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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07148
---------------------------------------------
Schwartz Investment Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
3707 West Maple Road Bloomfield Hills, Michigan 48301
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
George P. Schwartz
Schwartz Investment Counsel, Inc. 3707 W. Maple Road Bloomfield Hills, MI 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, 2007
------------------------------------------------------
Date of reporting period: December 31, 2007
------------------------------------------------------
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
. . . . . . . . . . . . . . . . .
VALUE INVESTING SINCE 1984
[GRAPHIC OMITTED]
ANNUAL REPORT
. . . . . . . . . . . . . . . . .
DECEMBER 31, 2007
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 Shareholder,
The Schwartz Value Fund (the "Fund") had a poor year in 2007, down 11.1%. Many
of the stocks in the Fund which performed poorly in 2007 were financials,
retail, and consumer-related. In managing the portfolio, our investment team
underestimated the effects of the credit crisis on several high quality
portfolio holdings in the consumer area. Stocks which negatively affected
performance in 2007 included Craftmade International, Inc. (housewares), Chico's
FAS, Inc. (retail), and Citizens Republic Bancorp, Inc. (banking). We have
reassessed each company in the portfolio and re-examined each company's
fundamentals, and adjusted our strategies in response to the evolving economic
environment. Stocks that contributed positively to the Fund's performance
included Waters Corporation (scientific instruments), Kinetic Concepts, Inc.
(medical devices), Gentex Corporation (auto equipment), and Berkshire Hathaway,
Inc. (insurance).
Annual Rate of Return
For 1 year ended 12-31-07
--------------------------------------
SCHWARTZ VALUE FUND -11.1%
Russell 2000 Value Index - 9.8%
Russell 2000 Index - 1.6%
NASDAQ Composite Index (a) + 9.8%
S&P 500 Index + 5.5%
Several portfolio holdings are now deeply depressed. Even though a recession
seems to be unfolding, these distressed securities are selling at prices that in
our opinion are significantly below their intrinsic values. Also, it's important
to remember that recessions don't last forever. They are followed by an economic
recovery, just like bear markets are always followed by bull markets.
In our view, the sell-off in many of the small-cap value stocks has produced
extraordinarily cheap prices - a value investor's dream. During such periods,
these orphan stocks represent opportunities for long-term investors, not unlike
those
1
opportunities found in the bear markets of 1987, 1990, and 2002. While past
performance should never be considered to be indicative of results in future
periods, it is interesting to note that in the years following each of those
down years, the Schwartz Value Fund produced returns of 23.1%, 32.0%, and 39.3%
respectively.
I personally purchased additional shares of the Schwartz Value Fund recently.
From the currently depressed levels of many of our stocks, I believe that a good
year in 2008 could be readily achievable.
Best regards,
SCHWARTZ VALUE FUND
/s/ George P. Schwartz
George P. Schwartz, CFA
President
February 15, 2008
(a) Excluding dividends.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT RESULTS AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER
THAN THE PERFORMANCE DATA QUOTED. PERFORMANCE DATA, CURRENT TO THE MOST RECENT
MONTH END, ARE AVAILABLE BY CALLING THE FUND AT 1-888-726-0753.
An investor should consider the investment objectives, risks, charges and
expenses of the Fund carefully before investing. The Fund's prospectus contains
this and other important information. To obtain a copy of the prospectus please
visit our website at www.schwartzvaluefund.com or call 1-888-726-0753 and a copy
will be sent to you free of charge. Please read the prospectus carefully before
you invest. The Schwartz Value Fund is distributed by Ultimus Fund Distributors,
LLC.
The Letter to Shareholders seeks to describe some of the adviser's current
opinions and views of the financial markets. Although the adviser believes it
has a reasonable basis for any opinions or views expressed, actual results may
differ, sometimes significantly so, from those expected or expressed.
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
[LINE GRAPH OMITTED]
RUSSELL 2000 INDEX SCHWARTZ VALUE FUND
------------------ -------------------
DATE VALUE DATE VALUE
---- ----- ---- -----
12/31/97 $ 10,000 12/31/97 $ 10,000
12/31/98 9,745 12/31/98 8,962
12/31/99 11,817 12/31/99 8,742
12/31/00 11,460 12/31/00 9,553
12/31/01 11,745 12/31/01 12,236
12/31/02 9,340 12/31/02 10,412
12/31/03 13,753 12/31/03 14,502
12/31/04 16,274 12/31/04 17,779
12/31/05 17,014 12/31/05 18,460
12/31/06 20,140 12/31/06 21,098
12/31/07 19,824 12/31/07 18,760
Past performance is not predictive of future performance.
- --------------------------------------------------------------------------------
------------------------------------------
Schwartz Value Fund
Average Annual Total Returns (a)
(for periods ended December 31, 2007)
1 Year 5 Years 10 Years
------ ------- --------
-11.08% 12.50% 6.49%
------------------------------------------
(a) The returns shown do not reflect the deduction of taxes a shareholder
would pay on Fund distributions or the redemption of Fund shares.
THIS REPORT IS FOR THE INFORMATION OF SHAREHOLDERS, BUT IT MAY ALSO BE USED AS
SALES LITERATURE WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS, WHICH
GIVES DETAILS ABOUT CHARGES, EXPENSES, INVESTMENT OBJECTIVES AND OPERATING
POLICIES OF THE FUND. THE FUND IS 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
VALUE 2000 VALUE GROWTH NASDAQ LINE S&P 500
FUND(a) INDEX INDEX INDEX COMPOSITE(b) COMPOSITE(b) INDEX
- ----------------------------------------------------------------------------------------------------
1984 11.1% -7.3% 2.3% -15.8% -11.2% -8.4% 6.1%
1985 21.7% 31.1% 31.0% 31.0% 31.4% 20.7% 31.6%
1986 16.4% 5.7% 7.4% 3.6% 7.4% 5.0% 18.7%
1987 -0.6% -8.8% -7.1% -10.5% -5.3% -10.6% 5.3%
1988 23.1% 24.9% 29.5% 20.4% 15.4% 15.4% 16.8%
1989 8.3% 16.2% 12.4% 20.2% 19.3% 11.2% 31.6%
1990 -5.3% -19.5% -21.8% -17.4% -17.8% -24.3% -3.2%
1991 32.0% 46.1% 41.7% 51.2% 56.8% 27.2% 30.4%
1992 22.7% 18.4% 29.1% 7.8% 15.5% 7.0% 7.6%
1993 20.5% 18.9% 23.8% 13.4% 14.7% 10.7% 10.1%
1994 -6.8% -1.8% -1.6% -2.4% -3.2% -6.0% 1.3%
1995 16.9% 28.4% 25.8% 31.0% 39.9% 19.3% 37.5%
1996 18.3% 16.5% 21.4% 11.3% 22.7% 13.4% 22.9%
1997 28.0% 22.4% 31.8% 13.0% 21.6% 21.1% 33.4%
1998 -10.4% -2.5% -6.5% 1.2% 39.6% -3.8% 28.6%
1999 -2.5% 21.3% -1.5% 43.1% 85.6% -1.4% 21.0%
2000 9.3% -3.0% 22.8% -22.4% -39.3% -8.7% -9.1%
2001 28.1% 2.5% 14.0% -9.2% -21.0% -6.1% -11.9%
2002 -14.9% -20.5% -11.4% -30.3% -31.5% -28.6% -22.1%
2003 39.3% 47.3% 46.0% 48.5% 50.0% 37.4% 28.7%
2004 22.6% 18.3% 22.3% 14.3% 8.6% 11.5% 10.9%
2005 3.8% 4.6% 4.7% 4.2% 1.4% 2.0% 4.9%
2006 14.3% 18.4% 23.5% 13.4% 9.5% 11.0% 15.8%
2007 -11.1% -1.6% -9.8% 7.1% 9.8% -3.8% 5.5%
AVERAGE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31, 2007 (UNAUDITED)
================================================================================
RUSSELL RUSSELL
SCHWARTZ RUSSELL 2000 2000 VALUE
VALUE 2000 VALUE GROWTH NASDAQ LINE S&P 500
FUND(a) INDEX INDEX INDEX COMPOSITE(b) COMPOSITE(b) INDEX
- ----------------------------------------------------------------------------------------------------
3 Years 1.8% 6.8% 5.3% 8.1% 6.8% 2.9% 8.6%
5 Years 12.5% 16.3% 15.8% 16.5% 14.7% 10.8% 12.8%
10 Years 6.5% 7.1% 9.1% 4.3% 5.4% -0.3% 5.9%
24 Years 10.9% 10.1% 12.3% 7.4% 9.8% 3.5% 12.3%
(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, 2007 (UNAUDITED)
================================================================================
% OF
SHARES COMPANY MARKET VALUE NET ASSETS
- --------------------------------------------------------------------------------
165,000 Citizens Republic Bancorp, Inc............ $ 2,394,150 4.4%
15 Berkshire Hathaway, Inc. - Class A........ 2,124,000 3.9%
60,000 Zebra Technologies Corporation - Class A.. 2,082,000 3.8%
200,000 Meadowbrook Insurance Group, Inc. ........ 1,882,000 3.4%
35,000 Kinetic Concepts, Inc..................... 1,874,600 3.4%
182,700 Unico American Corporation................ 1,872,675 3.4%
237 AmTrust Financial Corporation............. 1,659,000 3.0%
20,000 Waters Corporation........................ 1,581,400 2.9%
75,000 RPM International, Inc.................... 1,522,500 2.8%
85,000 ION Geophysical Corporation............... 1,341,300 2.4%
ASSET ALLOCATION (UNAUDITED)
================================================================================
% OF
SECTOR NET ASSETS
- --------------------------------------------------------------------------------
Aerospace & Defense ................................................ 1.5%
Apparel & Textiles ................................................. 1.1%
Building Materials & Construction .................................. 1.0%
Business Services .................................................. 2.8%
Consumer - Durables ................................................ 5.8%
Consumer - Nondurables ............................................. 5.9%
Consumer - Retail .................................................. 2.9%
Education .......................................................... 0.7%
Energy & Mining .................................................... 4.3%
Finance ............................................................ 27.1%
Healthcare ......................................................... 10.6%
Industrial Products & Services ..................................... 15.5%
Real Estate ........................................................ 1.8%
Technology ......................................................... 12.2%
Transportation ..................................................... 1.4%
Exchange-Traded Funds .............................................. 1.1%
Cash Equivalents, Other Assets and Liabilities ..................... 4.3%
------
100.0%
======
5
SCHWARTZ VALUE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2007
================================================================================
SHARES COMMON STOCKS -- 94.6% MARKET VALUE
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 1.5%
2,500 General Dynamics Corporation ................... $ 222,475
10,000 Harris Corporation ............................. 626,800
------------
849,275
------------
APPAREL & TEXTILES -- 1.1%
7,500 Columbia Sportswear Company .................... 330,675
52,550 Tefron Ltd. * .................................. 259,597
------------
590,272
------------
BUILDING MATERIALS & CONSTRUCTION -- 1.0%
25,000 Pulte Homes, Inc. .............................. 263,500
10,000 Simpson Manufacturing Company, Inc. ............ 265,900
------------
529,400
------------
BUSINESS SERVICES -- 2.8%
4,000 Courier Corporation ............................ 132,040
12,500 Neogen Corporation * ........................... 331,875
10,000 Robert Half International, Inc. ................ 270,400
82,000 Superior Uniform Group, Inc. ................... 799,500
------------
1,533,815
------------
CONSUMER -- DURABLES -- 5.8%
114,000 Craftmade International, Inc. .................. 940,500
10,000 HNI Corporation ................................ 350,600
110,000 La-Z-Boy Incorporated .......................... 872,300
25,000 Select Comfort Corporation * ................... 175,250
75,000 Smith & Wesson Holding Corporation * ........... 457,500
10,000 Thor Industries, Inc. .......................... 380,100
------------
3,176,250
------------
CONSUMER -- NONDURABLES -- 5.9%
10,000 Acme United Corporation ........................ 143,500
4,000 Fortune Brands, Inc. ........................... 289,440
150,000 Hartmarx Corporation * ......................... 511,500
15,000 K-Swiss, Inc. - Class A ........................ 271,500
50,000 Lifetime Brands, Inc. .......................... 649,000
5,000 Sherwin-Williams Company (The) ................. 290,200
40,000 Weyco Group, Inc. .............................. 1,100,000
------------
3,255,140
------------
CONSUMER -- RETAIL -- 2.9%
100,000 Chico's FAS, Inc. * ............................ 903,000
75,000 Sally Beauty Holdings, Inc. * .................. 678,750
------------
1,581,750
------------
EDUCATION -- 0.7%
15,000 Nobel Learning Communities, Inc. * ............. 215,100
1,000 Strayer Education, Inc. ........................ 170,580
------------
385,680
------------
6
SCHWARTZ VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 94.6% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
ENERGY & MINING -- 4.3%
10,000 EnCana Corporation ............................. $ 679,600
85,000 ION Geophysical Corporation * .................. 1,341,300
26,400 TXCO Resources, Inc. * ......................... 318,384
------------
2,339,284
------------
FINANCE -- BANKS & THRIFTS -- 13.2%
237 AmTrust Financial Corporation .................. 1,659,000
7,000 Boston Private Financial Holdings, Inc. ........ 189,560
26,800 Century Bancorp, Inc. - Class A ................ 540,556
165,000 Citizens Republic Bancorp, Inc. ................ 2,394,150
10,000 Clarkston Financial Corporation * .............. 80,000
20,081 FNBH Bancorp, Inc. ............................. 271,094
25,000 Hudson City Bancorp, Inc. ...................... 375,500
40,000 NewAlliance Bancshares, Inc. ................... 460,800
28,567 Oxford Bank Corporation ........................ 747,027
10,000 People's United Financial, Inc. ................ 178,000
5,000 PrivateBancorp, Inc. ........................... 163,250
20,000 Westfield Financial, Inc. ...................... 194,000
------------
7,252,937
------------
FINANCE -- INSURANCE -- 12.7%
5,000 Arthur J. Gallagher & Co. ...................... 120,950
15 Berkshire Hathaway, Inc. - Class A * ........... 2,124,000
36,500 Fremont Michigan InsuraCorp, Inc. - Class A * .. 700,800
500 Markel Corporation * ........................... 245,550
200,000 Meadowbrook Insurance Group, Inc. * ............ 1,882,000
182,700 Unico American Corporation * ................... 1,872,675
------------
6,945,975
------------
FINANCE -- SERVICES -- 1.2%
10,000 AmeriCredit Corporation * ...................... 127,900
20,000 Countrywide Financial Corporation .............. 178,800
10,000 First Horizon National Corporation ............. 181,500
5,000 Moody's Corporation ............................ 178,500
------------
666,700
------------
HEALTHCARE -- 10.6%
20,000 Computer Programs & Systems, Inc. .............. 454,800
190,949 Continucare Corporation * ...................... 515,562
35,000 Kinetic Concepts, Inc. * ....................... 1,874,600
15,000 MedQuist, Inc. * ............................... 161,850
50,000 National Dentex Corporation * .................. 806,000
26,000 Psychemedics Corporation ....................... 417,300
20,000 Waters Corporation * ........................... 1,581,400
------------
5,811,512
------------
7
SCHWARTZ VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 94.6% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & SERVICES -- 15.5%
15,000 Applied Industrial Technologies, Inc. .......... $ 435,300
10,000 Dover Corporation .............................. 460,900
60,000 Gentex Corporation ............................. 1,066,200
30,000 Graco, Inc. .................................... 1,117,800
10,000 Lincoln Electric Holdings, Inc. ................ 711,800
1,500 PACCAR, Inc. ................................... 81,720
20,000 Raven Industries, Inc. ......................... 767,800
22,000 Rofin-Sinar Technologies, Inc. * ............... 1,058,420
75,000 RPM International, Inc. ........................ 1,522,500
18,000 Strattec Security Corporation .................. 745,740
20,000 Sun Hydraulics Corporation ..................... 504,600
------------
8,472,780
------------
REAL ESTATE -- 1.8%
16,499 I. Gordon Corporation * ........................ 329,980
20,000 PICO Holdings, Inc. * .......................... 672,400
------------
1,002,380
------------
TECHNOLOGY -- 12.2%
40,000 ADTRAN, Inc. ................................... 855,200
35,000 Check Point Software Technologies Ltd. * ....... 768,600
32,100 Cognex Corporation ............................. 646,815
17,500 MTS Systems Corporation ........................ 746,725
170,068 Sparton Corporation * .......................... 840,136
10,000 SPSS, Inc. * ................................... 359,100
25,000 Stamps.com, Inc. * ............................. 304,500
4,000 Stratasys, Inc. * .............................. 103,360
60,000 Zebra Technologies Corporation - Class A * ..... 2,082,000
------------
6,706,436
------------
TRANSPORTATION -- 1.4%
40,000 American Railcar Industries, Inc. .............. 770,000
------------
TOTAL COMMON STOCKS (Cost $48,241,945) ......... $ 51,869,586
------------
================================================================================
SHARES OPEN-END FUNDS -- 0.0% MARKET VALUE
- --------------------------------------------------------------------------------
57 Sequoia Fund (Cost $7,502) ..................... $ 7,915
------------
8
SCHWARTZ VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES EXCHANGE-TRADED FUNDS -- 1.1% MARKET VALUE
- --------------------------------------------------------------------------------
5,000 iShares S&P 100 Index Fund ..................... $ 342,750
2,500 Rydex Russell Top 50 ETF ....................... 276,825
------------
TOTAL EXCHANGE-TRADED FUNDS (Cost $540,349) .... $ 619,575
------------
================================================================================
SHARES CASH EQUIVALENTS -- 2.8% MARKET VALUE
- --------------------------------------------------------------------------------
1,532,065 Federated Treasury Obligations Fund -
Institutional Shares (Cost $1,532,065) ......... $ 1,532,065
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 98.5%
(Cost $50,321,861) ............................. $ 54,029,141
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.5% .. 833,935
------------
NET ASSETS -- 100.0% ........................... $ 54,863,076
============
* Non-income producing security.
See notes to financial statements.
9
SCHWARTZ VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2007
================================================================================
ASSETS
Investments, at market value (cost of $50,321,861) (Note 1) ... $ 54,029,141
Cash .......................................................... 1,700
Receivable for capital shares sold ............................ 3,653
Receivable for investment securities sold ..................... 1,289,703
Dividends and interest receivable ............................. 49,442
Other assets .................................................. 16,166
------------
TOTAL ASSETS ............................................... 55,389,805
------------
LIABILITIES
Payable for capital shares redeemed ........................... 343,549
Payable to Adviser (Note 2) ................................... 151,482
Payable to administrator (Note 2) ............................. 7,100
Other accrued expenses and liabilities ........................ 24,598
------------
TOTAL LIABILITIES .......................................... 526,729
------------
NET ASSETS .................................................... $ 54,863,076
============
NET ASSETS CONSIST OF:
Paid-in capital ............................................... $ 51,238,425
Distributions in excess of net realized gains
from security transactions ................................. (82,629)
Net unrealized appreciation on investments .................... 3,707,280
------------
NET ASSETS .................................................... $ 54,863,076
============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ................. 2,477,177
============
Net asset value, offering price and redemption price per share $ 22.15
============
See notes to financial statements.
