bit of good fortune was not by
coincidence. As a matter of policy, we simply don't invest in speculative,
over-priced, and highly leveraged companies that use questionable accounting
methods. What you will find in our value-laden portfolio are a multitude of
low-risk, profitable, conservatively run, financially sound companies with
boards of directors who take their fiduciary responsibility to owners seriously.
In managing the portfolio, we sidestepped the landmines by avoiding the popular
stocks, which had been so overpriced. Buying what's popular makes for good
cocktail-party conversation, but usually poor investment results. Instead, we
did what we always do; we spent our time identifying good businesses selling at
discounts to intrinsic value. Unfortunately, in 2002 those discounts widened in
many cases.
Several of the companies in the Schwartz Value Fund have long and storied
histories, dating back 100 years or more. These companies include Courier
Corporation, Harris Corporation, and ProQuest Company.
Courier Corporation traces its roots back to newspaper publishing in 1824. For
much of its history, Courier thrived as a printing company specializing in
printed forms. In the 1980's, sensing the advent of computerization, Courier's
management sold the printed forms business and redeployed assets into budding
electronic publishing technologies. Today, Courier is one of the largest book
printers in the U.S., including an online unit that capitalizes on the growth of
electronic media.
Harris Corporation was founded in 1895 by two brothers who were inventors. Among
their inventions was a specialized printing press. Harris remained a small,
family-run business for most of the 20th century. Through a series of
acquisitions during the 1960's and 1970's, the company became a manufacturer of
electronics equipment and microwave radio systems. Today, Harris is a leading
manufacturer of mobile communication products, air traffic control systems, and
digital network broadcasting equipment.
ProQuest Company (formerly Bell & Howell) was formed in the early 1900's as a
projector and camera manufacturer. The company rose to prominence in the movie
industry by establishing 35mm as the standard film width, and by 1919 nearly all
of the movie equipment used in rapidly growing Hollywood was made by Bell &
Howell. In the 1950's, the company diversified into microfilm equipment. In the
late 1990's, the company divested its photo lines. In 2001, the corporate name
was changed to ProQuest to reflect its focus on information services. Today,
ProQuest is primarily an information management company that offers digital
databases in a subscription format. This service has a 90% renewal rate.
2
The hallmark of these financially sound companies is low debt, which enhances
staying power. Companies with staying power can grow and prosper during good
times, and then take market share from competitors when inevitable downturns
come. However, longevity alone does not necessarily make these companies good
investments today. Each company has the aforementioned staying power, plus the
investment characteristics we always look for--a dominant market position, a
well-respected management team, proprietary products with good growth prospects,
and a share price that is at a discount to intrinsic value.
Heading into 2003, there is much cause for optimism. A fourth consecutive year
of stock market declines is highly unlikely. (It only happened once--1929 to
1932.) The current accommodating monetary policy combined with President Bush's
new fiscal stimulus package is likely to boost the economy and the equity market
in 2003. An expeditious resolution to the impending Iraq war could really add
fuel to a 2003 bull market. Additionally, low interest rates, near-zero
inflation, improving corporate profits, and reasonable P-Es are a prescription
for a major upward move in stock prices.
With best regards,
/s/ George P. Schwartz, CFA
George P. Schwartz, CFA
President
January 31, 2003
3
COMPARISON OF THE CHANGE IN VALUE OF A
$10,000 INVESTMENT IN THE SCHWARTZ VALUE FUND(a)
AND THE RUSSELL 2000 INDEX
Schwartz Value Fund
Average Annual Total Returns (b)
1 Year(c) 5 Years 10 Years
--------- ------- --------
(15.76)% 0.81% 7.55%
[GRAPHIC OMITTED]
12/02
-------
Schwartz Value Fund $20,705
Russell 2000 Index $18,340
Past performance is not predictive of future performance.
(a) Combines the performance of the Fund, since its commencement of operations
on July 20, 1993, and the performance of RCM Partners Limited Partnership
for periods prior to July 20, 1993. It should be noted that: (1) the Fund's
quoted performance data includes performance for periods before the Fund's
registration statement became effective; (2) the Fund was not registered
under the 1940 Act during such periods and therefore was not subject to
certain investment restrictions imposed by the 1940 Act; and (3) if the
Fund had been registered under the 1940 Act during such periods,
performance may have been adversely affected.
(b) The returns shown do not reflect the deduction of taxes a shareholder would
pay on Fund distributions or the redemption of Fund shares.
