----------------------------
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Expires: September 30, 2007
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hours per response: 19.4
----------------------------
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, Suite 100 Bloomfield Hills, Michigan 48301
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
George P. Schwartz
Schwartz Investment Counsel, Inc. 3707 W. Maple Road, Suite 100 Bloomfield Hills, Michigan 48301
- ----------------------------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (248) 644-8500
----------------------
Date of fiscal year end: December 31, 2005
--------------------------------------------
Date of reporting period: December 31, 2005
--------------------------------------------
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.
SCHWARTZ
VALUE FUND
A SERIES OF
SCHWARTZ
INVESTMENT
TRUST
[GRAPHIC OMITTED]
ANNUAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2005
TICKER SYMBOL: RCMFX
SHAREHOLDER ACCOUNTS CORPORATE OFFICES
c/o Ultimus Fund 3707 W. Maple Road
Solutions, LLC [GRAPHIC OMITTED] Suite 100
P.O. Box 46707 Bloomfield Hills, MI 48301
Cincinnati, OH 45246 (248) 644-8500
(888) 726-0753 Fax (248) 644-4250
SCHWARTZ VALUE FUND
Dear Fellow Shareowner,
Last year at this time equity investors were optimistic about the prospects for
another good year in 2005, following the sizeable gains in '03 and '04. However,
2005 turned out to be a lackluster year for most U.S. equity investors. Only two
out of eleven S&P 500 industry sectors recorded double-digit gains for the year
- - energy and utilities, neither of which were heavily represented in our
portfolio. For 2005, the Schwartz Value Fund had a 3.8% total return.
Annual Rate of Return
For 1 year ended 12-31-05
-----------------------------------
SCHWARTZ VALUE FUND + 3.8%
Russell 2000 Index + 4.6%
NASDAQ Composite(a) + 1.4%
S&P 500 Index + 4.9%
Dow Jones Industrial Average + 1.9%
As portfolio managers, we constantly search for value in neglected and
overlooked stocks. In 2005, most of our companies' share prices lagged behind
their underlying business progress. The following stocks were happy exceptions
with sharp share price increases last year: Diamond Offshore Drilling, Inc.
(+75%), Harris Corporation (+40%), Thor Industries, Inc. (+34%), Lifetime
Brands, Inc. (+30%), and Fargo Electronics, Inc. (+28%). When these stocks were
purchased, they were neglected and misunderstood issues of good companies. With
the passage of time, the popular view of these companies improved and share
prices rose. This is the essence of value investing-buying straw hats in
January. The positive performance generated by these holdings and others, was
offset to some degree by disappointing results from several of the Fund's
consumer related holdings, including Dollar Tree Stores, Inc. and Furniture
Brands International, Inc. Despite the less than stellar results last year, the
Fund's 5-year compound annual rate of return compares favorably to the major
stock market indices.
1
Compound Annual Rate of Return
For 5 Years Ended 12-31-05
-----------------------------------
SCHWARTZ VALUE FUND + 14.1%
Russell 2000 Index + 8.2%
NASDAQ Composite(a) - 2.3%
S&P 500 Index + 0.5%
Dow Jones Industrial Average + 2.0%
One investment theme the Fund is pursuing is Homeland Security. Increasingly,
the U.S. Government is investing (spending) to fulfill its main purpose for
existing - "To insure domestic tranquility and provide for the common defense."
Corporations too, are beefing up their security measures in numerous ways.
Non-military Homeland Security spending is projected to exceed $50 billion in
2006, and to grow rapidly thereafter. The Schwartz Value Fund has accumulated
positions in several high-quality companies participating in various segments of
the industry, including American Science and Engineering, Inc. (x-ray detection
and scanning systems), Applied Signal Technology, Inc. (reconnaissance and
surveillance equipment), Fargo Electronics, Inc. (ID-card printers and
software), Harris Corporation (military radios & communications equipment), Mine
Safety Appliances Company (military helmets, gas masks, and body armor), and TVI
Corporation (decontamination and infection control equipment). These companies
meet the criteria that we look for in value investing: reputable management,
proprietary products, above-average profitability, growing free cash flow, low
debt, high return on capital deployed, and above-average growth prospects.
Importantly, the stocks were purchased at prices which represent a discount to
our estimate of each company's intrinsic value.
On December 29, 2005, the Fund paid a $2.66 per share distribution, which was
composed of $.35 per share of short-term gains and $2.31 per share of long-term
gains. After the distribution, the Fund ended the year with a NAV of $25.44 per
share.
This month, your Board of Trustees approved a management fee reduction of .25%
or 25 basis points per year (from 1.25% to 1.00%). At the current rate, 2006
will mark the sixth consecutive year in which the expense ratio for the Schwartz
Value Fund has been reduced.
Best regards,
SCHWARTZ VALUE FUND
/s/ George P. Schwartz
George P. Schwartz, CFA
President
(a) Excluding dividends.
February 19, 2006
2
SCHWARTZ VALUE FUND
PERFORMANCE (UNAUDITED)
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE SCHWARTZ VALUE FUND AND THE RUSSELL 2000 INDEX
-------------------------------------
Schwartz Value Fund
Average Annual Total Returns(a)
(for periods ended December 31, 2005)
1 Year 5 Years 10 Years
-------- --------- ----------
2.89%(b) 14.08% 10.83%
-------------------------------------
SCHWARTZ VALUE FUND RUSSELL 2000 INDEX
------------------- ------------------
Date Balance Date Balance
---- ------- ---- -------
12/31/1995 $ 10,000 12/31/1995 $ 10,000
12/31/1996 11,827 12/31/1996 11,649
12/31/1997 15,143 12/31/1997 14,254
12/31/1998 13,571 12/31/1998 13,890
12/31/1999 13,238 12/31/1999 16,843
12/31/2000 14,465 12/31/2000 16,335
12/31/2001 18,528 12/31/2001 16,741
12/31/2002 15,765 12/31/2002 13,313
12/31/2003 21,958 12/31/2003 19,603
12/31/2004 26,922 12/31/2004 23,196
12/31/2005 27,954 12/31/2005 24,252
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) The return shown reflects a 1% contingent deferred sales charge.
Preceded or accompanied by a Prospectus distributed by Ultimus Fund
Distributors, LLC.
3
SCHWARTZ VALUE FUND
ANNUAL TOTAL RATES OF RETURN
COMPARISON WITH MAJOR INDICES (UNAUDITED)
============================================================================================
RUSSELL RUSSELL
SCHWARTZ RUSSELL 2000 2000 VALUE CONSUMER
VALUE 2000 VALUE GROWTH NASDAQ LINE S&P 500 PRICE
FUND(a) INDEX INDEX INDEX COMPOSITE(b) COMPOSITE(b) INDEX INDEX
- --------------------------------------------------------------------------------------------
1984 11.1% -7.3% 2.3% -15.8% -11.2% -8.4% 6.1% 3.9%
1985 21.7% 31.1% 31.0% 31.0% 31.4% 20.7% 31.6% 3.8%
1986 16.4% 5.7% 7.4% 3.6% 7.4% 5.0% 18.7% 1.1%
1987 -0.6% -8.8% -7.1% -10.5% -5.3% -10.6% 5.3% 4.4%
1988 23.1% 24.9% 29.5% 20.4% 15.4% 15.4% 16.8% 4.4%
1989 8.3% 16.2% 12.4% 20.2% 19.3% 11.2% 31.6% 4.6%
1990 -5.3% -19.5% -21.8% -17.4% -17.8% -24.3% -3.2% 6.1%
1991 32.0% 46.1% 41.7% 51.2% 56.8% 27.2% 30.4% 3.1%
1992 22.7% 18.4% 29.1% 7.8% 15.5% 7.0% 7.6% 2.9%
1993 20.5% 18.9% 23.8% 13.4% 14.7% 10.7% 10.1% 2.7%
1994 -6.8% -1.8% -1.6% -2.4% -3.2% -6.0% 1.3% 2.7%
1995 16.9% 28.4% 25.8% 31.0% 39.9% 19.3% 37.5% 2.5%
1996 18.3% 16.5% 21.4% 11.3% 22.7% 13.4% 22.9% 3.3%
1997 28.0% 22.4% 31.8% 13.0% 21.6% 21.1% 33.4% 1.7%
1998 -10.4% -2.5% -6.5% 1.2% 39.6% -3.8% 28.6% 1.6%
1999 -2.5% 21.3% -1.5% 43.1% 85.6% -1.4% 21.0% 2.7%
2000 9.3% -3.0% 22.8% -22.4% -39.3% -8.7% -9.1% 3.4%
2001 28.1% 2.5% 14.0% -9.2% -21.0% -6.1% -11.9% 1.6%
2002 -14.9% -20.5% -11.4% -30.3% -31.6% -28.6% -22.1% 2.4%
2003 39.3% 47.3% 46.0% 48.5% 50.0% 37.4% 28.7% 1.9%
2004 22.6% 18.3% 22.3% 14.3% 8.6% 11.5% 10.9% 3.3%
2005 3.8% 4.6% 4.7% 4.2% 1.4% 2.0% 4.9% 3.4%
AVERAGE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31, 2005 (UNAUDITED)
============================================================================================
RUSSELL RUSSELL
SCHWARTZ RUSSELL 2000 2000 VALUE CONSUMER
VALUE 2000 VALUE GROWTH NASDAQ LINE S&P 500 PRICE
FUND(a) INDEX INDEX INDEX COMPOSITE(b) COMPOSITE(b) INDEX INDEX
- --------------------------------------------------------------------------------------------
3 Years 21.0% 22.1% 23.2% 20.9% 18.2% 16.0% 14.4% 2.9%
5 Years 14.1% 8.2% 13.6% 2.3% -2.3% 1.0% 0.5% 2.5%
10 Years 10.8% 9.3% 13.1% 4.7% 7.7% 2.2% 9.1% 2.5%
22 Years 11.9% 10.3% 13.0% 7.1% 9.9% 3.5% 12.5% 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.
4
SCHWARTZ VALUE FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2005 (UNAUDITED)
================================================================================
SHARES COMPANY MARKET VALUE
- --------------------------------------------------------------------------------
200,000 Fargo Electronics, Inc. ........................... $ 3,850,000
95,000 Thor Industries, Inc. ............................. 3,806,650
75,000 First Data Corporation ............................ 3,225,750
150,000 Lifetime Brands, Inc. ............................. 3,100,500
13,000 Student Loan Corporation (The) .................... 2,719,990
135,000 Craftmade International, Inc. ..................... 2,701,350
60,000 Lexmark International, Inc. ....................... 2,689,800
30,000 Mohawk Industries, Inc. ........................... 2,609,400
50,000 Simpson Manufacturing Company, Inc. ............... 1,817,500
75,000 Dollar Tree Stores, Inc. .......................... 1,795,500
ASSET ALLOCATION (UNAUDITED)
================================================================================
SECTOR % OF NET ASSETS
------ ---------------
Aerospace/Defense ............................................ 5.7%
Apparel & Textiles ........................................... 4.4%
Building Materials & Construction ............................ 0.7%
Business Services ............................................ 14.1%
Consumer Products ............................................ 14.3%
Education .................................................... 2.3%
Energy & Mining .............................................. 4.9%
Finance ...................................................... 7.7%
Healthcare ................................................... 10.4%
Holding Companies ............................................ 1.2%
Industrial Products & Services ............................... 13.2%
Leisure & Entertainment ...................................... 2.0%
Printing & Publishing ........................................ 1.1%
Real Estate .................................................. 0.5%
Retail ....................................................... 6.6%
Technology ................................................... 5.6%
Transportation ............................................... 5.7%
Utilities .................................................... 0.8%
Cash Equivalents, Other Assets and Liabilities ............... -1.2%
---------
100.0%
=========
5
SCHWARTZ VALUE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2005
================================================================================
SHARES COMMON STOCKS -- 101.2% MARKET VALUE
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE -- 5.7%
10,000 American Science and Engineering, Inc. * .......... $ 623,700
40,000 Applied Signal Technology, Inc. ................... 908,000
5,000 Engineered Support Systems, Inc. .................. 208,200
7,500 General Dynamics Corporation ...................... 855,375
7,500 Harris Corporation ................................ 322,575
5,000 Rockwell Collins, Inc. ............................ 232,350
200,000 TVI Corporation * ................................. 800,000
------------
3,950,200
------------
APPAREL & TEXTILES -- 4.4%
10,000 Jones Apparel Group, Inc. ......................... 307,200
5,000 K-Swiss, Inc. - Class A ........................... 162,200
30,000 Mohawk Industries, Inc. * ......................... 2,609,400
------------
3,078,800
------------
BUILDING MATERIALS & CONSTRUCTION -- 0.7%
10,000 Pulte Homes, Inc. ................................. 393,600
1,000 Ryland Group, Inc. (The) .......................... 72,130
------------
465,730
------------
BUSINESS & INDUSTRIAL PRODUCTS -- 4.7%
45,000 Diebold, Incorporated ............................. 1,710,000
3,000 Genuine Parts Company ............................. 131,760
40,000 Mine Safety Appliances Company .................... 1,448,400
------------
3,290,160
------------
BUSINESS SERVICES -- 14.1%
200,000 Fargo Electronics, Inc. * ......................... 3,850,000
75,000 First Data Corporation ............................ 3,225,750
1,000 Kronos, Inc. * .................................... 41,860
82,878 Neogen Corporation * .............................. 1,741,267
94,000 Superior Uniform Group, Inc. ...................... 963,500
------------
9,822,377
------------
COMMUNICATION EQUIPMENT & SERVICES -- 0.1%
5,000 Universal Electronics Inc. * ...................... 86,150
------------
COMPUTER EQUIPMENT & SERVICES -- 3.9%
60,000 Lexmark International, Inc. * ..................... 2,689,800
------------
CONSUMER PRODUCTS -- DURABLES -- 6.4%
135,000 Craftmade International, Inc. ..................... 2,701,350
2,500 Ethan Allen Interiors, Inc. ....................... 91,325
4,000 Harley-Davidson, Inc. ............................. 205,960
62,500 Leggett & Platt, Inc. ............................. 1,435,000
------------
4,433,635
------------
6
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 101.2% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS -- NONDURABLES -- 7.9%
6,175 ACCO Brands Corporation * ......................... $ 151,288
25,000 Chattem, Inc. * ................................... 909,750
2,500 Coach, Inc. * ..................................... 83,350
5,000 Fortune Brands, Inc. .............................. 390,100
150,000 Lifetime Brands, Inc. ............................. 3,100,500
8,486 Velcro Industries N.V ............................. 120,925
40,000 Weyco Group, Inc. ................................. 764,000
------------
5,519,913
------------
EDUCATION -- 2.3%
30,000 Corinthian Colleges, Inc. * ....................... 353,400
25,000 Education Management Corporation * ................ 837,750
30,000 Nobel Learning Communities, Inc. * ................ 283,200
1,000 Strayer Education, Inc. ........................... 93,700
------------
1,568,050
------------
ELECTRONICS -- 1.6%
22,500 Gentex Corporation ................................ 438,750
73,585 Sparton Corporation ............................... 659,322
------------
1,098,072
------------
ENERGY & MINING -- 4.9%
45,000 Core Laboratories N.V. * .......................... 1,681,200
1,000 Diamond Offshore Drilling, Inc. ................... 69,560
75,000 Input/Output, Inc. * .............................. 527,250
5,000 Patterson-UTI Energy, Inc. ........................ 164,750
10,000 Pioneer Natural Resources Company ................. 512,700
3,000 Transocean Inc. * ................................. 209,070
5,000 XTO Energy, Inc. .................................. 219,700
------------
3,384,230
------------
FINANCE -- BANKS & THRIFTS -- 0.0%
30 CSB Bancorp, Inc. ................................. 12,750
------------
FINANCE -- INSURANCE -- 3.8%
161,300 Meadowbrook Insurance Group, Inc. * ............... 941,992
182,700 Unico American Corporation * ...................... 1,708,245
------------
2,650,237
------------
FINANCE -- MISCELLANEOUS -- 3.9%
13,000 Student Loan Corporation (The) .................... 2,719,990
------------
HEALTHCARE -- 10.4%
10,000 Boston Scientific Corporation * ................... 244,900
10,000 Henry Schein, Inc. * .............................. 436,400
20,000 Kinetic Concepts, Inc. * .......................... 795,200
20,000 Lincare Holdings Inc. * ........................... 838,200
12,500 Manor Care, Inc. .................................. 497,125
75,000 National Dentex Corporation * ..................... 1,690,500
45,000 Waters Corporation * .............................. 1,701,000
30,000 Young Innovations, Inc. ........................... 1,022,400
------------
7,225,725
------------
7
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 101.2% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
HOLDING COMPANIES -- 1.2%
25,000 PICO Holdings, Inc. * ............................. $ 806,500
------------
INDUSTRIAL PRODUCTS & SERVICES -- 8.5%
60,000 American Pacific Corporation * .................... 413,400
12,500 Balchem Corporation ............................... 372,625
10,000 Dover Corporation ................................. 404,900
30,000 Graco, Inc. ....................................... 1,094,400
25,000 Maritrans Inc. .................................... 650,500
50,000 Simpson Manufacturing Company, Inc. ............... 1,817,500
27,812 Strattec Security Corporation * ................... 1,124,161
------------
5,877,486
------------
LEISURE & ENTERTAINMENT -- 2.0%
40,000 RC2 Corporation * ................................. 1,420,800
------------
PRINTING & PUBLISHING -- 1.1%
5,000 Courier Corporation ............................... 171,700
20,000 ProQuest Company * ................................ 558,200
------------
729,900
------------
REAL ESTATE -- 0.5%
16,499 I. Gordon Corporation * ........................... 329,980
------------
RETAIL -- 6.6%
30,000 Christopher & Banks Corporation ................... 563,400
75,000 Dollar Tree Stores, Inc. * ........................ 1,795,500
30,000 Home Depot, Inc. .................................. 1,214,400
30,000 Ross Stores, Inc. ................................. 867,000
3,000 Tractor Supply Company * .......................... 158,820
------------
4,599,120
------------
TRANSPORTATION -- 5.7%
2,000 PACCAR, Inc. ...................................... 138,460
95,000 Thor Industries, Inc. ............................. 3,806,650
------------
3,945,110
------------
UTILITIES -- 0.8%
100,000 SEMCO Energy, Inc. * .............................. 562,000
------------
TOTAL COMMON STOCKS (Cost $57,179,998)............. $ 70,266,715
------------
8
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES OPEN-END FUNDS -- 0.0% MARKET VALUE
- --------------------------------------------------------------------------------
43 Sequoia Fund (Cost $5,473) ........................ $ 6,766
------------
================================================================================
FACE AMOUNT REPURCHASE AGREEMENTS (1) -- 0.0% MARKET VALUE
- --------------------------------------------------------------------------------
$ 12,427 US Bank N.A., 3.25%, dated 12/30/05, due 01/03/06
repurchase proceeds: $12,431 (Cost $12,427)...... $ 12,427
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 101.2%
(Cost $57,197,898)............................... $ 70,285,908
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.2%).... (800,019)
------------
NET ASSETS -- 100.0%............................... $ 69,485,889
============
* Non-income producing security.