10
SCHWARTZ VALUE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007
================================================================================
INVESTMENT INCOME
Dividends .................................................. $ 834,432
Interest ................................................... 50,676
------------
TOTAL INCOME ............................................ 885,108
------------
EXPENSES
Investment advisory fees (Note 2) .......................... 662,982
Administration, accounting and transfer agent fees (Note 2) 99,446
Legal and audit fees ....................................... 29,855
Trustees' fees and expenses ................................ 26,068
Registration fees .......................................... 17,923
Custodian fees ............................................. 13,354
Postage and supplies ....................................... 9,503
Reports to shareholders .................................... 8,877
Insurance expense .......................................... 6,021
Compliance service fees (Note 2) ........................... 2,569
Other expenses ............................................. 11,675
------------
TOTAL EXPENSES .......................................... 888,273
------------
NET INVESTMENT LOSS ........................................... (3,165)
------------
REALIZED AND UNREALIZED GAINS/(LOSSES) ON INVESTMENTS
Net realized gains from security transactions .............. 1,295,456
Net change in unrealized appreciation/
(depreciation) on investments ........................... (8,248,217)
------------
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS ............. (6,952,761)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS .................... $ (6,955,926)
============
See notes to financial statements.
11
SCHWARTZ VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
=======================================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2007 2006
- -------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss ............................................... $ (3,165) $ (247,253)
Net realized gains from security transactions ..................... 1,295,456 9,136,372
Net realized gains from in-kind redemptions (Note 1) .............. -- 1,315,022
Net change in unrealized appreciation/(depreciation) on investments (8,248,217) (1,132,513)
------------ ------------
Net increase/(decrease) in net assets from operations ................ (6,955,926) 9,071,628
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains on investments ............................ (1,333,716) (8,564,394)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ......................................... 2,731,231 3,542,040
Reinvestment of distributions to shareholders ..................... 1,132,551 7,110,164
Payments for shares redeemed ...................................... (9,119,440) (12,236,951)
------------ ------------
Net decrease in net assets from capital share transactions ........... (5,255,658) (1,584,747)
------------ ------------
TOTAL DECREASE IN NET ASSETS ......................................... (13,545,300) (1,077,513)
NET ASSETS
Beginning of year ................................................. 68,408,376 69,485,889
------------ ------------
End of year ....................................................... $ 54,863,076 $ 68,408,376
============ ============
ACCUMULATED NET INVESTMENT INCOME .................................... $ -- $ --
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold ....................................................... 108,174 131,398
Shares issued in reinvestment of distributions to shareholders .... 50,787 277,308
Shares redeemed ................................................... (362,557) (458,868)
------------ ------------
Net decrease in shares outstanding ................................ (203,596) (50,162)
Shares outstanding, beginning of year ............................. 2,680,773 2,730,935
------------ ------------
Shares outstanding, end of year ................................... 2,477,177 2,680,773
============ ============
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,
2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of year.. ...... $ 25.52 $ 25.44 $ 27.04 $ 25.84 $ 20.20
---------- ---------- ---------- ---------- ----------
Income/(loss) from investment operations:
Net investment loss ...................... (0.00)(a) (0.09) (0.17) (0.21) (0.16)
Net realized and unrealized gains/(losses)
on investments ........................ (2.82) 3.74 1.23 6.02 8.10
---------- ---------- ---------- ---------- ----------
Total from investment operations ............ (2.82) 3.65 1.06 5.81 7.94
---------- ---------- ---------- ---------- ----------
Less distributions:
From net realized gains on investments .... (0.55) (3.57) (2.66) (4.61) (2.30)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year .............. $ 22.15 $ 25.52 $ 25.44 $ 27.04 $ 25.84
========== ========== ========== ========== ==========
Total return (b) ............................ (11.1)% 14.3% 3.8% 22.6% 39.3%
========== ========== ========== ========== ==========
Ratios/Supplementary Data:
Net assets at end of year (000's) ........... $ 54,863 $ 68,408 $ 69,486 $ 76,510 $ 59,592
========== ========== ========== ========== ==========
Ratio of expenses to average net assets ..... 1.34% 1.38% 1.61% 1.82% 1.89%
Ratio of net investment loss to
average net assets ........................ (0.00)% (0.35)% (0.65)% (0.84)% (0.73)%
Portfolio turnover rate ..................... 78% 82% 78% 83% 74%
(a) Amount rounds to less than $0.01 per share.
(b) Total return is a measure of the change in value of an investment in the
Fund over the years 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.
See notes to financial statements.
13
SCHWARTZ VALUE FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
================================================================================
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.
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 are valued at the last reported sales price or, if
there is no reported sale on the valuation date, at the most recently
quoted bid price. 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.
(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.
14
SCHWARTZ VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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, 2007 was as
follows:
Unrealized appreciation $ 3,624,614
Undistributed long-term gains 37
------------
Total distributable earnings $ 3,624,651
============
For federal income tax purposes, the cost of portfolio investments
amounted to $50,404,527 at December 31, 2007. 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 $ 8,464,676
Gross unrealized depreciation (4,840,062)
------------
Net unrealized appreciation $ 3,624,614
============
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.
On July 13, 2006, the Financial Accounting Standards Board ("FASB")
released Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in
Income Taxes." FIN 48 provides guidance for how uncertain tax positions
should be recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken in the
course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable
tax authority. Tax positions not deemed to meet the more-likely-than-not
threshold would be recorded as a tax benefit or expense in the current
year. The Fund incorporated FIN 48 in its Semi-Annual report on June 30,
2007. Based on management's analysis, the adoption of FIN 48 did not have
a material impact on the financial statements. The statute of limitations
on the Fund's tax returns remains open for the years ended December 31,
2004 through December 31, 2006. Additionally, management does not
anticipate FIN 48 having a material impact on the financial statements for
the year ended December 31, 2008.
For the year ended December 31, 2007, the Fund reclassified $3,165 of net
investment loss against paid-in capital on the Statement of Assets and
Liabilities. Such reclassification, the result of permanent differences
between the financial statement and income tax reporting requirements, has
no effect on the Fund's net assets or net asset value per share.
15
SCHWARTZ VALUE FUND
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, 2007 and 2006 was as follows:
Long-Term
Ordinary Capital Total
Year Ended Income Gains Distributions
--------------------------------------------------------------------
December 31, 2007 $ -- $ 1,333,716 $ 1,333,716
December 31, 2006 $ 1,354,903 $ 7,209,491 $ 8,564,394
(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 accounting principles generally accepted 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. The Adviser
receives from the Fund a quarterly fee at the annual rate of 1.00% of its
average daily net assets.
16
SCHWARTZ VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
The Chief Compliance Officer of the Fund (the "CCO") is an employee of the
Adviser. The Trust pays the Adviser $23,500 annually for providing CCO services,
of which the Fund pays its proportionate share along with the other series of
the Trust.
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 0.15% of its
average daily net assets, subject to a minimum monthly fee of $4,000.
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. The Distributor is an affiliate of Ultimus.
3. INVESTMENT TRANSACTIONS
During the year ended December 31, 2007, cost of purchases and proceeds from
sales and maturities of investment securities, excluding short-term investments
and U.S. government securities, amounted to $49,490,065 and $58,243,481,
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.
5. NEW ACCOUNTING PRONOUNCEMENT
In September 2006, the Financial Accounting Standards Board issued Statement on
Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." This
standard establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and requires additional disclosures about
fair value measurements. SFAS No. 157 applies to fair value measurements already
required or permitted by existing standards. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007
and interim periods within those fiscal years. The changes to current generally
accepted accounting principles from the application of this Statement relate to
the definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurements. As of December 31, 2007, the
Fund does not believe the adoption of SFAS No. 157 will impact the amounts
reported in the financial statements, however, additional disclosures may be
required about the inputs used to develop the measurements and the effect of the
measurements reported on the statement of changes in net assets for a fiscal
period.
17
SCHWARTZ VALUE FUND
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Trustees
Schwartz Value Fund:
We have audited the accompanying statement of assets and liabilities of Schwartz
Value Fund (the "Fund"), including the schedule of t 0 0 investments, as of
December 31, 2007, 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 the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with 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. The Fund
is not required to have, nor were we engaged to perform, audits of their
internal control over financial reporting. Our audits included 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, 2007, by correspondence with the
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, 2007, 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 15, 2008
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/Officer Address Age with the Trust Time Served
- ------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
* Gregory J. Schwartz 3707 W. Maple Road, 66 Chairman of the Since 1992
Bloomfield Hills, MI Board/Trustee
* George P. Schwartz, CFA 3707 W. Maple Road, 63 President/Trustee Since 1992
Bloomfield Hills, MI
INDEPENDENT TRUSTEES:
John E. Barnds 640 Lakeside Road, 75 Trustee Since 2005
Birmingham, MI
Peter F. Barry 3707 W. Maple Road, 80 Trustee Since 2004
Bloomfield Hills, MI
Donald J. Dawson, Jr. 333 W. Seventh Street, 60 Trustee Since 1993
Royal Oak, MI
Joseph M. Grace 4978 Malibu Drive, 71 Trustee Since 2007
Bloomfield Hills, MI
EXECUTIVE OFFICERS:
* Richard L. Platte, Jr., CFA 3707 W. Maple Road, 56 Vice President Since 1993
Bloomfield Hills, MI and Secretary
* Timothy S. Schwartz, CFA 3707 W. Maple Road, 36 Treasurer Since 2000
Bloomfield Hills, MI
* Becky S. Renaud 3707 W. Maple Road, 35 Chief Compliance Since 2006
Bloomfield Hills, MI Officer
* Gregory J. Schwartz, George P. Schwartz, Richard L. Platte, Jr., Timothy
S. Schwartz and Becky S. Renaud, 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 six portfolios of the Trust: the Ave Maria Catholic Values
Fund, the Ave Maria Growth Fund, the Ave Maria Rising Dividend Fund, the Ave
Maria Opportunity 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
SCHWARTZ VALUE FUND
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
(JPMorgan Chase).
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).
Joseph M. Grace is retired Senior Vice President of National Bank of Detroit
(JPMorgan Chase).
Richard L. Platte, Jr., CFA is Executive Vice President and Secretary of
Schwartz Investment Counsel, Inc.
Timothy S. Schwartz, CFA is Vice President and Treasurer of Schwartz Investment
Counsel, Inc.
Becky S. Renaud is Chief Financial Officer and Chief Compliance Officer of
Schwartz Investment Counsel, Inc.
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, 2007. On December 28, 2007, the Fund
declared and paid a long-term capital gain distribution of $0.5460 per share. As
provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003, the
long-term capital gain distribution of $0.5460 per share may be subject to a
maximum tax rate of 15%. Early in 2008, as required by federal regulations,
shareholders received notification of their portion of the Fund's taxable
capital gain distribution, if any, paid during the 2007 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. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs 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 ongoing costs are expressed as a percentage of its average net
assets. This figure is known as the expense ratio. The ongoing costs reflected
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, 2007) and held until the end of the
period (December 31, 2007).
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 sales loads or redemption
fees.
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 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, 2007 December 31, 2007 During Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $ 841.10 $ 6.22
Based on Hypothetical 5%
Return (before expenses) $1,000.00 $1,018.45 $ 6.82
- --------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.34% for the
period, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
21
SCHWARTZ VALUE FUND
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.
SCHWARTZ VALUE FUND
INVESTMENT PHILOSOPHY
================================================================================
Schwartz Value Fund (the "Fund") 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. The Fund 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. The Fund purchases shares which are
temporarily out-of-favor and selling below intrinsic value.
A common thread in the Fund'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 the Fund 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.
22
- --------------------------------------------------------------------------------
SCHWARTZ VALUE FUND
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.
Joseph M. Grace
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
Becky S. Renaud, 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 TRUST
- --------------------------------------------------------------------------------
AVE MARIA
MUTUAL
FUNDS
---------
AVE MARIA CATHOLIC VALUES FUND
AVE MARIA GROWTH FUND
AVE MARIA RISING DIVIDEND FUND
AVE MARIA OPPORTUNITY FUND
AVE MARIA BOND FUND
ANNUAL REPORT
2007
SHAREHOLDER ACCOUNTS [GRAPHIC OMITTED] CORPORATE OFFICES
c/o Ultimus Fund AVE MARIA 3707 W. Maple Road
Solutions, LLC MUTUAL Suite 100
P.O. Box 46707 FUNDS Bloomfield Hills, MI 48301
Cincinnati, OH 45246 --------- (248) 644-8500
(888) 726-9331 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 Opportunity Fund (AVESX)
Ave Maria Bond Fund (AVEFX)
Ave Maria Money Market Account
2007 was an inflection point for the financial markets. At the beginning of the
year, the economy was performing well. The Fed's primary focus was on keeping
the economy from overheating and holding inflation within acceptable limits.
Housing prices were stable. This benign economic picture was reflected in the
stock market with low volatility and prices moving generally higher.
Wrinkles in this picture began to appear mid-year when the first inklings of
trouble appeared in the form of rapidly rising defaults on sub-prime mortgages.
Pools of these sub-prime mortgages had been packaged by Wall Street, and then
sold to institutional investors. As the first wave broke, markets staggered but
seemed to recover before sliding more precipitously late in the year, as the
growing swell of defaults turned into a tsunami sweeping through the banking
industry. As it became obvious that there was an oversupply of houses, prices
fell and consumers retrenched. Financial services and consumer discretionary
stocks came under intense selling pressure. In the bond market, there was a
flight to quality, i.e. government bonds, which significantly helped the
performance of the Ave Maria Bond Fund.
Within the equity markets, certain sectors dramatically outperformed others. For
the first time in several years, large-cap stocks outperformed small-cap stocks,
and growth stocks outperformed value stocks. This had a negative effect on
performance for our value-oriented Funds but favored the Ave Maria Growth Fund,
which had a very good year. (Please read individual portfolio mangers' letters
for details on the performance of the individual Funds.)
In early 2008, the incredible losses reported by banks have added to the growing
prospects of economic recession. Response to this crisis has been rapid. The Fed
has taken an aggressive course to reduce short-term interest rates and ensure
liquidity in the financial system and provide stimulus to the general economy.
The federal government is also implementing tax cuts and rebates (fiscal
stimulus) to prod economic activity. The effects of these positive steps should
not be underestimated. These measures will work with a lag, but they will work.
High levels of liquidity worldwide have also been available to recapitalize
banks' balance sheets as necessary. There are reasons for optimism.
It is important to remember that the stock market is a leading economic
indicator and anticipates future events. By the time you read about it in the
newspaper, it's already in the price. By the time economic recovery is obvious,
stock prices will have already advanced significantly. That's why experienced
investors have always recognized that stocks are most attractively priced for
purchase when the business news is terrible and investors are panicky. With the
recent market turmoil, many individual stocks have experienced their own bear
markets. Accordingly, stocks of financially sound, well-run companies are
selling at bargain prices. Indeed, the degree of pessimism currently evident
among both retail and institutional investors leads us to believe that a major
stock market bottom is near or recently passed. And in that context, our Fund
managers have adjusted their portfolios to reflect changing economic conditions.
More than 20,000 people have invested in the Ave Maria Family of Funds. Many
investors have said they were attracted by our MORALLY RESPONSIBLE INVESTING
approach. Besides searching for the best investment opportunities, our portfolio
managers screen out companies based on moral guidelines established by our
Catholic Advisory Board. These screens eliminate from consideration companies
which support abortion, pornography, and companies which offer their employees
non-marital partner benefits.
Your participation in the Ave Maria Mutual Funds is appreciated and your
comments are welcome.
Sincerely,
/s/ George P. Schwartz
George P. Schwartz, CFA
President
February 15, 2008
P.S. Shareholders now have the ability to access their account balances and view
transaction history online at www.avemariafunds.com. You may call shareholder
services toll-free at 1-888-726-9331 for help in accessing your account
information.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT RESULTS AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER
THAN THE PERFORMANCE DATA QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH END, ARE AVAILABLE AT THE AVE MARIA FUNDS WEBSITE WWW.AVEMARIAFUNDS.COM OR
BY CALLING 1-888-726-9331.
An investor should consider the investment objectives, risks, charges and
expenses of the Funds carefully before investing. The Funds' prospectus contains
this and other important information. To obtain a copy of the Funds' prospectus
please visit our website or call 1-888-726-9331 and a copy will be sent to you
free of charge. Please read the prospectus carefully before you invest. The Ave
Maria Funds are distributed by Ultimus Fund Distributors, LLC.
The Letters to Shareholders seek to describe some of the adviser's current
opinions and views of the financial markets. Although the adviser believes it
has a reasonable basis for any opinions or views expressed, actual results may
differ, sometimes significantly so, from those expected or expressed. Keep in
mind that the information and opinions cover the period through the date of this
report.