(c) Return includes a contingent deferred sales charge of 1% on redemptions of
Fund shares made within one year of their purchase.
4
SCHWARTZ VALUE FUND
ANNUAL TOTAL RATES OF RETURN
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
SCHWARTZ VALUE FUND (a) 11.1% 21.7% 16.4% -0.6% 23.1% 8.3% -5.3% 32.0% 22.7% 20.5% -6.8%
RUSSELL 2000 INDEX (b) -9.6% 28.0% 4.0% -10.2% 22.5% 14.2% -21.3% 43.4% 16.5% 17.3% -3.2%
RUSSELL 2000 VALUE) b) -1.4% 26.5% 4.9% -9.1% 26.0% 9.6% -24.3% 38.0% 26.3% 21.5% -3.7%
RUSSELL 2000 GROWTH (b) -17.0% 29.3% 2.6% -11.4% 18.8% 19.0% -18.5% 49.6% 6.8% 12.5% -3.1%
NASDAQ~ COMPOSITE (b) -11.2% 31.4% 7.4% -5.3% 15.4% 19.3% -17.8% 56.8% 15.5% 14.7% -3.2%
VALUE LINE COMPOSITE (b) -8.4% 20.7% 5.0% -10.6% 15.4% 11.2% -24.3% 27.2% 7.0% 10.7% -6.0%
S & P 500 6.1% 31.6% 18.7% 5.3% 16.8% 31.6% -3.2% 30.4% 7.6% 10.1% 1.3%
CONSUMER PRICE INDEX 4.3% 3.5% 1.1% 4.4% 4.4% 4.6% 6.1% 3.1% 2.9% 2.7% 2.7%
Compound Annual
Total Rates of Return
---------------------
1995 1996 1997 1998 1999 2000 2001 2002 5 Year 10 Year 19 Year
---- ---- ---- ---- ---- ---- ---- ---- ------ ------- -------
SCHWARTZ VALUE FUND (a) 16.9% ~18.3% 28.0% -10.4% -2.5% 9.3% 28.1% -14.9% 0.8% 7.6% 10.5%
RUSSELL 2000 INDEX (b) 26.2% 14.8% 20.5% -3.5% 19.6% -4.2% 1.O% -21.6% -2.6% 5.7% 6.7%
RUSSELL 2000 VALUE (b) 22.1% 18.4% 28.9% -8.5% -3.5% 19.6% 11.4% -13.2% 0.4% 8.4% 8.7%
RUSSELL 2000 GROWTH (b) 30.1% 10.7% 12.5% 0.8% 42.5% -22.7% -9.6% -30.7% -7.0% 2.1% 4.3%
NASDAQ COMPOSITE (b) 39.9% 22.7% 21.6% 39.6% 85.6% -39.3% -21 .0% -31.6% -3.2% 7.0% 8.6%
VALUE LINE COMPOSITE (b) 19.3% 13.4% 21.1% -3.8% -1.4% -8.7% -6.1% -28.6% -10.3% -0.1% 1.6%
S & P 500 37.5% 22.9% 33.4% 28.6% 21.0% -9.1% -11.9% -22.1% -0.6% 9.3% 12.2%
CONSUMER PRICE INDEX 2.6% 3.3% I.7% 1.5% 2.7% 3.4% 1.6% 2.4% 2.3% 2.5% 3.1%
- ---------------------
(a) Schwartz Value Fund's performance combines the performance of the Fund,
since its commencement of operations as a registered investment company on
July 20, 1993, and the performance of RCM Partners Limited Partnership for
periods prior thereto.
(b) Excluding dividends.