(1) Repurchase agreement is fully collaterized by $12,427 FNCI, Pool #729590,
4.50%, due 07/01/2018. The aggregate market value of the collateral at
December 31, 2005 was $13,227.
See notes to financial statements.
9
SCHWARTZ VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2005
================================================================================
ASSETS
Investments, at market value (cost of $57,197,898) (Note 1) .... $ 70,285,908
Receivable for capital shares sold ............................. 956
Receivable for investment securities sold ...................... 575,356
Dividends and interest receivable .............................. 44,652
Other assets ................................................... 18,980
------------
TOTAL ASSETS.................................................. 70,925,852
------------
LIABILITIES
Payable for capital shares redeemed ............................ 1,700
Payable for investment securities purchased .................... 1,193,580
Accrued investment advisory fees (Note 2) ...................... 219,908
Payable to affiliate (Note 2) .................................. 9,000
Other accrued expenses ......................................... 15,775
------------
TOTAL LIABILITIES............................................. 1,439,963
------------
NET ASSETS ..................................................... $ 69,485,889
============
NET ASSETS CONSIST OF:
Paid-in capital ................................................ $ 56,766,973
Distributions in excess of net realized gains from security
transactions.................................................. (369,094)
Net unrealized appreciation on investments ..................... 13,088,010
------------
NET ASSETS ..................................................... $ 69,485,889
============
Shares of beneficial interest outstanding (unlimited number of
shares authorized, no par value) ............................. 2,730,935
============
Net asset value and offering price per share (a) ............... $ 25.44
============
(a) Redemption price will vary if subject to contingent deferred sales charge
(Note 1).
See notes to financial statements.
10
SCHWARTZ VALUE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
================================================================================
INVESTMENT INCOME
Dividends .................................................... $ 610,394
Interest ..................................................... 69,850
------------
TOTAL INCOME ............................................... 680,244
------------
EXPENSES
Investment advisory fees (Note 2) ............................ 905,728
Administration, accounting and transfer agent fees (Note 2) .. 106,869
Legal and audit fees ......................................... 26,980
Registration fees ............................................ 25,377
Trustees' fees and expenses .................................. 20,189
Custodian fees ............................................... 15,984
Postage and supplies ......................................... 13,518
Reports to shareholders ...................................... 7,759
Insurance expense ............................................ 7,477
Compliance service fees ...................................... 6,747
Other expenses ............................................... 7,656
------------
TOTAL EXPENSES ............................................. 1,144,284
------------
NET INVESTMENT LOSS ............................................ (464,040)
------------
REALIZED AND UNREALIZED GAINS/(LOSSES) ON INVESTMENTS
Net realized gains from security transactions ................ 6,895,911
Net realized gains from in-kind redemptions (Note 1) ......... 1,621,009
Net change in unrealized appreciation/(depreciation) on
investments ................................................ (5,594,639)
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ............... 2,922,281
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ..................... $ 2,458,241
============
See notes to financial statements.
11
SCHWARTZ VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
======================================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2005 2004
- ------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss ............................................... $ (464,040) $ (584,873)
Net realized gains from security transactions ..................... 6,895,911 11,755,181
Net realized gains from in-kind redemptions (Note 1) .............. 1,621,009 --
Net change in unrealized appreciation/(depreciation) on investments (5,594,639) 2,881,647
------------ ------------
Net increase in net assets from operations .......................... 2,458,241 14,051,955
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains on investments ............................ (6,701,121) (10,973,068)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ......................................... 4,817,052 24,713,497
Reinvestment of distributions to shareholders ..................... 5,575,730 9,828,308
Payments for shares redeemed ...................................... (13,173,652) (20,702,942)
------------ ------------
Net increase/(decrease) in net assets from capital share transactions (2,780,870) 13,838,863
------------ ------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS ............................. (7,023,750) 16,917,750
NET ASSETS
Beginning of year ................................................. 76,509,639 59,591,889
------------ ------------
End of year ....................................................... $ 69,485,889 $ 76,509,639
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ................................. $ -- $ --
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold ....................................................... 176,867 876,236
Shares issued in reinvestment of distributions to shareholders .... 216,968 365,637
Shares redeemed ................................................... (492,565) (718,682)
------------ ------------
Net increase/(decrease) in shares outstanding ..................... (98,730) 523,191
Shares outstanding, beginning of year ............................. 2,829,665 2,306,474
------------ ------------
Shares outstanding, end of year ................................... 2,730,935 2,829,665
============ ============
See notes to financial statements.
12
SCHWARTZ VALUE FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
======================================================================================================================
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of year ..... $ 27.04 $ 25.84 $ 20.20 $ 23.74 $ 20.62
---------- ---------- ---------- ---------- ----------
Income/(loss) from investment operations:
Net investment loss .................... (0.17) (0.21) (0.16) (0.21) (0.12)
Net realized and unrealized gains/(losses)
on investments ....................... 1.23 6.02 8.10 (3.33) 5.91
---------- ---------- ---------- ---------- ----------
Total from investment operations ......... 1.06 5.81 7.94 (3.54) 5.79
---------- ---------- ---------- ---------- ----------
Less distributions:
From net realized gains on investments . (2.66) (4.61) (2.30) -- (2.67)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year ........... $ 25.44 $ 27.04 $ 25.84 $ 20.20 $ 23.74
========== ========== ========== ========== ==========
Total return (a) ......................... 3.8% 22.6% 39.3% (14.9)% 28.1%
========== ========== ========== ========== ==========
Ratios/Supplementary Data:
Net assets at end of year (000's) ........ $ 69,486 $ 76,510 $ 59,592 $ 44,261 $ 50,031
========== ========== ========== ========== ==========
Ratio of expenses to average net assets .. 1.61% 1.82% 1.89% 1.95% 2.04%
Ratio of net investment loss to
average net assets ..................... (0.65)% (0.84)% (0.73)% (0.98)% (0.62)%
Portfolio turnover rate .................. 78% 83% 74% 103% 103%
(a) Total return is a measure of the change in value of an investment in the Fund over the periods covered, which
assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not
reflect any reduction for sales charges, nor do they reflect the deduction of taxes a shareholder would pay on
Fund distributions or the redemption of Fund shares.
See notes to financial statements.
13
SCHWARTZ VALUE FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Schwartz Value Fund (the Fund) is a diversified series of Schwartz Investment
Trust (the "Trust"), an 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 information regarding the principal 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 are equal to the net asset value per share,
except that shares of the Fund may be subject to a 1% contingent deferred sales
charge (CDSC) if redeemed within one year of their purchase. Shares are not
subject to the CDSC if the shares are purchased either directly from the Fund or
through a broker-dealer or other financial intermediary that does not receive
any compensation in connection with such 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 closing sales price as of the close of the
regular session of trading on the New York Stock Exchange (NYSE) on the day
the securities are being valued, or, if not traded on a particular day, at
the closing bid price. Securities which are quoted by NASDAQ are valued at
the NASDAQ Official Closing Price. 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 the regular session of trading on the
NYSE on the day of valuation. Securities which are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market. Investments representing primarily
capital stock of other open-end investment companies are valued at their
net asset value as reported by such companies. 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. Short-term instruments (those with
remaining maturities of 60 days or less) are valued at amortized cost,
which approximates market value.
14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
(b) INCOME TAXES -- It is the Fund's policy to comply with the special
provisions of Subchapter M 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.
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.
The tax character of distributable earnings at December 31, 2005 was as
follows:
Unrealized appreciation $ 12,718,916
============
For federal income tax purposes, the cost of portfolio investments amounted
to $57,566,992 at December 31, 2005. 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 $ 14,465,454
Gross unrealized depreciation (1,746,538)
------------
Net unrealized appreciation $ 12,718,916
============
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. These "book/tax"
differences are temporary in nature and are primarily due to the tax deferral of
losses on wash sales.
During the year ended December 31, 2005, the Fund realized $1,621,009 of net
capital gains resulting from in-kind redemptions - in which shareholders who
redeemed Fund shares received securities held by the Fund rather than cash. The
Fund recognizes a gain on in-kind redemptions to the extent that the value of
the distributed securities on the date of redemption exceeds the cost of those
securities. Such gains are not taxable to the Fund and are not required to be
distributed to shareholders.
For the year ended December 31, 2005, the Fund reclassified its net investment
loss of $464,040 against distributions in excess of net realized gains from
security transactions on the Statement of Assets and Liabilities. Additionally,
the Fund reclassified its net capital gains resulting from in-kind redemptions
of $1,621,009 against paid-in capital on the Statement of Assets and
Liabilities. Such reclassifications, the result of permanent differences between
the financial statement and income tax reporting requirements, have no effect on
the Fund's net assets or net asset value per share.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
(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 years ended
December 31, 2005 and December 31, 2004 was as follows:
Long-Term
Ordinary Capital Total
Year Ended Income Gains Distributions
----------------------------------------------------------------------
December 31, 2005 $ 974,486 $ 5,726,635 $ 6,701,121
December 31, 2004 $ 2,093,053 $ 8,880,015 $ 10,973,068
(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 may be deemed
to be loans by the Fund. The Fund's policy is to take possession of U.S.
Government obligations as collateral under a repurchase agreement and, on a
daily basis, mark-to-market such obligations to ensure that their value,
including accrued interest, is at least equal to the amount to be repaid to
the Fund under the repurchase agreement.
(f) ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles in the United States of America
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.
(g) COMMON EXPENSES --- Common expenses of the Trust are allocated among
the Fund and the other series of the Trust based on relative net assets of
each series or the nature of the services performed and the relative
applicability to each series.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES
The President of the Trust is also the President and Chief Investment Officer of
Schwartz Investment Counsel, Inc. (the "Adviser"). Certain other officers of the
Trust are officers of the Adviser, or of Ultimus Fund Solutions, LLC
("Ultimus"), the administrative, accounting and transfer agent for the Fund or
of Ultimus Fund Distributors, LLC (the "Distributor"), the Fund's principal
underwriter.
Pursuant to an Investment Advisory Agreement between the Trust 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. Effective as of
February 1, 2005, the Adviser
16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
receives from the Fund a quarterly fee at the annual rate of 1.25% of its
average daily net assets up to $100 million and 1% of such assets in excess of
$100 million. Prior to February 1, 2005, the Adviser received from the Fund a
quarterly fee at the annual rate of 1.5% of its 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.
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. For the
year ended December 31, 2005, the Fund paid $106,869 to Ultimus for mutual fund
services.
Pursuant to a Distribution Agreement between the Fund and the Distributor, the
Distributor serves as the Fund's exclusive agent for the distribution of its
shares. During the year ended December 31, 2005, the Distributor collected
$1,380 in contingent deferred sales charges on redemptions of Fund shares. The
Distributor is an affiliate of Ultimus.
3. INVESTMENT TRANSACTIONS
During the year ended December 31, 2005, cost of purchases and proceeds from
sales and maturities of investment securities, excluding short-term investments
and U.S. government securities, amounted to $53,183,534 and $57,047,677,
respectively.
4. CONTINGENCIES AND COMMITMENTS
The Fund indemnifies the Trust's officers and trustees for certain liabilities
that might arise from their performance of their duties to the Fund.
Additionally, in the normal course of business the Fund enters into contracts
that contain a variety of representations and warranties and which provide
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 that have not yet occurred. However, based on experience, the Fund expects
the risk of loss to be remote.
17
SCHWARTZ VALUE FUND
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Trustees
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, 2005, and 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 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 the standards of the Public Company
Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Fund's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of December 31, 2005, by
correspondence with the Fund's custodian and brokers. 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, 2005, and 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
Chicago, Illinois
February 14, 2006
18
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:
Position Held Length of
Trustee/Officers Address Age with the Trust Time Served
- -------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
* Gregory J. Schwartz 3707 W. Maple Road, 64 Chairman of the Since 1992
Bloomfield Hills, MI Board/Trustee
* George P. Schwartz, CFA 3707 W. Maple Road, 61 President/Trustee Since 1992
Bloomfield Hills, MI
INDEPENDENT TRUSTEES:
John E. Barnds 640 Lakeside Road 73 Trustee Since 2005
Birmingham, MI
Peter F. Barry 3707 W. Maple Road, 78 Trustee Since 2004
Bloomfield Hills, MI
Donald J. Dawson, Jr. 333 W. Seventh Street, 58 Trustee Since 1993
Royal Oak, MI
Fred A. Erb 800 Old North Woodward, 82 Trustee Emeritus Since 1994
Birmingham, MI
John J. McHale 2014 Royal Fern Court, 84 Trustee Emeritus Since 1993
Palm City, FL
Sidney F. McKenna 1173 Banbury Circle, 83 Trustee Emeritus Since 1993
Bloomfield Hills, MI
EXECUTIVE OFFICERS:
* Richard L. Platte, Jr., CFA 3707 W. Maple Road, 54 Vice President Since 1993
Bloomfield Hills, MI and Secretary
* Timothy S. Schwartz 3707 W. Maple Road, 34 Treasurer Since 2000
Bloomfield Hills, MI
Cynthia M. Dickinson 34600 W. Eight Mile Road, 46 Chief Compliance Since 2004
Farmington Hills, MI Officer
* 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.
Each Trustee oversees five portfolios of the Trust: the Ave Maria Catholic
Values Fund, the Ave Maria Growth Fund, the Ave Maria Rising Dividend Fund, the
Ave Maria Bond 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:
19
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
(UNAUDITED) (CONTINUED)
================================================================================
Gregory J. Schwartz is Chairman of Gregory J. Schwartz & Co., Inc., a registered
broker-dealer.
George P. Schwartz, CFA is President and Chief Investment Officer of Schwartz
Investment Counsel, Inc. and is the portfolio manager of the Fund.
John E. Barnds is retired First Vice President of National Bank of Detroit.
Peter F. Barry is retired President of Cadillac Rubber & Plastics Company (a
manufacturer of rubber and plastics components).
Donald J. Dawson, Jr. is Chairman of Payroll 1, Inc. (a payroll processing
company).
Fred A. Erb is Chairman and Chief Executive Officer of Edgemere Enterprises,
Inc. (a real estate investment, development and management company).
John J. McHale is retired 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 and Secretary of
Schwartz Investment Counsel, Inc.
Timothy S. Schwartz is Vice President and Treasurer of Schwartz Investment
Counsel, Inc.
Cynthia M. Dickinson is President of CMD Consulting, LLC (business consultant).
Additional information about members of the Board of Trustees and executive
officers is available in the Statement of Additional Information (SAI). To
obtain a free copy of the SAI, please call (888) 726-0753.
FEDERAL TAX INFORMATION (UNAUDITED)
================================================================================
In accordance with federal tax requirements, the following provides shareholders
with information concerning distributions from net realized gains made by the
Fund during the year ended December 31, 2005. On December 29, 2005, the Fund
declared and paid a short-term capital gain distribution of $0.3567 per share
and a long-term capital gain distribution of $2.3068 per share. As provided by
the Jobs and Growth Tax Relief Reconciliation Act of 2003, both the short-term
capital gain distribution of $0.3567 per share and the long-term capital gain
distribution of $2.3068 per share may be subject to a maximum tax rate of 15%.
Early in 2006, as required by federal regulations, shareholders received
notification of their portion of the Fund's taxable capital gain distribution,
if any, paid during the 2005 calendar year.
20
SCHWARTZ VALUE FUND
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
================================================================================
We believe it is important for you to understand the impact of costs on your
investment. All mutual funds have operating expenses. As a shareholder of the
Fund, you incur two types of cost: (1) transaction costs, possibly including a
contingent deferred sales charge, and (2) ongoing costs, including management
fees and other Fund expenses. The following examples are 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.
A mutual fund's expenses are expressed as a percentage of its average net
assets. This figure is known as the expense ratio. The expenses in the table
below are based on an investment of $1,000 made at the beginning of the most
recent semi-annual period (July 1, 2005) and held until the end of the period
(December 31, 2005).
The table below illustrates the Fund's costs in two ways:
ACTUAL FUND RETURN - This section helps you to estimate the actual expenses that
you paid over the period. The "Ending Account Value" shown is derived from the
Fund's actual return, and the third column shows the dollar amount of operating
expenses that would have been paid by an investor who started with $1,000 in the
Fund. You may use the information here, together with the amount you invested,
to estimate the expenses that you paid over the period.
To do so, 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
given for the Fund under the heading "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN - This section is intended to help you compare the Fund's
costs with those of other mutual funds. It assumes that the Fund had an annual
return of 5% before expenses during the period shown, but that the expense ratio
is unchanged. In this case, because the return used is not the Fund's actual
returns, the results do not apply to your investment. The example is useful in
making comparisons because the Securities and Exchange Commission requires all
mutual funds to calculate expenses based on a 5% return. You can assess the
Fund's costs by comparing this hypothetical example with the hypothetical
examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you
compare ongoing costs only. The Fund does not charge a front-end sales load.
However, a contingent deferred sales charge of 1% may apply if you redeem Fund
shares within one year of their purchase.
The calculations assume no shares were bought or sold during the period. Your
actual costs may have been higher or lower, depending on the amount of your
investment and the timing of any purchases or redemptions.
21
SCHWARTZ VALUE FUND
ABOUT YOUR FUND'S EXPENSES (UNAUDITED) (CONTINUED)
================================================================================
More information about the Fund's expenses, including historical annual expense
ratios, can be found in this report. For additional information on operating
expenses and other shareholder costs, please refer to the Fund's prospectus.
- --------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2005 Dec. 31, 2005 During Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,026.20 $8.17
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,017.14 $8.13
- --------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.60% for the
period, multiplied by the average account value over the period, multiplied
by 184/365 (to reflect the one-half year period).
OTHER INFORMATION (UNAUDITED)
================================================================================
A description of the policies and procedures the Fund uses to determine how to
vote proxies relating to portfolio securities is available without charge upon
request by calling toll-free (888) 726-0753, or on the Securities and Exchange
Commission's ("SEC") 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 also available without charge upon request by
calling toll-free (888) 726-0753, or on the SEC's website http://www.sec.gov.
The Trust files a complete listing of portfolio holdings for the Fund with the
SEC as of the first and third quarters of each fiscal year on Form N-Q. The
filings are available free of charge, upon request, by calling (888) 726-0753.
Furthermore, you may obtain a copy of the filing on the SEC's website at
http://www.sec.gov. The Trust's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC, and information on the operation
of the Public Reference Room may be obtained by calling (800) SEC-0330.
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 the Adviser believes 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's 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
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THIS PAGE INTENTIONALLY LEFT BLANK.
SCHWARTZ VALUE FUND
a series of
Schwartz Investment Trust
3707 W. Maple Road
Suite 100
Bloomfield Hills, Michigan 48301
BOARD OF TRUSTEES
Gregory J. Schwartz, Chairman
George P. Schwartz, CFA
John E. Barnds
Peter F. Barry
Donald J. Dawson, Jr.
Fred A. Erb, Emeritus
John J. McHale, Emeritus
Sidney F. McKenna, Emeritus
OFFICERS
George P. Schwartz, CFA, President
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 M. Bridge, CPA, Assistant Treasurer
Craig J. Hunt, Assistant Vice President
Cynthia M. Dickinson, Chief Compliance Officer
INVESTMENT ADVISER
SCHWARTZ INVESTMENT COUNSEL, INC.