AVE MARIA MUTUAL FUNDS
TABLE OF CONTENTS
================================================================================
Ave Maria Catholic Values Fund:
Portfolio Manager Commentary..................................... 1
Performance...................................................... 3
Annual Total Rates of Return Comparison with Major Indices....... 4
Ten Largest Equity Holdings...................................... 5
Asset Allocation................................................. 5
Schedule of Investments.......................................... 6
Ave Maria Growth Fund:
Portfolio Manager Commentary..................................... 9
Performance...................................................... 10
Annual Total Rates of Return Comparison with Major Indices....... 11
Ten Largest Equity Holdings...................................... 12
Asset Allocation................................................. 12
Schedule of Investments.......................................... 13
Ave Maria Rising Dividend Fund:
Portfolio Manager Commentary..................................... 15
Performance...................................................... 17
Ten Largest Equity Holdings...................................... 18
Asset Allocation................................................. 18
Schedule of Investments.......................................... 19
Ave Maria Opportunity Fund:
Portfolio Manager Commentary..................................... 22
Performance...................................................... 24
Ten Largest Equity Holdings...................................... 25
Asset Allocation................................................. 25
Schedule of Investments.......................................... 26
Ave Maria Bond Fund:
Portfolio Manager Commentary..................................... 29
Performance...................................................... 30
Annual Total Rates of Return Comparison with Major Indices....... 31
Ten Largest Holdings............................................. 32
Asset Allocation................................................. 32
Schedule of Investments.......................................... 33
Statements of Assets and Liabilities.................................... 36
Statements of Operations................................................ 37
AVE MARIA MUTUAL FUNDS
TABLE OF CONTENTS (CONTINUED)
================================================================================
Statements of Changes in Net Assets:
Ave Maria Catholic Values Fund....................................... 38
Ave Maria Growth Fund................................................ 39
Ave Maria Rising Dividend Fund....................................... 40
Ave Maria Opportunity Fund........................................... 41
Ave Maria Bond Fund.................................................. 42
Financial Highlights:
Ave Maria Catholic Values Fund....................................... 43
Ave Maria Growth Fund................................................ 44
Ave Maria Rising Dividend Fund....................................... 45
Ave Maria Opportunity Fund........................................... 46
Ave Maria Bond Fund - Class I........................................ 47
Ave Maria Bond Fund - Class R........................................ 48
Notes to Financial Statements........................................... 49
Report of Independent Registered Public Accounting Firm................. 57
Board of Trustees and Executive Officers................................ 58
Catholic Advisory Board................................................. 60
Federal Tax Information................................................. 61
About Your Funds' Expenses.............................................. 62
Other Information....................................................... 65
THIS REPORT IS FOR THE INFORMATION OF SHAREHOLDERS OF THE AVE MARIA MUTUAL
FUNDS, BUT IT MAY ALSO BE USED AS SALES LITERATURE WHEN PRECEDED OR ACCOMPANIED
BY A CURRENT PROSPECTUS, WHICH GIVES DETAILS ABOUT CHARGES, EXPENSES, INVESTMENT
OBJECTIVES AND OPERATING POLICIES OF THE FUNDS. THE AVE MARIA MUTUAL FUNDS ARE
DISTRIBUTED BY ULTIMUS FUND DISTRIBUTORS, LLC.
AVE MARIA CATHOLIC VALUES FUND
PORTFOLIO MANAGER COMMENTARY
================================================================================
Dear Fellow Shareowner:
The Ave Maria Catholic Values Fund's return for 2007 was -4.0% compared to 5.5%
for the S&P 500 Index and 8.0% for the S&P 400 MidCap Index. Since inception on
May 1, 2001, the Fund's return versus its benchmarks is:
Since 5-01-01 Inception through 12-31-07
Total Returns
-------------------------------------
Cumulative Annualized
---------- ----------
Ave Maria Catholic Values Fund (AVEMX) 79.2% 9.1%
S&P 500 Index 30.4% 4.1%
S&P 400 MidCap Index 80.2% 9.2%
In most years, the Fund's value investment style has generated double-digit
returns. 2007 was not one of those years. However, we remained committed to our
investment philosophy of buying attractively priced, out of favor stocks of
companies with a sustainable competitive advantage, strong management,
profitable history and above-average long-term growth potential. In 2007, the
market sold down many of these stocks to extraordinarily low prices, indeed
lower than the prices at which we judged them to offer great long-term value.
Fears that the housing and sub-prime mortgage problems will drive the economy
into recession focused investors on near-term deteriorating results, especially
in the consumer and financial sectors. This selling was especially magnified in
the stocks of smaller companies, as reflected in the Russell 2000 Value Index of
small capitalization stocks which produced a -9.8% return in 2007.
Stocks with the most negative impact on the Fund's performance were Pulte Homes,
Inc. and The Ryland Group, Inc. (homebuilders), Legg Mason, Inc. and Citizens
Republic Bancorp, Inc. (financials), and consumer discretionary issues including
Chico's FAS, Inc. (retail), and Brunswick Corporation (leisure products). We
believe these and the other stocks in the Fund representing these economic
sectors offer outstanding appreciation potential once investors are willing to
look beyond this valley of economic weakness toward the inevitable recovery.
Not all of the news was bad last year, as the Fund held a number of stellar
performers such as Neogen Corporation, Kinetic Concepts, Inc. and Waters
Corporation (all in healthcare), Apollo Group, Inc. (education), and
Southwestern Energy Company, all of which made a significant positive
contribution to the Fund's results. As always, none of the Fund's investments
violated any of the Fund's moral screens regarding abortion, pornography or the
offering of non-marital partner employee benefits.
1
AVE MARIA CATHOLIC VALUES FUND
PORTFOLIO MANAGER COMMENTARY (CONTINUED)
================================================================================
Late in the year, we significantly restructured the portfolio by selling issues
which had questionable recovery potential. We reduced exposure to the home
furnishing industry through the sale of Leggett & Platt, Inc. and American
Woodmark Corporation. Student Loan Corporation and TCF Financial Corporation had
loan portfolio quality concerns. Mylan Laboratories, Inc. and Teleflex, Inc.
made major acquisitions, which increased their debt loads and reduced their
attractiveness. Mine Safety Appliances and Transocean, Inc. appeared fully
valued and Alltel Corp. and Manor Care, Inc. were acquired by private investor
groups.
Proceeds from these sales were invested into new positions. Belden Inc., Foster
Wheeler, Ltd., Lincoln Electric Holdings, Inc. and Trinity Industries, Inc. were
purchased for their attractive global energy and transportation infrastructure
businesses. Other new holdings include RPM International Inc. (additives),
La-Z-Boy, Inc. (furniture) and Rofin-Sinar Technologies, Inc. (scientific
testing equipment). We also added some larger companies including Western Union
Company and Burlington Northern Santa Fe Corporation.
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
[LINE GRAPH OMITTED]
AVE MARIA CATHOLIC
S&P 500 INDEX S&P 400 MID CAP INDEX VALUES FUND
--------------------- --------------------- ---------------------
DATE VALUE DATE VALUE DATE VALUE
---- ----- ---- ----- ---- -----
05/01/01 $ 10,000 05/01/01 $ 10,000 05/01/01 $ 10,000
06/30/01 9,690 06/30/01 10,110 06/30/01 10,370
09/30/01 8,268 09/30/01 8,435 09/30/01 9,360
12/31/01 9,151 12/31/01 9,952 12/31/01 10,529
03/31/02 9,177 03/31/02 10,622 03/31/02 11,201
06/30/02 7,947 06/30/02 9,633 06/30/02 10,970
09/30/02 6,574 09/30/02 8,039 09/30/02 9,236
12/31/02 7,128 12/31/02 8,508 12/31/02 9,496
03/31/03 6,904 03/31/03 8,131 03/31/03 8,904
06/30/03 7,967 06/30/03 9,564 06/30/03 10,649
09/30/03 8,177 09/30/03 10,194 09/30/03 11,552
12/31/03 9,173 12/31/03 11,538 12/31/03 12,872
03/31/04 9,328 03/31/04 12,123 03/31/04 13,982
06/30/04 9,489 06/30/04 12,240 06/30/04 14,184
09/30/04 9,311 09/30/04 11,984 09/30/04 14,235
12/31/04 10,171 12/31/04 13,441 12/31/04 15,459
03/31/05 9,952 03/31/05 13,387 03/31/05 15,459
06/30/05 10,088 06/30/05 13,958 06/30/05 15,660
09/30/05 10,452 09/30/05 14,639 09/30/05 15,956
12/31/05 10,670 12/31/05 15,129 12/31/05 16,354
03/31/06 11,119 03/31/06 16,284 03/31/06 17,950
06/30/06 10,959 06/30/06 15,771 06/30/06 17,244
09/30/06 11,580 09/30/06 15,600 09/30/06 17,244
12/31/06 12,355 12/31/06 16,690 12/31/06 18,674
03/31/07 12,434 03/31/07 17,658 03/31/07 19,319
06/30/07 13,215 06/30/07 18,689 06/30/07 20,429
09/30/07 13,483 09/30/07 18,527 09/30/07 19,399
12/31/07 13,036 12/31/07 18,022 12/31/07 17,922
Past performance is not predictive of future performance.
- --------------------------------------------------------------------------------
-------------------------------------------------
Ave Maria Catholic Values Fund
Average Annual Total Returns (a)
(for periods ended December 31, 2007)
Since
1 Year 5 Years Inception(b)
------ ------- ------------
-4.03% 13.54% 9.14%
-------------------------------------------------
(a) The returns 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 1, 2001)
through December 31, 2007.
3
AVE MARIA CATHOLIC VALUES FUND
ANNUAL TOTAL RATES OF RETURN
COMPARISON WITH MAJOR INDICES (UNAUDITED)
================================================================================
AVE MARIA CATHOLIC S&P 500 S&P 400 S&P 600 SMALL NASDAQ VALUE LINE
VALUES FUND INDEX MID CAP INDEX CAP INDEX COMPOSITE (b) COMPOSITE(b)
- ----------------------------------------------------------------------------------------------------------
2001 (a) 5.3% -8.5% -0.5% 5.0% -10.1% -7.3%
2002 -9.8% -22.1% -14.5% -14.6% -31.5% -28.6%
2003 35.6% 28.7% 35.6% 38.8% 50.0% 37.4%
2004 20.1% 10.9% 16.5% 22.7% 8.6% 11.5%
2005 5.8% 4.9% 12.6% 7.7% 1.4% 2.0%
2006 14.2% 15.8% 10.3% 15.1% 9.5% 11.0%
2007 -4.0% 5.5% 8.0% -0.3% 9.8% -3.8%
AVERAGE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31, 2007 (UNAUDITED)
================================================================================
AVE MARIA CATHOLIC S&P 500 S&P 400 S&P 600 SMALL NASDAQ VALUE LINE
VALUES FUND INDEX MID CAP INDEX CAP INDEX COMPOSITE (b) COMPOSITE (b)
- ----------------------------------------------------------------------------------------------------------
3 Years 5.1% 8.6% 10.3% 7.3% 6.8% 2.9%
5 Years 13.5% 12.8% 16.2% 16.0% 14.7% 10.8%
Since Inception 9.1% 4.1% 9.2% 10.0% 3.1% 1.5%
(a) Represents the period from the commencement of operations (May 1, 2001)
through December 31, 2001.
(b) Excluding dividends.
4
AVE MARIA CATHOLIC VALUES FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2007 (UNAUDITED)
================================================================================
% OF
SHARES COMPANY MARKET VALUE NET ASSETS
- --------------------------------------------------------------------------------
550,000 Gentex Corporation ..................... $9,773,500 4.0%
275,000 Zebra Technologies Corporation - Class A 9,542,500 3.9%
175,000 Kinetic Concepts, Inc. ................. 9,373,000 3.8%
100,000 Waters Corporation ..................... 7,907,000 3.2%
475,000 ION Geophysical Corporation ............ 7,495,500 3.0%
500,000 Citizens Republic Bancorp, Inc. ........ 7,255,000 2.9%
80,000 General Dynamics Corporation ........... 7,119,200 2.9%
700,000 Meadowbrook Insurance Group, Inc. ...... 6,587,000 2.7%
170,000 Graco, Inc. ............................ 6,334,200 2.6%
75,000 United Technologies Corporation ........ 5,740,500 2.3%
ASSET ALLOCATION (UNAUDITED)
================================================================================
% OF
SECTOR NET ASSETS
- --------------------------------------------------------------------------------
Aerospace & Defense ................................................ 4.6%
Building Materials & Construction .................................. 3.8%
Business Services .................................................. 2.1%
Consumer - Durables ................................................ 5.9%
Consumer - Nondurables ............................................. 5.0%
Consumer - Retail .................................................. 5.9%
Education .......................................................... 1.3%
Energy & Mining .................................................... 10.3%
Finance ............................................................ 17.0%
Healthcare ......................................................... 9.4%
Industrial Products & Services ..................................... 22.4%
Real Estate ........................................................ 0.7%
Technology ......................................................... 6.3%
Transportation ..................................................... 1.5%
Cash Equivalents, Other Assets and Liabilities ..................... 3.8%
------
100.0%
======
5
AVE MARIA CATHOLIC VALUES FUND
SCHEDULE OF INVESTMENTS.
DECEMBER 31, 2007
================================================================================
SHARES COMMON STOCKS -- 96.2% MARKET VALUE
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 4.6%
75,000 American Science and Engineering, Inc. ......... $ 4,256,250
80,000 General Dynamics Corporation ................... 7,119,200
------------
11,375,450
------------
BUILDING MATERIALS & CONSTRUCTION -- 3.8%
175,000 Champion Enterprises, Inc. * ................... 1,648,500
300,000 Pulte Homes, Inc. .............................. 3,162,000
100,000 Ryland Group, Inc. (The) ....................... 2,755,000
65,000 Simpson Manufacturing Company, Inc. ............ 1,728,350
------------
9,293,850
------------
BUSINESS SERVICES -- 2.1%
25,000 Diebold, Incorporated .......................... 724,500
165,000 Neogen Corporation * ........................... 4,380,750
------------
5,105,250
------------
CONSUMER - DURABLES -- 5.9%
125,000 Brunswick Corporation .......................... 2,131,250
278,483 Craftmade International, Inc. .................. 2,297,485
65,000 Harley-Davidson, Inc. .......................... 3,036,150
300,000 La-Z-Boy Incorporated .......................... 2,379,000
125,000 Thor Industries, Inc. .......................... 4,751,250
------------
14,595,135
------------
CONSUMER - NONDURABLES -- 5.0%
265,000 Lifetime Brands, Inc. .......................... 3,439,700
50,000 RC2 Corporation * .............................. 1,403,500
75,000 Sherwin-Williams Company (The) ................. 4,353,000
45,000 VF Corporation ................................. 3,089,700
------------
12,285,900
------------
CONSUMER - RETAIL -- 5.9%
120,000 Bed Bath & Beyond Inc. * ....................... 3,526,800
485,000 Chico's FAS, Inc. * ............................ 4,379,550
110,000 Dollar Tree Stores, Inc. * ..................... 2,851,200
150,000 Ross Stores, Inc. .............................. 3,835,500
------------
14,593,050
------------
EDUCATION -- 1.3%
45,000 Apollo Group, Inc. - Class A * ................. 3,156,750
------------
6
AVE MARIA CATHOLIC VALUES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.2% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
ENERGY & MINING -- 10.3%
10,000 ConocoPhillips ................................. $ 883,000
20,000 Exxon Mobil Corporation ........................ 1,873,800
150,000 Halliburton Company ............................ 5,686,500
475,000 ION Geophysical Corporation * .................. 7,495,500
90,000 Patterson-UTI Energy, Inc. ..................... 1,756,800
75,000 Southwestern Energy Company * .................. 4,179,000
250,000 TXCO Resources, Inc. * ......................... 3,015,000
12,500 XTO Energy Inc. ................................ 642,000
------------
25,531,600
------------
FINANCE - BANKS & THRIFTS -- 3.8%
15,000 BB&T Corporation ............................... 460,050
500,000 Citizens Republic Bancorp, Inc. ................ 7,255,000
75,000 Synovus Financial Corporation .................. 1,806,000
------------
9,521,050
------------
FINANCE - INSURANCE -- 8.6%
210,000 American Safety Insurance Holdings, Ltd. * ..... 4,126,500
40,000 Everest Re Group, Ltd. ......................... 4,016,000
80,000 Hanover Insurance Group, Inc. (The) ............ 3,664,000
700,000 Meadowbrook Insurance Group, Inc. * ............ 6,587,000
282,945 Unico American Corporation * ................... 2,900,186
------------
21,293,686
------------
FINANCE - SERVICES -- 4.6%
120,000 First Marblehead Corporation (The) ............. 1,836,000
65,000 Legg Mason, Inc. ............................... 4,754,750
200,000 Western Union Company .......................... 4,856,000
------------
11,446,750
------------
HEALTHCARE -- 9.4%
30,000 Beckman Coulter, Inc. .......................... 2,184,000
175,000 Kinetic Concepts, Inc. * ....................... 9,373,000
50,000 Stryker Corporation ............................ 3,736,000
100,000 Waters Corporation * ........................... 7,907,000
------------
23,200,000
------------
INDUSTRIAL PRODUCTS & SERVICES -- 22.4%
90,000 Balchem Corporation ............................ 2,014,200
90,000 Belden Inc. .................................... 4,005,000
70,000 Caterpillar Inc. ............................... 5,079,200
15,000 Foster Wheeler, Ltd. * ......................... 2,325,300
550,000 Gentex Corporation ............................. 9,773,500
50,000 Genuine Parts Company .......................... 2,315,000
170,000 Graco, Inc. .................................... 6,334,200
75,000 ITT Corporation ................................ 4,953,000
100,000 Johnson Controls, Inc. ......................... 3,604,000
7
AVE MARIA CATHOLIC VALUES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.2% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & SERVICES -- 22.4%
(CONTINUED)
35,000 Lincoln Electric Holdings, Inc. ................ $ 2,491,300
20,000 Rofin-Sinar Technologies, Inc. * ............... 962,200
85,000 RPM International Inc. ......................... 1,725,500
20,000 Stericycle, Inc. * ............................. 1,188,000
100,000 Trinity Industries, Inc. ....................... 2,776,000
75,000 United Technologies Corporation ................ 5,740,500
------------
55,286,900
------------
REAL ESTATE -- 0.7%
50,000 HCP, Inc. ...................................... 1,739,000
------------
TECHNOLOGY -- 6.3%
135,000 ADTRAN, Inc. ................................... 2,886,300
15,000 CenturyTel, Inc. ............................... 621,900
100,000 Stratasys, Inc. * .............................. 2,584,000
275,000 Zebra Technologies Corporation - Class A * ..... 9,542,500
------------
15,634,700
------------
TRANSPORTATION -- 1.5%
45,000 Burlington Northern Santa Fe Corporation ....... 3,745,350
------------
TOTAL COMMON STOCKS (Cost $206,654,697) ........ $237,804,421
------------
================================================================================
SHARES CASH EQUIVALENTS -- 4.6% MARKET VALUE
- --------------------------------------------------------------------------------
11,372,352 Federated Treasury Obligations Fund -
Institutional Shares (Cost $11,372,352) ........ $ 11,372,352
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 100.8%
(Cost $218,027,049) ............................ $249,176,773
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.8%) (1,981,327)
------------
NET ASSETS -- 100.0% ........................... $247,195,446
============
* Non-income producing security.
See notes to financial statements.
8
AVE MARIA GROWTH FUND
PORTFOLIO MANAGER COMMENTARY
================================================================================
Dear Fellow Shareholders:
For the year ended December 31, 2007, the Ave Maria Growth Fund had a total
return of 11.6% compared with 5.5% for the S&P 500 Index. For the three years
ended December 31, 2007, the Fund's total return was 9.0% annualized compared
with 8.6% annualized for the S&P 500 Index. Since inception (May 1, 2003), the
Fund's total return was 15.3%, annualized compared with 12.7% annualized for the
S&P 500. During each period, stock selection within the context of our
disciplined approach to portfolio management can be credited for the
outperformance.