5
SCHWARTZ VALUE FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2002
MARKET
SHARES COMPANY VALUE
- ------- --------------------------------------------------------- ------------
110,000 ProQuest Company ........................................ $2,156,000
125,000 Brookstone, Inc. ........................................ 1,807,500
200,000 Layne Christensen Company ............................... 1,640,000
40,000 H&R Block, Inc. ......................................... 1,608,000
90,000 Esterline Technologies Corporation ...................... 1,590,300
40,000 Health Care Property Investors, Inc. .................... 1,532,000
55,000 Hibbett Sporting Goods, Inc. ............................ 1,315,600
30,000 Ross Stores, Inc. ....................................... 1,271,700
100,000 Hector Communications Corporation ....................... 1,265,000
35,000 Washington Mutual, Inc. ................................. 1,208,550
6
SCHWARTZ VALUE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
MARKET
SHARES COMMON STOCK - 98.5% VALUE
- ------- --------------------------------------------------------- ------------
AEROSPACE/DEFENSE - 8.1%
90,000 Esterline Technologies Corporation * $ 1,590,300
8,000 General Dynamics Corporation 634,960
35,000 Harris Corporation 920,500
4,500 Northrop Grumman Corporation 436,500
-------------
3,582,260
-------------
APPAREL & TEXTILES - 2.0%
17,500 Jones Apparel Group, Inc.* 620,200
4,000 K-Swiss, Inc. - Class A 86,840
15,000 Nautica Enterprises, Inc.* 166,650
-------------
873,690
-------------
BUILDING MATERIALS & CONSTRUCTION - 6.4%
400,000 Champion Enterprises, Inc. * 1,140,000
120,000 Fleetwood Enterprises, Inc.* 942,000
45,000 Monaco Coach Corporation* 744,750
-------------
2,826,750
-------------
BUSINESS SERVICES - 4.4%
60,000 Concord EFS, Inc. * 944,400
73,200 Dwyer Group, Inc. (The)* 278,160
4,000 Kronos, Inc. * 147,960
100,000 Navigant Consulting, Inc. * 590,000
-------------
1,960,520
-------------
COMMUNICATION EQUIPMENT & SERVICES - 3.3%
100,000 Hector Communications Corporation * 1,265,000
20,000 Universal Electronics, Inc. * 194,800
-------------
1,459,800
-------------
CONSUMER PRODUCTS - DURABLES - 1.7%
33,000 Craftmade International, Inc. 508,200
7,500 Ethan Allen Interiors, Inc. 257,775
-------------
765,975
-------------
7
SCHEDULE OF INVESTMENTS (CONTINUED)
MARKET
SHARES COMMON STOCK - 98.5% VALUE
- ------- --------------------------------------------------------- ------------
CONSUMER PRODUCTS - NONDURABLES - 5.5%
25,000 Coach, Inc.* $ 823,000
4,000 Fortune Brands, Inc. 186,040
25,000 Maxwell Shoe Company, Inc. * 290,500
57,000 Velcro Industries N.V. 521,550
17,500 Weyco Group, Inc. 600,600
-------------
2,421,690
-------------
EDUCATION - 2.1%
30,000 DeVry, Inc.* 498,300
50,000 Nobel Learning Communities, Inc.* 197,500
4,000 Strayer Education, Inc. 230,000
-------------
925,800
-------------
ELECTRONICS - 0.9%
50,000 Sparton Corporation* 395,000
-------------
ENERGY & MINING - 3.4%
12,000 Diamond Offshore Drilling, Inc. 262,200
15,000 Forest Oil Corporation * 413,400
20,000 Patterson-UTI Energy, Inc.* 603,400
10,000 Prima Energy Corporation * 223,600
-------------
1,502,600
-------------
ENVIRONMENTAL SERVICES - 3.7%
200,000 Layne Christensen Company * 1,640,000
-------------
FINANCE - BANKS & THRIFTS - 4.4%
17,500 Comerica, Inc. 756,700
35,000 Washington Mutual, Inc. 1,208,550
-------------
1,965,250
-------------
FINANCE - INSURANCE - 1.9%
15,000 American Physicians Capital, Inc.* 282,150
11,000 First Health Group Corporation* 267,850
100,000 Unico American Corporation 315,000
-------------
865,000
-------------
8
SCHEDULE OF INVESTMENTS (CONTINUED)
MARKET
SHARES COMMON STOCK - 98.5% VALUE
- ------- --------------------------------------------------------- ------------
FINANCE - MISCELLANEOUS - 4.4%
40,000 H&R Block, Inc. $ 1,608,000
15,000 Investment Technology Group, Inc.* 335,400
-------------
1,943,400
-------------
HEALTHCARE - 2.5%