3707 W. Maple Road
Suite 100
Bloomfield Hills, Michigan 48301
DISTRIBUTOR
ULTIMUS FUND DISTRIBUTORS, LLC
225 Pictoria Drive, Suite 450
Cincinnati, Ohio 45246
CUSTODIAN
US BANK, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
ADMINISTRATOR
ULTIMUS FUND SOLUTIONS, LLC
P.O. Box 46707
Cincinnati, Ohio 45246
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
111 S. Wacker Drive
Chicago, Illinois 60606
LEGAL COUNSEL
SULLIVAN & WORCESTER LLP
1666 K Street, NW, Suite 700
Washington, D.C. 20006
[GRAPHIC OMITTED]
SCHWARTZ INVESTMENT COUNSEL, INC.
AVE MARIA
MUTUAL
FUNDS
AVE MARIA CATHOLIC VALUES FUND
AVE MARIA GROWTH FUND
AVE MARIA RISING DIVIDEND FUND
AVE MARIA BOND FUND
ANNUAL REPORT
2005
SHAREHOLDER ACCOUNTS CORPORATE OFFICES
c/o Ultimus Fund 3707 W. Maple Road
Solutions, LLC [GRAPHIC OMITTED] Suite 100
P.O. Box 46707 AVE MARIA Bloomfield Hills, MI 48301
Cincinnati, OH 45246 MUTUAL (248) 644-8500
(888) 726-9331 FUNDS Fax (248) 644-4250
Dear Shareowner of:
Ave Maria Catholic Values Fund (AVEMX)
Ave Maria Growth Fund (AVEGX)
Ave Maria Rising Dividend Fund (AVEDX)
Ave Maria Bond Fund (AVEFX)
The portfolio managers of the Ave Maria Mutual Funds screen out companies based
on the guidelines established by our Catholic Advisory Board. This eliminates
from consideration companies related to abortion, pornography, and companies
which offer their employees non-marital partner benefits. In total, about 400
companies are screened out by this process, still leaving thousands of issues
for our portfolio managers to choose from in assembling the four investment
portfolios.
Based on conversations I've had with many of you, screening out offending
companies is what you want from a mutual fund family, besides good investment
results. Shareholders contact me regularly about how fed up they are with
abortion on demand, and the debauchery which has poisoned the culture and
threatened traditional marriage. That's probably why our pro-life, pro-family
mutual funds have become so popular with investing Catholics. Over 12,000
investors (up 40% during 2005) in 50 states have invested over $400 million in
the Ave Maria Mutual Funds.
As portfolio managers, we look for investment opportunities in companies with
good business characteristics, strong balance sheets, positive cash flow, and
growing earnings. We don't speculate on short-term trends or fads, instead
focusing on the standards which prudent investors have always used to produce
favorable long-term results - financial analysis, broad diversification, and a
keen attention to valuation.
I'm proud that you are a shareholder.
Sincerely,
/s/ George P. Schwartz
George P. Schwartz, CFA
President
February 10, 2006
AVE MARIA MUTUAL FUNDS
TABLE OF CONTENTS
================================================================================
Ave Maria Catholic Values Fund:
Portfolio Manager Commentary .......................................... 1
Performance ........................................................... 3
Ten Largest Equity Holdings ........................................... 4
Asset Allocation ...................................................... 4
Schedule of Investments ............................................... 5
Ave Maria Growth Fund:
Portfolio Manager Commentary .......................................... 9
Performance ........................................................... 10
Ten Largest Equity Holdings ........................................... 11
Asset Allocation ...................................................... 11
Schedule of Investments ............................................... 12
Ave Maria Rising Dividend Fund:
Portfolio Manager Commentary .......................................... 14
Performance ........................................................... 15
Ten Largest Equity Holdings ........................................... 16
Asset Allocation ...................................................... 16
Schedule of Investments ............................................... 17
Ave Maria Bond Fund:
Portfolio Manager Commentary .......................................... 20
Performance ........................................................... 21
Ten Largest Holdings .................................................. 22
Asset Allocation ...................................................... 22
Schedule of Investments ............................................... 23
Statements of Assets and Liabilities ...................................... 26
Statements of Operations .................................................. 27
Statements of Changes in Net Assets:
Ave Maria Catholic Values Fund ........................................ 28
Ave Maria Growth Fund ................................................. 29
Ave Maria Rising Dividend Fund ........................................ 30
Ave Maria Bond Fund ................................................... 31
Financial Highlights:
Ave Maria Catholic Values Fund ........................................ 32
Ave Maria Growth Fund ................................................. 33
Ave Maria Rising Dividend Fund ........................................ 34
Ave Maria Bond Fund - Class I ......................................... 35
Ave Maria Bond Fund - Class R ......................................... 36
Notes to Financial Statements ............................................. 37
Report of Independent Registered Public Accounting Firm ................... 44
Board of Trustees and Executive Officers .................................. 45
Catholic Advisory Board ................................................... 47
Federal Tax Information ................................................... 48
About Your Fund's Expenses ................................................ 49
Other Information ......................................................... 51
Preceded or accompanied by a Prospectus distributed by Ultimus Fund
Distributors, LLC.
AVE MARIA CATHOLIC VALUES FUND
PORTFOLIO MANAGER COMMENTARY
================================================================================
Dear Fellow Shareowner:
The Ave Maria Catholic Values Fund had a total return in 2005 of 5.8% (does not
include deduction of contingent deferred sales charge) compared to 4.9% for the
S&P 500 Index and 12.6% for the S&P 400 Mid Cap Index. Since inception on May 1,
2001, the Fund's return compares favorably to both benchmarks:
Since 5-01-01 Inception Through 12-31-05
Total Return
----------------------------------------
Cumulative Annualized
---------- ----------
Ave Maria Catholic
Values Fund (AVEMX) 63.5% 11.1%
S&P 500 Index 6.7% 1.4%
S&P 400 Mid Cap Index 51.3% 9.3%
Similar to 2004, much of 2005's positive stock market performance came in the
final quarter of the year as investors realized that $60 oil, rising interest
rates, and even hurricanes would not derail the economy. While the rate of
growth in the economy will likely slow in 2006, the benefits of low inflation,
stabilizing interest rates and energy prices, and reasonable stock valuations
should provide a favorable environment for our style of value investing.
Over the last few months, we've added several companies involved with Homeland
Security to the portfolio. They have the characteristics we typically look for
in long-term investments. Domestic security will likely demand increasing
attention and funding by government and business in coming years. Therefore,
we've increased existing positions of Fargo Electronics, Inc. (ID cards and
printers) and Mine Safety Appliances Company (gas masks, helmets and body
armor), and initiated positions in American Science and Engineering, Inc. (x-ray
detection and scanning equipment) and Applied Signal Technology, Inc.
(surveillance equipment). These companies offer proprietary products or services
that benefit directly from Homeland Security spending and help the U.S.
Government fulfill its main purpose for existing - "To insure domestic
tranquility and provide for the common defense."
A second area of opportunity for the Ave Maria Catholic Values Fund is the
growing importance of higher education to keep America competitive in the global
economy. We see good value in for-profit educators, as well as companies that
facilitate student loans. These include Education Management Corporation,
Student Loan Corporation, First Marblehead Corporation, and ProQuest Company.
1
AVE MARIA CATHOLIC VALUES FUND
PORTFOLIO MANAGER COMMENTARY (CONTINUED)
================================================================================
Stocks which contributed significantly to 2005 performance were: XTO Energy
Inc., Transocean Inc., Patterson-UTI Energy, Inc., and Core Laboratories N.V.
(all energy stocks), as well as Thor Industries, Inc., Fargo Electronics, Inc.,
SunGard Data Systems, Inc., and Lifetime Brands, Inc. Notable under-performers
were Dollar Tree Stores, Inc., Furniture Brands International, Inc.,
Input/Output, Inc., and Diebold, Incorporated. We totally liquidated positions
in Diamond Offshore Drilling, Inc., Fleetwood Enterprises, Inc., and Pioneer
Natural Resources Company because they had appreciated beyond our estimate of
intrinsic value.
Encouragingly, this year we didn't have to sell any shares of companies for
violating our pro-life and pro-family screens. Perhaps our letters to the CEOs
are having a positive effect. We regularly send letters to the CEOs of companies
held in the Fund, lauding their moral business behavior for not violating our
Catholic screens.
Thank you for your commitment and support.
Sincerely,
/s/ George P. Schwartz /s/ Gregory R. Heilman
George P. Schwartz, CFA Gregory R. Heilman, CFA
Co-Portfolio Manager Co-Portfolio Manager
2
AVE MARIA CATHOLIC VALUES FUND
PERFORMANCE (UNAUDITED)
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE AVE MARIA CATHOLIC VALUES FUND, THE S&P 500 INDEX,
AND THE S&P 400 MID CAP INDEX
[GRAPHIC OMITTED]
AVE MARIA
CATHOLIC VALUES FUND S&P 500 INDEX S&P 400 MID CAP INDEX
-------------------- -------------------- ---------------------
DATE BALANCE DATE BALANCE DATE BALANCE
---- ------- ---- ------- ---- -------
5/1/2001 $ 10,000 5/1/2001 $ 10,000 5/1/2001 $ 10,000
5/31/2001 10,250 5/31/2001 9,932 5/31/2001 10,151
6/30/2001 10,370 6/30/2001 9,690 6/30/2001 10,110
7/31/2001 10,250 7/31/2001 9,595 7/31/2001 10,110
8/31/2001 10,040 8/31/2001 8,994 8/31/2001 10,110
9/30/2001 9,360 9/30/2001 8,268 9/30/2001 8,435
10/31/2001 9,520 10/31/2001 8,426 10/31/2001 8,435
11/30/2001 10,130 11/30/2001 9,072 11/30/2001 8,435
12/31/2001 10,529 12/31/2001 9,151 12/31/2001 9,952
3/31/2002 11,201 3/31/2002 9,177 3/31/2002 10,622
6/30/2002 10,970 6/30/2002 7,947 6/30/2002 9,633
9/30/2002 9,236 9/30/2002 6,574 9/30/2002 8,039
12/31/2002 9,496 12/31/2002 7,128 12/31/2002 8,508
3/31/2003 8,904 3/31/2003 6,904 3/31/2003 8,131
6/30/2003 10,649 6/30/2003 7,967 6/30/2003 9,564
9/30/2003 11,552 9/30/2003 8,177 9/30/2003 10,194
12/31/2003 12,872 12/31/2003 9,173 12/31/2003 11,538
3/31/2004 13,982 3/31/2004 9,328 3/31/2004 12,123
6/30/2004 14,184 6/30/2004 9,489 6/30/2004 12,240
9/30/2004 14,235 9/30/2004 9,311 9/30/2004 11,984
12/31/2004 15,459 12/31/2004 10,171 12/31/2004 13,441
3/31/2005 15,459 3/31/2005 9,952 3/31/2005 13,387
6/30/2005 15,660 6/30/2005 10,088 6/30/2005 13,958
9/30/2005 15,956 9/30/2005 10,452 9/30/2005 14,639
12/31/2005 16,354 12/31/2005 10,672 12/31/2005 15,129
----------------------------------------
Ave Maria Catholic Values Fund
Average Annual Total Returns(a)
(for periods ended December 31, 2005)
1 Year Since Inception(b)
------ ------------------
4.79%(c) 11.11%
----------------------------------------
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) Represents the period from the commencement of operations (May 1,
2001) through December 31, 2005.
(c) The return shown reflects a 1% contingent deferred sales charge.
3
AVE MARIA CATHOLIC VALUES FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2005 (UNAUDITED)
================================================================================
SHARES COMPANY MARKET VALUE
- --------------------------------------------------------------------------------
250,000 Thor Industries, Inc. ............................ $ 10,017,500
450,000 Fargo Electronics, Inc. .......................... 8,662,500
115,000 American International Group, Inc. ............... 7,846,450
300,000 Dollar Tree Stores, Inc. ......................... 7,182,000
60,000 General Dynamics Corporation ..................... 6,843,000
330,000 Lifetime Brands, Inc. ............................ 6,821,100
32,500 Student Loan Corporation (The) ................... 6,799,975
245,000 North Fork Bancorporation, Inc. .................. 6,703,200
185,000 Mine Safety Appliances Company ................... 6,698,850
75,000 Mohawk Industries, Inc. .......................... 6,523,500
ASSET ALLOCATION (UNAUDITED)
================================================================================
SECTOR % OF NET ASSETS
------ ---------------
Aerospace/Defense ........................................ 6.3%
Apparel & Textiles ....................................... 4.4%
Building Materials & Construction ........................ 0.8%
Business Services ........................................ 5.5%
Communication Equipment & Services ....................... 1.4%
Consumer Products ........................................ 12.0%
Education ................................................ 1.1%
Electronics .............................................. 1.8%
Energy & Mining .......................................... 7.0%
Environmental Services ................................... 0.5%
Finance .................................................. 13.9%
Healthcare ............................................... 10.0%
Industrial Products & Services ........................... 14.9%
Leisure & Entertainment .................................. 1.1%
Printing & Publishing .................................... 1.1%
Real Estate .............................................. 0.9%
Retail ................................................... 5.8%
Technology ............................................... 0.1%
Transportation ........................................... 4.1%
Utilities ................................................ 0.7%
Cash Equivalents, Other Assets and Liabilities ........... 6.6%
-------
100.0%
=======
4
AVE MARIA CATHOLIC VALUES FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2005
================================================================================
SHARES COMMON STOCKS -- 93.4% MARKET VALUE
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE -- 6.3%
25,000 American Science and Engineering, Inc. * ....... $ 1,559,250
165,000 Applied Signal Technology, Inc. ................ 3,745,500
60,000 General Dynamics Corporation ................... 6,843,000
30,000 Harris Corporation ............................. 1,290,300
500,000 TVI Corporation * .............................. 2,000,000
------------
15,438,050
------------
APPAREL & TEXTILES -- 4.4%
140,000 Jones Apparel Group, Inc. ...................... 4,300,800
75,000 Mohawk Industries, Inc. * ...................... 6,523,500
------------
10,824,300
------------
BUILDING MATERIALS & CONSTRUCTION -- 0.8%
50,000 Pulte Homes, Inc. .............................. 1,968,000
------------
BUSINESS SERVICES -- 5.5%
50,000 Automatic Data Processing, Inc. ................ 2,294,500
450,000 Fargo Electronics, Inc. * ...................... 8,662,500
130,000 Neogen Corporation * ........................... 2,731,300
------------
13,688,300
------------
COMMUNICATION EQUIPMENT & SERVICES -- 1.4%
30,000 Alltel Corporation ............................. 1,893,000
50,000 CenturyTel, Inc. ............................... 1,658,000
------------
3,551,000
------------
CONSUMER PRODUCTS - DURABLES -- 6.4%
40,000 Brunswick Corporation .......................... 1,626,400
307,000 Craftmade International, Inc. .................. 6,143,070
50,000 Harley-Davidson, Inc. .......................... 2,574,500
235,000 Leggett & Platt, Inc. .......................... 5,395,600
------------
15,739,570
------------
CONSUMER PRODUCTS - NONDURABLES -- 5.6%
4,700 ACCO Brands Corporation * ...................... 115,150
145,000 Chattem, Inc. * ................................ 5,276,550
4,000 Coach, Inc. * .................................. 133,360
20,000 Fortune Brands, Inc. ........................... 1,560,400
330,000 Lifetime Brands, Inc. .......................... 6,821,100
------------
13,906,560
------------
EDUCATION -- 1.1%
70,000 Corinthian Colleges, Inc.* ..................... 824,600
60,000 Education Management Corporation* .............. 2,010,600
------------
2,835,200
------------
5
AVE MARIA CATHOLIC VALUES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 93.4% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
ELECTRONICS -- 1.8%
150,000 Gentex Corporation ............................. $ 2,925,000
160,547 Sparton Corporation ............................ 1,438,502
------------
4,363,502
------------
ENERGY & MINING -- 7.0%
10,000 Anadarko Petroleum Corporation ................. 947,500
90,000 Core Laboratories N.V. * ....................... 3,362,400
80,000 Exxon Mobil Corporation ........................ 4,493,600
575,000 Input/Output, Inc. * ........................... 4,042,250
10,000 Patterson-UTI Energy, Inc. ..................... 329,500
35,000 Transocean Inc. * .............................. 2,439,150
35,000 XTO Energy Inc. ................................ 1,537,900
------------
17,152,300
------------
ENVIRONMENTAL SERVICES -- 0.5%
50,000 Layne Christensen Company * .................... 1,271,500
------------
FINANCE - BANKS & THRIFTS -- 3.7%
45,000 BB&T Corporation ............................... 1,885,950
245,000 North Fork Bancorporation, Inc. ................ 6,703,200
20,000 Synovus Financial Corporation .................. 540,200
------------
9,129,350
------------
FINANCE - INSURANCE -- 7.0%
115,000 American International Group, Inc. ............. 7,846,450
50,000 Everest Re Group, Ltd. ......................... 5,017,500
300,000 Meadowbrook Insurance Group, Inc. * ............ 1,752,000
282,945 Unico American Corporation * ................... 2,645,536
------------
17,261,486
------------
FINANCE - MISCELLANEOUS -- 3.2%
30,000 First Marblehead Corporation (The) ............. 985,800
32,500 Student Loan Corporation (The) ................. 6,799,975
------------
7,785,775
------------
HEALTHCARE -- 10.0%
35,000 Beckman Coulter, Inc. .......................... 1,991,500
40,000 Kinetic Concepts, Inc.* ........................ 1,590,400
83,000 Lincare Holdings Inc. * ........................ 3,478,530
135,000 Manor Care, Inc. ............................... 5,368,950
300,000 Mylan Laboratories Inc. ........................ 5,988,000
97,000 STERIS Corporation ............................. 2,426,940
100,000 Waters Corporation * ........................... 3,780,000
------------
24,624,320
------------
INDUSTRIAL PRODUCTS & SERVICES -- 14.9%
52,500 3M Company ..................................... 4,068,750
50,000 Balchem Corporation ............................ 1,490,500
75,000 Caterpillar Inc. ............................... 4,332,750
85,000 Diebold, Incorporated .......................... 3,230,000
6
AVE MARIA CATHOLIC VALUES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 93.4% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & SERVICES -- 14.9%
(CONTINUED)
10,000 Dover Corporation .............................. $ 404,900
50,000 Genuine Parts Company .......................... 2,196,000
150,000 Graco, Inc. .................................... 5,472,000
185,000 Mine Safety Appliances Company ................. 6,698,850
100,000 Simpson Manufacturing Company, Inc. ............ 3,635,000
22,500 Stericycle, Inc. * ............................. 1,324,800
20,000 Teleflex Incorporated .......................... 1,299,600
60,000 Zebra Technologies Corporation - Class A * ..... 2,571,000
------------
36,724,150
------------
LEISURE & ENTERTAINMENT -- 1.1%
10,000 Polaris Industries, Inc. ....................... 502,000
65,000 RC2 Corporation * .............................. 2,308,800
------------
2,810,800
------------
PRINTING & PUBLISHING -- 1.1%
5,000 Courier Corporation ............................ 171,700
95,500 ProQuest Company * ............................. 2,665,405
------------
2,837,105
------------
REAL ESTATE -- 0.9%
25,000 Duke Realty Corporation ........................ 835,000
50,000 Health Care Property Investors, Inc. ........... 1,278,000
------------
2,113,000
------------
RETAIL -- 5.8%
150,000 Christopher & Banks Corporation ................ 2,817,000
300,000 Dollar Tree Stores, Inc. * ..................... 7,182,000
5,000 Hibbett Sporting Goods, Inc. * ................. 142,400
135,000 Ross Stores, Inc. .............................. 3,901,500
4,000 Tractor Supply Company * ....................... 211,760
------------
14,254,660
------------
TECHNOLOGY -- 0.1%
7,100 Stratasys, Inc.* ............................... 177,571
------------
TRANSPORTATION -- 4.1%
250,000 Thor Industries, Inc. .......................... 10,017,500
------------
UTILITIES -- 0.7%
305,000 SEMCO Energy, Inc. * ........................... 1,714,100
------------
TOTAL COMMON STOCKS (Cost $190,383,502)........... $230,188,099
------------
7
AVE MARIA CATHOLIC VALUES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS (1) -- 7.0% MARKET VALUE
- --------------------------------------------------------------------------------
$17,317,339 U.S. Bank N.A., 3.250%, dated 12/30/05, due 01/03/06
repurchase proceeds: $17,323,592
(Cost $17,317,339)............................ $ 17,317,339
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 100.4%
(Cost $207,700,841).............................. $247,505,438
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.4%)... (1,130,326)
------------
NET ASSETS -- 100.0%.............................. $246,375,112
============
* Non-income producing security.