The top five performing issues in the Ave Maria Growth Fund for 2007 were:
Occidental Petroleum Corporation (Integrated Oil & Gas) +60.1%
Waters Corporation (Life Sciences Tools & Services) +58.7%
AMETEK, Inc. (Electronic Instruments & Electromechanical Devices) +48.5%
Frontier Oil Corporation (Oil Refining & Marketing) +44.3%
Mettler-Toledo International Inc. (Electronic Instruments & Equipment) +44.3%
The bottom five performing issues were:
Coach, Inc. (Apparel, Accessories & Luxury Goods) -44.3%
Harley-Davidson, Inc. (Motorcycle Manufacturer) -32.3%
Franklin Electric Company, Inc. (Submersible Pumps & Equipment) -25.1%
Bed Bath & Beyond Inc. (Home Furnishing Retail) -24.3%
Brown & Brown, Inc. (Insurance Broker) -16.9%
The Fund is diversified among eight out of eleven S&P 500 economic sectors:
Consumer Staples 6.6%
Consumer Cyclicals 11.5%
Financial 7.6%
Transportation 4.2%
Energy 12.2%
Capital Goods 34.7%
Technology 7.3%
Health Care 15.9%
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
[LINE GRAPH OMITTED]
S&P 500 INDEX AVE MARIA GROWTH FUND
------------- ---------------------
DATE VALUE DATE VALUE
---- ----- ---- -----
05/01/03 $ 10,000 05/01/03 $ 10,000
06/30/03 10,667 06/30/03 10,660
09/30/03 10,952 09/30/03 10,980
12/31/03 12,286 12/31/03 12,340
03/31/04 12,494 03/31/04 12,860
06/30/04 12,708 06/30/04 13,240
09/30/04 12,470 09/30/04 13,570
12/31/04 13,623 12/31/04 14,990
03/31/05 13,330 03/31/05 14,390
06/30/05 13,512 06/30/05 14,170
09/30/05 13,999 09/30/05 14,540
12/31/05 14,291 12/31/05 15,040
03/31/06 14,893 03/31/06 16,344
06/30/06 14,678 06/30/06 16,554
09/30/06 15,510 09/30/06 16,494
12/31/06 16,548 12/31/06 17,410
03/31/07 16,654 03/31/07 18,138
06/30/07 17,700 06/30/07 18,937
09/30/07 18,059 09/30/07 19,200
12/31/07 17,453 12/31/07 19,433
Past performance is not predictive of future performance.
- --------------------------------------------------------------------------------
-------------------------------------
Ave Maria Growth Fund
Average Annual Total Returns (a)
(for periods ended December 31, 2007)
Since
1 Year Inception(b)
------ ------------
11.61% 15.29%
-------------------------------------
(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, 2007.
10
AVE MARIA GROWTH FUND
ANNUAL TOTAL RATES OF RETURN
COMPARISON WITH MAJOR INDICES (UNAUDITED)
================================================================================
AVE MARIA GROWTH FUND S&P 500 INDEX
- --------------------------------------------------------------------------------
2003 (a) 23.4% 22.8%
2004 21.5% 10.9%
2005 0.3% 4.9%
2006 15.8% 15.8%
2007 11.6% 5.5%
AVERAGE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31, 2007 (UNAUDITED)
================================================================================
AVE MARIA GROWTH FUND S&P 500 INDEX
- --------------------------------------------------------------------------------
3 Years 9.0% 8.6%
Since Inception 15.3% 12.7%
(a) Represents the period from the commencement of operations (May 1, 2003)
through December 31, 2003.
11
AVE MARIA GROWTH FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2007 (UNAUDITED)
================================================================================
% OF
SHARES COMPANY MARKET VALUE NET ASSETS
- --------------------------------------------------------------------------------
88,800 Varian Medical Systems, Inc. ........... $4,631,808 4.0%
47,800 C.R. Bard, Inc. ........................ 4,531,440 3.9%
56,800 Stryker Corporation .................... 4,244,096 3.6%
129,900 SEI Investments Company ................ 4,178,883 3.6%
100,900 Frontier Oil Corporation ............... 4,094,522 3.5%
77,625 XTO Energy, Inc. ....................... 3,986,820 3.4%
60,300 ITT Corporation ........................ 3,982,212 3.4%
44,700 Danaher Corporation .................... 3,921,978 3.4%
46,300 Dionex Corporation ..................... 3,836,418 3.3%
53,300 Rockwell Collins, Inc. ................. 3,836,001 3.3%
ASSET ALLOCATION (UNAUDITED)
================================================================================
% OF
SECTOR NET ASSETS
- --------------------------------------------------------------------------------
Aerospace & Defense ................................................ 8.1%
Business Services .................................................. 4.7%
Consumer - Durables ................................................ 8.6%
Consumer - Nondurables ............................................. 4.5%
Consumer - Retail .................................................. 2.5%
Energy & Mining .................................................... 12.0%
Finance ............................................................ 7.7%
Food & Tobacco ..................................................... 3.1%
Healthcare ......................................................... 16.9%
Industrial Products & Services ..................................... 25.2%
Technology ......................................................... 6.4%
Cash Equivalents, Other Assets and Liabilities ..................... 0.3%
------
100.0%
======
12
AVE MARIA GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2007
================================================================================
SHARES COMMON STOCKS -- 99.7% MARKET VALUE
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 8.1%
26,300 Alliant Techsystems, Inc. * .................... $ 2,991,888
29,200 General Dynamics Corporation ................... 2,598,508
53,300 Rockwell Collins, Inc. ......................... 3,836,001
------------
9,426,397
------------
BUSINESS SERVICES -- 4.7%
53,000 Accenture Ltd. - Class A ....................... 1,909,590
186,000 Rollins, Inc. .................................. 3,571,200
------------
5,480,790
------------
CONSUMER - DURABLES -- 8.6%
34,000 Black & Decker Corporation (The) ............... 2,368,100
51,300 Harley-Davidson, Inc. .......................... 2,396,223
38,200 Polaris Industries, Inc. ....................... 1,824,814
63,900 Toro Company (The) ............................. 3,478,716
------------
10,067,853
------------
CONSUMER - NONDURABLES -- 4.5%
50,000 Coach, Inc. * .................................. 1,529,000
98,300 McCormick & Company, Inc. ...................... 3,726,553
------------
5,255,553
------------
CONSUMER - RETAIL -- 2.5%
60,100 Bed Bath & Beyond Inc. * ....................... 1,766,339
46,300 Ross Stores, Inc. .............................. 1,183,891
------------
2,950,230
------------
ENERGY & MINING -- 12.0%
23,000 Exxon Mobil Corporation ........................ 2,154,870
100,900 Frontier Oil Corporation ....................... 4,094,522
48,800 Occidental Petroleum Corporation ............... 3,757,112
77,625 XTO Energy, Inc. ............................... 3,986,820
------------
13,993,324
------------
FINANCE - INSURANCE -- 2.9%
144,200 Brown & Brown, Inc. ............................ 3,388,700
------------
FINANCE - SERVICES -- 4.8%
25,950 FactSet Research Systems, Inc. ................. 1,445,415
129,900 SEI Investments Company ........................ 4,178,883
------------
5,624,298
------------
FOOD & TOBACCO -- 3.1%
69,700 Kellogg Company ................................ 3,654,371
------------
13
AVE MARIA GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 99.7% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
HEALTHCARE -- 16.9%
29,300 Beckman Coulter, Inc. .......................... $ 2,133,040
47,800 C. R. Bard, Inc. ............................... 4,531,440
55,500 Patterson Companies, Inc. * .................... 1,884,225
56,800 Stryker Corporation ............................ 4,244,096
88,800 Varian Medical Systems, Inc. * ................. 4,631,808
28,600 Waters Corporation * ........................... 2,261,402
------------
19,686,011
------------
INDUSTRIAL PRODUCTS & SERVICES -- 25.2%
71,400 AMETEK, Inc. ................................... 3,344,376
61,800 CLARCOR, Inc. .................................. 2,346,546
44,700 Danaher Corporation ............................ 3,921,978
61,400 Donaldson Company, Inc. ........................ 2,847,732
49,100 Expeditors International of Washington, Inc. ... 2,193,788
42,300 Franklin Electric Company, Inc. ................ 1,618,821
88,400 Graco, Inc. .................................... 3,293,784
60,300 ITT Corporation ................................ 3,982,212
81,900 Johnson Controls, Inc. ......................... 2,951,676
67,500 Landstar System, Inc. .......................... 2,845,125
------------
29,346,038
------------
TECHNOLOGY -- 6.4%
46,300 Dionex Corporation * ........................... 3,836,418
31,900 Mettler-Toledo International Inc. * ............ 3,630,220
------------
7,466,638
------------
TOTAL COMMON STOCKS (Cost $94,529,944) ......... $116,340,203
------------
================================================================================
SHARES CASH EQUIVALENTS -- 0.5% MARKET VALUE
- --------------------------------------------------------------------------------
588,695 Federated Treasury Obligations Fund -
Institutional Shares (Cost $588,695) ........... $ 588,695
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 100.2%
(Cost $95,118,639) ............................. $116,928,898
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.2%) (191,624)
------------
NET ASSETS -- 100.0% ........................... $116,737,274
============
* Non-income producing security.
See notes to financial statements.
14
AVE MARIA RISING DIVIDEND FUND
PORTFOLIO MANAGER COMMENTARY
================================================================================
Dear Fellow Shareholders:
In 2007, the Ave Maria Rising Dividend Fund had a total return of -0.6%. This
compares with -2.1% for the Standard & Poors Dividend Aristocrat Index and 5.5%
for the Standard & Poors 500 Index. It was a rough year for stocks generally,
and a particularly rough year for dividend-paying stocks. As the accompanying
table illustrates, those stocks in the S&P 500 with the highest dividend yields
at the beginning of 2007 had the lowest total returns for the year, while those
with the lowest dividend yield performed the best.
RETURNS FOR S&P 500 COMPANIES BY QUINTILES
Dividend Yield Total Return
Quintile as of 12/31/06 for 2007
-------- -------------- --------
1 0.0% 12.3%
2 0.4% 9.8%
3 1.1% 5.1%
4 1.9% 2.6%
5 3.4% -4.8%
Source: StockVal
Of course, our Fund doesn't buy stocks that just pay dividends. We focus on
companies that pay a rising stream of dividends, and continue to believe that
this investment strategy will produce favorable long-term results with below
average risks.
Our best performing issues in 2007 included energy-related Exxon Mobil
Corporation (+24%), and healthcare issues Stryker Corporation (+36%), Beckman
Coulter, Inc. (+23%), and Becton, Dickinson and Company (+21%). Beyond that,
Johnson Controls, Inc. (automotive supplier) and W.W. Grainger, Inc. (business
supplies and services) were each up 27%.
Driven in large part by the fears that began with the sub-prime mortgage market,
financial services stocks performed poorly during the year. The portfolio was
negatively affected by Citizens Republic Bancorp, Inc. (-41%), TCF Financial
Corporation (-31%), and BB&T Corporation (-26%). Reflecting fear of the slowing
economy, consumer discretionary stocks such as Cato Corporation also did poorly,
down (-28%).
Even though the Fund had a disappointing year in 2007, most of the portfolio
companies continued to raise their dividends. Over 95% of them raised their
dividends during the year by an average of 15%.
15
AVE MARIA RISING DIVIDEND FUND
PORTFOLIO MANAGER COMMENTARY (CONTINUED)
================================================================================
The companies in the Ave Maria Rising Dividend Fund have been selected because
of their proven ability to raise their dividends even during turbulent periods.
We expect them to continue to do so. For those investors whose time horizon is
long-term, we believe the future is bright for this Fund. In our opinion, the
current period of investor anxiety has produced opportunities to acquire shares
of excellent companies at bargain prices.
We appreciate your participation in the Fund.
/s/ George P. Schwartz /s/ Richard L. Platte, Jr.
George P. Schwartz, CFA Richard L. Platte, Jr., CFA
Co-Portfolio Manager Co-Portfolio Manager
16
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
[LINE GRAPH OMITTED]
S&P 500 DIVIDEND AVE MARIA RISING
S&P 500 INDEX ARISTOCRAT INDEX DIVIDEND FUND
--------------------- --------------------- ---------------------
DATE VALUE DATE VALUE DATE VALUE
---- ----- ---- ----- ---- -----
05/02/05 $ 10,000 05/02/05 $ 10,000 05/02/05 $ 10,000
06/30/05 10,286 06/30/05 10,031 06/30/05 10,200
09/30/05 10,656 09/30/05 10,136 09/30/05 10,330
12/31/05 10,879 12/31/05 10,542 12/31/05 10,671
03/31/06 11,336 03/31/06 11,049 03/31/06 11,386
06/30/06 11,173 06/30/06 11,176 06/30/06 11,336
09/30/06 11,806 09/30/06 11,754 09/30/06 11,751
12/31/06 12,596 12/31/06 12,365 12/31/06 12,580
03/31/07 12,677 03/31/07 12,536 03/31/07 12,990
06/30/07 13,473 06/30/07 13,078 06/30/07 13,617
09/30/07 13,746 09/30/07 12,830 09/30/07 13,412
12/31/07 13,289 12/31/07 12,110 12/31/07 12,506
Past performance is not predictive of future performance.
- --------------------------------------------------------------------------------
------------------------------------------
Ave Maria Rising Dividend Fund
Average Annual Total Returns (a)
(for periods ended December 31, 2007)
Since
1 Year Inception(b)
------ -----------
-0.59% 8.75%
------------------------------------------
(a) The returns 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, 2007.
17
AVE MARIA RISING DIVIDEND FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2007 (UNAUDITED)
================================================================================
% OF
SHARES COMPANY MARKET VALUE NET ASSETS
- --------------------------------------------------------------------------------
35,000 Exxon Mobil Corporation ................ $3,279,150 4.0%
150,000 RPM International Inc. ................. 3,045,000 3.7%
75,000 Halliburton Company .................... 2,843,250 3.4%
70,000 Hormel Foods Corporation ............... 2,833,600 3.4%
37,000 Laboratory Corporation
of America Holdings .................... 2,794,610 3.4%
105,000 Ross Stores, Inc. ...................... 2,684,850 3.2%
70,000 R.R. Donnelley & Sons Company .......... 2,641,800 3.2%
35,000 Legg Mason, Inc. ....................... 2,560,250 3.1%
30,000 Burlington Northern Santa Fe Corporation 2,496,900 3.0%
30,000 PartnerRe Ltd. ......................... 2,475,900 3.0%
ASSET ALLOCATION (UNAUDITED)
================================================================================
% OF
SECTOR NET ASSETS
- --------------------------------------------------------------------------------
Aerospace & Defense ................................................ 2.7%
Business Services .................................................. 1.7%
Consumer - Durables ................................................ 4.3%
Consumer - Nondurables ............................................. 4.7%
Consumer - Retail .................................................. 4.8%
Energy & Mining .................................................... 9.2%
Finance ............................................................ 18.3%
Food & Tobacco ..................................................... 7.4%
Healthcare ......................................................... 9.1%
Industrial Products & Services ..................................... 25.4%
Printing & Publishing .............................................. 3.2%
Transportation ..................................................... 5.7%
Cash Equivalents, Other Assets and Liabilities ..................... 3.5%
------
100.0%
======
18
AVE MARIA RISING DIVIDEND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2007
================================================================================
SHARES COMMON STOCKS -- 96.5% MARKET VALUE
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 2.7%
25,000 General Dynamics Corporation ................... $ 2,224,750
------------
BUSINESS SERVICES -- 1.7%
50,000 Diebold, Incorporated .......................... 1,449,000
------------
CONSUMER - DURABLES -- 4.3%
50,000 Harley-Davidson, Inc. .......................... 2,335,500
35,000 HNI Corporation ................................ 1,227,100
------------
3,562,600
------------
CONSUMER - NONDURABLES -- 4.7%
40,000 Scotts Miracle-Gro Company - Class A (The) ..... 1,496,800
24,000 Sherwin-Williams Company (The) ................. 1,392,960
15,000 VF Corporation ................................. 1,029,900
------------
3,919,660
------------
CONSUMER - RETAIL -- 4.8%
81,900 Cato Corporation - Class A (The) ............... 1,282,554
105,000 Ross Stores, Inc. .............................. 2,684,850
------------
3,967,404
------------
ENERGY & MINING -- 9.2%
35,000 Exxon Mobil Corporation ........................ 3,279,150
75,000 Halliburton Company ............................ 2,843,250
15,000 Schlumberger Limited ........................... 1,475,550
------------
7,597,950
------------
FINANCE - BANKS & THRIFTS -- 8.5%
70,000 BB&T Corporation ............................... 2,146,900
100,000 Citizens Republic Bancorp, Inc. ................ 1,451,000
80,000 Synovus Financial Corporation .................. 1,926,400
20,000 TCF Financial Corporation ...................... 358,600
40,000 United Bankshares, Inc. ........................ 1,120,800
------------
7,003,700
------------
FINANCE - INSURANCE -- 6.7%
75,000 Arthur J. Gallagher & Co. ...................... 1,814,250
25,000 Mercury General Corporation .................... 1,245,250
30,000 PartnerRe Ltd. ................................. 2,475,900
------------
5,535,400
------------
19
AVE MARIA RISING DIVIDEND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.5% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
FINANCE - SERVICES -- 3.1%
35,000 Legg Mason, Inc. ............................... $ 2,560,250
------------
FOOD & TOBACCO -- 7.4%
28,000 ConAgra Foods, Inc. ............................ 666,120
70,000 Hormel Foods Corporation ....................... 2,833,600
10,000 J.M. Smucker Company (The) ..................... 514,400
40,000 Kellogg Company ................................ 2,097,200
------------
6,111,320
------------
HEALTHCARE -- 9.1%
13,500 Beckman Coulter, Inc. .......................... 982,800
15,000 Becton, Dickinson & Company .................... 1,253,700
37,000 Laboratory Corporation of America Holdings * ... 2,794,610
33,000 Stryker Corporation ............................ 2,465,760
------------
7,496,870
------------
INDUSTRIAL PRODUCTS & SERVICES -- 25.4%
30,000 Caterpillar Inc. ............................... 2,176,800
2,000 Ecolab, Inc. ................................... 102,420
100,000 Gentex Corporation ............................. 1,777,000
30,000 Genuine Parts Company .......................... 1,389,000
65,000 Graco, Inc. .................................... 2,421,900
60,000 Johnson Controls, Inc. ......................... 2,162,400
25,000 Raven Industries, Inc. ......................... 959,750
150,000 RPM International Inc. ......................... 3,045,000
25,000 Stanley Works (The) ............................ 1,212,000
30,000 United Technologies Corporation ................ 2,296,200
75,000 Waste Management, Inc. ......................... 2,450,250
12,000 W.W. Grainger, Inc. ............................ 1,050,240
------------
21,042,960
------------
PRINTING & PUBLISHING -- 3.2%
70,000 R.R. Donnelley & Sons Company .................. 2,641,800
------------
TRANSPORTATION -- 5.7%
30,000 Burlington Northern Santa Fe Corporation ....... 2,496,900
25,000 CSX Corporation ................................ 1,099,500
22,500 Norfolk Southern Corporation ................... 1,134,900
------------
4,731,300
------------
TOTAL COMMON STOCKS (Cost $79,111,651) ......... 79,844,964
------------
20
AVE MARIA RISING DIVIDEND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES CASH EQUIVALENTS -- 3.5% MARKET VALUE
- --------------------------------------------------------------------------------
2,894,801 Federated Treasury Obligations Fund -
Institutional Shares (Cost $2,894,801) ......... $ 2,894,801
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 100.0%
(Cost $82,006,452) ............................. $ 82,739,765
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.0% .. 2,760
------------
NET ASSETS -- 100.0% ........................... $ 82,742,525
============
* Non-income producing security.