25,000 Eclipsys Corporation* 133,750
10,000 Manor Care, Inc. * 186,100
10,000 NDCHealth Corporation 199,000
15,000 STERIS Corporation* 363,750
50,000 Theragenics Corporation * 201,500
-------------
1,084,100
-------------
HOLDING COMPANIES - 1.5%
50,000 PICO Holdings, Inc.* 671,500
-------------
INDUSTRIAL PRODUCTS & SERVICES - 8.9%
5,000 AptarGroup, Inc. 156,200
10,000 Automatic Data Processing, Inc. 392,500
30,000 Dover Corporation 874,800
37,500 Maritrans, Inc. 506,250
20,000 Simpson Manufacturing Company, Inc. * 658,000
25,000 Snap-on, Inc. 702,750
30,000 Waters Corporation* 653,400
-------------
3,943,900
-------------
INFORMATION TECHNOLOGY - 2.0%
30,000 Quality Systems, Inc. * 603,000
20,000 SPSS, Inc. * 279,800
-------------
882,800
-------------
PRINTING & PUBLISHING - 7.5%
25,000 Courier Corporation 1,146,000
110,000 ProQuest Company* 2,156,000
-------------
3,302,000
-------------
9
SCHEDULE OF INVESTMENTS (CONTINUED)
MARKET
SHARES COMMON STOCK - 98.5% VALUE
- ------- --------------------------------------------------------- ------------
REAL ESTATE - 5.3%
40,000 Health Care Property Investors, Inc. $ 1,532,000
16,499 I. Gordon Realty Corporation* 189,945
25,000 Washington Real Estate Investment Trust 637,500
-------------
2,359,445
-------------
RETAIL - 17.3%
125,000 Brookstone, Inc. * 1,807,500
15,000 Dollar Tree Stores, Inc.* 368,550
55,000 Hibbett Sporting Goods, Inc.* 1,315,600
30,000 Ross Stores, Inc. 1,271,700
40,000 Ryan's Family Steak Houses, Inc. * 454,000
50,000 Sears, Roebuck and Company 1,197,500
20,000 TJX Companies, Inc. 390,400
30,000 Toys "R" Us, Inc.* 300,000
15,000 Tractor Supply Company * 564,000
-------------
7,669,250
-------------
TECHNOLOGY - 1.3%
65,000 Cable Design Technologies Corporation* 383,500
15,000 Electro Rent Corporation* 181,815
-------------
565,315
-------------
TOTAL COMMON STOCK - 98.5% (Cost $39,405,760) $ 43,606,045
-------------
PREFERRED STOCK - 0.9%
5,000 Allen Group, Inc., 7.75%, convertible until 02/15/14
(Cost $217,561) $ 370,000
-------------
OPEN-END FUNDS - 0.0%
40 Sequoia Fund (Cost $5,003) $ 5,095
-------------
10
SCHEDULE OF INVESTMENTS (CONTINUED)
MARKET
FACE AMOUNT REPURCHASE AGREEMENTS (1) - 1.1% VALUE
- ------------ -------------------------------------------------------- -----------
$ 489,873 Fifth Third Bank, 0.35%, dated 12/31/02, due 01/02/03,
repurchase proceeds: $489,883 (Cost $489,873) $ 489,873
------------
TOTAL INVESTMENTS - 100.5% (Cost $40,118,197) $ 44,471,013
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.5%) (209,855)
------------
NET ASSETS - 100.0% $ 44,261,158
============
* Non-income producing security.
(1)Repurchase agreements are fully collateralized by U.S. Government
obligations.
See notes to financial statements.
11
SCHWARTZ VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2002
ASSETS
Investments, at value (cost of $40,118,197) (Note 1) $ 44,471,013
Receivable for securities sold 261,395
Receivable for capital shares sold 28,846
Dividends and interest receivable 49,055
Other assets 17,659
-------------
TOTAL ASSETS 44,827,968
-------------
LIABILITIES
Bank overdraft 155,322
Payable for securities purchased 205,600
Payable for capital shares redeemed 2,900
Accrued investment advisory fees (Note 2) 165,935
Payable to affiliate (Note 2) 5,800
Other accrued expenses and liabilities 31,253
-------------
TOTAL LIABILITIES 566,810
-------------
NET ASSETS $ 44,261,158
=============
NET ASSETS CONSIST OF:
Paid-in capital $ 40,798,826
Accumulated net realized losses from security transactions (890,484)
Net unrealized appreciation on investments 4,352,816
-------------
NET ASSETS $ 44,261,158
=============
Shares of beneficial interest outstanding (unlimited number of
shares authorized, no par value) 2,191,238
=============
Net asset value and offering price per share (a) $ 20.20
=============
(a) Redemption price varies based on length of time held (Note 1)
See notes to financial statements.