(1) Repurchase agreement is fully collaterized by $17,317,339 GNMA, Series
2004-18 AB, 4.500%, due 12/16/28. The aggregate market value of the
collateral at December 31, 2005 was $17,664,048.
See notes to financial statements.
8
AVE MARIA GROWTH FUND
PORTFOLIO MANAGER COMMENTARY
================================================================================
Dear Fellow Shareholders:
For the year ended December 31, 2005, the Ave Maria Growth Fund had a total
return of 0.3% compared with 4.9% for the S&P 500 Index. Since inception (May 1,
2003), the Fund's total return has been 16.5% annualized compared to 14.3%
annualized for the S&P 500 Index.
Calendar year 2005 presented special challenges. The 4.9% return for the S&P 500
Index was heavily influenced by a 40% jump in the energy component of the index
and a 20% return from the utility segment. Because energy and utility companies
have not historically been growth companies, we only had one name in these two
industries - Occidental Petroleum Corporation. Our mission is to purchase shares
of superior growth companies when they're selling at reasonable prices.
Additionally, the healthcare and consumer staples sectors provided small
positive returns. These four sectors comprised approximately 37% of the $11
trillion market value of the S&P 500 Index. As a result, six of the investment
sectors, or about 63% of its total market value, recorded negative returns in
2005. The bottom line for 2005 was, if you didn't own energy and utility stocks
it was very hard to have good performance.
However, during the fourth quarter of 2005, this phenomenon began to reverse.
Energy and utilities were negative, and five out of six of the earlier negative
investment sectors turned positive. If this more balanced trend continues, it
may work to the advantage of a diversified, high-quality investment portfolio
like the Ave Maria Growth Fund.
The best performing issues in the Ave Maria Growth Fund in 2005 were Brown &
Brown, Inc. (insurance agency), Johnson Controls, Inc. (automotive supplier),
and Garmin Ltd. (global positioning systems). Those that lagged included these
consumer-related stocks: Polaris Industries, Inc. (all-terrain vehicles) and
Harley-Davidson, Inc. (motorcycles). We're adding to the laggards because their
fundamentals are still good and the shares are now better values.
Respectfully,
/s/ James L. Bashaw
James L. Bashaw, CFA
Portfolio Manager
9
AVE MARIA GROWTH FUND
PERFORMANCE (UNAUDITED)
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE AVE MARIA GROWTH FUND AND THE S&P 500 INDEX
[GRAPHIC OMITTED]
AVE MARIA GROWTH FUND S&P 500 INDEX
--------------------- --------------------
DATE BALANCE DATE BALANCE
---- ------- ---- -------
5/1/2003 $ 10,000 5/1/2003 $ 10,000
5/31/2003 10,470 5/31/2003 10,532
6/30/2003 10,660 6/30/2003 10,668
7/31/2003 11,070 7/31/2003 10,857
8/31/2003 11,440 8/31/2003 11,070
9/30/2003 10,980 9/30/2003 10,954
10/31/2003 11,900 10/31/2003 11,573
11/30/2003 12,160 11/30/2003 11,675
12/31/2003 12,340 12/31/2003 12,287
1/31/2004 12,470 1/31/2004 12,513
2/29/2004 12,690 2/29/2004 12,687
3/31/2004 12,860 3/31/2004 12,496
4/30/2004 12,570 4/30/2004 12,300
5/31/2004 12,790 5/31/2004 12,468
6/30/2004 13,240 6/30/2004 12,710
7/31/2004 12,840 7/31/2004 12,289
8/31/2004 13,030 8/31/2004 12,338
9/30/2004 13,570 9/30/2004 12,472
10/31/2004 13,820 10/31/2004 12,662
11/30/2004 14,530 11/30/2004 13,175
12/31/2004 14,990 12/31/2004 13,625
1/31/2005 14,790 1/31/2005 13,292
2/28/2005 14,910 2/28/2005 13,572
3/31/2005 14,390 3/31/2005 13,332
4/30/2005 13,770 4/30/2005 13,079
5/31/2005 14,260 5/31/2005 13,495
6/30/2005 14,170 6/30/2005 13,514
7/31/2005 14,920 7/31/2005 14,017
8/31/2005 14,600 8/31/2005 13,889
9/30/2005 14,540 9/30/2005 14,001
10/31/2005 14,350 10/31/2005 13,768
11/30/2005 15,050 11/30/2005 14,289
12/31/2005 15,040 12/31/2005 14,287
----------------------------------------
Ave Maria Growth Fund
Average Annual Total Returns(a)
(for periods ended December 31, 2005)
1 Year Since Inception(b)
---------- ------------------
(0.66%)(c) 16.53%
----------------------------------------
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) Represents the period from the commencement of operations (May 1,
2003) through December 31, 2005.
(c) The return shown reflects a 1% contingent deferred sales charge.
10
AVE MARIA GROWTH FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2005 (UNAUDITED)
================================================================================
SHARES COMPANY MARKET VALUE
- --------------------------------------------------------------------------------
30,600 Johnson Controls, Inc. ........................... $ 2,231,046
50,950 FactSet Research Systems, Inc. ................... 2,097,102
68,200 CLARCOR, Inc. .................................... 2,026,222
55,400 Biomet, Inc. ..................................... 2,025,978
50,300 Franklin Electric Company, Inc. .................. 1,988,862
30,100 C.R. Bard, Inc. .................................. 1,984,192
71,950 North Fork Bancorporation, Inc. .................. 1,968,552
45,200 Kellogg Company .................................. 1,953,544
61,400 Donaldson Company, Inc. .......................... 1,952,520
53,050 Graco, Inc. ...................................... 1,935,264
ASSET ALLOCATION (UNAUDITED)
================================================================================
SECTOR % OF NET ASSETS
------ ---------------
Aerospace/Defense ..................................... 6.2%
Business Services ..................................... 3.3%
Consumer Products ..................................... 8.2%
Electronics ........................................... 2.6%
Energy & Mining ....................................... 2.9%
Finance ............................................... 14.3%
Food & Tobacco ........................................ 6.0%
Healthcare ............................................ 14.3%
Industrial Products & Services ........................ 23.9%
Leisure & Entertainment ............................... 2.4%
Retail ................................................ 7.2%
Technology ............................................ 2.8%
Transportation ........................................ 2.8%
Cash Equivalents, Other Assets and Liabilities ........ 3.1%
-------
100.0%
=======
11
AVE MARIA GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2005
================================================================================
SHARES COMMON STOCKS -- 96.9% MARKET VALUE
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE -- 6.2%
24,200 Alliant Techsystems, Inc. * .................... $ 1,843,314
16,300 General Dynamics Corporation ................... 1,859,015
5,000 Rockwell Collins, Inc. ......................... 232,350
------------
3,934,679
------------
BUSINESS SERVICES -- 3.3%
50,950 FactSet Research Systems, Inc. ................. 2,097,102
------------
CONSUMER PRODUCTS - DURABLES -- 5.6%
34,900 Harley-Davidson, Inc. .......................... 1,797,001
39,900 Toro Company (The) ............................. 1,746,423
------------
3,543,424
------------
CONSUMER PRODUCTS - NONDURABLES -- 2.6%
19,100 Black & Decker Corporation (The) ............... 1,660,936
------------
ELECTRONICS -- 2.6%
25,200 Garmin Ltd. .................................... 1,672,020
------------
ENERGY & MINING -- 2.9%
22,900 Occidental Petroleum Corporation ............... 1,829,252
------------
FINANCE - BANKS & THRIFTS -- 6.1%
56,200 National City Corporation ...................... 1,886,634
71,950 North Fork Bancorporation, Inc. ................ 1,968,552
------------
3,855,186
------------
FINANCE - INSURANCE -- 5.3%
50,400 Arthur J. Gallagher & Co. ...................... 1,556,352
58,500 Brown & Brown, Inc. ............................ 1,786,590
------------
3,342,942
------------
FINANCE - MISCELLANEOUS -- 2.9%
49,900 SEI Investments Company ........................ 1,846,300
------------
FOOD & TOBACCO -- 6.0%
45,200 Kellogg Company ................................ 1,953,544
60,000 McCormick & Company, Inc. ...................... 1,855,200
------------
3,808,744
------------
HEALTHCARE -- 14.3%
29,300 Beckman Coulter, Inc. .......................... 1,667,170
55,400 Biomet, Inc. ................................... 2,025,978
30,100 C. R. Bard, Inc. ............................... 1,984,192
53,000 Patterson Companies, Inc. * .................... 1,770,200
43,600 Waters Corporation * ........................... 1,648,080
------------
9,095,620
------------
12
AVE MARIA GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.9% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & SERVICES -- 23.9%
43,400 AMETEK, Inc. ................................... $ 1,846,236
68,200 CLARCOR, Inc. .................................. 2,026,222
61,400 Donaldson Company, Inc. ........................ 1,952,520
24,100 Expeditors International of Washington, Inc. ... 1,626,991
50,300 Franklin Electric Company, Inc. ................ 1,988,862
53,050 Graco, Inc. .................................... 1,935,264
15,700 ITT Industries, Inc. ........................... 1,614,274
30,600 Johnson Controls, Inc. ......................... 2,231,046
------------
15,221,415
------------
LEISURE & ENTERTAINMENT -- 2.4%
30,300 Polaris Industries, Inc. ....................... 1,521,060
------------
RETAIL -- 7.2%
45,800 Bed Bath & Beyond Inc. * ....................... 1,655,670
73,500 Christopher & Banks Corporation ................ 1,380,330
54,100 Ross Stores, Inc. .............................. 1,563,490
------------
4,599,490
------------
TECHNOLOGY -- 2.8%
32,300 Mettler-Toledo International Inc. * ............ 1,782,960
------------
TRANSPORTATION -- 2.8%
42,300 Landstar System, Inc. .......................... 1,765,602
------------
TOTAL COMMON STOCKS (Cost $57,445,931)............ $ 61,576,732
------------
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS (1) -- 3.0% MARKET VALUE
- --------------------------------------------------------------------------------
$ 1,890,623 U.S. Bank N.A., 3.250%, dated 12/30/05, due 01/03/06
repurchase proceeds: $1,891,306
(Cost $1,890,623)............................. $ 1,890,623
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 99.9%
(Cost $59,336,554)................................ $ 63,467,355
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1%..... 93,997
------------
NET ASSETS -- 100.0%.............................. $ 63,561,352
============
* Non-income producing security.
(1) Repurchase agreement is fully collaterized by $1,890,623 FGCI, Pool
#E99430, 4.500%, due 09/01/18. The aggregate market value of the collateral
at December 31, 2005 was $1,928,846.
See notes to financial statements.
13
AVE MARIA RISING DIVIDEND FUND
PORTFOLIO MANAGER COMMENTARY
================================================================================
Dear Fellow Shareholders:
As of December 31, 2005, the Ave Maria Rising Dividend Fund held stock in 39
companies diversified across 18 industries. Virtually all of the companies in
the portfolio raised their dividend during 2005. Investing in companies that
have regularly raised their dividend is a defining characteristic of this Fund.
Traditionally, dividends have contributed about half of the total return
produced by stocks in general; therefore, a growing stream of dividends is
particularly important. Rising dividends are also indicative of balance sheet
integrity and sound underlying business fundamentals. To increase dividends year
after year, companies must generate growth in earnings and cash flow. Some
companies use accounting gimmicks to fudge their earnings - but they can't fake
a dividend. Our typical portfolio company uses conservative accounting practices
and regularly increases dividends, which is indicative of a highly-disciplined
board of directors and a shareholder-focused corporate culture.
The investment performance for the Fund during its first eight months of
operation ended December 31, 2005 was +6.7%. This compares with the 5.4% total
return on the S&P Dividend Aristocrat Index and 8.8% return for the S&P 500
Index for the same period.
The energy sector represented one of the only industries with positive
investment results in 2005. Given our focus on companies with the capacity to
regularly increase dividends, we didn't find much cause to invest in energy
stocks. Major contributors to the performance of the Fund came from Thor
Industries, Inc. (recreational vehicles), Johnson Controls, Inc. (automotive
supply and building controls), Caterpillar Inc. (construction and mining
equipment), and Ross Stores, Inc. (retailer).
We sold Dominion Resources, Inc. out of the portfolio because it became a
violator of one of our pro-life, pro-family screens. The Company adopted a
policy of offering non-marital partner benefits to their employees. As is our
practice, we wrote to management and the Board of Directors of Dominion
informing them of our reason for selling the stock and urged them to reverse
their policy, which would allow us to repurchase the shares.
We appreciate your commitment and strive to do all in our power to merit your
confidence.
With best regards,
/s/ George P. Schwartz /s/ Richard L. Platte, Jr.
George P. Schwartz, CFA Richard L. Platte, Jr., CFA
Co-portfolio Manager Co-portfolio Manager
14
AVE MARIA RISING DIVIDEND FUND
PERFORMANCE (UNAUDITED)
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE AVE MARIA RISING DIVIDEND FUND, THE S&P 500 INDEX,
AND THE S&P DIVIDEND ARISTOCRAT INDEX
[GRAPHIC OMITTED]
AVE MARIA RISING S&P DIVIDEND
DIVIDEND FUND S&P 500 INDEX ARISTOCRAT INDEX
------------------ -------------------- ---------------------
DATE BALANCE DATE BALANCE DATE BALANCE
---- ------- ---- ------- ---- -------
5/2/2005 $ 10,000 5/2/2005 $ 10,000 5/2/2005 $ 10,000
5/31/2005 10,130 5/31/2005 10,271 5/31/2005 10,130
6/30/2005 10,200 6/30/2005 10,286 6/30/2005 10,031
7/31/2005 10,641 7/31/2005 10,668 7/31/2005 10,388
8/31/2005 10,471 8/31/2005 10,571 8/31/2005 10,182
9/30/2005 10,330 9/30/2005 10,656 9/30/2005 10,136
10/31/2005 10,310 10/31/2005 10,479 10/31/2005 10,189
11/30/2005 10,702 11/30/2005 10,875 11/30/2005 10,502
12/31/2005 10,671 12/31/2005 10,879 12/31/2005 10,542
----------------------------------------
Ave Maria Rising Dividend Fund
Total Return(a)
Since Inception(b)
------------------
6.71%
----------------------------------------
Past performance is not predictive of future performance.
(a) The return shown does not reflect the deduction of taxes a shareholder
would pay on Fund distributions or the redemption of Fund shares.
(b) Represents the period from the commencement of operations (May 2,
2005) through December 31, 2005.
15
AVE MARIA RISING DIVIDEND FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2005 (UNAUDITED)
================================================================================
SHARES COMPANY MARKET VALUE
- --------------------------------------------------------------------------------
25,000 Thor Industries, Inc. ............................ $ 1,001,750
18,000 Alberto-Culver Company ........................... 823,500
28,000 Ross Stores, Inc. ................................ 809,200
35,000 Leggett & Platt, Inc. ............................ 803,600
26,000 Arthur J. Gallagher & Co. ........................ 802,880
18,000 Kellogg Company .................................. 777,960
25,000 McCormick & Company, Inc. ........................ 773,000
20,000 Diebold, Incorporated ............................ 760,000
16,500 Sherwin-Williams Company (The) ................... 749,430
10,000 Emerson Electric Co. ............................. 747,000
ASSET ALLOCATION (UNAUDITED)
================================================================================
SECTOR % OF NET ASSETS
------ ---------------
Aerospace/Defense ..................................... 1.8%
Apparel & Textiles .................................... 0.3%
Building Materials & Construction ..................... 4.5%
Business Services ..................................... 2.4%
Communication Equipment & Services .................... 1.7%
Consumer Products ..................................... 13.8%
Energy & Mining ....................................... 1.9%
Finance ............................................... 16.1%
Food & Tobacco ........................................ 8.1%
Healthcare ............................................ 2.7%
Industrial Products & Services ........................ 27.5%
Leisure & Entertainment ............................... 2.5%
Retail ................................................ 3.2%
Transportation ........................................ 4.0%
Utilities ............................................. 5.4%
Cash Equivalents, Other Assets and Liabilities ........ 4.1%
-------
100.0%
=======
16
AVE MARIA RISING DIVIDEND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2005
================================================================================
SHARES COMMON STOCKS -- 95.9% MARKET VALUE
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE -- 1.8%
4,000 General Dynamics Corporation ................... $ 456,200
------------
APPAREL & TEXTILES -- 0.3%
1,000 Mohawk Industries, Inc. * ...................... 86,980
------------
BUILDING MATERIALS & CONSTRUCTION -- 4.5%
20,000 Masco Corporation .............................. 603,800
30,000 RPM International Inc. ......................... 521,100
------------
1,124,900
------------
BUSINESS SERVICES -- 2.4%
13,000 Automatic Data Processing, Inc. ................ 596,570
------------
COMMUNICATION EQUIPMENT & SERVICES -- 1.7%
7,000 Alltel Corporation ............................. 441,700
------------
CONSUMER PRODUCTS - DURABLES -- 7.6%
10,000 Harley-Davidson, Inc. .......................... 514,900
35,000 Leggett & Platt, Inc. .......................... 803,600
25,000 Newell Rubbermaid Inc. ......................... 594,500
------------
1,913,000
------------
CONSUMER PRODUCTS - NONDURABLES -- 6.2%
18,000 Alberto-Culver Company ......................... 823,500
16,500 Sherwin-Williams Company (The) ................. 749,430
------------
1,572,930
------------
ENERGY & MINING -- 1.9%
8,500 Exxon Mobil Corporation ........................ 477,445
------------
FINANCE - BANKS & THRIFTS -- 9.3%
16,000 BB&T Corporation ............................... 670,560
27,000 North Fork Bancorporation, Inc. ................ 738,720
15,000 Synovus Financial Corporation .................. 405,150
15,000 United Bankshares, Inc. ........................ 528,600
------------
2,343,030
------------
FINANCE - INSURANCE -- 4.3%
4,000 American International Group, Inc. ............. 272,920
26,000 Arthur J. Gallagher & Co. ...................... 802,880
------------
1,075,800
------------
FINANCE - MISCELLANEOUS -- 2.5%
3,000 Student Loan Corporation (The) ................. 627,690
------------
17
AVE MARIA RISING DIVIDEND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 95.9% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
FOOD & TOBACCO -- 8.1%
15,000 Hormel Foods Corporation ....................... $ 490,200
18,000 Kellogg Company ................................ 777,960
25,000 McCormick & Company, Inc. ...................... 773,000
------------
2,041,160
------------
HEALTHCARE -- 2.7%
17,000 Manor Care, Inc. ............................... 676,090
------------
INDUSTRIAL PRODUCTS & SERVICES -- 27.5%
9,000 3M Company ..................................... 697,500
13,000 Avery Dennison Corporation ..................... 718,510
12,000 Caterpillar Inc. ............................... 693,240
20,000 Diebold, Incorporated .......................... 760,000
14,000 Dover Corporation .............................. 566,860
10,000 Emerson Electric Co. ........................... 747,000
15,000 Graco, Inc. .................................... 547,200
10,000 Johnson Controls, Inc. ......................... 729,100
18,000 Mine Safety Appliances Company ................. 651,780
13,500 Stanley Works (The) ............................ 648,540
3,000 Teleflex Incorporated .......................... 194,940
------------
6,954,670
------------
LEISURE & ENTERTAINMENT -- 2.5%
12,500 Polaris Industries, Inc. ....................... 627,500
------------
RETAIL -- 3.2%
28,000 Ross Stores, Inc. .............................. 809,200
------------
TRANSPORTATION -- 4.0%
25,000 Thor Industries, Inc. .......................... 1,001,750
------------
UTILITIES -- 5.4%
14,000 Exelon Corporation ............................. 743,960
15,000 FPL Group, Inc. ................................ 623,400
------------
1,367,360
------------
TOTAL COMMON STOCKS (Cost $23,123,442)............ $ 24,193,975
------------
18
AVE MARIA RISING DIVIDEND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS (1) -- 4.8% MARKET VALUE
- --------------------------------------------------------------------------------
$ 1,217,808 U.S. Bank N.A., 3.250%, dated 12/30/05, due 01/03/06
repurchase proceeds: $1,218,247
(Cost $1,217,808)............................. $ 1,217,808
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 100.7%
(Cost $24,341,250)................................ $ 25,411,783
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.7%)... (169,172)
------------
NET ASSETS -- 100.0%.............................. $ 25,242,611
============
* Non-income producing security.