See notes to financial statements.
21
AVE MARIA OPPORTUNITY FUND
PORTFOLIO MANAGER COMMENTARY
================================================================================
Dear Fellow Shareholders:
Last year was a challenging year for small-cap value investors. While small-cap
stocks underperformed their large-cap brethren, value stocks were trounced by
growth stocks. Several small-cap value stock indices fell sharply during the
year, including the Russell 2000 Value Index, which declined 9.8%. The Ave Maria
Opportunity Fund declined 8.5% during 2007, compared to a 1.6% decline for the
Russell 2000 Index, and a 0.3% decline for the S&P 600 SmallCap Index. Since
inception on May 1, 2006, the Fund's annualized total return is -0.6%, compared
to 1.6% for the Russell 2000 Index and 1.1% for the S&P 600 SmallCap Index.
The Fund's less than satisfactory performance in 2007 was primarily attributable
to its consumer and financial holdings. Of the Fund's 25 worst performing stocks
during the year, nine were financials, and ten were consumer related. These
stocks, which looked inexpensive at the time of purchase, continued to get
cheaper as the year unfolded. Essentially we underestimated the magnitude of the
credit crisis and the collapsing housing market. What began as strictly a
sub-prime mortgage problem early last year, has filtered throughout financial
markets, negatively impacting housing prices, consumer sentiment, consumer
spending, and a broad spectrum of financial institutions and specialty
retailers. Consumer and financial related companies that had an outsized
negative effect on performance during the year included Chico's FAS, Inc.
(women's apparel retailing), Select Comfort Corporation (Sleep Number beds),
Smith & Wesson Holding Corporation (firearms), AmTrust Financial Corporation
(regional banking), and Citizens Republic Bancorp, Inc. (regional banking).
Stocks which contributed positively to performance in 2007 included Sun
Hydraulics Corporation (+87%), Raven Industries, Inc. (+45%), Kinetic Concepts,
Inc. (+39%), and Harris Corporation (+38%). Unfortunately, the winners were more
than offset by the declines in the Fund's consumer and financial stock holdings.
The Fund has been re-positioned in recent months, with a greater emphasis on
higher quality and somewhat larger companies. Characteristics of high quality
companies include, among others, a long track record of rising sales and profits
(in good and poor economic climates), high profit margins owing to proprietary
products and services, low capital spending needs resulting in strong free cash
flow, and above average returns on equity and capital, with little or no debt
leverage. Due to the recent small-cap carnage, we were able to purchase several
high quality companies at distressed prices, including AZZ, Inc. (energy
infrastructure), CommScope, Inc. (communication and networking equipment),
FactSet Research Systems, Inc. (financial data services), RADVision Ltd.
(teleconferencing equipment), and Rimage Corporation (DVD-recordable publishing
systems).
22
AVE MARIA OPPORTUNITY FUND
PORTFOLIO MANAGER COMMENTARY (CONTINUED)
================================================================================
Also, on a positive note, the expense ratio for the Fund continues to be below
the industry average for small-cap equity funds. According to Morningstar, the
average small-cap value equity fund had a total expense ratio of 1.51% as of
December 31, 2007, while our Fund had an expense ratio of 1.25% after fee
waivers.
Your continued interest and investment in the Ave Maria Opportunity Fund is
greatly appreciated.
With best regards,
/s/ Timothy S. Schwartz
Timothy S. Schwartz, CFA
Portfolio Manager
23
AVE MARIA OPPORTUNITY FUND
PERFORMANCE (UNAUDITED)
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE AVE MARIA OPPORTUNITY FUND AND THE RUSSELL 2000 INDEX
[LINE GRAPH OMITTED]
RUSSELL 2000 INDEX AVE MARIA OPPORTUNITY FUND
------------------ --------------------------
DATE VALUE DATE VALUE
---- ----- ---- -----
05/01/06 $ 10,000 05/01/06 $ 10,000
06/30/06 9,542 06/30/06 9,940
09/30/06 9,584 09/30/06 10,030
12/31/06 10,438 12/31/06 10,829
03/31/07 10,641 03/31/07 11,157
06/30/07 11,111 06/30/07 11,793
09/30/07 10,767 09/30/07 10,829
12/31/07 10,273 12/31/07 9,906
Past performance is not predictive of future performance.
- --------------------------------------------------------------------------------
---------------------------------------------
Ave Maria Rising Dividend Fund
Average Annual Total Returns (a)
(for periods ended December 31, 2007)
Since
1 Year Inception(b)
------ ------------
-8.52% -0.56%
---------------------------------------------
(a) The returns 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 1, 2006)
through December 31, 2006.
24
AVE MARIA OPPORTUNITY FUND
TEN LARGEST EQUITY HOLDINGS
DECEMBER 31, 2007 (UNAUDITED)
================================================================================
% OF
SHARES COMPANY MARKET VALUE NET ASSETS
- --------------------------------------------------------------------------------
26,000 Zebra Technologies Corporation - Class A $ 902,200 5.0%
14,000 Kinetic Concepts, Inc. ................. 749,840 4.1%
80,000 Chico's FAS, Inc. ...................... 722,400 4.0%
16,500 Graco, Inc. ............................ 614,790 3.4%
221,600 Continucare Corporation ................ 598,320 3.3%
20,000 Sun Hydraulics Corporation ............. 504,600 2.8%
70,000 Select Comfort Corporation ............. 490,700 2.7%
22,600 ADTRAN, Inc. ........................... 483,188 2.7%
8,400 American Science and Engineering, Inc. . 476,700 2.6%
30,000 ION Geophysical Corporation ............ 473,400 2.6%
ASSET ALLOCATION (UNAUDITED)
================================================================================
% OF
SECTOR NET ASSETS
- --------------------------------------------------------------------------------
Aerospace & Defense ................................................ 4.8%
Apparel & Textiles ................................................. 3.0%
Business Services .................................................. 0.8%
Consumer - Durables ................................................ 8.6%
Consumer - Nondurables ............................................. 1.9%
Consumer - Retail .................................................. 9.9%
Energy & Mining .................................................... 4.0%
Finance ............................................................ 12.3%
Healthcare ......................................................... 10.0%
Industrial Products & Services ..................................... 18.9%
Technology ......................................................... 13.8%
Transportation ..................................................... 2.1%
Cash Equivalents, Other Assets and Liabilities ..................... 9.9%
------
100.0%
======
25
AVE MARIA OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2007
================================================================================
SHARES COMMON STOCKS -- 90.1% MARKET VALUE
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 4.8%
8,400 American Science and Engineering, Inc. * ....... $ 476,700
6,200 Harris Corporation ............................. 388,616
------------
865,316
------------
APPAREL & TEXTILES -- 3.0%
4,300 Columbia Sportswear Company .................... 189,587
70,600 Tefron Ltd. * .................................. 348,764
------------
538,351
------------
BUSINESS SERVICES -- 0.8%
4,600 Courier Corporation ............................ 151,846
------------
CONSUMER - DURABLES -- 8.6%
10,000 HNI Corporation ................................ 350,600
16,400 La-Z-Boy Incorporated .......................... 130,052
70,000 Select Comfort Corporation * ................... 490,700
35,000 Smith & Wesson Holding Corporation * ........... 213,500
10,000 Thor Industries, Inc. .......................... 380,100
------------
1,564,952
------------
CONSUMER - NONDURABLES -- 1.9%
15,000 Acme United Corporation ........................ 215,250
7,100 K-Swiss, Inc. - Class A ........................ 128,510
------------
343,760
------------
CONSUMER - RETAIL -- 9.9%
80,000 Chico's FAS, Inc. * ............................ 722,400
7,200 Dollar Tree Stores, Inc. * ..................... 186,624
2,600 Foot Locker, Inc. .............................. 35,516
8,400 Hibbett Sports, Inc. * ......................... 167,832
16,500 Ross Stores, Inc. .............................. 421,905
30,000 Sally Beauty Holdings, Inc. * .................. 271,500
------------
1,805,777
------------
ENERGY & MINING -- 4.0%
30,000 ION Geophysical Corporation * .................. 473,400
12,500 Patterson-UTI Energy, Inc. ..................... 244,000
------------
717,400
------------
FINANCE - BANKS & THRIFTS -- 7.8%
45 AmTrust Financial Corporation .................. 315,000
2,600 Boston Private Financial Holdings, Inc. ........ 70,408
15,000 Century Bancorp, Inc. - Class A ................ 302,550
10,000 Citizens Republic Bancorp, Inc. ................ 145,100
2,500 Clarkston Financial Corporation * .............. 20,000
5,600 FNBH Bancorp, Inc. ............................. 75,600
4,000 Hudson City Bancorp, Inc. ...................... 60,080
4,000 Macatawa Bank Corporation ...................... 34,360
26
AVE MARIA OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 90.1% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
FINANCE - BANKS & THRIFTS -- 7.8% (CONTINUED)
3,789 Oxford Bank Corporation ........................ $ 99,082
4,800 People's United Financial, Inc. ................ 85,440
3,300 PrivateBancorp, Inc. ........................... 107,745
9,400 Westfield Financial, Inc. ...................... 91,180
------------
1,406,545
------------
FINANCE - INSURANCE -- 4.5%
10,000 Fremont Michigan InsuraCorp, Inc. - Class A * .. 192,000
50,000 Meadowbrook Insurance Group, Inc. * ............ 470,500
15,000 Unico American Corporation * ................... 153,750
------------
816,250
------------
HEALTHCARE -- 10.0%
10,000 Computer Programs & Systems, Inc. .............. 227,400
221,600 Continucare Corporation * ...................... 598,320
14,000 Kinetic Concepts, Inc. * ....................... 749,840
15,300 Psychemedics Corporation ....................... 245,565
------------
1,821,125
------------
INDUSTRIAL PRODUCTS & SERVICES -- 18.9%
11,300 Applied Industrial Technologies, Inc. .......... 327,926
25,000 Gentex Corporation ............................. 444,250
16,500 Graco, Inc. .................................... 614,790
5,100 Lincoln Electric Holdings, Inc. ................ 363,018
12,000 Raven Industries, Inc. ......................... 460,680
4,400 Rofin-Sinar Technologies, Inc. * ............... 211,684
20,400 RPM International Inc. ......................... 414,120
20,000 Sun Hydraulics Corporation ..................... 504,600
3,400 Trinity Industries, Inc. ....................... 94,384
------------
3,435,452
------------
TECHNOLOGY -- 13.8%
22,600 ADTRAN, Inc. ................................... 483,188
8,400 Cognex Corporation ............................. 169,260
5,400 CommScope, Inc. * .............................. 265,734
10,000 MTS Systems Corporation ........................ 426,700
2,600 Rimage Corporation * ........................... 67,470
2,000 SPSS, Inc. * ................................... 71,820
10,000 Stamps.com, Inc. * ............................. 121,800
26,000 Zebra Technologies Corporation - Class A * ..... 902,200
------------
2,508,172
------------
TRANSPORTATION -- 2.1%
20,200 American Railcar Industries, Inc. .............. 388,850
------------
TOTAL COMMON STOCKS (Cost $16,525,782) ......... $ 16,363,796
------------
27
AVE MARIA OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES CASH EQUIVALENTS -- 9.8% MARKET VALUE
- --------------------------------------------------------------------------------
844,000 Federated Government Obligations
Tax-Managed Fund - Institutional Shares ..... $ 844,000
843,730 Federated Treasury Obligations Fund -
Institutional Shares ........................ 843,730
94,730 Federated U.S. Treasury Cash
Reserve Fund - Institutional Shares.......... 94,730
------------
TOTAL CASH EQUIVALENTS (Cost $1,782,460) ....... $ 1,782,460
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 99.9%
(Cost $18,308,242) ............................. $ 18,146,256
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% .. 17,217
------------
NET ASSETS -- 100.0% ........................... $ 18,163,473
============
* Non-income producing security.
See notes to financial statements.
28
AVE MARIA BOND FUND
PORTFOLIO MANAGER COMMENTARY
================================================================================
Dear Fellow Shareholders:
For the year ended December 31, 2007, the Ave Maria Bond Fund (Class R) had a
total return of 4.8%, compared to the return of the Lehman Brothers Intermediate
U.S. Government/Credit Index of 7.4%.
2007 was a year of dramatic change in the U.S. credit markets. At the beginning
of the year, interest rates were relatively high with the yield on the 10 year
Treasury note at 4.7%. The yield curve was flat with little difference between
the yields on 2, 10 and 30 year Treasuries. Credit spreads were narrow between
bonds of differing credit quality. In that environment, the highest quality
bonds - U.S. Treasuries - were undervalued, so we significantly overweighted
them in the portfolio. During the year, as we expected, interest rates fell
across the maturity spectrum with the biggest drop at the short-end, creating an
upwardly sloped yield curve. With investors sobered by the melt down in the
sub-prime mortgage market, credit spreads widened significantly and U.S.
Treasuries outperformed, which helped the Fund.
As these events unfolded, we made a number of changes in the portfolio. When
Treasury prices rose in relation to corporate bonds, we sold Treasuries and
bought corporates. Responding to falling interest rates, we shortened the
average maturity of the bonds in the portfolio to reduce the interest rate risk.
Equities represented 15.3% of the portfolio at year-end, versus 17.8% at the
start of 2007.
The positive performance of the Fund resulted from falling interest rates which
favorably impacted bond prices. The equity portion of the portfolio negatively
impacted the Fund by approximately 1.1% largely as a result of financial service
companies such as Citizens Republic Bancorp, Inc., BB&T Corporation, and TCF
Financial Corporation.
It's becoming increasingly apparent that the U.S. economy has slipped into
recession. We expect the Fed to continue its accommodative monetary policy
pushing short-term interest rates progressively lower. Credit spreads should
continue to widen. If prices on corporate bonds become even cheaper, we
anticipate adding to those positions. With the decline in equity prices noted
above, many dividend paying stocks are now more attractive for purchase than
they have been in many years. We anticipate adding to equity holdings and expect
them to make a disproportionately positive contribution to performance on a
long-term basis.
We appreciate your continued participation in the Fund.
Sincerely,
/s/ Richard L. Platte, Jr.
Richard L. Platte, Jr., CFA
Portfolio Manager
29
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
[LINE GRAPH OMITTED]
LEHMAN BROTHERS
INTERMEDIATE
U.S.GOVERNMENT/ AVE MARIA BOND AVE MARIA BOND
CREDIT INDEX FUND (CLASS I) FUND (CLASS R)
--------------------- --------------------- ---------------------
DATE VALUE DATE VALUE DATE VALUE
---- ------- ---- ------- ---- -------
05/01/03 $ 10,000 05/01/03 $ 10,000 05/01/03 $ 10,000
06/30/03 10,188 06/30/03 10,163 06/30/03 10,151
09/30/03 10,186 09/30/03 10,174 09/30/03 10,163
12/31/03 10,192 12/31/03 10,256 12/31/03 10,236
03/31/04 10,445 03/31/04 10,500 03/31/04 10,470
06/30/04 10,182 06/30/04 10,354 06/30/04 10,306
09/30/04 10,457 09/30/04 10,679 09/30/04 10,620
12/31/04 10,502 12/31/04 10,823 12/31/04 10,753
03/31/05 10,410 03/31/05 10,722 03/31/05 10,643
06/30/05 10,669 06/30/05 10,946 06/30/05 10,857
09/30/05 10,613 09/30/05 10,950 09/30/05 10,853
12/31/05 10,668 12/31/05 11,020 12/31/05 10,903
03/31/06 10,626 03/31/06 11,019 03/31/06 10,905
06/30/06 10,649 06/30/06 11,070 06/30/06 10,937
09/30/06 10,990 09/30/06 11,452 09/30/06 11,318
12/31/06 11,103 12/31/06 11,698 12/31/06 11,552
03/31/07 11,279 03/31/07 11,924 03/31/07 11,756
06/30/07 11,262 06/30/07 11,830 06/30/07 11,666
09/30/07 11,586 09/30/07 12,208 09/30/07 12,019
12/31/07 11,922 12/31/07 12,300 12/31/07 12,102
Past performance is not predictive of future performance.
- --------------------------------------------------------------------------------
------------------------------------------
Ave Maria Bond Fund
Average Annual Total Returns (a)
(for the period ended December 31, 2007)
Since
1 Year Inception (b)
------ -------------
Class I 5.14% 4.53%
Class R 4.75% 4.17%
------------------------------------------
(a) The returns shown do not reflect the deduction of taxes a shareholder
would pay on Fund distribution or the redemption of Fund shares.
(b) Represents the period from commencement of operations (May 1, 2003)
through December 31, 2007.
30
AVE MARIA BOND FUND
ANNUAL TOTAL RATES OF RETURN
COMPARISON WITH MAJOR INDICES (UNAUDITED)
================================================================================
LEHMAN BROTHERS
INTERMEDIATE
AVE MARIA BOND FUND AVE MARIA BOND FUND U.S. GOVERNMENT/
CLASS I CLASS R CREDIT INDEX
- --------------------------------------------------------------------------------
2003 (a) 2.6% 2.4% 1.9%
2004 5.5% 5.1% 3.0%
2005 1.8% 1.4% 1.6%
2006 6.2% 6.0% 4.1%
2007 5.1% 4.8% 7.4%
AVERAGE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31, 2007 (UNAUDITED)
================================================================================
LEHMAN BROTHERS
INTERMEDIATE
AVE MARIA BOND FUND AVE MARIA BOND FUND U.S. GOVERNMENT/
CLASS I CLASS R CREDIT INDEX
- --------------------------------------------------------------------------------
3 Years 4.4% 4.0% 4.3%
Since Inception 4.5% 4.2% 3.8%
(a) Represents the period from the commencement of operations (May 1, 2003)
through December 31, 2003.