12
SCHWARTZ VALUE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
INVESTMENT INCOME
Dividends and interest $ 459,817
--------------
EXPENSES
Investment advisory fees (Note 2) 712,586
Administration, accounting and transfer agent fees (Note 2) 71,359
Trustees' fees and expenses 33,327
Legal and audit fees 27,937
Registration fees 17,371
Reports to shareholders 16,608
Insurance expense 14,241
Custodian fees 11,420
Postage and supplies 8,574
Other expenses 10,587
--------------
TOTAL EXPENSES 924,010
--------------
NET INVESTMENT LOSS (464,193)
--------------
REALIZED AND UNREALIZED LOSSES ON INVESTMENTS
Net realized losses from security transactions (883,882)
Net change in unrealized appreciation/depreciation on investments (6,787,710)
--------------
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS (7,671,592)
--------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (8,135,785)
==============
See notes to financial statements.
13
SCHWARTZ VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------
FROM OPERATIONS
Net investment loss $ (464,193) $ (254,637)
Net realized gains (losses) from security transactions (883,882) 5,283,004
Net change in unrealized appreciation/depreciation on investments (6,787,710) 5,412,312
------------ ------------
Net increase (decrease) in net assets from operations (8,135,785) 10,440,679
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains on investments -- (4,985,794)
Distributions in excess of realized gains -- (6,602)
------------ ------------
Net decrease in net assets from distributions to shareholders -- (4,992,396)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 41,596,948 13,668,362
Reinvestment of distributions to shareholders -- 4,560,029
Payments for shares redeemed (39,231,453) (9,594,624)
------------ ------------
Net increase in net assets from capital share transactions 2,365,495 8,633,767
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (5,770,290) 14,082,050
NET ASSETS
Beginning of year 50,031,448 35,949,398
------------ ------------
End of year $ 44,261,158 $ 50,031,448
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 1,802,341 567,511
Shares issued in reinvestment of distributions to shareholder -- 192,082
Shares redeemed (1,718,185) (395,582)
------------ ------------
Net increase in shares outstanding 84,156 364,011
Shares outstanding, beginning of year 2,107,082 1,743,071
------------ ------------
Shares outstanding, end of year 2,191,238 2,107,082
============ ============
See notes to financial statements.
14
SCHWARTZ VALUE FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2000 1999 1998
------- -------- -------- -------- -------
Net asset value at beginning of year $ 23.74 $ 20.62 $ 19.74 $ 21.50 $ 23.99
------- -------- -------- -------- -------
Income (loss) from investment operations:
Net investment loss (0.21) (0.12) (0.01) (0.15) (0.09)
Net realized and unrealized gains
(losses) on investments (3.33) 5.91 1.84 (0.38) (2.40)
------- -------- -------- -------- -------
Total from investment operations (3.54) 5.79 1.83 (0.53) (2.49)
------- -------- -------- -------- -------
Less distributions:
From net realized gains on investments - (2.67) (0.92) (1.05) -
In excess of net realized gains
on investments - (0.00) (0.03) (0.18) -
------- -------- -------- -------- -------
Total distributions - (2.67) (0.95) (1.23) -
------- -------- -------- -------- -------
Net asset value at end of year $ 20.20 $ 23.74 $ 20.62 $ 19.74 $ 21.50
======= ======== ======== ======== =======
Total return (14.9) % 28.1 % 9.3 % (2.5) % (10.4) %
======= ======== ======== ======== =======
Ratios/Supplementary Data:
Ratio of expenses to average net assets 1.95 % 2.04 % 2.10 % 2.05 % 1.94 %
Ratio of net investment loss
to average net assets (0.98) % (0.62) % (0.06) % (0.61) % (0.39) %
Portfolio turnover rate 103 % 103 % 70 % 59 % 54 %
Net assets at end of year (000's) $44,261 $ 50,031 $ 35,949 $ 41,672 $62,697
See notes to financial statements.
15
SCHWARTZ VALUE FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
1. SIGNIFICANT ACCOUNTING POLICIES
Schwartz Value Fund (the Fund) is a series of Schwartz Investment Trust, a
diversified open-end management investment company established as an Ohio
Business Trust under a Declaration of Trust dated August 31, 1992. The Fund is
registered under the Investment Company Act of 1940 and commenced operations on
July 20, 1993. The Fund determines and makes available for publication the net
asset value of its shares on a daily basis.
The investment objective of the Fund is to seek long-term capital appreciation.
See the Prospectus for more detailed information regarding the investment
strategies of the Fund.
Shares of the Fund are sold at net asset value. To calculate the net asset
value, the Fund's assets are valued and totaled, liabilities are subtracted, and
the balance is divided by the number of shares outstanding. The offering price
and redemption price per share is equal to the net asset value per share, except
that effective April 1, 2002, shares of the Fund are subject to a 1% contingent
deferred sales load if redeemed within one year of their purchase.