(1) Repurchase agreement is fully collaterized by $1,217,808 FGCI, Pool
#E99430, 4.500%, due 09/01/18. The aggregate market value of the collateral
at December 31, 2005 was $1,242,412.
See notes to financial statements.
19
AVE MARIA BOND FUND
PORTFOLIO MANAGER COMMENTARY
================================================================================
Dear Fellow Shareholders:
The bond market spent another year dealing with the fallout of Fed monetary
policy. During 2005, the Fed raised the Fed Funds rate eight times, and once so
far in 2006. That was on top of the five increases during 2004 or 14 increases
over 18 months, raising the overnight rate from 1.00% to 4.50% currently. In
contrast, long-term rates remained stable during this period. The result has
been a flat yield curve, which is unusual, since investors generally demand
higher yields for longer maturity, fixed-income instruments.
The flat yield curve has resulted in lower prices of short and intermediate
maturity bonds, even the extremely high quality conservative type, which we have
in the Ave Maria Bond Fund. Consequently, in 2005 the decline in the prices of
our bonds, combined with the coupon income, produced a total return of 1.4% for
the retail class compared to 1.6% for the Lehman Brothers Intermediate U.S.
Government/Credit Index. Our small position in dividend paying stocks (15% of
the portfolio as of December 31, 2005) made a modest positive contribution to
performance for the year.
We sold Dominion Resources, Inc. out of the portfolio because the company became
a violator of one of our pro-life, pro-family screens. The Company adopted a
policy of offering non-marital partner benefits to their employees. As is our
practice, we wrote to management and the Board of Directors of Dominion
informing them of our reason for selling the stock and urged them to reverse
their policy, which would allow us to repurchase the shares.
With best regards,
/s/ Richard L. Platte, Jr.
Richard L. Platte, Jr., CFA
Portfolio Manager
20
AVE MARIA BOND FUND
PERFORMANCE (UNAUDITED)
========================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE AVE MARIA BOND FUND AND THE LEHMAN BROTHERS
INTERMEDIATE U.S. GOVERNMENT/CREDIT INDEX
[GRAPHIC OMITTED]
AVE MARIA BOND FUND AVE MARIA BOND FUND LEHMAN BROTHERS INTERMEDIATE
(Class I) (Class R) U.S. GOVERNMENT/CREDIT INDEX
------------------- ------------------- ----------------------------
DATE BALANCE DATE BALANCE DATE BALANCE
---- ------- ---- ------- ---- -------
5/1/2003 $ 10,000 5/1/2003 $ 10,000 5/1/2003 $ 10,000
5/31/2003 10,165 5/31/2003 10,164 5/31/2003 10,195
6/30/2003 10,163 6/30/2003 10,151 6/30/2003 10,188
7/31/2003 9,941 7/31/2003 9,936 7/31/2003 9,911
8/31/2003 9,962 8/31/2003 9,954 8/31/2003 9,934
9/30/2003 10,174 9/30/2003 10,163 9/30/2003 10,186
10/31/2003 10,145 10/31/2003 10,131 10/31/2003 10,090
11/30/2003 10,158 11/30/2003 10,131 11/30/2003 10,104
12/31/2003 10,256 12/31/2003 10,236 12/31/2003 10,192
1/31/2004 10,316 1/31/2004 10,282 1/31/2004 10,259
2/29/2004 10,426 2/29/2004 10,399 2/24/2004 10,364
3/31/2004 10,500 3/31/2004 10,470 3/31/2004 10,445
4/30/2004 10,278 4/30/2004 10,235 4/30/2004 10,197
5/31/2004 10,299 5/31/2004 10,252 5/31/2004 10,151
6/30/2004 10,354 6/30/2004 10,306 6/30/2004 10,182
7/31/2004 10,442 7/31/2004 10,390 7/31/2004 10,267
8/31/2004 10,635 8/31/2004 10,579 8/31/2004 10,439
9/30/2004 10,679 9/30/2004 10,620 9/30/2004 10,457
10/31/2004 10,768 10/31/2004 10,705 10/31/2004 10,527
11/30/2004 10,722 11/30/2004 10,656 11/30/2004 10,431
12/31/2004 10,823 12/31/2004 10,753 12/31/2004 10,502
1/31/2005 10,766 1/31/2005 10,693 1/31/2005 10,522
2/28/2005 10,749 2/28/2005 10,673 2/28/2005 10,464
3/31/2005 10,722 3/31/2005 10,643 3/31/2005 10,410
4/30/2005 10,826 4/30/2005 10,732 4/30/2005 10,529
5/31/2005 10,885 5/31/2005 10,798 5/31/2005 10,624
6/30/2005 10,946 6/30/2005 10,857 6/30/2005 10,669
7/31/2005 10,934 7/31/2005 10,842 7/31/2005 10,580
8/31/2005 11,006 8/31/2005 10,911 8/31/2005 10,704
9/30/2005 10,950 9/30/2005 10,853 9/30/2005 10,613
10/31/2005 10,895 10/31/2005 10,785 10/31/2005 10,555
11/30/2005 10,973 11/30/2005 10,871 11/30/2005 10,601
12/31/2005 11,020 12/31/2005 10,903 12/31/2005 10,668
----------------------------------------
Ave Maria Bond Fund
Average Annual Total Returns(a)
(for periods ended December 31, 2005)
1 Year Since Inception(b)
-------- ------------------
Class I 1.81% 3.71%
Class R 0.41%(c) 3.29%
----------------------------------------
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) Represents the period from the commencement of operations (May 1,
2003) through December 31, 2005.
(c) The return shown reflects a 1% contingent deferred sales charge.
21
AVE MARIA BOND FUND
TEN LARGEST HOLDINGS
DECEMBER 31, 2005 (UNAUDITED)
================================================================================
PAR VALUE HOLDING MARKET VALUE
- --------------------------------------------------------------------------------
$ 5,000,000 U.S. Treasury Note, 3.750%, due 05/15/08 ......... $ 4,928,905
3,500,000 U.S. Treasury Note, 3.750%, due 03/31/07 ......... 3,470,194
3,500,000 U.S. Treasury Note, 4.125%, due 05/15/15 ......... 3,423,301
3,500,000 U.S. Treasury Note, 3.375%, due 10/15/09 ......... 3,379,824
3,000,000 U.S. Treasury Note, 3.000%, due 11/15/07 ......... 2,925,234
3,000,000 U.S. Treasury Note, 2.625%, due 05/15/08 ......... 2,881,875
2,500,000 U.S. Treasury Note, 3.375%, due 02/28/07 ......... 2,469,530
2,000,000 U.S. Treasury Note, 4.375%, due 08/15/12 ......... 1,999,766
2,000,000 U.S. Treasury Note, 2.875%, due 11/30/06 ......... 1,972,266
2,000,000 U.S. Treasury Note, 3.375%, due 02/15/08 ......... 1,958,828
ASSET ALLOCATION (UNAUDITED)
================================================================================
% OF NET ASSETS
---------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
U.S. Treasuries ......................................... 54.0%
U.S. Government Agencies ................................ 6.9%
CORPORATE BONDS
SECTOR
- ------
Consumer Products ....................................... 3.0%
Finance ................................................. 6.3%
Industrials ............................................. 6.3%
Utilities ............................................... 3.0%
COMMON STOCKS
SECTOR
- ------
Building Materials & Construction ....................... 0.9%
Communication Equipment & Services ...................... 0.7%
Consumer Products ....................................... 2.1%
Energy & Mining ......................................... 0.7%
Finance ................................................. 4.3%
Healthcare .............................................. 0.7%
Real Estate ............................................. 1.1%
Utilities ............................................... 4.2%
Cash Equivalents, Other Assets and Liabilities .......... 5.8%
-------
100.0%
=======
22
AVE MARIA BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2005
================================================================================
U.S. GOVERNMENT AND
PAR VALUE AGENCY OBLIGATIONS -- 60.9% MARKET VALUE
- --------------------------------------------------------------------------------
U.S. TREASURIES -- 54.0%
$2,000,000 U.S. Treasury Note, 2.875%, due 11/30/06 ......... $ 1,972,266
2,500,000 U.S. Treasury Note, 3.375%, due 02/28/07 ......... 2,469,530
3,500,000 U.S. Treasury Note, 3.750%, due 03/31/07 ......... 3,470,194
3,000,000 U.S. Treasury Note, 3.000%, due 11/15/07 ......... 2,925,234
1,000,000 U.S. Treasury Note, 3.000%, due 02/15/08 ......... 971,836
2,000,000 U.S. Treasury Note, 3.375%, due 02/15/08 ......... 1,958,828
3,000,000 U.S. Treasury Note, 2.625%, due 05/15/08 ......... 2,881,875
5,000,000 U.S. Treasury Note, 3.750%, due 05/15/08 ......... 4,928,905
1,214,560 U.S. Treasury Inflation-Protection Note,
3.875%, due 01/15/09 ........................... 1,276,522
1,000,000 U.S. Treasury Note, 3.000%, due 02/15/09 ......... 959,766
3,500,000 U.S. Treasury Note, 3.375%, due 10/15/09 ......... 3,379,824
1,500,000 U.S. Treasury Note, 4.250%, due 10/15/10 ......... 1,492,149
2,000,000 U.S. Treasury Note, 4.375%, due 08/15/12 ......... 1,999,766
1,000,000 U.S. Treasury Note, 4.000%, due 02/15/14 ......... 972,891
3,500,000 U.S. Treasury Note, 4.125%, due 05/15/15 ......... 3,423,301
------------
35,082,887
------------
U.S. GOVERNMENT AGENCIES -- 6.9%
1,000,000 Federal Farm Credit Bank, 4.480%, due 08/24/12 ... 984,693
1,000,000 Federal Farm Credit Bank, 4.600%, due 12/27/12 ... 991,736
500,000 Federal Home Loan Bank, 3.375%, due 07/21/08 ..... 483,921
1,000,000 Federal Home Loan Bank, 5.477%, due 01/28/09 ..... 1,020,935
1,000,000 Federal Home Loan Bank, 4.375%, due 02/04/10 ..... 979,881
------------
4,461,166
------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS (Cost $40,132,398)............. $ 39,544,053
------------
================================================================================
PAR VALUE CORPORATE BONDS -- 18.6% MARKET VALUE
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS -- 3.0%
$1,000,000 Harley-Davidson, Inc.-144A, 3.625%, due 12/15/08 . $ 967,344
1,000,000 Leggett & Platt, Inc., 4.650%, due 11/15/14 ...... 961,284
------------
1,928,628
------------
FINANCE -- 6.3%
1,000,000 Caterpillar Financial Services Corporation, 2.650%,
due 01/30/06 ................................... 998,690
1,000,000 Caterpillar Financial Services Corporation, 4.750%,
due 02/17/15.................................... 976,578
1,000,000 Marshall & Ilsley Bank, 5.250%, due 09/04/12 1,011,685
1,000,000 Regions Financial Corporation, 7.000%, due 03/01/11 1,092,985
------------
4,079,938
------------
23
AVE MARIA BOND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE CORPORATE BONDS -- 18.6% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
INDUSTRIALS -- 6.3%
$1,000,000 Alcoa, Inc., 6.000%, due 01/15/12 ................ $ 1,047,194
1,010,000 Dover Corporation, 6.250%, due 06/01/08 .......... 1,044,198
1,000,000 Masco Corporation, 4.800%, due 06/15/15 .......... 932,165
1,000,000 United Technologies Corporation, 6.350%, due 03/01/11 1,065,744
------------
4,089,301
------------
UTILITIES -- 3.0%
1,000,000 Alabama Power Company, 3.125%, due 05/01/08 ...... 961,080
1,000,000 National Rural Utilities Cooperative Finance
Corporation, 6.000%, due 05/15/06 .............. 1,004,621
------------
1,965,701
------------
TOTAL CORPORATE BONDS (Cost $12,277,552).............. $ 12,063,568
------------
================================================================================
SHARES COMMON STOCKS -- 14.7% MARKET VALUE
- --------------------------------------------------------------------------------
BUILDING MATERIALS & CONSTRUCTION -- 0.9%
35,000 RPM International Inc. ........................... $ 607,950
------------
COMMUNICATION EQUIPMENT & SERVICES -- 0.7%
7,500 Alltel Corporation ............................... 473,250
------------
CONSUMER PRODUCTS - DURABLES -- 2.1%
30,000 Leggett & Platt, Inc. ............................ 688,800
27,000 Newell Rubbermaid Inc. ........................... 642,060
------------
1,330,860
------------
ENERGY AND MINING -- 0.7%
15,000 National Fuel Gas Company ........................ 467,850
------------
FINANCE - BANKS & THRIFTS -- 3.3%
15,000 BB&T Corporation ................................. 628,650
15,000 Huntington Bancshares Incorporated ............... 356,250
15,000 National City Corporation ........................ 503,550
24,000 North Fork Bancorporation, Inc. .................. 656,640
------------
2,145,090
------------
FINANCE - INSURANCE -- 1.0%
22,000 Arthur J. Gallagher & Co. ........................ 679,360
------------
HEALTHCARE -- 0.7%
10,000 Landauer, Inc. ................................... 460,900
------------
REAL ESTATE -- 1.1%
12,000 Duke Realty Corporation .......................... 400,800
10,000 Washington Real Estate Investment Trust .......... 303,500
------------
704,300
------------
24
AVE MARIA BOND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 14.7% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
UTILITIES -- 4.2%
15,000 Exelon Corporation ............................... $ 797,100
15,000 FPL Group, Inc. .................................. 623,400
16,000 Pinnacle West Capital Corporation ................ 661,600
18,000 Southern Company ................................. 621,540
------------
2,703,640
------------
TOTAL COMMON STOCKS (Cost $8,801,100)............... $ 9,573,200
------------
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS (1) -- 5.0% MARKET VALUE
- --------------------------------------------------------------------------------
$3,252,648 U.S. Bank N.A., 3.250%, dated 12/31/05, due 01/03/06
repurchase proceeds: $3,253,823 (Cost $3,252,648). $ 3,252,648
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 99.2%
(Cost $64,463,698).................................. $ 64,433,469
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.8%....... 520,202
------------
NET ASSETS -- 100.0%................................ $ 64,953,671
============
(1) Repurchase agreement is fully collaterized by $3,252,648 GNMA, Series
2002-94 C, 4.463%, due 10/16/25. The aggregate market value of the
collateral at December 31, 2005 was $3,317,847.
See notes to financial statements.
25
AVE MARIA MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2005
=========================================================================================================================
AVE MARIA AVE MARIA
CATHOLIC AVE MARIA RISING AVE MARIA
VALUES FUND GROWTH FUND DIVIDEND FUND BOND FUND
- -------------------------------------------------------------------------------------------------------------------------
ASSETS
Investment securities:
At amortized cost .................................. $ 207,700,841 $ 59,336,554 $ 24,341,250 $ 64,463,698
============= ============= ============= =============
At market value (Note 1) ........................... $ 247,505,438 $ 63,467,355 $ 25,411,783 $ 64,433,469
Receivable for investment securities sold ............ 950,171 -- -- --
Receivable for capital shares sold ................... 634,242 226,042 162,424 9,976
Dividends and interest receivable .................... 171,367 58,636 35,217 526,602
Other assets ......................................... 22,941 10,724 11,670 9,574
------------- ------------- ------------- -------------
TOTAL ASSETS ....................................... 249,284,159 63,762,757 25,621,094 64,979,621
------------- ------------- ------------- -------------
LIABILITIES
Payable for investment securities purchased .......... 2,088,148 -- 331,662 --
Payable for capital shares redeemed .................. 138,503 45,483 -- 500
Payable to Adviser (Note 2) .......................... 610,791 133,147 31,567 3,146
Payable to affiliate (Note 2) ........................ 31,100 7,900 4,000 5,500
Other accrued expenses ............................... 40,505 14,875 11,254 16,804
------------- ------------- ------------- -------------
TOTAL LIABILITIES .................................. 2,909,047 201,405 378,483 25,950
------------- ------------- ------------- -------------
NET ASSETS ........................................... $ 246,375,112 $ 63,561,352 $ 25,242,611 $ 64,953,671
============= ============= ============= =============
NET ASSETS CONSIST OF:
Paid-in capital ...................................... $ 207,470,128 $ 59,430,551 $ 24,172,078 $ 64,982,084
Undistributed net investment income .................. -- -- -- 1,816
Distributions in excess of net realized gains
from security transactions ......................... (899,613) -- -- --
Net unrealized appreciation/(depreciation)
on investments ..................................... 39,804,597 4,130,801 1,070,533 (30,229)
------------- ------------- ------------- -------------
NET ASSETS ........................................... $ 246,375,112 $ 63,561,352 $ 25,242,611 $ 64,953,671
============= ============= ============= =============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ......... 16,356,868 4,236,942 2,383,277
============= ============= =============
Net asset value, offering price and redemption
price per share (Note 1)(a) ........................ $ 15.06 $ 15.00 $ 10.59
============= ============= =============
PRICING OF CLASS I SHARES
Net assets applicable to Class I shares .............. $ 48,114,866
=============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ......... 4,766,155
=============
Net asset value, offering price and redemption
price per share (Note 1) ........................... $ 10.10
=============
PRICING OF CLASS R SHARES
Net assets applicable to Class R shares .............. $ 16,838,805
=============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ......... 1,670,034
=============
Net asset value, offering price and redemption
price per share (Note 1) (a) ....................... $ 10.08
=============
(a) Except with respect to the Ave Maria Rising Dividend Fund and Class I shares of the Ave Maria Bond Fund, redemption
price will vary if subject to contingent deferred sales charge (Note 1).