31
AVE MARIA BOND FUND
TEN LARGEST HOLDINGS*
DECEMBER 31, 2007 (UNAUDITED)
================================================================================
% OF NET
PAR VALUE HOLDING MARKET VALUE ASSETS
- --------------------------------------------------------------------------------
$3,000,000 U.S. Treasury Note, 2.625%, due 05/15/08 $2,992,266 6.8%
1,500,000 U.S. Treasury Note, 4.750%, due 01/31/12 1,581,093 3.6%
1,500,000 U.S. Treasury Note, 4.375%, due 08/15/12 1,565,391 3.5%
1,500,000 U.S. Treasury Note, 4.250%, due 08/15/13 1,554,726 3.5%
1,500,000 U.S. Treasury Note, 4.250%, due 10/15/10 1,547,929 3.5%
1,500,000 U.S. Treasury Note, 4.250%, due 11/15/14 1,547,462 3.5%
1,273,910 U.S. Treasury Inflation-Protection Note,
3.875%, due 01/15/09 1,311,530 3.0%
1,034,510 U.S. Treasury Inflation-Protection Note,
2.500%, due 07/15/16 1,103,208 2.5%
1,000,000 ConocoPhillips, 8.750%, due 05/25/10 1,095,559 2.5%
1,008,030 U.S. Treasury Inflation-Protection Note,
2.625%, due 07/15/17 1,087,648 2.5%
* Excludes cash equivalents.
ASSET ALLOCATION (UNAUDITED)
================================================================================
% OF
NET ASSETS
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
U.S. Treasuries .................................................... 39.2%
U.S. Government Agencies ........................................... 10.4%
CORPORATE BONDS
SECTOR
- ------
Consumer Products .................................................. 4.6%
Finance ............................................................ 4.4%
Food & Tobacco ..................................................... 1.5%
Industrials ........................................................ 13.1%
Utilities .......................................................... 4.7%
COMMON STOCKS
SECTOR
- ------
Consumer - Durables ................................................ 0.6%
Consumer - Retail .................................................. 0.9%
Finance ............................................................ 5.5%
Industrial Products & Services ..................................... 2.7%
Printing & Publishing .............................................. 0.9%
Utilities .......................................................... 4.7%
Cash Equivalents, Other Assets and Liabilities ..................... 6.8%
------
100.0%
======
32
AVE MARIA BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2007
================================================================================
PAR VALUE U.S. GOVERNMENT AND
AGENCY OBLIGATIONS -- 49.6% MARKET VALUE
- --------------------------------------------------------------------------------
U.S. TREASURIES -- 39.2%
$3,000,000 U.S. Treasury Note, 2.625%, due 05/15/08 ....... $ 2,992,266
1,000,000 U.S. Treasury Note, 3.750%, due 05/15/08 ....... 1,001,172
1,273,910 U.S. Treasury Inflation-Protection Note, 3.875%,
due 01/15/09 ................................. 1,311,530
1,000,000 U.S. Treasury Note, 3.000%, due 02/15/09 ....... 998,750
1,000,000 U.S. Treasury Note, 3.375%, due 10/15/09 ....... 1,006,172
1,500,000 U.S. Treasury Note, 4.250%, due 10/15/10 ....... 1,547,929
1,500,000 U.S. Treasury Note, 4.750%, due 01/31/12 ....... 1,581,093
1,500,000 U.S. Treasury Note, 4.375%, due 08/15/12 ....... 1,565,391
1,500,000 U.S. Treasury Note, 4.250%, due 08/15/13 ....... 1,554,726
1,500,000 U.S. Treasury Note, 4.250%, due 11/15/14 ....... 1,547,462
1,034,510 U.S. Treasury Inflation-Protection Note, 2.500%,
due 07/15/16 ................................. 1,103,208
1,008,030 U.S. Treasury Inflation-Protection Note, 2.625%,
due 07/15/17 ................................... 1,087,648
------------
17,297,347
------------
U.S. GOVERNMENT AGENCIES -- 10.4%
1,000,000 Federal Farm Credit Bank, 4.480%, due 08/24/12 . 1,022,762
1,000,000 Federal Farm Credit Bank, 4.600%, due 12/27/12 . 1,027,833
500,000 Federal Home Loan Bank, 3.375%, due 07/21/08 ... 497,276
1,000,000 Federal Home Loan Bank, 5.000%, due 09/01/10 ... 1,034,867
1,000,000 Federal Home Loan Bank, 5.815%, due 08/21/13 ... 1,010,663
------------
4,593,401
------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS (Cost $21,386,711) ........ $ 21,890,748
------------
================================================================================
PAR VALUE CORPORATE BONDS -- 28.3% MARKET VALUE
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS -- 4.6%
$1,000,000 Harley-Davidson, Inc. - 144A(a), 3.625%,
due 12/15/08 ................................. $ 989,179
1,000,000 Stanley Works, 5.000%, due 03/15/10 ............ 1,016,267
------------
2,005,446
------------
FINANCE -- 4.4%
1,000,000 Caterpillar Financial Services Corporation, 4.750%,
due 02/17/15 ................................. 966,223
1,000,000 Marshall & Ilsley Bank, 5.250%, due 09/04/12 ... 990,677
------------
1,956,900
------------
FOOD & TOBACCO -- 1.5%
600,000 Hormel Foods Corporation, 6.625%, due 06/01/11 . 643,660
------------
33
AVE MARIA BOND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE CORPORATE BONDS -- 28.3% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
INDUSTRIALS -- 13.1%
$1,000,000 ConocoPhillips, 8.750%, due 05/25/10 ........... $ 1,095,559
1,000,000 Dover Corporation, 6.500%, due 02/15/11 ........ 1,052,012
1,000,000 Halliburton Company, 5.500%, due 10/15/10 ...... 1,027,952
500,000 Johnson Controls, Inc., 5.250%, due 01/15/11 ... 501,411
1,000,000 Masco Corporation, 5.875%, due 07/15/12 ........ 1,025,044
1,000,000 United Technologies Corporation, 6.350%,
due 03/01/11 ................................. 1,064,788
------------
5,766,766
------------
UTILITIES -- 4.7%
1,000,000 FPL Group Capital, Inc., 5.625%, due 09/01/11 .. 1,023,974
1,000,000 Southern Power Company, 6.250%, due 07/15/12 ... 1,046,019
------------
2,069,993
------------
TOTAL CORPORATE BONDS (Cost $12,438,024) ....... $ 12,442,765
------------
================================================================================
SHARES COMMON STOCKS -- 15.3% MARKET VALUE
- --------------------------------------------------------------------------------
CONSUMER - DURABLES -- 0.6%
10,000 Newell Rubbermaid Inc. ......................... $ 258,800
------------
CONSUMER - RETAIL -- 0.9%
15,000 Ross Stores, Inc. .............................. 383,550
------------
FINANCE - BANKS & THRIFTS -- 3.0%
20,000 BB&T Corporation ............................... 613,400
25,000 Citizens Republic Bancorp, Inc. ................ 362,750
20,000 TCF Financial Corporation ...................... 358,600
------------
1,334,750
------------
FINANCE - INSURANCE -- 2.5%
30,000 Arthur J. Gallagher & Co. ...................... 725,700
8,000 Mercury General Corporation .................... 398,480
------------
1,124,180
------------
INDUSTRIAL PRODUCTS & SERVICES -- 2.7%
6,000 Genuine Parts Company .......................... 277,800
45,000 RPM International Inc. ......................... 913,500
------------
1,191,300
------------
PRINTING & PUBLISHING -- 0.9%
10,000 R.R. Donnelley & Sons Company .................. 377,400
------------
34
AVE MARIA BOND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 15.3% (CONTINUED) MARKET VALUE
- --------------------------------------------------------------------------------
UTILITIES -- 4.7%
15,000 NSTAR .......................................... $ 543,300
18,000 Pinnacle West Capital Corporation .............. 763,380
20,000 Southern Company ............................... 775,000
------------
2,081,680
------------
TOTAL COMMON STOCKS (Cost $7,154,524) .......... $ 6,751,660
------------
================================================================================
SHARES CASH EQUIVALENTS -- 5.7% MARKET VALUE
- --------------------------------------------------------------------------------
448,059 Federated Government Obligations
Tax-Managed Fund - Institutional Shares ...... $ 448,059
2,079,164 Federated Treasury Obligations Fund -
Institutional Shares ......................... 2,079,164
------------
TOTAL CASH EQUIVALENTS (Cost $2,527,223) ....... $ 2,527,223
------------
TOTAL INVESTMENTS AT MARKET VALUE -- 98.9%
(Cost $43,506,482) ............................. $ 43,612,396
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.1% .. 484,222
------------
NET ASSETS -- 100.0% ........................... $ 44,096,618
============
(a) 144A - This is a restricted security that was sold in a transaction exempt
from Rule 144A of the Securities Act of 1933. This security may be sold in
transactions exempt from registration, normally to qualified institutional
buyers.
See notes to financial statements.
35
AVE MARIA MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2007
================================================================================================================================
AVE MARIA AVE MARIA AVE MARIA AVE MARIA
CATHOLIC GROWTH RISING OPPORTUNITY AVE MARIA
VALUES FUND FUND DIVIDEND FUND FUND BOND FUND
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investment securities:
At amortized cost .......................... $218,027,049 $ 95,118,639 $ 82,006,452 $ 18,308,242 $ 43,506,482
============ ============ ============ ============ ============
At market value (Note 1) ................... $249,176,773 $116,928,898 $ 82,739,765 $ 18,146,256 $ 43,612,396
Receivable for capital shares sold ........... 199,497 53,577 82,968 30,514 40,576
Dividends and interest receivable ............ 213,234 102,475 131,728 16,228 474,263
Other assets ................................. 15,404 13,856 12,326 8,340 10,357
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS ............................... 249,604,908 117,098,806 82,966,787 18,201,338 44,137,592
------------ ------------ ------------ ------------ ------------
LIABILITIES
Payable for investment securities purchased .. 1,201,315 -- -- -- --
Payable for capital shares redeemed .......... 441,876 35,416 15,142 41 527
Payable to Adviser (Note 2) .................. 680,924 276,220 172,654 21,184 2,632
Payable to administrator (Note 2) ............ 31,800 14,800 10,700 4,000 4,000
Accrued distribution fees (Note 2) ........... 6,950 9,189 -- -- 16,868
Other accrued expenses ....................... 46,597 25,907 25,766 12,640 16,947
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES .......................... 2,409,462 361,532 224,262 37,865 40,974
------------ ------------ ------------ ------------ ------------
NET ASSETS ................................... $247,195,446 $116,737,274 $ 82,742,525 $ 18,163,473 $ 44,096,618
============ ============ ============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital .............................. $216,400,344 $ 94,927,015 $ 81,828,544 $ 19,119,871 $ 43,991,659
Undistributed/(Distributions in excess of)
net investment income ...................... -- -- 586 -- (1,019)
Accumulated undistributed net realized
gains/(losses) from security transactions .. (354,622) -- 180,082 (794,412) 64
Net unrealized appreciation/(depreciation)
on investments ............................. 31,149,724 21,810,259 733,313 (161,986) 105,914
------------ ------------ ------------ ------------ ------------
NET ASSETS ................................... $247,195,446 $116,737,274 $ 82,742,525 $ 18,163,473 $ 44,096,618
============ ============ ============ ============ ============
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) .............................. 15,742,151 6,162,442 7,167,832 1,896,306
============ ============ ============ ============
Net asset value, offering price and redemption
price per share (Note 1) ................... $ 15.70 $ 18.94 $ 11.54 $ 9.58
============ ============ ============ ============
PRICING OF CLASS I SHARES
Net assets applicable to Class I shares ...... $ 9,918,753
============
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) .............................. 978,503
============
Net asset value, offering price and redemption
price per share (Note 1) ................... $ 10.14
============
PRICING OF CLASS R SHARES
Net assets applicable to Class R shares ...... $ 34,177,865
============
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) .............................. 3,376,073
============
Net asset value, offering price and redemption
price per share (Note 1) ................... $ 10.12
============
See notes to financial statements.
36
AVE MARIA MUTUAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007
===================================================================================================================================
AVE MARIA AVE MARIA AVE MARIA AVE MARIA
CATHOLIC GROWTH RISING OPPORTUNITY AVE MARIA
VALUES FUND FUND DIVIDEND FUND FUND BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividend .................................... $ 4,159,928 $ 1,007,772 $ 1,871,320 $ 362,817 $ 397,915
Interest .................................... 25,596 -- 36,088 24,533 1,462,678
------------ ------------ ------------ ------------ ------------
TOTAL INCOME ............................. 4,185,524 1,007,772 1,907,408 387,350 1,860,593
------------ ------------ ------------ ------------ ------------
EXPENSES
Investment advisory fees (Note 2) ........... 2,760,220 1,058,040 595,285 202,586 128,134
Shareholder servicing fees (Note 2) ......... 690,052 264,509 -- -- --
Shareholder servicing fees - Class R (Note 2) -- -- -- -- 70,626
Administration, accounting and
transfer agent fees (Note 2) ............. 414,082 158,800 119,171 48,000 48,000
Legal and audit fees ........................ 53,799 41,626 35,109 25,298 28,542
Postage and supplies ........................ 60,453 33,792 20,535 10,454 17,544
Trustees' fees and expenses ................. 26,068 26,068 26,068 26,068 26,068
Registration fees - Common .................. 16,340 23,945 22,241 24,567 11,297
Registration fees - Class I ................. -- -- -- -- 565
Registration fees - Class R ................. -- -- -- -- 8,585
Custodian fees .............................. 27,796 10,903 12,485 8,511 4,207
Insurance expense ........................... 19,035 7,416 4,925 2,151 4,644
Reports to shareholders ..................... 13,941 7,480 3,895 1,633 2,518
Advisory board fees and expenses ............ 5,267 5,267 5,267 5,267 5,267
Compliance service fees ..................... 10,711 4,329 3,598 844 1,744
Other expenses .............................. 19,390 10,230 10,632 8,653 13,128
------------ ------------ ------------ ------------ ------------
TOTAL EXPENSES ........................... 4,117,154 1,652,405 859,211 364,032 370,869
Less fees waived and/or expenses
reimbursed by the Adviser (Note 2):
Common ................................... -- (65,346) -- (110,801) (133,206)
Class I .................................. -- -- -- -- (565)
Plus previously waived investment
advisory fees and expense reimbursements
recouped by the Adviser (Note 2): ........ 23,171 -- 44,436 -- --
------------ ------------ ------------ ------------ ------------
NET EXPENSES ............................. 4,140,325 1,587,059 903,647 253,231 237,098
------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME/(LOSS) .................. 45,199 (579,287) 1,003,761 134,119 1,623,495
------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED
GAINS/(LOSSES) ON INVESTMENTS
Net realized gains/(losses) from
security transactions ....................... 2,169,395 1,884,422 2,240,936 (763,976) 967,612
Net increase from payment by Adviser due
to the disposal of investments in violation
of investment restrictions (Note 2) ......... 176,249 -- -- -- --
Net change in unrealized appreciation/
(depreciation) on investments ............... (13,218,975) 9,682,834 (2,669,327) (1,185,767) (568,779)
------------ ------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAINS/(LOSSES) ON INVESTMENTS ............... (10,873,331) 11,567,256 (428,391) (1,949,743) 398,833
------------ ------------ ------------ ------------ ------------
NET INCREASE/(DECREASE) IN NET
ASSETS FROM OPERATIONS ...................... $(10,828,132) $ 10,987,969 $ 575,370 $ (1,815,624) $ 2,022,328
============ ============ ============ ============ ============
See notes to financial statements.
37
AVE MARIA CATHOLIC VALUES FUND
STATEMENTS OF CHANGES IN NET ASSETS
=======================================================================================================
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2007 2006
- -------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income/(loss) ...................................... $ 45,199 $ (570,434)
Net realized gains from security transactions ..................... 2,169,395 10,818,434
Net increase from payment by Adviser due to the disposal of
investments in violation of investment restrictions (Note 2) ... 176,249 --
Net realized gains from in-kind redemptions (Note 1) .............. -- 18,457,383
Net change in unrealized appreciation/(depreciation) on investments (13,218,975) 4,564,102
------------ ------------
Net increase/(decrease) in net assets from operations ................ (10,828,132) 33,269,485
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ........................................ (53,179) --
From net realized gains on investments ............................ (2,073,963) (10,545,124)
------------ ------------
Net decrease in net assets from distributions to shareholders ........ (2,127,142) (10,545,124)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ......................................... 51,156,753 52,002,346
Reinvestment of distributions to shareholders ..................... 1,945,841 9,595,000
Payments for shares redeemed ...................................... (50,963,533) (72,685,160)
------------ ------------
Net increase/(decrease) in net assets from capital share transactions. 2,139,061 (11,087,814)
------------ ------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS .............................. (10,816,213) 11,636,547
NET ASSETS
Beginning of year ................................................. 258,011,659 246,375,112
------------ ------------
End of year ....................................................... $247,195,446 $258,011,659
============ ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME ............................................. $ -- $ --
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold ....................................................... 2,963,771 3,249,139
Shares issued in reinvestment of distributions to shareholders .... 123,155 578,360
Shares redeemed ................................................... (2,985,874) (4,543,268)
------------ ------------
Net increase/(decrease) in shares outstanding ..................... 101,052 (715,769)
Shares outstanding, beginning of year ............................. 15,641,099 16,356,868
------------ ------------
Shares outstanding, end of year ................................... 15,742,151 15,641,099
============ ============
See notes to financial statements.
38
AVE MARIA GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
=======================================================================================================
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2007 2006
- -------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss ............................................... $ (579,287) $ (220,994)
Net realized gains from security transactions ..................... 1,884,422 712,003
Net realized gains from in-kind redemptions (Note 1) .............. -- 2,014,638
Net change in unrealized appreciation/(depreciation) on investments 9,682,834 7,996,624
------------ ------------
Net increase in net assets from operations ........................... 10,987,969 10,502,271
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains on investments ............................ (1,717,378) (711,674)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ......................................... 37,125,655 27,242,598
Reinvestment of distributions to shareholders ..................... 1,588,147 668,695
Payments for shares redeemed ...................................... (16,457,823) (16,052,538)
------------ ------------
Net increase in net assets from capital share transactions ........... 22,255,979 11,858,755
------------ ------------
TOTAL INCREASE IN NET ASSETS ......................................... 31,526,570 21,649,352
NET ASSETS
Beginning of year ................................................. 85,210,704 63,561,352
------------ ------------
End of year ....................................................... $116,737,274 $ 85,210,704
============ ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME ............................................. $ -- $ --
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold ....................................................... 2,016,293 1,667,583
Shares issued in reinvestment of distributions to shareholders .... 83,105 38,564
Shares redeemed ................................................... (886,636) (993,409)
------------ ------------
Net increase in shares outstanding ................................ 1,212,762 712,738
Shares outstanding, beginning of year ............................. 4,949,680 4,236,942
------------ ------------
Shares outstanding, end of year ................................... 6,162,442 4,949,680
============ ============
See notes to financial statements.