The following is a summary of significant accounting policies followed by the
Fund:
(a) VALUATION OF INVESTMENTS -- Securities which are traded on stock
exchanges are valued at the last reported sale price as of the close of
the regular session of trading on the New York Stock Exchange on the
day the securities are valued, or, if not traded on a particular day,
at the closing bid price. Securities that are quoted by NASDAQ are
valued at the last reported sale price, or, if not traded on a
particular day, at the mean between the closing bid and asked prices as
reported by NASDAQ. Securities traded in the over-the-counter market,
not quoted by NASDAQ, are valued at the average of the highest current
independent bid and lowest current independent offer as of the close of
trading on the day of valuation. Securities (and other assets) for
which market quotations are not readily available are valued at their
fair value as determined in good faith in accordance with consistently
applied procedures established by and under the general supervision of
the Board of Trustees.
(b) INCOME TAXES -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated
investment companies. As provided therein, in any fiscal year in which
the Fund so qualifies and distributes at least 90% of its taxable
income, the Fund (but not the shareholders) will be relieved of federal
income tax on the income distributed. Accordingly, no provision for
income taxes has been made.
16
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income and 98% of its net
realized capital gains plus undistributed amounts from prior years.
For the year ended December 31, 2002, the Fund reclassified its net investment
loss of $464,193 against paid-in capital on the Statement of Assets and
Liabilities. Such reclassification, the result of permanent differences between
the financial statement and income tax reporting requirements, has no effect on
the Fund's net assets or net asset value per share.
For federal income tax purposes, the cost of portfolio investments amounted to
$40,473,517 at December 31, 2002. The composition of unrealized appreciation
(the excess of value over tax cost) and unrealized depreciation (the excess of
tax cost over value) was as follows:
Gross unrealized appreciation $ 6,634,321
Gross unrealized depreciation (2,636,825)
----------
Net unrealized appreciation $ 3,997,496
==========
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for the Fund is due to certain timing differences
in the recognition of capital losses under income tax regulations and accounting
principles generally accepted in the United States of America (GAAP).
As of December 31, 2002, the Fund had a capital loss carryforward of $535,164
for income tax purposes which expires December 31, 2010. This capital loss
carryforward may be utilized in future years to offset net realized capital
gains, if any, prior to distributing such gains to shareholders.
The tax character of distributable earnings at December 31, 2002 was as follows:
Unrealized Capital Loss Total Distributable
Appreciation Carryforward Earnings
- --------------------------------------------------------------------------------
$ 3,997,496 $ (535,164) $ 3,462,332
(c) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date. Interest income is recognized on the accrual basis. Realized gains and
losses on security transactions are determined on the identified cost basis.
17
(d) DIVIDENDS AND DISTRIBUTIONS -- Dividends from net investment income and net
capital gains, if any, are declared and paid annually in December. Dividends and
distributions to shareholders are recorded on the ex-dividend date. The tax
character of distributions paid during the years ended December 31, 2002 and
December 31, 2001 were as follows:
Ordinary Long-Term Total
Year Ended Income Capital Gains Distributions
- --------------------------------------------------------------------------------
December 31, 2002 $ - $ - $ -
December 31, 2001 $ 1,566,614 $ 3,425,782 $ 4,992,396
(e) REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements
(agreements to purchase securities subject to the seller's agreement to
repurchase them at a specified time and price) with well-established registered
securities dealers or banks. Repurchase agreements are the equivalent of loans
by the Fund. The Fund's policy is to take possession of the underlying
securities and, on a daily basis, mark to market such securities to ensure that
the value, including accrued interest, is at least equal to the amount to be
repaid to the Fund under the agreement.
(f) ESTIMATES -- The preparation of financial statements in conformity with 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
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES
The President of the Fund is also the President and Chief Investment Officer of
Schwartz Investment Counsel, Inc. (the Adviser). Certain other trustees and
officers of the Fund are officers of the Adviser, or of Schwartz Fund
Distributors, Inc. (the Distributor), the Fund's principal underwriter, or of
Ultimus Fund Solutions, LLC (Ultimus), the administrative, accounting and
transfer agent for the Fund.
Pursuant to an Investment Advisory Agreement between the Fund and the Adviser,
the Adviser is responsible for the management of the Fund and provides
investment advice along with the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund. For such
services, the Fund pays the Adviser a quarterly fee equal to the annual rate of
1.5% of the average daily net assets up to $75 million; 1.25% of such assets
from $75 million to $100 million; and 1% of such assets in excess of $100
million.