See notes to financial statements.
26
AVE MARIA MUTUAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005(a)
=========================================================================================================================
AVE MARIA AVE MARIA
CATHOLIC AVE MARIA RISING AVE MARIA
VALUES FUND GROWTH FUND DIVIDEND FUND BOND FUND
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividend ........................................... $ 2,586,676 $ 637,580 $ 290,534 $ 340,338
Interest ........................................... 374,644 30,200 26,685 1,658,272
------------- ------------- ------------- -------------
Total Income ..................................... 2,961,320 667,780 317,219 1,998,610
------------- ------------- ------------- -------------
EXPENSES
Investment advisory fees (Note 2) .................. 2,424,716 577,142 97,361 165,253
Distribution fees (Note 2) ......................... 606,177 144,285 -- --
Distribution fees - Class R (Note 2) ............... -- -- -- 32,724
Administration, accounting and
transfer agent fees (Note 2) ..................... 363,821 86,575 32,000 57,197
Postage and supplies ............................... 59,356 25,647 7,301 16,677
Legal and audit fees ............................... 48,937 24,228 11,788 23,699
Registration fees - Common ......................... 41,662 27,415 13,918 12,632
Registration fees - Class I ........................ -- -- -- 1,627
Registration fees - Class R ........................ -- -- -- 7,858
Trustees' fees and expenses ........................ 21,391 21,391 8,618 21,391
Custodian fees ..................................... 29,554 11,512 5,278 8,562
Compliance service fees ............................ 22,616 5,388 1,196 5,190
Insurance expense .................................. 20,401 4,917 1,174 5,394
Advisory board fees and expenses ................... 6,146 6,146 4,480 6,146
Reports to shareholders ............................ 10,731 4,895 681 1,945
Other expenses ..................................... 14,721 6,719 3,115 10,638
------------- ------------- ------------- -------------
TOTAL EXPENSES ................................... 3,670,229 946,260 186,910 376,933
Less fees waived and/or expenses reimbursed
by the Adviser (Note 2):
Common ........................................... (33,160) (80,548) (24,642) (169,186)
Class I .......................................... -- -- -- (1,627)
------------- ------------- ------------- -------------
NET EXPENSES ..................................... 3,637,069 865,712 162,268 206,120
------------- ------------- ------------- -------------
NET INVESTMENT INCOME/(LOSS) ......................... (675,749) (197,932) 154,951 1,792,490
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAINS/
(LOSSES) ON INVESTMENTS
Net realized gains from security transactions ...... 6,419,904 195,655 5,878 277,837
Net realized gains from in-kind
redemptions (Note 1) ............................. 25,684,514 5,019,059 -- --
Net change in unrealized appreciation/
(depreciation) on investments .................... (18,517,281) (4,911,979) 1,070,533 (954,305)
------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED
GAINS/(LOSSES) ON INVESTMENTS ...................... 13,587,137 302,735 1,076,411 (676,468)
------------- ------------- ------------- -------------
NET INCREASE IN NET
ASSETS FROM OPERATIONS ............................. $ 12,911,388 $ 104,803 $ 1,231,362 $ 1,116,022
============= ============= ============= =============
(a) Except for the Ave Maria Rising Dividend Fund, which represents the period from the commencement of operations (May
2, 2005) through December 31, 2005.
See notes to financial statements.
27
AVE MARIA CATHOLIC VALUES FUND
STATEMENTS OF CHANGES IN NET ASSETS
=========================================================================================================
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2005 2004
- ---------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss ................................................. $ (675,749) $ (848,428)
Net realized gains from security transactions ....................... 6,419,904 11,939,746
Net realized gains from in-kind redemptions (Note 1) ................ 25,684,514 --
Net change in unrealized appreciation/(depreciation) on investments . (18,517,281) 25,552,126
------------- -------------
Net increase in net assets from operations ............................ 12,911,388 36,643,444
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains on investments .............................. (6,556,047) (11,172,077)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ........................................... 71,427,677 83,221,894
Reinvestment of distributions to shareholders ....................... 4,811,260 10,923,676
Payments for shares redeemed ........................................ (84,289,471) (16,502,334)
------------- -------------
Net increase/(decrease) in net assets from capital share transactions . (8,050,534) 77,643,236
------------- -------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS ............................... (1,695,193) 103,114,603
NET ASSETS
Beginning of year ................................................... 248,070,305 144,955,702
------------- -------------
End of year ......................................................... $ 246,375,112 $ 248,070,305
============= =============
UNDISTRIBUTED NET INVESTMENT INCOME ................................... $ -- $ --
============= =============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold ......................................................... 4,855,617 5,983,686
Shares issued in reinvestment of distributions to shareholders ...... 316,942 750,253
Shares redeemed ..................................................... (5,785,549) (1,133,670)
------------- -------------
Net increase/(decrease) in shares outstanding ....................... (612,990) 5,600,269
Shares outstanding, beginning of year ............................... 16,969,858 11,369,589
------------- -------------
Shares outstanding, end of year ..................................... 16,356,868 16,969,858
============= =============
See notes to financial statements.
28
AVE MARIA GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
=========================================================================================================
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2005 2004
- ---------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss ................................................. $ (197,932) $ (90,052)
Net realized gains from security transactions ....................... 195,655 88,987
Net realized gains from in-kind redemptions (Note 1) ................ 5,019,059 --
Net change in unrealized appreciation/(depreciation) on investments . (4,911,979) 7,175,089
------------- -------------
Net increase in net assets from operations ............................ 104,803 7,174,024
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains on investments .............................. (170,748) --
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ........................................... 33,341,319 30,047,463
Reinvestment of distributions to shareholders ....................... 145,383 --
Payments for shares redeemed ........................................ (21,433,585) (752,065)
------------- -------------
Net increase in net assets from capital share transactions ............ 12,053,117 29,295,398
------------- -------------
TOTAL INCREASE IN NET ASSETS .......................................... 11,987,172 36,469,422
NET ASSETS
Beginning of year ................................................... 51,574,180 15,104,758
------------- -------------
End of year ......................................................... $ 63,561,352 $ 51,574,180
============= =============
UNDISTRIBUTED NET INVESTMENT INCOME ................................... $ -- $ --
============= =============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold ......................................................... 2,275,713 2,271,166
Shares issued in reinvestment of distributions to shareholders ...... 9,634 --
Shares redeemed ..................................................... (1,488,490) (55,526)
------------- -------------
Net increase in shares outstanding .................................. 796,857 2,215,640
Shares outstanding, beginning of year ............................... 3,440,085 1,224,445
------------- -------------
Shares outstanding, end of year ..................................... 4,236,942 3,440,085
============= =============
See notes to financial statements.
29
AVE MARIA RISING DIVIDEND FUND
STATEMENT OF CHANGES IN NET ASSETS
========================================================================================
PERIOD
ENDED
DECEMBER 31,
2005(a)
- ----------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ................................................ $ 154,951
Net realized gains from security transactions ........................ 5,878
Net change in unrealized appreciation/(depreciation) on investments .. 1,070,533
------------
Net increase in net assets from operations ............................. 1,231,362
------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ........................................... (155,062)
From net realized gains on investments ............................... (5,912)
------------
Net decrease in net assets from distributions to shareholders .......... (160,974)
------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............................................ 24,214,318
Reinvestment of distributions to shareholders ........................ 115,204
Payments for shares redeemed ......................................... (157,299)
------------
Net increase in net assets from capital share transactions ............. 24,172,223
------------
TOTAL INCREASE IN NET ASSETS ........................................... 25,242,611
NET ASSETS
Beginning of period .................................................. --
------------
End of period ........................................................ $ 25,242,611
============
UNDISTRIBUTED NET INVESTMENT INCOME .................................... $ --
============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold .......................................................... 2,387,085
Shares issued in reinvestment of distributions to shareholders ....... 11,154
Shares redeemed ...................................................... (14,962)
------------
Net increase in shares outstanding ................................... 2,383,277
Shares outstanding, beginning of period .............................. --
------------
Shares outstanding, end of period .................................... 2,383,277
============
(a) Represents the period from the commencement of operations (May 2, 2005) through
December 31, 2005.
See notes to financial statements.
30
AVE MARIA BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
=========================================================================================================
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2005 2004
- ---------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ............................................... $ 1,792,490 $ 953,713
Net realized gains from security transactions ....................... 277,837 286,596
Net change in unrealized appreciation/(depreciation) on investments . (954,305) 625,970
------------- -------------
Net increase in net assets from operations ............................ 1,116,022 1,866,279
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class I ................................. (1,391,917) (860,906)
From net investment income, Class R ................................. (401,832) (89,172)
From net realized gains on investments, Class I ..................... (206,354) (223,509)
From net realized gains on investments, Class R ..................... (71,805) (44,699)
------------- -------------
Net decrease in net assets from distributions to shareholders ......... (2,071,908) (1,218,286)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
CLASS I
Proceeds from shares sold ........................................... 15,155,714 --
Reinvestment of distributions to shareholders ....................... 1,255,136 1,084,415
Payments for shares redeemed ........................................ (128) --
------------- -------------
Net increase in net assets from Class I capital share transactions .... 16,410,722 1,084,415
------------- -------------
CLASS R
Proceeds from shares sold ........................................... 12,343,959 5,057,877
Reinvestment of distributions to shareholders ....................... 437,119 114,761
Payments for shares redeemed ........................................ (2,230,831) (231,322)
------------- -------------
Net increase in net assets from Class R capital share transactions .... 10,550,247 4,941,316
------------- -------------
TOTAL INCREASE IN NET ASSETS .......................................... 26,005,083 6,673,724
NET ASSETS
Beginning of year ................................................... 38,948,588 32,274,864
------------- -------------
End of year ......................................................... $ 64,953,671 $ 38,948,588
============= =============
UNDISTRIBUTED NET INVESTMENT INCOME .................................. $ 1,957 $ 3,685
============= =============
SUMMARY OF CAPITAL SHARE ACTIVITY
CLASS I
Shares sold ......................................................... 1,487,398 --
Shares issued in reinvestment of distributions to shareholders ...... 123,286 106,183
Shares redeemed ..................................................... (13) --
------------- -------------
Net increase in shares outstanding .................................. 1,610,671 106,183
Shares outstanding, beginning of year ............................... 3,155,484 3,049,301
------------- -------------
Shares outstanding, end of year ..................................... 4,766,155 3,155,484
============= =============
CLASS R
Shares sold ......................................................... 1,215,210 494,261
Shares issued in reinvestment of distributions to shareholders ...... 43,058 11,216
Shares redeemed ..................................................... (219,911) (22,676)
------------- -------------
Net increase in shares outstanding .................................. 1,038,357 482,801
Shares outstanding, beginning of year ............................... 631,677 148,876
------------- -------------
Shares outstanding, end of year ..................................... 1,670,034 631,677
============= =============
See notes to financial statements.
31
AVE MARIA CATHOLIC VALUES FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
====================================================================================================================================
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2005 2004 2003 2002 2001(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period .......... $ 14.62 $ 12.75 $ 9.47 $ 10.50 $ 10.00
------------ ------------ ------------ ------------ ------------
Income/(loss) from investment operations:
Net investment income/(loss) .................. (0.04) (0.05) (0.03) (0.01) 0.02
Net realized and unrealized gains/(losses)
on investments .............................. 0.89 2.61 3.40 (1.02) 0.51
------------ ------------ ------------ ------------ ------------
Total from investment operations ................ 0.85 2.56 3.37 (1.03) 0.53
------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment income .................... -- -- -- -- (0.02)
From net realized gains on investments ........ (0.41) (0.69) (0.09) -- (0.01)
In excess of net realized gains
on investments .............................. -- -- -- -- (0.00)(b)
------------ ------------ ------------ ------------ ------------
Total distributions ............................. (0.41) (0.69) (0.09) -- (0.03)
------------ ------------ ------------ ------------ ------------
Net asset value at end of period ................ $ 15.06 $ 14.62 $ 12.75 $ 9.47 $ 10.50
============ ============ ============ ============ ============
Total return (c) ................................ 5.8% 20.1% 35.6% (9.8)% 5.3%(d)
============ ============ ============ ============ ============
Ratios/Supplementary Data:
Net assets at end of period (000's) ............. $ 246,375 $ 248,070 $ 144,956 $ 61,802 $ 23,953
============ ============ ============ ============ ============
Ratio of net expenses to average net assets (e) . 1.50% 1.50% 1.50% 1.50% 1.50%(f)
Ratio of net investment income/(loss)
to average net assets ......................... (0.28)% (0.44)% (0.28)% (0.14)% 0.39%(f)
Portfolio turnover rate ......................... 61% 34% 58% 86% 44%(f)
(a) Represents the period from the initial public offering (May 1, 2001)
through December 31, 2001.
(b) Amount rounds to less than $0.01 per share.
(c) Total return is a measure of the change in value of an investment in the
Fund over the periods covered, which assumes any dividends or capital gains
distributions are reinvested in shares of the Fund. Returns shown do not
reflect any reduction for sales charges, nor do they reflect the deduction
of taxes a shareholder would pay on Fund distributions or the redemption of
Fund shares.
(d) Not annualized.
(e) Absent investment advisory fees waived by the Adviser, the ratio of
expenses to average net assets would have been 1.51%, 1.52%, 1.56%, 1.69%,
and 2.09%(f) for the periods ended December 31, 2005, 2004, 2003, 2002, and
2001, respectively.
(f) Annualized.
See notes to financial statements.
32
AVE MARIA GROWTH FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
=================================================================================================
YEAR YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2005 2004 2003(a)
- -------------------------------------------------------------------------------------------------
Net asset value at beginning of period ............. $ 14.99 $ 12.34 $ 10.00
---------- ---------- ----------
Income/(loss) from investment operations:
Net investment loss .............................. (0.05) (0.03) (0.02)
Net realized and unrealized gains on investments . 0.10 2.68 2.36
---------- ---------- ----------
Total from investment operations ................... 0.05 2.65 2.34
---------- ---------- ----------
Less distributions:
From net investment income ....................... -- -- --
From net realized gains on investments ........... (0.04) -- --
---------- ---------- ----------
Total distributions ................................ (0.04) -- --
---------- ---------- ----------
Net asset value at end of period ................... $ 15.00 $ 14.99 $ 12.34
========== ========== ==========
Total return (b) ................................... 0.3% 21.5% 23.4%(c)
========== ========== ==========
Ratios/Supplementary Data:
Net assets at end of period (000's) ................ $ 63,561 $ 51,574 $ 15,105
========== ========== ==========
Ratio of net expenses to average net assets (d) .... 1.50% 1.50 1.49%(e)
Ratio of net investment loss to average net assets . (0.34)% (0.29)% (0.36)%(e)
Portfolio turnover rate ............................ 29% 3% 0%
(a) Represents the period from the initial public offering (May 1, 2003)
through December 31, 2003.
(b) Total return is a measure of the change in value of an investment in the
Fund over the periods covered, which assumes any dividends or capital gains
distributions are reinvested in shares of the Fund. Returns shown do not
reflect any reduction for sales charges, nor do they reflect the deduction
of taxes a shareholder would pay on Fund distributions or the redemption of
Fund shares.
(c) Not annualized.
(d) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 1.64%, 1.79% and 2.61%(e)
for the periods ended December 31, 2005, 2004 and 2003, respectively.
(e) Annualized
See notes to financial statements.
33
AVE MARIA RISING DIVIDEND FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
================================================================================
PERIOD
ENDED
DECEMBER 31,
2005(a)
- --------------------------------------------------------------------------------
Net asset value at beginning of period ........................ $ 10.00
-----------
Income from investment operations:
Net investment income ....................................... 0.08
Net realized and unrealized gains on investments ............ 0.59
-----------
Total from investment operations .............................. 0.67
-----------
Less distributions:
From net investment income .................................. (0.08)
From net realized gains on investments ...................... (0.00)(b)
-----------
Total distributions ........................................... (0.08)
-----------
Net asset value at end of period .............................. $ 10.59
===========
Total return (c) .............................................. 6.7%(d)
===========
Ratios/Supplementary Data:
Net assets at end of period (000's) ........................... $ 25,243
===========
Ratio of net expenses to average net assets (e) ............... 1.24%(f)
Ratio of net investment income to average net assets .......... 1.19%(f)
Portfolio turnover rate ....................................... 21%(f)
(a) Represents the period from the initial public offering (May 2, 2005)
through December 31, 2005.
(b) Amount rounds to less than $0.01 per share.
(c) Total return is a measure of the change in value of an investment in the
Fund over the period covered, which assumes any dividends or capital gains
distributions are reinvested in shares of the Fund. The return shown does
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(d) Not annualized.
(e) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 1.43%(f) for the period
ended December 31, 2005.
(f) Annualized.
See notes to financial statements.
34
AVE MARIA BOND FUND - CLASS I
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
=================================================================================================
YEAR YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2005 2004 2003(a)
- -------------------------------------------------------------------------------------------------
Net asset value at beginning of period ............. $ 10.29 $ 10.09 $ 10.00
---------- ---------- ----------
Income/(loss) from investment operations:
Net investment income ............................ 0.33 0.28 0.16
Net realized and unrealized gains/
(losses) on investments ........................ (0.15) 0.27 0.10
---------- ---------- ----------
Total from investment operations ................... 0.18 0.55 0.26
---------- ---------- ----------
Less distributions:
From net investment income ....................... (0.33) (0.28) (0.16)
From net realized gains on investments ........... (0.04) (0.07) (0.01)
---------- ---------- ----------
Total distributions ................................ (0.37) (0.35) (0.17)
---------- ---------- ----------
Net asset value at end of period ................... $ 10.10 $ 10.29 $ 10.09
========== ========== ==========
Total return (b) ................................... 1.8% 5.5% 2.6%(c)
========== ========== ==========
Ratios/Supplementary Data:
Net assets at end of period (000's) ................ $ 48,115 $ 32,458 $ 30,773
========== ========== ==========
Ratio of net expenses to average net assets (d) .... 0.30% 0.30% 0.30%(e)
Ratio of net investment income to average net assets 3.32% 2.77% 2.36%(e)
Portfolio turnover rate ............................ 22% 47% 50%(e)
(a) Represents the period from the initial public offering (May 1, 2003) through December
31, 2003.