39
AVE MARIA RISING DIVIDEND FUND
STATEMENTS OF CHANGES IN NET ASSETS
=======================================================================================================
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2007 2006
- -------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ............................................. $ 1,003,761 $ 376,535
Net realized gains from security transactions ..................... 2,240,936 748,365
Net realized gains from in-kind redemptions (Note 1) .............. -- 1,733,646
Net change in unrealized appreciation/(depreciation) on investments (2,669,327) 2,332,107
------------ ------------
Net increase in net assets from operations ........................... 575,370 5,190,653
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ........................................ (1,003,175) (376,535)
From net realized gains on investments ............................ (2,241,008) (748,272)
------------ ------------
Net decrease in net assets from distributions to shareholders ........ (3,244,183) (1,124,807)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Net assets received in conjunction with fund merger (Note 1) ...... 46,890,726 --
Proceeds from shares sold ......................................... 19,866,356 16,397,640
Reinvestment of distributions to shareholders ..................... 2,409,951 711,266
Payments for shares redeemed ...................................... (18,806,800) (11,366,258)
------------ ------------
Net increase in net assets from capital share transactions ........... 50,360,233 5,742,648
------------ ------------
TOTAL INCREASE IN NET ASSETS ......................................... 47,691,420 9,808,494
NET ASSETS
Beginning of year ................................................. 35,051,105 25,242,611
------------ ------------
End of year ....................................................... $ 82,742,525 $ 35,051,105
============ ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME ............................................. $ 586 $ --
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares issued in conjunction with fund merger (Note 1) ............ 3,770,256 --
Shares sold ....................................................... 1,809,315 1,432,894
Shares issued in reinvestment of distributions to shareholders .... 204,522 59,190
Shares redeemed ................................................... (1,518,764) (972,858)
------------ ------------
Net increase in shares outstanding ................................ 4,265,329 519,226
Shares outstanding, beginning of year ............................. 2,902,503 2,383,277
------------ ------------
Shares outstanding, end of year ................................... 7,167,832 2,902,503
============ ============
See notes to financial statements.
40
AVE MARIA OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
=======================================================================================================
YEAR PERIOD
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2007 2006(a)
- -------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ............................................. $ 134,119 $ 94,493
Net realized gains/(losses) from security transactions ............ (763,976) 342,668
Net change in unrealized appreciation/(depreciation) on investments (1,185,767) 1,023,781
------------ ------------
Net increase/(decrease) in net assets from operations ................ (1,815,624) 1,460,942
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ........................................ (134,519) (94,235)
From net realized gains on investments ............................ -- (373,104)
------------ ------------
Net decrease in net assets from distributions to shareholders ........ (134,519) (467,339)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ......................................... 8,423,798 18,868,063
Reinvestment of distributions to shareholders ..................... 60,986 91,678
Payments for shares redeemed ...................................... (6,085,594) (2,238,918)
------------ ------------
Net increase in net assets from capital share transactions ........... 2,399,190 16,720,823
------------ ------------
TOTAL INCREASE IN NET ASSETS ......................................... 449,047 17,714,426
NET ASSETS
Beginning of period ............................................... 17,714,426 --
------------ ------------
End of period ..................................................... $ 18,163,473 $ 17,714,426
============ ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME ............................................. $ -- $ 258
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold ....................................................... 778,095 1,880,754
Shares issued in reinvestment of distributions to shareholders .... 6,346 8,641
Shares redeemed ................................................... (567,589) (209,941)
------------ ------------
Net increase in shares outstanding ................................ 216,852 1,679,454
Shares outstanding, beginning of period ........................... 1,679,454 --
------------ ------------
Shares outstanding, end of period ................................. 1,896,306 1,679,454
============ ============
(a) Represents the period from the commencement of operations (May 1, 2006)
through December 31, 2006.
See notes to financial statements.
41
AVE MARIA BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
=======================================================================================================
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2007 2006
- -------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ............................................. $ 1,623,495 $ 1,832,732
Net realized gains from security transactions ..................... 967,612 260,709
Net change in unrealized appreciation/(depreciation) on investments (568,779) 704,922
------------ ------------
Net increase in net assets from operations ........................... 2,022,328 2,798,363
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class I ............................... (571,441) (1,135,731)
From net investment income, Class R ............................... (1,061,024) (700,257)
From net realized gains on investments, Class I ................... (221,533) (114,092)
From net realized gains on investments, Class R ................... (746,173) (146,596)
------------ ------------
Net decrease in net assets from distributions to shareholders ........ (2,600,171) (2,096,676)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
CLASS I
Proceeds from shares sold ......................................... 164,508 135,000
Reinvestment of distributions to shareholders ..................... -- 16,961
Payments for shares redeemed ...................................... (8,035,904) (30,709,371)
------------ ------------
Net decrease in net assets from Class I capital share transactions ... (7,871,396) (30,557,410)
------------ ------------
CLASS R
Proceeds from shares sold ......................................... 15,304,038 8,193,903
Reinvestment of distributions to shareholders ..................... 1,548,186 774,275
Payments for shares redeemed ...................................... (5,568,193) (2,804,300)
------------ ------------
Net increase in net assets from Class R capital share transactions ... 11,284,031 6,163,878
------------ ------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS .............................. 2,834,792 (23,691,845)
NET ASSETS
Beginning of year ................................................. 41,261,826 64,953,671
------------ ------------
End of year ....................................................... $ 44,096,618 $ 41,261,826
============ ============
DISTRIBUTIONS IN EXCESS OF
NET INVESTMENT INCOME ............................................. $ (10,410) $ (1,440)
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
CLASS I
Shares sold ....................................................... 16,013 13,478
Shares issued in reinvestment of distributions to shareholders .... -- 1,689
Shares redeemed ................................................... (779,366) (3,039,466)
------------ ------------
Net decrease in shares outstanding ................................ (763,353) (3,024,299)
Shares outstanding, beginning of year ............................. 1,741,856 4,766,155
------------ ------------
Shares outstanding, end of year ................................... 978,503 1,741,856
============ ============
CLASS R
Shares sold ....................................................... 1,483,843 811,940
Shares issued in reinvestment of distributions to shareholders .... 151,631 76,363
Shares redeemed ................................................... (540,087) (277,651)
------------ ------------
Net increase in shares outstanding ................................ 1,095,387 610,652
Shares outstanding, beginning of year ............................. 2,280,686 1,670,034
------------ ------------
Shares outstanding, end of year ................................... 3,376,073 2,280,686
============ ============
See notes to financial statements.
42
AVE MARIA CATHOLIC VALUES FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
======================================================================================================================
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2007 2006 2005 2004 2003
- ----------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of year........ $ 16.50 $ 15.06 $ 14.62 $ 12.75 $ 9.47
---------- ---------- ---------- ---------- ----------
Income/(loss) from investment operations:
Net investment income/(loss) ............. 0.00(a) (0.04) (0.04) (0.05) (0.03)
Net realized and unrealized gains/(losses)
on investments ....................... (0.67) 2.18 0.89 2.61 3.40
---------- ---------- ---------- ---------- ----------
Total from investment operations ........... (0.67) 2.14 0.85 2.56 3.37
---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income ............... (0.00)(a) -- -- -- --
From net realized gains on investments ... (0.13) (0.70) (0.41) (0.69) (0.09)
---------- ---------- ---------- ---------- ----------
Total distributions ........................ (0.13) (0.70) (0.41) (0.69) (0.09)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year ............. $ 15.70 $ 16.50 $ 15.06 $ 14.62 $ 12.75
========== ========== ========== ========== ==========
Total return (b) ........................... (4.0%)(c) 14.2% 5.8% 20.1% 35.6%
========== ========== ========== ========== ==========
Ratios/Supplementary Data:
Net assets at end of year (000's) .......... $ 247,195 $ 258,012 $ 246,375 $ 248,070 $ 144,956
========== ========== ========== ========== ==========
Ratio of net expenses to
average net assets (d) ................... 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment income/(loss)
to average net assets .................... 0.03% (0.23)% (0.28)% (0.44)% (0.28)%
Portfolio turnover rate .................... 52% 59% 61% 34% 58%
(a) Amount rounds to less than $0.01 per share.
(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. The returns
shown do not reflect the deduction of taxes a shareholder would pay on
Fund distributions or the redemption of Fund shares.
(c) During the year ended December 31, 2007, the Fund received a payment from
the Adviser of $176,249 for losses realized on the disposal of investments
purchased in violation of investment restrictions, which otherwise would
have reduced the total return by 0.06% (Note 2).
(d) Absent investment advisory fees waived by the Adviser, the ratio of
expenses to average net assets would have been 1.52%, 1.51%, 1.52% and
1.56% for the years ended December 31, 2006, 2005, 2004 and 2003,
respectively.
See notes to financial statements.
43
AVE MARIA GROWTH 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,
2007 2006 2005 2004 2003(a)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period ........ $ 17.22 $ 15.00 $ 14.99 $ 12.34 $ 10.00
---------- ---------- ---------- ---------- ----------
Income/(loss) from investment operations:
Net investment loss ......................... (0.09) (0.04) (0.05) (0.03) (0.02)
Net realized and unrealized
gains on investments ..................... 2.09 2.40 0.10 2.68 2.36
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 2.00 2.36 0.05 2.65 2.34
---------- ---------- ---------- ---------- ----------
Less distributions:
From net realized gains on investments ...... (0.28) (0.14) (0.04) -- --
---------- ---------- ---------- ---------- ----------
Net asset value at end of period .............. $ 18.94 $ 17.22 $ 15.00 $ 14.99 $ 12.34
========== ========== ========== ========== ==========
Total return (b) .............................. 11.6% 15.8% 0.3% 21.5% 23.4%(c)
========== ========== ========== ========== ==========
Ratios/Supplementary Data:
Net assets at end of period (000's) ........... $ 116,737 $ 85,211 $ 63,561 $ 51,574 $ 15,105
========== ========== ========== ========== ==========
Ratio of net expenses to average net assets (d) 1.50% 1.50% 1.50% 1.50% 1.49%(e)
Ratio of net investment loss
to average net assets ....................... (0.55)% (0.30)% (0.34)% (0.29)% (0.36)%(e)
Portfolio turnover rate ....................... 9% 13% 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. The 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 investment advisory fee waivers and expense reimbursements by the
Adviser, the ratio of expenses to average net assets would have been
1.56%, 1.62%, 1.64%, 1.79% and 2.61%(e) for the periods ended December 31,
2007, 2006, 2005, 2004 and 2003, respectively.
(e) Annualized.
See notes to financial statements.
44
AVE MARIA RISING DIVIDEND 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,
2007 2006 2005(a)
- ------------------------------------------------------------------------------------------------
Net asset value at beginning of period ............. $ 12.08 $ 10.59 $ 10.00
---------- ---------- ----------
Income/(loss) from investment operations:
Net investment income ........................... 0.16 0.14 0.08
Net realized and unrealized gains/(losses)
on investments ............................... (0.22) 1.75 0.59
---------- ---------- ----------
Total from investment operations ................... (0.06) 1.89 0.67
---------- ---------- ----------
Less distributions:
From net investment income ...................... (0.16) (0.14) (0.08)
From net realized gains on investments .......... (0.32) (0.26) (0.00)(b)
---------- ---------- ----------
Total distributions ................................ (0.48) (0.40) (0.08)
---------- ---------- ----------
Net asset value at end of period ................... $ 11.54 $ 12.08 $ 10.59
========== ========== ==========
Total return (c) ................................... (0.6%) 17.9% 6.7%(d)
========== ========== ==========
Ratios/Supplementary Data:
Net assets at end of period (000's) ................ $ 82,743 $ 35,051 $ 25,243
========== ========== ==========
Ratio of net expenses to average net assets (e) .... 1.14% 1.25% 1.24%(f)
Ratio of net investment income to average net assets 1.26% 1.23% 1.19%(f)
Portfolio turnover rate ............................ 41% 65% 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 periods covered, which assumes any dividends or capital
gains distributions are reinvested in shares of the Fund. The returns
shown do not 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 1.31% and 1.43%(f) for the
periods ended December 31, 2006 and 2005, respectively.
(f) Annualized.
See notes to financial statements.
45
AVE MARIA OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
=========================================================================================
YEAR PERIOD
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2007 2006 (a)
- -----------------------------------------------------------------------------------------
Net asset value at beginning of period ..................... $ 10.55 $ 10.00
---------- ----------
Income/(loss) from investment operations:
Net investment income ................................... 0.07 0.06
Net realized and unrealized gains/(losses) on investments (0.97) 0.77
---------- ----------
Total from investment operations ........................... (0.90) 0.83
---------- ----------
Less distributions:
From net investment income .............................. (0.07) (0.06)
From net realized gains on investments .................. -- (0.22)
---------- ----------
Total distributions ........................................ (0.07) (0.28)
---------- ----------
Net asset value at end of period ........................... $ 9.58 $ 10.55
========== ==========
Total return (b) ........................................... (8.5%) 8.3%(c)
========== ==========
Ratios/Supplementary Data:
Net assets at end of period (000's) ........................ $ 18,163 $ 17,714
========== ==========
Ratio of net expenses to average net assets (d) ............ 1.25% 1.24%(e)
Ratio of net investment income to average net assets ....... 0.66% 0.84%(e)
Portfolio turnover rate .................................... 126% 102%(e)
(a) Represents the period from the initial public offering (May 1, 2006)
through December 31, 2006.
(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. The 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 investment advisory fees waived by the Adviser, the ratio of
expenses to average net assets would have been 1.80% and 1.90%(e) for the
periods ended December 31, 2007 and 2006, respectively.
(e) Annualized.
See notes to financial statements.
46
AVE MARIA BOND FUND - CLASS I
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,
2007 2006 2005 2004 2003(a)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period ........ $ 10.26 $ 10.10 $ 10.29 $ 10.09 $ 10.00
---------- ---------- ---------- ---------- ----------
Income/(loss) from investment operations:
Net investment income ....................... 0.41 0.38 0.33 0.28 0.16
Net realized and unrealized gains/
(losses) on investments .................. 0.11 0.23 (0.15) 0.27 0.10
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 0.52 0.61 0.18 0.55 0.26
---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income .................. (0.41) (0.38) (0.33) (0.28) (0.16)
From net realized gains on investments ...... (0.23) (0.07) (0.04) (0.07) (0.01)
---------- ---------- ---------- ---------- ----------
Total distributions ........................... (0.64) (0.45) (0.37) (0.35) (0.17)
---------- ---------- ---------- ---------- ----------
Net asset value at end of period .............. $ 10.14 $ 10.26 $ 10.10 $ 10.29 $ 10.09
========== ========== ========== ========== ==========
Total return (b) .............................. 5.1% 6.2% 1.8% 5.5% 2.6%(c)
========== ========== ========== ========== ==========
Ratios/Supplementary Data:
Net Assets at end of period (000's) ........... $ 9,919 $ 17,880 $ 48,115 $ 32,458 $ 30,773
========== ========== ========== ========== ==========
Ratio of net expenses to average net assets (d) 0.37% 0.30% 0.30% 0.30% 0.30%(e)
Ratio of net investment income
to average net assets ....................... 3.96% 3.67% 3.32% 2.77% 2.36%(e)
Portfolio turnover rate ....................... 45% 21% 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. The 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 investment advisory fee waivers and expense reimbursements by the
Adviser, the ratio of expenses to average net assets would have been
0.68%, 0.65%, 0.61%, 0.72% and 0.71%(e) for the periods ended December 31,
2007, 2006, 2005, 2004 and 2003, respectively.
(e) Annualized.
See notes to financial statements.
47
AVE MARIA BOND FUND - CLASS R
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,
2007 2006 2005 2004 2003(a)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period ........ $ 10.25 $ 10.08 $ 10.28 $ 10.09 $ 10.00
---------- ---------- ---------- ---------- ----------
Income/(loss) from investment operations:
Net investment income ....................... 0.38 0.35 0.30 0.24 0.14
Net realized and unrealized gains/
(losses) on investments .................. 0.10 0.24 (0.16) 0.26 0.10
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 0.48 0.59 0.14 0.50 0.24
---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income .................. (0.38) (0.35) (0.30) (0.24) (0.14)
From net realized gains on investments ...... (0.23) (0.07) (0.04) (0.07) (0.01)
---------- ---------- ---------- ---------- ----------
Total distributions ........................... (0.61) (0.42) (0.34) (0.31) (0.15)
---------- ---------- ---------- ---------- ----------
Net asset value at end of period .............. $ 10.12 $ 10.25 $ 10.08 $ 10.28 $ 10.09
========== ========== ========== ========== ==========
Total return (b) .............................. 4.8% 6.0% 1.4% 5.1% 2.4%(c)
========== ========== ========== ========== ==========
Ratios/Supplementary Data:
Net assets at end of period (000's) ........... $ 34,178 $ 23,382 $ 16,839 $ 6,491 $ 1,502
========== ========== ========== ========== ==========
Ratio of net expenses to average net assets (d) 0.65% 0.60% 0.61% 0.70% 0.69%(e)
Ratio of net investment income
to average net assets ....................... 3.69% 3.37% 3.01% 2.37% 1.96%(e)
Portfolio turnover rate ....................... 45% 21% 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. The 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 investment advisory fee waivers and expense reimbursements by the
Adviser, the ratio of expenses to average net assets would have been
0.96%, 0.94%, 0.92%, 1.31% and 2.49%(e) for the periods ended December 31,
2007, 2006, 2005, 2004 and 2003, respectively.
(e) Annualized.
See notes to financial statements.
48
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Ave Maria Catholic Values Fund, the Ave Maria Growth Fund, the Ave Maria
Rising Dividend Fund, the Ave Maria Opportunity Fund and the Ave Maria Bond Fund
(collectively, 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 Ave Maria Opportunity Fund
commenced the public offering of its shares on May 1, 2006. The Funds determine
and make available for publication the net asset value of each of its shares on
a daily basis.