The Distributor serves as the principal underwriter for the distribution of
shares of the Fund. During the year ended December 31, 2002, the Distributor
collected $2,371 in contingent deferred sales loads on redemptions of Fund
shares.
18
Pursuant to a Mutual Fund Services Agreement between the Fund and Ultimus,
Ultimus supplies regulatory and compliance services, calculates the daily net
asset value per share, maintains the financial books and records of the Fund,
maintains the records of each shareholder's account, and processes purchases and
redemptions of the Fund's shares. For the performance of these services, the
Fund pays Ultimus a fee, payable monthly, at an annual rate of .15% of the
average daily net assets, subject to a minimum monthly fee of $4,000.
3. INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales and maturities of investments other
than short-term investments for the year ended December 31, 2002 were
$52,151,380 and $46,553,060, respectively.
19
SCHWARTZ VALUE FUND
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of Schwartz Value Fund:
We have audited the accompanying statement of assets and liabilities of Schwartz
Value Fund (the "Fund"), including the schedule of investments, as of December
31, 2002, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2002, by correspondence with the Fund's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Schwartz Value Fund as of December 31, 2002, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
January 24, 2003
Columbus, Ohio
20
SCHWARTZ VALUE FUND
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
(UNAUDITED)
Overall responsibility for management of the Trust rests with the Board of
Trustees. The Trustees serve during the lifetime of the Trust and until its
termination, or until death, resignation, retirement or removal. The Trustees,
in turn, elect the officers of the Trust to actively supervise its day-to-day
operations. The officers have been elected for an annual term. The following are
the Trustees and executive officers of the Trust:
Length of Time
Trustee Address Age Position Held with the Trust Served
- --------------------------- --------------------------------------------- --- -------------------------------- -------------
* Gregory J. Schwartz 3707 W. Maple Road, Bloomfield Hills, MI 61 Chairman of the Board/Trustee Since 1992
* George P. Schwartz, CFA 3707 W. Maple Road, Bloomfield Hills, MI 58 President/Trustee Since 1992
Donald J. Dawson, Jr. 333 W. Seventh Street, Royal Oak, MI 55 Trustee Since 1993
Fred A. Erb 800 Old North Woodward, Birmingham, MI 79 Trustee Since 1994
**Bowie K. Kuhn 136 Teal Pointe Lane, Ponta Vedra Beach, FL 76 Trustee Since 2001
John J. McHale 2014 Royal Fern Court, Palm City, FL 81 Trustee Since 1993
Sidney F. McKenna 1173 Banbury Circle, Bloomfield Hills, MI 80 Trustee Since 1993
* Richard L. Platte, Jr., CFA 3707 W. Maple Road, Bloomfield Hills, MI 51 Vice President and Secretary Since 1993
* Timothy S. Schwartz 3707 W. Maple Road, Bloomfield Hills, MI 31 Treasurer Since 2000
* Gregory J. Schwartz, George P. Schwartz, Richard L. Platte, Jr. and Timothy S.
Schwartz, as affiliated persons of Schwartz Investment Counsel, Inc., the Fund's
investment adviser, are "interested persons" of the Trust within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940. Gregory J. Schwartz and
George P. Schwartz are brothers, and Timothy S. Schwartz is the son of George P.
Schwartz and the nephew of Gregory J. Schwartz.
** Bowie K. Kuhn is an "interested person" of the Trust by virtue of his
membership on the Catholic Advisory Board, a committee of individuals whose
responsibilities relate to the Ave Maria Catholic Values Fund, another series of
the Trust.
Each Trustee oversees two portfolios of the Trust: the Ave Maria Catholic Values
Fund and the Schwartz Value Fund. The principal occupations of the Trustees and
executive officers of the Trust during the past five years and public
directorships held by the Trustees are set forth below:
Gregory J. Schwartz is Chairman of Schwartz Investment Counsel, Inc., the Fund's
investment adviser.
George P. Schwartz, CFA is President and Chief Investment Officer of Schwartz
Investment Counsel, Inc. and is the portfolio manager of the Fund.
Donald J. Dawson, Jr. is Chairman of Payroll 1, Inc. (a payroll processing
company).
21
Fred A. Erb is the Chairman and Chief Executive Officer of Edgemere Enterprises,
Inc. (a real estate investment, development and management company) and Chairman
of D.I.Y. Home Warehouse (a retail building supplies company).