(b) Total return is a measure of the change in value of an investment in the Fund over the
periods covered, which assumes any dividends or capital gains distributions are reinvested
in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder
would pay on Fund distributions or the redemption of Fund shares.
(c) Not annualized.
(d) Absent fee waivers and expense reimbursements by the Adviser, the ratio of expenses to
average net assets would have been 0.61%, 0.72% and 0.71%(e) for the periods ended
December 31, 2005, 2004 and 2003, respectively.
(e) Annualized.
See notes to financial statements.
35
AVE MARIA BOND FUND - CLASS R
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
=================================================================================================
YEAR YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2005 2004 2003(a)
- -------------------------------------------------------------------------------------------------
Net asset value at beginning of period ............. $ 10.28 $ 10.09 $ 10.00
---------- ---------- ----------
Income/(loss) from investment operations:
Net investment income ............................ 0.30 0.24 0.14
Net realized and unrealized gains/
(losses) on investments ........................ (0.16) 0.26 0.10
---------- ---------- ----------
Total from investment operations ................... 0.14 0.50 0.24
---------- ---------- ----------
Less distributions:
From net investment income ....................... (0.30) (0.24) (0.14)
From net realized gains on investments ........... (0.04) (0.07) (0.01)
---------- ---------- ----------
Total distributions ................................ (0.34) (0.31) (0.15)
---------- ---------- ----------
Net asset value at end of period ................... $ 10.08 $ 10.28 $ 10.09
========== ========== ==========
Total return (b) ................................... 1.4% 5.1% 2.4%(c)
========== ========== ==========
Ratios/Supplementary Data:
Net assets at end of period (000's) ................ $ 16,839 $ 6,491 $ 1,502
========== ========== ==========
Ratio of net expenses to average net assets (d) .... 0.61% 0.70% 0.69%(e)
Ratio of net investment income to average net assets 3.01% 2.37% 1.96%(e)
Portfolio turnover rate ............................ 22% 47% 50%(e)
(a) Represents the period from the initial public offering (May 1, 2003) through December
31, 2003.
(b) Total return is a measure of the change in value of an investment in the Fund over the
periods covered, which assumes any dividends or capital gains distributions are reinvested
in shares of the Fund. Returns shown do not reflect any reduction for sales charges, nor do
they reflect the deduction of taxes a shareholder would pay on Fund distributions or the
redemption of Fund shares.
(c) Not annualized.
(d) Absent fee waivers and expense reimbursements by the Adviser, the ratio of expenses to
average net assets would have been 0.92%, 1.31% and 2.49%(e) for the periods ended December
31, 2005, 2004 and 2003, respectively.
(e) Annualized.
See notes to financial statements.
36
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Ave Maria Catholic Values Fund, the Ave Maria Growth Fund, the Ave Maria
Rising Dividend Fund and the Ave Maria Bond Fund (the "Funds") are each a
diversified series of the Schwartz Investment Trust (the "Trust"), an open-end
management investment company registered under the Investment Company Act of
1940 and established as an Ohio business trust under a Declaration of Trust
dated August 31, 1992. The Ave Maria Catholic Values Fund commenced the public
offering of its shares on May 1, 2001. The public offering of shares of the Ave
Maria Growth Fund and the Ave Maria Bond Fund commenced on May 1, 2003. The Ave
Maria Rising Dividend Fund commenced the public offering of its shares on May 2,
2005. The Funds determine and make available for publication the net asset value
of each of its shares on a daily basis.
The investment objective of the Ave Maria Catholic Values Fund is to seek
long-term capital appreciation from equity investments in companies that do not
violate the core values and teachings of the Roman Catholic Church. The
investment objective of the Ave Maria Growth Fund is to seek long-term capital
appreciation, using the growth style, from equity investments in companies that
do not violate the core values and teachings of the Roman Catholic Church. The
investment objective of the Ave Maria Rising Dividend Fund is to provide
increasing dividend income over time, long-term growth of capital, and a
reasonable level of current income from investments in dividend-paying common
stocks of companies that do no violate the core values and teachings of the
Roman Catholic Church. The investment objective of the Ave Maria Bond Fund is to
seek preservation of principal with a reasonable level of current income. See
the Trust's Prospectus for information regarding the investment strategies of
each Fund.
The Ave Maria Bond Fund offers two classes of shares: Class I shares (sold
subject to a distribution fee of up to 0.10% of the average daily net assets
attributable to Class I shares) and Class R shares (sold subject to a contingent
deferred sales charge of 1.00% and a distribution fee of up to 0.25% of the
average daily net assets attributable to Class R shares). Each class of shares
represents an interest in the same assets of the Fund, has the same rights and
is identical in all material respects except that: (1) Class R bears the
expenses of higher distribution fees; (2) certain other class-specific expenses
will be borne solely by the class to which such expenses are attributable; (3)
Class I shares are not subject to the contingent deferred sales charge described
below; (4) each class has exclusive voting rights with respect to matters
relating to its own distribution arrangements; and (5) Class I shares require an
initial investment of $25 million. Investment income earned, realized capital
gains and losses, and unrealized appreciation and depreciation are allocated
daily to each class of shares based upon its proportionate share of total net
assets of the Fund. Class-specific expenses are charged directly to the class
incurring the expense. Common expenses which are not attributable to a specific
class are allocated daily to each class of shares based upon its proportionate
share of total net assets of the Fund.
37
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Shares of each Fund are sold at net asset value. To calculate the net asset
value, each 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 are equal to the net asset value per share,
except that shares of the Ave Maria Catholic Values Fund, the Ave Maria Growth
Fund and Class R shares of the Ave Maria Bond Fund may be subject to a 1%
contingent deferred sales charge (CDSC) if redeemed within one year of their
purchase. Shares are not subject to the CDSC if the shares are purchased either
directly from the Funds or through a broker-dealer or other financial
intermediary that does not receive any compensation in connection with such
purchases.
The following is a summary of significant accounting policies followed by the
Funds:
(a) VALUATION OF INVESTMENTS - Securities which are traded on stock
exchanges are valued at the closing sales price as of the close of the
regular session of trading on the New York Stock Exchange (NYSE) on the day
the securities are being valued, or, if not traded on a particular day, at
the closing bid price. Securities which are quoted by NASDAQ are valued at
the NASDAQ Official Closing Price. 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 the regular session of trading on the
NYSE on the day of valuation. Securities which are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market. 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. Short-term instruments (those with remaining maturities of 60
days or less) are valued at amortized cost, which approximates market
value.
(b) INCOME TAXES - It is each Fund's policy to comply with the special
provisions of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies. As provided therein, in any fiscal year in
which a Fund so qualifies and distributes at least 90% of its taxable
income, such 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.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each 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.
The tax character of distributable earnings at December 31, 2005 was as
follows:
----------------------------------------------------------------------------------------------------------
AVE MARIA AVE MARIA
CATHOLIC AVE MARIA RISING DIVIDEND AVE MARIA
VALUES FUND GROWTH FUND FUND BOND FUND
----------------------------------------------------------------------------------------------------------
Undistributed ordinary income............... $ -- $ -- $ -- $ 7,725
Undistributed long-term gains............... 183,566 -- -- --
Net unrealized appreciation/(depreciation).. 38,721,418 4,130,801 1,070,533 (36,138)
------------ ------------ ------------ -----------
Total distributable earnings/(deficit)...... $ 38,904,984 $ 4,130,801 $ 1,070,533 $ (28,413)
============ ============ ============ ===========
----------------------------------------------------------------------------------------------------------
38
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
The following information is based upon the federal income tax cost of the
investment securities as of December 31, 2005:
----------------------------------------------------------------------------------------------------------
AVE MARIA AVE MARIA
CATHOLIC AVE MARIA RISING DIVIDEND AVE MARIA
VALUES FUND GROWTH FUND FUND BOND FUND
----------------------------------------------------------------------------------------------------------
Gross unrealized appreciation............... $ 41,143,506 $ 6,191,872 $ 1,597,945 $ 1,025,681
Gross unrealized depreciation............... (2,422,088) (2,061,071) (527,412) (1,061,819)
------------ ------------ ------------ -----------
Net unrealized appreciation/(depreciation).. $ 38,721,418 $ 4,130,801 $ 1,070,533 $ (36,138)
============ ============ ============ ===========
Federal income tax cost..................... $208,784,020 $ 59,336,554 $ 24,341,250 $64,469,607
============ ============ ============ ===========
----------------------------------------------------------------------------------------------------------
The difference between the federal income tax cost of portfolio investments
and the financial statement cost for the Ave Maria Catholic Values 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. These "book/tax" differences are temporary
in nature and are due to the tax deferral of losses on wash sales. The
difference between the federal income tax cost of portfolio investments and
the financial statement cost for the Ave Maria Bond Fund is due to certain
timing differences in the recognition of the amortization of organizational
costs. These "book/tax" differences are also temporary in nature.
During the year ended December 31, 2005, the Ave Maria Catholic Values Fund
and the Ave Maria Growth Fund realized $25,684,514 and $5,019,059,
respectively, of net capital gains resulting from in-kind redemptions - in
which shareholders who redeemed Fund shares received securities held by the
Fund rather than cash. The Funds recognize a gain on in-kind redemptions to
the extent that the value of the distributed securities on the date of
redemption exceeds the cost of those securities. Such gains are not taxable
to the Funds and are not required to be distributed to shareholders.
For the year ended December 31, 2005, the Ave Maria Catholic Values Fund
reclassified $675,749 of its net investment loss against paid-in capital.
For the year ended December 31, 2005, the Ave Maria Growth Fund
reclassified $25,155 of its net investment loss against realized gains and
$172,777 against paid-in capital. In addition, the Ave Maria Growth Fund
reclassified $248 of distributions in excess of net realized gains from
security transactions against paid-in capital. Also, the Ave Maria Catholic
Values Fund and the Ave Maria Growth Fund reclassified its net capital
gains resulting from in-kind redemptions of $25,684,514 and $5,019,059,
respectively, against paid-in capital. For the year ended December 31,
2005, the Ave Maria Rising Dividend Fund reclassified $111 of
overdistributed net investment income and $34 of distributions in excess of
net realized gains from security transactions against paid-in capital. For
the year ended December 31, 2005, the Ave Maria Bond Fund reclassified $152
of distributions in excess of net realized gains from security transactions
against paid-in capital. These reclassifications are reflected on the
Statement of Assets and Liabilities. Such reclassifications, the result of
permanent differences between the financial statement and income tax
reporting requirements, have no effect on each Fund's net assets or net
asset value per share.
39
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
(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 securities sold are determined on a specific
identification basis. Discounts and premiums on fixed-income securities
purchased are amortized using the interest method.
(d) DIVIDENDS AND DISTRIBUTIONS - Dividends from net investment income, if
any, are declared and paid annually in December for the Ave Maria Catholic
Values Fund and the Ave Maria Growth Fund. Dividends from net investment
income, if any, are declared and paid quarterly for the Ave Maria Rising
Dividend Fund and are declared and paid monthly for the Ave Maria Bond
Fund. Each Fund expects to distribute any net realized capital gains
annually. Dividends and distributions to shareholders are recorded on the
ex-dividend date. The tax character of distributions paid during the years
ended December 31, 2005 and December 31, 2004 was as follows:
---------------------------------------------------------------------------
ORDINARY LONG-TERM TOTAL
PERIOD ENDED INCOME CAPITAL GAINS DISTRIBUTIONS
---------------------------------------------------------------------------
AVE MARIA CATHOLIC VALUES FUND:
December 31, 2005 ............ $ -- $ 6,556,047 $ 6,556,047
December 31, 2004 ............ $ -- $11,172,077 $11,172,077
AVE MARIA GROWTH FUND*:
December 31, 2005 ............ $ -- $ 170,748 $ 170,748
AVE MARIA RISING DIVIDEND FUND:
December 31, 2005 ............ $ 160,974 $ -- $ 160,974
AVE MARIA BOND FUND - CLASS I:
December 31, 2005 ............ $ 1,391,917 $ 206,354 $ 1,598,271
December 31, 2004 ............ $ 1,020,957 $ 63,458 $ 1,084,415
AVE MARIA BOND FUND - CLASS R:
December 31, 2005 ............ $ 401,832 $ 71,805 $ 473,637
December 31, 2004 ............ $ 121,180 $ 12,691 $ 133,871
---------------------------------------------------------------------------
* There were no distributions for the Ave Maria Growth Fund for the year
ended December 31, 2004.
(e) REPURCHASE AGREEMENTS - The Funds 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 may be deemed
to be loans by the Funds. It is each Fund's policy to take possession of
U.S. Government obligations as collateral under a repurchase agreement and,
on a daily basis, mark-to-market such obligations to ensure that their
value, including accrued interest, is at least equal to the amount to be
repaid to the Fund under the repurchase agreement.
(f) ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles in the United States of America
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.
40
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
(g) COMMON EXPENSES - Common expenses of the Trust are allocated among the
Funds of the Trust based on relative net assets of each Fund or the nature
of the services performed and the relative applicability to each Fund.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES
The President of the Trust is also the President and Chief Investment Officer of
Schwartz Investment Counsel, Inc. (the "Adviser"). Certain other officers of the
Trust are officers of the Adviser, or of Ultimus Fund Solutions, LLC
("Ultimus"), the administrative, accounting and transfer agent for the Funds or
of Ultimus Fund Distributors, LLC (the "Distributor"), the Funds' principal
underwriter.
Pursuant to an Investment Advisory Agreement between the Trust and the Adviser,
the Adviser is responsible for the management of each Fund and provides
investment advice along with the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Funds. For such
services, the Adviser receives from each of the Ave Maria Catholic Values Fund
and the Ave Maria Growth Fund a quarterly fee at the annual rate of 1.00% of its
average daily net assets. The Adviser receives from the Ave Maria Rising
Dividend Fund and the Ave Maria Bond Fund a quarterly fee at the annual rate of
0.75% and 0.30%, respectively, of its average daily net assets.
The Adviser has contractually agreed to waive a portion of its advisory fees or
reimburse a portion of operating expenses so that the net expenses of the Ave
Maria Catholic Values Fund do not exceed 1.50% until at least May 1, 2006. The
Adviser has contractually agreed to waive a portion of its advisory fees or
reimburse a portion of operating expenses so that the net expenses of the Ave
Maria Growth Fund do not exceed 1.50% and the net expenses of Class I and Class
R shares of the Ave Maria Bond Fund do not exceed 0.30% and 0.70%, respectively,
until at least May 1, 2007. The Adviser has contractually agreed to waive a
portion of its advisory fees or reimburse a portion of operating expenses so
that the net expenses of the Ave Maria Rising Dividend Fund do not exceed 1.25%,
until at least May 1, 2008. For the year ended December 31, 2005, the Adviser
waived investment advisory fees of $33,160 with respect to the Ave Maria
Catholic Values Fund; waived investment advisory fees of $80,548 with respect to
the Ave Maria Growth Fund; waived investment advisory fees of $24,642 with
respect to the Ave Maria Rising Dividend Fund; and waived all of its investment
advisory fees of $165,253 and reimbursed $5,560 of other operating expenses
(including $3,933 of common expenses and $1,627 of Class I expenses) with
respect to the Ave Maria Bond Fund.
Any fee waivers or expense reimbursements by the Adviser are subject to
repayment by the Funds for a period of three years from the time such waivers or
reimbursements occurred, provided the Funds are able to effect such repayment
and remain in compliance with the undertaking by the Adviser to limit expenses
of the Funds. As of December 31, 2005 the amount of fee waivers and expense
reimbursements available for reimbursement to the Adviser are as follows:
- --------------------------------------------------------------------------------
Ave Maria Catholic Values Fund ................................ $ 136,943
Ave Maria Growth Fund ......................................... $ 246,682
Ave Maria Rising Dividend Fund ................................ $ 24,642
Ave Maria Bond Fund ........................................... $ 415,914
- --------------------------------------------------------------------------------
41
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
As of December 31, 2005, the Adviser may recapture a portion of the above
amounts no later than the dates as stated below:
- --------------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2007 2008
- --------------------------------------------------------------------------------
Ave Maria Catholic Values Fund .. $ 66,849 $ 36,934 $ 33,160
Ave Maria Growth Fund ........... $ 72,903 $ 93,231 $ 80,548
Ave Maria Rising Dividend Fund .. $ -- $ -- $ 24,642
Ave Maria Bond Fund ............. $ 90,827 $ 154,274 $ 170,813
- --------------------------------------------------------------------------------
Pursuant to a Mutual Fund Services Agreement between the Funds and Ultimus,
Ultimus supplies regulatory and compliance services, calculates the daily net
asset value per share, maintains the financial books and records of the Funds,
maintains the records of each shareholder's account, and processes purchases and
redemptions of each Fund's shares. For the performance of these services, the
Ave Maria Bond Fund pays Ultimus a monthly fee at an annual rate of 0.10% of its
average daily net assets and each of the Ave Maria Catholic Values Fund, the Ave
Maria Growth Fund, and the Ave Maria Rising Dividend Fund pays Ultimus a monthly
fee at an annual rate of 0.15% of its average daily net assets. The fee payable
by each Fund is subject to a minimum monthly fee of $4,000. For the year ended
December 31, 2005, the Ave Maria Catholic Values Fund, the Ave Maria Growth
Fund, the Ave Maria Rising Dividend Fund and the Ave Maria Bond Fund paid
$363,821, $86,575, $32,000 and $57,197, respectively, to Ultimus for mutual fund
services.
Pursuant to a Distribution Agreement between the Funds' and the Distributor, the
Distributor serves as the Funds' exclusive agent for the distribution of its
shares. During the year ended December 31, 2005, the Distributor collected
$33,893, $20,888, and $4,099 in contingent deferred sales charges on redemptions
of shares of the Ave Maria Catholic Values Fund, the Ave Maria Growth Fund, and
Class R shares of the Ave Maria Bond Fund, respectively.
The Ave Maria Catholic Values Fund, the Ave Maria Growth Fund and the Ave Maria
Bond Fund have adopted a Shareholder Servicing Plan (the "Plan"), which allows
the Funds to make payments to financial organizations (including the Adviser and
other affiliates of each Fund) for providing account administration and
personnel and account maintenance services to Fund shareholders. The annual
service fee may not exceed an amount equal to 0.25% of each Fund's daily net
assets (except that the service fee is limited to 0.10% of the average net
assets of the Ave Maria Bond Fund allocable to Class I shares). During the year
ended December 31, 2005, the total expenses incurred pursuant to the Plan were
$606,177, $144,285, and $32,724 for the Ave Maria Catholic Values Fund, the Ave
Maria Growth Fund, and Class R shares of the Ave Maria Bond Fund, respectively.
No expenses were incurred pursuant to the Plan for Class I shares of the Ave
Maria Bond Fund.
42
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
3. INVESTMENT TRANSACTIONS
During the year ended December 31, 2005, cost of purchases and proceeds from
sales and maturities of investment securities, excluding short-term investments
and U.S. government securities, were as follows:
- --------------------------------------------------------------------------------------------------------------
AVE MARIA AVE MARIA
CATHOLIC AVE MARIA RISING DIVIDEND AVE MARIA
VALUES FUND GROWTH FUND FUND BOND FUND
- --------------------------------------------------------------------------------------------------------------
Purchases of investment securities............. $137,257,830 $ 27,108,333 $ 25,783,832 $ 10,816,160
============ ============ ============ ============
Proceeds from sales of investment securities... $156,504,559 $ 16,119,488 $ 2,666,268 $ 2,799,079
============ ============ ============ ============
- --------------------------------------------------------------------------------------------------------------
4. CONTINGENCIES AND COMMITMENTS
The Funds indemnify the Trust's officers and trustees for certain liabilities
that might arise from their performance of their duties to the Funds.
Additionally, in the normal course of business, the Funds enter into contracts
that contain a variety of representations and warranties and which provide
general indemnifications. The Funds' maximum exposure under these arrangements
is unknown, as this would involve future claims that may be made against the
Funds that have not yet occurred. However, based on experience, the Funds expect
the risk of loss to be remote.
43
AVE MARIA MUTUAL FUNDS
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Trustees
Ave Maria Catholic Values Fund, Ave Maria Growth Fund,
Ave Maria Rising Dividend Fund and Ave Maria Bond Fund
We have audited the accompanying statements of assets and liabilities of Ave
Maria Catholic Values Fund, Ave Maria Growth Fund, Ave Maria Rising Dividend
Fund and Ave Maria Bond Fund (the "Funds"), including the schedules of
investments, as of December 31, 2005, and the related statements of operations,
changes in net assets, and financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Funds' 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 the standards of the Public Company
Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Funds'
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of December 31, 2005, by
correspondence with the Funds' custodian and brokers. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Ave
Maria Catholic Values Fund, Ave Maria Growth Fund, Ave Maria Rising Dividend
Fund and Ave Maria Bond Fund as of December 31, 2005, and the results of their
operations, their changes in net assets, and their financial highlights for the
periods presented, in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
February 14, 2006
44
AVE MARIA MUTUAL FUNDS
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:
Position Held Length of
Trustee/Officer Address Age with the Trust Time Served
- -------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
* Gregory J. Schwartz 3707 W. Maple Road 64 Chairman of the Since 1992
Bloomfield Hills, MI Board/Trustee
* George P. Schwartz, CFA 3707 W. Maple Road 61 President/Trustee Since 1992
Bloomfield Hills, MI
INDEPENDENT TRUSTEES:
John E. Barnds 640 Lakeside Road 73 Trustee Since 2005
Birmingham, MI
Peter F. Barry 3707 W. Maple Road 78 Trustee Since 2004
Bloomfield Hills, MI
Donald J. Dawson, Jr. 333 W. Seventh Street 58 Trustee Since 1993
Royal Oak, MI
Fred A. Erb 800 Old North Woodward 82 Trustee Emeritus Since 1994
Birmingham, MI
John J. McHale 2014 Royal Fern Court 84 Trustee Emeritus Since 1993
Palm City, FL
Sidney F. McKenna 1173 Banbury Circle 83 Trustee Emeritus Since 1993
Bloomfield Hills, MI
EXECUTIVE OFFICERS:
* Richard L. Platte, Jr., CFA 3707 W. Maple Road 54 Vice President Since 1993
Bloomfield Hills, MI and Secretary
* Timothy S. Schwartz 3707 W. Maple Road 34 Treasurer Since 2000
Bloomfield Hills, MI
Cynthia M. Dickinson 34600 W. Eight Mile Road 46 Chief Compliance Since 2004
Farmington Hills, MI Officer
* Gregory J. Schwartz, George P. Schwartz, Richard L. Platte, Jr. and Timothy
S. Schwartz, as affiliated persons of Schwartz Investment Counsel, Inc.,
the Funds' 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.
Each Trustee oversees five portfolios of the Trust: the Ave Maria Catholic
Values Fund, the Ave Maria Growth Fund, the Ave Maria Rising Dividend Fund, the
Ave Maria Bond 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 Gregory J. Schwartz & Co., Inc., a registered
broker-dealer.
45
AVE MARIA MUTUAL FUNDS
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
(UNAUDITED) (CONTINUED)
================================================================================
George P. Schwartz, CFA is President and Chief Investment Officer of Schwartz
Investment Counsel, Inc. and is the co-portfolio manager of the Ave Maria
Catholic Values Fund and the Ave Maria Rising Dividend Fund.
John E. Barnds is retired First Vice President of National Bank of Detroit.
Peter F. Barry is retired President of Cadillac Rubber & Plastics Company (a
manufacturer of rubber and plastics components).
Donald J. Dawson, Jr. is Chairman of Payroll 1, Inc. (a payroll processing
company).
Fred A. Erb is Chairman and Chief Executive Officer of Edgemere Enterprises,
Inc. (a real estate investment, development and management company).
John J. McHale is retired 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 and Secretary of
Schwartz Investment Counsel, Inc. and is the portfolio manager of the Ave Maria
Bond Fund and the co-portfolio manager of the Ave Maria Rising Dividend Fund.
Timothy S. Schwartz is Vice President and Treasurer of Schwartz Investment
Counsel, Inc.
Cynthia M. Dickinson is President of CMD Consulting, LLC (business consultant).
46
AVE MARIA MUTUAL FUNDS
CATHOLIC ADVISORY BOARD (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:
Length of
Member Address Age Time Served
- -----------------------------------------------------------------------------------------------------
Bowie K. Kuhn 136 Teal Pointe Lane, Ponta Vedra Beach, FL 79 Since 2001
Lawrence Kudlow One Dag Hammarskjold Plaza, 26th Floor, New York, NY 58 Since 2005
Thomas S. Monaghan One Ave Maria Drive, Ann Arbor, MI 69 Since 2001
Michael Novak 1150 17th Street, NW, Suite 1100, Washington, DC 72 Since 2001
Paul R. Roney One Ave Maria Drive, Ann Arbor, MI 48 Since 2001
Phyllis Schlafly 7800 Bonhomme, St. Louis, MO 81 Since 2001
Bowie K. Kuhn is President of The Kent Group (business, sports and financial
consultant), and is the former Commissioner of Major League Baseball.
Lawrence Kudlow is the host of CNBC's "Kudlow & Company" and a nationally
syndicated columnist.
Thomas S. Monaghan is Chairman of the Ave Maria Foundation (a non-profit
foundation supporting Roman Catholic organizations) and Chairman of Domino's
Farms Corporation. 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 Schlafly is an author, columnist and radio commentator. She is President
of Eagle Forum (an organization promoting conservative and pro-family values).
Additional information regarding the Funds' Trustees, executive officers and
Catholic Advisory Board members may be found in the Funds' Statement of
Additional Information and is available without charge upon request by calling
(888) 726-9331.
47
AVE MARIA MUTUAL FUNDS
FEDERAL TAX INFORMATION (UNAUDITED)
================================================================================
In accordance with federal tax requirements, the following provides shareholders
with information concerning distributions from net realized gains made by the
Ave Maria Catholic Values Fund, the Ave Maria Growth Fund, the Ave Maria Rising
Dividend Fund and the Ave Maria Bond Fund and certain ordinary income dividends
paid by the Ave Maria Rising Dividend Fund and the Ave Maria Bond Fund during
the fiscal year ended December 31, 2005. On December 29, 2005, the Ave Maria
Catholic Values Fund declared and paid a long-term capital gain distribution of
$0.4093 per share; the Ave Maria Growth Fund declared and paid a long-term
capital gain distribution of $0.0405 per share; the Ave Maria Rising Dividend
Fund declared and paid a short-term capital gain distribution of $0.0025 per
share; and the Ave Maria Bond Fund declared and paid a long-term capital gain
distribution of $0.0433 per share. Periodically throughout the year, the Ave
Maria Rising Dividend Fund paid ordinary income dividends totaling $0.0767 per
share. Periodically throughout the year, the Ave Maria Bond Fund paid ordinary
income dividends totaling $0.3296 per share for Class I shares and $0.2973 per
share for Class R shares. As provided by the Jobs and Growth Tax Relief
Reconciliation Act of 2003, 100% of the long-term capital gain distribution of
$0.4093, $0.0405, and $0.0433 per share for the Ave Maria Catholic Values Fund,
the Ave Maria Growth Fund, and the Ave Maria Bond Fund, respectively, and a
percentage (100% and 18.9%) of the ordinary income dividends paid for the Ave
Maria Rising Dividend Fund and the Ave Maria Bond Fund, respectively, may be
subject to a maximum tax rate of 15%. Early in 2006, as required by federal
regulations, shareholders received notification of their portion of the Funds'
taxable gain distribution, if any, paid during the 2005 calendar year.
48
AVE MARIA MUTUAL FUNDS
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
================================================================================
We believe it is important for you to understand the impact of costs on your
investment. All mutual funds have operating expenses. As a shareholder of the
Funds, you incur two types of costs: (1) transaction costs, possibly including
contingent deferred sales charges; and (2) ongoing costs, including management
fees and other Fund expenses. The following examples are intended to help you
understand your ongoing costs (in dollars) of investing in the Funds and to
compare these costs with the ongoing costs of investing in other mutual funds.
A mutual fund's expenses are expressed as a percentage of its average net
assets. This figure is known as the expense ratio. The expenses in the tables
below are based on an investment of $1,000 made at the beginning of the most
recent semi-annual period (July 1, 2005) and held until the end of the period
(December 31, 2005).
The tables that follow illustrate each Fund's costs in two ways:
ACTUAL FUND RETURN - This section helps you to estimate the actual expenses that
you paid over the period. The "Ending Account Value" shown is derived from each
Fund's actual return, and the third column shows the dollar amount of operating
expenses that would have been paid by an investor who started with $1,000 in the
Funds. You may use the information here, together with the amount you invested,
to estimate the expenses that you paid over the period.
To do so, 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
given for the Funds under the heading "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN - This section is intended to help you compare the Funds'
costs with those of other mutual funds. It assumes that each Fund had an annual
return of 5% before expenses during the period shown, but that the expense ratio
is unchanged. In this case, because the return used is not the Funds' actual
returns, the results do not apply to your investment. The example is useful in
making comparisons because the Securities and Exchange Commission requires all
mutual funds to calculate expenses based on a 5% return. You can assess each
Fund's costs by comparing this hypothetical example with the hypothetical
examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you
compare ongoing costs only. The Funds do not charge a front-end sales load.
However, a contingent deferred sales charge of 1% may apply if you redeem your
shares within one year of their purchase.
The calculations assume no shares were bought or sold during the period. Your
actual costs may have been higher or lower, depending on the amount of your
investment and the timing of any purchases or redemptions.
More information about the Funds' expenses, including historical annual expense
ratios, can be found in this report. For additional information on operating
expenses and other shareholder costs, please refer to the Funds' prospectus.
49
AVE MARIA MUTUAL FUNDS
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
(CONTINUED)
================================================================================
AVE MARIA CATHOLIC VALUES FUND
- --------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2005 Dec. 31, 2005 During Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,044.30 $7.73
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,017.64 $7.63
- --------------------------------------------------------------------------------
* Expenses are equal to the Ave Maria Catholic Values Fund's annualized
expense ratio of 1.50% for the period, multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half year
period).
AVE MARIA GROWTH FUND
- --------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2005 Dec. 31, 2005 During Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,061.40 $7.79
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,017.64 $7.63
- --------------------------------------------------------------------------------
* Expenses are equal to the Ave Maria Growth Fund's annualized expense ratio
of 1.50% for the period, multiplied by the average account value over the
period, multiplied by 184/365 (to reflect the one-half year period).
AVE MARIA RISING DIVIDEND FUND
- --------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2005 Dec. 31, 2005 During Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,046.20 $6.45
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,018.90 $6.36
- --------------------------------------------------------------------------------
* Expenses are equal to the Ave Maria Rising Dividend Fund's annualized
expense ratio of 1.25% for the period, multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half year
period).
50
AVE MARIA MUTUAL FUNDS
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
(CONTINUED)
================================================================================
AVE MARIA BOND FUND - CLASS I
- --------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2005 Dec. 31, 2005 During Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,006.70 $1.52
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,023.69 $1.53
- --------------------------------------------------------------------------------
* Expenses are equal to the Ave Maria Bond Fund - Class I's annualized
expense ratio of 0.30% for the period, multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half year
period).
AVE MARIA BOND FUND - CLASS R
- --------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2005 Dec. 31, 2005 During Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,004.20 $3.03
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,022.18 $3.06
- --------------------------------------------------------------------------------
* Expenses are equal to the Ave Maria Bond Fund - Class R's annualized
expense ratio of 0.60% for the period, multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half year
period).
OTHER INFORMATION (UNAUDITED)
================================================================================
A description of the policies and procedures the Funds use to determine how to
vote proxies relating to portfolio securities is available without charge upon
request by calling toll-free (888) 726-9331, or on the Securities and Exchange
Commission's ("SEC") website at http://www.sec.gov. Information regarding how
the Funds voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is also available without charge upon request by
calling toll-free (888) 726-9331, or on the SEC's website http://www.sec.gov.
The Schwartz Investment Trust files a complete listing of portfolio holdings for
each of the Funds with the SEC as of the first and third quarters of each fiscal
year on Form N-Q. The filings are available free of charge, upon request, by
calling (888) 726-9331. Furthermore, you may obtain a copy of the filing on the
SEC's website at http://www.sec.gov. The Trust's Forms N-Q may also be reviewed
and copied at the SEC's Public Reference Room in Washington, DC, and information
on the operation of the Public Reference Room may be obtained by calling (800)
SEC-0330.
51
[GRAPHIC OMITTED]
AVE MARIA
MUTUAL
FUNDS
Ave Maria Catholic Values Fund
Ave Maria Growth Fund
Ave Maria Rising Dividend Fund
Ave Maria Bond Fund
AVE MARIA MUTUAL FUNDS
series of
Schwartz Investment Trust
3707 W. Maple Road
Suite 100
Bloomfield Hills, Michigan 48301
BOARD OF TRUSTEES
Gregory J. Schwartz, Chairman
George P. Schwartz, CFA
John E. Barnds
Peter F. Barry
Donald J. Dawson, Jr.
Fred A. Erb, Emeritus
John J. McHale, Emeritus
Sidney F. McKenna, Emeritus
OFFICERS
George P. Schwartz, CFA, President
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 M. Bridge, CPA, Assistant Treasurer
Craig J. Hunt, Assistant Vice President
Cynthia M. Dickinson, Chief Compliance Officer
CATHOLIC ADVISORY BOARD
Bowie K. Kuhn, Chairman
Lawrence Kudlow
Thomas S. Monaghan
Michael Novak
Paul R. Roney
Phyllis Schlafly
INVESTMENT ADVISER
SCHWARTZ INVESTMENT COUNSEL, INC.
3707 W. Maple Road
Suite 100
Bloomfield Hills, Michigan 48301
DISTRIBUTOR
ULTIMUS FUND DISTRIBUTORS, LLC
225 Pictoria Drive, Suite 450
Cincinnati, Ohio 45246
CUSTODIAN
US BANK, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
ADMINISTRATOR
ULTIMUS FUND SOLUTIONS, LLC
P.O. Box 46707
Cincinnati, Ohio 45246
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
111 S. Wacker Drive
Chicago, Illinois 60606
LEGAL COUNSEL
SULLIVAN & WORCESTER LLP
1666 K Street, NW, Suite 700
Washington, DC 20006
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these individuals
are employed by the registrant or a third party. Pursuant to Item 12(a)(1), a
copy of registrant's code of ethics is filed as an exhibit to this Form N-CSR.
During the period covered by this report, the code of ethics has not been
amended, and the registrant has not granted any waivers, including implicit
waivers, from the provisions of the code of ethics.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of trustees has determined that the registrant has at
least one audit committee financial expert serving on its audit committee. The
name of the audit committee financial expert is Peter F. Barry. Mr. Barry is
"independent" for purposes of this Item.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES. The aggregate fees billed for professional services
rendered by the principal accountant for the audit of the registrant's
annual financial statements or for services that are normally provided
by the accountant in connection with statutory and regulatory filings
or engagements were $75,000 and $66,000 with respect to the
registrant's fiscal years ended December 31, 2005 and 2004,
respectively.
(b) AUDIT-RELATED FEES. No fees were billed in either of the last two
fiscal years for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item.
(c) TAX FEES. The aggregate fees billed for professional services rendered
by the principal accountant for tax compliance, tax advice, and tax
planning were $8,000 and $6,000 with respect to the registrant's
fiscal years ended December 31, 2005 and 2004, respectively. The
services comprising these fees are the preparation of the registrant's
federal income and excise tax returns.
(d) ALL OTHER FEES. No fees were billed in either of the last two fiscal
years for products and services provided by the principal accountant,
other than the services reported in paragraphs (a) through (c) of this
Item.
(e)(1) The audit committee has not adopted pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of
Regulation S-X.
(e)(2) None of the services described in paragraph (b) through (d) of
this Item were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Less than 50% of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year were attributed to work performed by persons other
than the principal accountant's full-time, permanent employees.
(g) During the fiscal years ended December 31, 2005 and 2004, aggregate
non-audit fees of $8,000 and $6,000, respectively, were billed by the
registrant's accountant for services rendered to the registrant. No
non-audit fees were billed in either of the last two fiscal years by
the registrant's accountant for services rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant.
(h) The principal accountant has not provided any non-audit services to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with
or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable [schedule filed with Item 1]
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.
The registrant's Committee of Independent Trustees shall review shareholder
recommendations to fill vacancies on the registrant's board of trustees if such
recommendations are submitted in writing, addressed to the Committee at the
registrant's offices and meet any minimum qualifications adopted by the
Committee. The Committee may adopt, by resolution, a policy regarding its
procedures for considering candidates for the board of trustees, including any
recommended by shareholders.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940) as of a date within 90 days of the filing date of this report, the
registrant's principal executive officer and principal financial officer have
concluded that such disclosure controls and procedures are reasonably designed
and are operating effectively to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to them
by others within those entities, particularly during the period in which this
report is being prepared, and that the information required in filings on Form
N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the second fiscal quarter of the period covered by this
report that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) 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: Attached hereto
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2(a)): Attached hereto
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act (17 CFR 270.23c-1) sent or given during the period covered by the report
by or on behalf of the registrant to 10 or more persons: Not applicable
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)): Attached hereto
Exhibit 99.CODE ETH Code of Ethics
Exhibit 99.CERT Certifications required by Rule 30a-2(a) under the Act
Exhibit 99.906CERT Certifications required by Rule 30a-2(b) under the Act
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 March 6, 2006
---------------------------------------
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 March 6, 2006
---------------------------------------
By (Signature and Title)* /s/ Timothy S. Schwartz
-------------------------------------------
Timothy S. Schwartz, Treasurer
Date March 6, 2006
---------------------------------------
* Print the name and title of each signing officer under his or her signature.