Bowie K. Kuhn is President of The Kent Group (business, sports and financial
consultant), and is the former Commissioner of Major League Baseball.
John J. McHale is retired as the President of the Montreal Expos (a major league
baseball team).
Sidney F. McKenna is retired Senior Vice President of United Technologies
Corporation (a major manufacturer of aircraft engines and other industrial
products).
Richard L. Platte, Jr., CFA is Executive Vice President, Secretary and Treasurer
of Schwartz Investment Counsel, Inc.
Timothy S. Schwartz is Vice President of Schwartz Investment Counsel, Inc.
22
SCHWARTZ VALUE FUND
INVESTMENT PHILOSOPHY
Schwartz Value Fund ("SVF") seeks long-term capital appreciation through value
investing - purchasing shares of strong, growing companies at reasonable prices.
Because small and medium size companies offer vast reward opportunities,
fundamental analysis is used to identify emerging companies with outstanding
business characteristics. Sometimes the best values are issues not followed
closely by Wall Street analysts.
Most value investors buy fair companies at an excellent price. SVF attempts to
buy excellent companies at a fair price. The essence of value investing is
finding companies with great business characteristics, which by their nature
offer a margin of safety. A truly fine business requires few assets to provide a
consistently expanding stream of income. SVF purchases shares which are
temporarily out-of-favor and selling below intrinsic value.
A common thread in SVF investments is that the market price is below what a
corporate or entrepreneurial buyer might be willing to pay for the entire
business. The auction nature and the inefficiencies of the stock market are such
that SVF can often buy a minority interest in a fine company at a small fraction
of the price per share necessary to acquire the entire company.
23
SCHWARTZ VALUE FUND
a series of
Schwartz Investment Trust SCHWARTZ
3707 W. Maple Road VALUE FUND
Bloomfield Hills, Michigan
48301 (248) 644-8500 A SERIES OF
SCHWARTZ
BOARD OF TRUSTEES INVESTMENT
Donald J. Dawson, Jr. TRUST
Fred A. Erb
Bowie K. Kuhn
John J. McHale
Sidney F. McKenna
George P. Schwartz, CFA [PICTURE]
Gregory J. Schwartz, Chairman
OFFICERS
George P. Schwartz, CFA, President
Richard L. Platte, Jr., CFA, V.P./Secretary
Timothy S. Schwartz, Treasurer
Robert G. Dorsey, Assistant Secretary ANNUAL REPORT
John F. Splain, Assistant Secretary FOR THE YEAR ENDED
Mark J. Seger, CPA, Assistant Treasurer DECEMBER 31, 2002
Theresa A. Minogue, CPA, Assistant Treasurer
Craig J. Hunt, Assistant Vice President TICKER SYMBOL: RCMFX
INVESTMENT ADVISER
SCHWARTZ INVESTMENT COUNSEL, INC.
3707 W. Maple Road
Bloomfield Hills, Michigan 48301
DISTRIBUTOR
SCHWARTZ FUND DISTRIBUTORS, INC.
3707 W. Maple Road
Bloomfield Hills, Michigan 48301
CUSTODIAN
FIFTH THIRD BANK
38 Fountain Square Plaza
Cincinnati, Ohio 45263
ADMINISTRATOR
ULTIMUS FUND SOLUTIONS, LLC
P.O. Box 46707
Cincinnati, Ohio 45246
AUDITORS
DELOITTE & TOUCHE LLP
155 E. Broad St.
Columbus, Ohio 43215
LEGAL COUNSEL
SULLIVAN & WORCESTER LLP
1666 K Street, NW, Suite 700
Washington, D.C. 20006
ITEM 2. CODE OF ETHICS.
Not applicable
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable
ITEMS 4-8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's disclosure controls and procedures (as
defined in Rule 30a-2(c) under the Investment Company Act (17 CFR 270.30a-2(c)))
are effective based on their evaluation of these controls and procedures as of a
date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2): 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) Schwartz Investment Trust
-----------------------------------------------------------------
By (Signature and Title)* /s/ George P. Schwartz
------------------------------------------------------
George P. Schwartz, President
Date February 21, 2003
-------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ George P. Schwartz
------------------------------------------------------
George P. Schwartz, President
Date February 21, 2003
-------------------------
By (Signature and Title)* /s/ Timothy S. Schwartz
------------------------------------------------------
Timothy S. Schwartz, Treasurer
Date February 21, 2003
-------------------------
* Print the name and title of each signing officer under his or her signature.