On March 30, 2007, the Ave Maria Rising Dividend Fund consummated a tax-free
merger with the Catholic Equity Fund. Pursuant to the terms of the agreement
governing the merger, each share of Class A, Class D and Class I shares of the
Catholic Equity Fund was converted into an equivalent dollar amount of shares of
the Ave Maria Rising Dividend Fund, based on the net asset value of the Ave
Maria Rising Dividend Fund and Class A, Class D and Class I shares of the
Catholic Equity Fund as of March 30, 2007 ($12.44 and $10.07, $9.44 and $10.07,
respectively), resulting in conversion ratios of 0.809762, 0.758704 and 0.810035
shares of the Ave Maria Rising Dividend Fund for each share of Class A, Class D
and Class I shares of the Catholic Equity Fund, respectively. The Ave Maria
Rising Dividend Fund thus issued 3,770,256 shares to shareholders of the
Catholic Equity Fund. Net assets of the Ave Maria Rising Dividend Fund and the
Catholic Equity Fund as of the merger date were $41,688,158 and $46,890,726,
including unrealized appreciation of $4,422,856 and $3,015,886, respectively. In
addition, the Catholic Equity Fund's net assets included accumulated realized
losses of $784,039. Total net assets immediately after the merger were
$88,578,884.
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 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 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 not violate core values and teachings of the Roman
Catholic Church. The investment objective of the Ave Maria Opportunity Fund is
long-term capital appreciation from equity investments in companies that do not
violate 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 Funds' Prospectus for information
regarding the investment strategies of each Fund.
49
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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
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) each class has exclusive voting rights with
respect to matters relating to its own distribution arrangements; and (4) Class
I shares require an initial investment of $10 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.
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
for each Fund.
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 are valued at the last reported sales price or, if
there is no reported sale on the valuation date, at the most recently
quoted bid price. 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.
(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.
50
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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, 2007 was as
follows:
------------------------------------------------------------------------------------------------------------------------
AVE MARIA AVE MARIA AVE MARIA AVE MARIA
CATHOLIC GROWTH RISING OPPORTUNITY AVE MARIA
VALUES FUND FUND DIVIDEND FUND FUND BOND FUND
------------------------------------------------------------------------------------------------------------------------
Undistributed ordinary income ........ $ -- $ -- $ 511,067 $ -- $ --
Undistributed long-term gains ........ 152,861 -- 17,632 -- 64
Capital loss carryforward ............ -- -- (330,285) (777,264) --
Net unrealized appreciation/
(depreciation) ...................... 30,642,241 21,810,259 715,567 (179,134) 104,895
------------ ------------ ------------ ------------ ------------
Total distributable earnings/(deficit) $ 30,795,102 $ 21,810,259 $ 913,981 $ (956,398) $ 104,959
============ ============ ============ ============ ============
As of December 31, 2007, the Ave Maria Rising Dividend Fund had a capital
loss carryforward acquired in the merger with the Catholic Equity Fund of
$330,285, of which $215,994 expires September 30, 2008, $108,803 expires
September 30, 2009 and $5,488 expires September 30, 2010. As of December
31, 2007, the Ave Maria Opportunity Fund had a capital loss carryforward
for federal income tax purposes of $777,264, which expires on December 31,
2015. These capital loss carryforwards may be utilized in future years to
offset net realized capital gains, if any, prior to distributing such
gains to shareholders.
During the year ended December 31, 2007, the Ave Maria Rising Dividend
Fund utilized $218,367 of capital loss carryforwards acquired through the
Catholic Equity Fund merger to offset current year realized gains.
On July 13, 2006, the Financial Accounting Standards Board ("FASB")
released Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in
Income Taxes." FIN 48 provides guidance for how uncertain tax positions
should be recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken in the
course of preparing each Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable
tax authority. Tax positions not deemed to meet the more-likely-than-not
threshold would be recorded as a tax benefit or expense in the current
year. Each Fund incorporated FIN 48 in its Semi-Annual report on June 30,
2007. Based on management's analysis, the adoption of FIN 48 did not have
a material impact on the financial statements. The statute of limitations
on the Funds' tax returns remains open for the years ended December 31,
2004 through December 31, 2006. Additionally, management does not
anticipate FIN 48 having a material impact on the financial statements for
the year ended December 31, 2008.
51
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, 2007:
----------------------------------------------------------------------------------------------------------------------
AVE MARIA AVE MARIA AVE MARIA AVE MARIA
CATHOLIC GROWTH RISING OPPORTUNITY AVE MARIA
VALUES FUND FUND DIVIDEND FUND FUND BOND FUND
----------------------------------------------------------------------------------------------------------------------
Gross unrealized appreciation $ 45,975,586 $ 26,220,281 $ 7,958,012 $ 1,354,525 $ 894,885
Gross unrealized depreciation (15,333,345) (4,410,022) (7,242,445) (1,533,659) (789,990)
------------- ------------- ------------- ------------- -------------
Net unrealized appreciation/
(depreciation) .......... $ 30,642,241 $ 21,810,259 $ 715,567 $ (179,134) $ 104,895
============= ============= ============= ============= =============
Federal income tax cost ..... $ 218,534,532 $ 95,118,639 $ 82,024,198 $ 18,325,390 $ 43,507,501
============= ============= ============= ============= =============
The difference between the federal income tax cost of portfolio
investments and the financial statement cost for the Ave Maria Catholic
Values Fund, Ave Maria Rising Dividend Fund and the Ave Maria Opportunity
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.
For the year ended December 31, 2007, the Ave Maria Catholic Values Fund
reclassified $7,980 of distributions in excess of net investment income
against paid-in capital; the Ave Maria Growth Fund reclassified $411,914
of its net investment loss against paid-in capital and $167,373 against
net realized gains from security transactions; the Ave Maria Rising
Dividend Fund reclassified $80 of distributions in excess of net realized
gains from security transactions and $179,981 of accumulated net realized
losses against paid-in capital; the Ave Maria Opportunity Fund
reclassified $142 of distributions in excess of net investment income
against paid-in capital; and the Ave Maria Bond Fund reclassified
distributions in excess of net investment income of $9,391 and
distributions in excess of net realized gains from security transactions
of $137 against paid-in capital. These reclassifications are reflected on
the Statements of Assets and Liabilities. Such reclassifications, the
result of permanent differences between the financial statement and the
income tax reporting requirements, have no effect on each Fund's net
assets or net asset value per share.
(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, the Ave Maria Growth Fund and the Ave Maria Opportunity Fund.
Dividends from net investment income, if any, are declared and paid
quarterly for the Ave
52
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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 periods ended December
31, 2007 and December 31, 2006 was as follows:
- --------------------------------------------------------------------------------
ORDINARY LONG-TERM TOTAL
PERIOD ENDED INCOME CAPITAL GAINS DISTRIBUTIONS
- --------------------------------------------------------------------------------
AVE MARIA CATHOLIC VALUES FUND:
December 31, 2007 ........... $ 53,179 $ 2,073,963 $ 2,127,142
December 31, 2006 ........... $ -- $ 10,545,124 $ 10,545,124
AVE MARIA GROWTH FUND:
December 31, 2007 ........... $ -- $ 1,717,378 $ 1,717,378
December 31, 2006 ........... $ -- $ 711,674 $ 711,674
AVE MARIA RISING DIVIDEND FUND:
December 31, 2007 ........... $ 1,707,552 $ 1,536,631 $ 3,244,183
December 31, 2006 ........... $ 719,951 $ 404,856 $ 1,124,807
AVE MARIA OPPORTUNITY FUND:
December 31, 2007 ........... $ 134,519 $ -- $ 134,519
December 31, 2006 ........... $ 467,339 $ -- $ 467,339
AVE MARIA BOND FUND - CLASS I:
December 31, 2007 ........... $ 604,319 $ 188,655 $ 792,974
December 31, 2006 ........... $ 1,135,731 $ 114,092 $ 1,249,823
AVE MARIA BOND FUND - CLASS R:
December 31, 2007 ........... $ 1,171,763 $ 635,434 $ 1,807,197
December 31, 2006 ........... $ 700,257 $ 146,596 $ 846,853
(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 obligations issued or guaranteed by the U.S. Government or
its agencies of instrumentalities 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
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.
53
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
2. INVESTMENT ADVISORY AGREEMENTS 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 Investment Advisory Agreements 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,
the Ave Maria Growth Fund and the Ave Maria Opportunity 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 average daily net
assets.
The Adviser has contractually agreed to reduce advisory fees or reimburse a
portion of operating expenses until at least May 1, 2010 so that: the net
expenses of the Ave Maria Catholic Values Fund and the Ave Maria Growth Fund do
not exceed 1.50% of average daily net assets; the net expenses of the Ave Maria
Rising Dividend Fund and the Ave Maria Opportunity Fund do not exceed 1.25% of
average daily net assets; and the net expenses of Class R and Class I shares of
the Ave Maria Bond Fund do not exceed 0.70% and 0.40%, respectively, of average
daily net assets. For the year ended December 31, 2007, the Adviser waived
investment advisory fees of $65,346 with respect to the Ave Maria Growth Fund;
waived investment advisory fees of $110,801 with respect to the Ave Maria
Opportunity Fund; and waived investment advisory fees of $128,134 and reimbursed
$5,637 of other operating expenses (including $5,072 of common expenses and $565
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 any undertaking by the Adviser to limit expenses
of the Funds. During the year ended December 31, 2007, the Adviser received
$23,171 from the Ave Maria Catholic Values Fund and $44,436 from the Ave Maria
Rising Dividend Fund in recoupment of fee waivers in prior fiscal periods. As of
December 31, 2007, the amount of fee waivers and expense reimbursements
available for reimbursement to the Adviser are as follows:
- --------------------------------------------------------------------------------
Ave Maria Catholic Values Fund.................................... $ 73,853
Ave Maria Growth Fund............................................. $ 236,511
Ave Maria Opportunity Fund........................................ $ 184,079
Ave Maria Bond Fund............................................... $ 482,562
- --------------------------------------------------------------------------------
54
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
The Adviser may recapture a portion of the above amounts no later than the dates
as stated below:
- --------------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2008 2009 2010
- --------------------------------------------------------------------------------
Ave Maria Catholic Values Fund ....... $ 33,160 $ 40,693 $ --
Ave Maria Growth Fund ................ $ 80,548 $ 90,617 $ 65,346
Ave Maria Opportunity Fund ........... $ -- $ 73,278 $ 110,801
Ave Maria Bond Fund .................. $ 170,813 $ 177,978 $ 133,771
- --------------------------------------------------------------------------------
Additionally, during the year ended December 31, 2007, the Adviser reimbursed
$176,249 to the Ave Maria Catholic Values Fund for losses realized on the
disposal of investments purchased in violation of investment restrictions.
The Chief Compliance Officer of the Trust (the "CCO") is an employee of the
Adviser. The Trust pays the Adviser $23,500 annually for providing CCO services,
of which each Fund pays its proportionate share along with the other series of
the Trust.
JLB & Associates, Inc. ("JLB") has been retained by the Adviser to manage the
investments of the Ave Maria Growth Fund pursuant to the terms of a Sub-Advisory
Agreement. The Adviser (not the Fund) pays JLB a fee at an annual rate of 0.30%
of the average value of the Fund's daily net assets. JLB has agreed to reduce
its sub-advisory fee, by means of a voluntary waiver, during the period from
September 1, 2007 through April 30, 2008, to the annual rate of 0.25% of average
daily net assets. JLB cannot recover from the Fund any such fee reductions.
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, the Ave Maria Rising Dividend Fund and the Ave Maria
Opportunity 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.
Pursuant to a Distribution Agreement between the Funds and the Distributor, the
Distributor serves as the Funds' exclusive agent for the distribution of each
Fund's shares. The Distributor is an affiliate of Ultimus.
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") under Section
12(b) of the Investment Company Act of 1940 and Rule 12b-1 thereunder, 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
55
AVE MARIA MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Class I shares). During the year ended December 31, 2007, the total expenses
incurred pursuant to the Plan were $690,052, $264,509, and $70,626 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.
3. INVESTMENT TRANSACTIONS
During the year ended December 31, 2007, 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 AVE MARIA AVE MARIA
CATHOLIC GROWTH RISING OPPORTUNITY AVE MARIA
VALUES FUND FUND DIVIDEND FUND FUND BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------
Purchases of investment securities ......... $140,727,733 $ 29,991,799 $ 64,176,332 $ 24,703,153 $ 10,902,276
============ ============ ============ ============ ============
Proceeds from sales of investment securities $132,342,469 $ 9,833,420 $ 29,737,816 $ 21,697,020 $ 4,526,956
============ ============ ============ ============ ============
- ----------------------------------------------------------------------------------------------------------------------------
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.
5. NEW ACCOUNTING PRONOUNCEMENT
In September 2006, the FASB issued Statement on Financial Accounting Standards
("SFAS") No. 157, "Fair Value Measurements." This standard establishes a single
authoritative definition of fair value, sets out a framework for measuring fair
value and requires additional disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. The changes to current generally accepted accounting
principles from the application of SFAS No. 157 relate to the definition of fair
value, the methods used to measure fair value, and the expanded disclosures
about fair value measurements. As of December 31, 2007, each Fund does not
believe the adoption of SFAS No. 157 will impact the amounts reported in the
financial statements, however, additional disclosures may be required about the
inputs used to develop the measurements and the effect of the measurements
reported on the statement of changes in net assets for a fiscal period.
56
AVE MARIA MUTUAL FUNDS
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Trustees
Ave Maria Catholic Values Fund, Ave Maria Growth Fund,
Ave Maria Rising Dividend Fund, Ave Maria Opportunity 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, Ave Maria Opportunity Fund, and Ave Maria Bond Fund (the "Funds"),
including the schedules of investments, as of December 31, 2007, and the related
statements of operations for the year ended, and the statements of 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. The Funds
are not required to have, nor were we engaged to perform, audits of their
internal control over financial reporting. Our audits included 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, 2007, by correspondence with the
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 Ave
Maria Catholic Values Fund, Ave Maria Growth Fund, Ave Maria Rising Dividend
Fund, Ave Maria Opportunity Fund, and Ave Maria Bond Fund as of December 31,
2007, the results of their operations for the year then ended, and the changes
in their net assets and the financial highlights for the respective stated
periods, in conformity with accounting principles generally accepted in the
United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
February 15, 2008
57
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, 66 Chairman of the Since 1992
Bloomfield Hills, MI Board/Trustee
* George P. Schwartz, CFA 3707 W. Maple Road, 63 President/Trustee Since 1992
Bloomfield Hills, MI
INDEPENDENT TRUSTEES:
John E. Barnds 640 Lakeside Road, 75 Trustee Since 2005
Birmingham, MI
Peter F. Barry 3707 W. Maple Road, 80 Trustee Since 2004
Bloomfield Hills, MI
Donald J. Dawson, Jr. 333 W. Seventh Street, 60 Trustee Since 1993
Royal Oak, MI
Joseph M. Grace 4978 Malibu Drive, 71 Trustee Since 2007
Bloomfield Hills, MI
EXECUTIVE OFFICERS:
* Richard L. Platte, Jr., CFA 3707 W. Maple Road, 56 Vice President Since 1993
Bloomfield Hills, MI and Secretary
* Timothy S. Schwartz, CFA 3707 W. Maple Road, 36 Treasurer Since 2000
Bloomfield Hills, MI
* Becky S. Renaud 3707 W. Maple Road, 35 Chief Compliance Since 2006
Bloomfield Hills, MI Officer
* Gregory J. Schwartz, George P. Schwartz, Richard L. Platte, Jr., Timothy
S. Schwartz and Becky S. Renaud, 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 six portfolios of the Trust: the Ave Maria Catholic Values
Fund, the Ave Maria Growth Fund, the Ave Maria Rising Dividend Fund, the Ave
Maria Opportunity 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.
58
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
(JPMorgan Chase).
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).
Joseph M. Grace is retired Senior Vice President of National Bank of Detroit
(JPMorgan Chase).
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, CFA is Vice President and Treasurer of Schwartz Investment
Counsel, Inc. and is the portfolio manager of the Ave Maria Opportunity Fund.
Becky S. Renaud is Chief Financial Officer and Chief Compliance Officer of
Schwartz Investment Counsel, Inc.
59
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 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
- ----------------------------------------------------------------------------------------------
Lou Holtz 5818 El Camino Real, Carlsbad, CA 71 Since 2007
Lawrence Kudlow 1375 Kings Hwy. East, Suite 260, Fairfield, CT 60 Since 2005
Thomas S. Monaghan One Ave Maria Drive, Ann Arbor, MI 71 Since 2001
Michael Novak 1150 17th Street, NW, Suite 1100, Washington, DC 74 Since 2001
Paul R. Roney One Ave Maria Drive, Ann Arbor, MI 50 Since 2001
Phyllis Schlafly 7800 Bonhomme, St. Louis, MO 83 Since 2001
Lou Holtz is the former football coach at University of Notre Dame among others,
ESPN college football analyst, author and motivational speaker.
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 Chancellor of Ave Maria
University. 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.
60
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 Catholic Values Fund, the Ave Maria Rising Dividend Fund,
the Ave Maria Opportunity Fund and the Ave Maria Bond Fund during the year end
December 31, 2007. On December 28, 2007, the Ave Maria Catholic Values Fund
declared and paid an ordinary income dividend of $0.0034 per share and declared
and paid a long-term capital gain distribution of $0.1326 per share; the Ave
Maria Growth Fund declared and paid a long-term capital gain distribution of
$0.2825 per share; the Ave Maria Rising Dividend Fund declared and paid a short
term capital gain distribution of $0.1008 per share and declared and paid a
long-term capital gain distribution of $0.2199 per share; the Ave Maria
Opportunity Fund declared and paid an ordinary income distribution of $0.0713
per share; the Ave Maria Bond Fund declared and paid a short-term capital gain
distribution of $0.0336 per share and declared and paid a long-term capital gain
distribution per share of $0.1928 per share. Periodically throughout the year,
the Ave Maria Rising Dividend Fund paid ordinary income dividends totaling
$0.1568 per share. Periodically throughout the year, the Ave Maria Bond Fund
paid ordinary income dividends totaling $0.4110 per share for Class I shares and
$0.3823 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
distributions of $0.1326, $0.2825, $0.2199 and $0.1928 per share for the Ave
Maria Catholic Values Fund, the Ave Maria Growth Fund, the Ave Maria Rising
Dividend Fund and the Ave Maria Bond Fund, respectively, 100% of the short-term
capital gain distributions of $0.1008 and $0.0336 per share for the Ave Maria
Rising Dividend Fund and the Ave Maria Bond Fund, respectively, and a percentage
(100%, 100%, 100%, and 15.75%) of the ordinary income dividends paid for the Ave
Maria Catholic Values Fund, the Ave Maria Rising Dividend Fund, the Ave Maria
Opportunity Fund and the Ave Maria Bond Fund, respectively, may be subject to a
maximum tax rate of 15%. Early in 2008, as required by federal regulations,
shareholders received notification of their portion of the Funds' taxable
distributions, if any, paid during the 2007 calendar year.
61
AVE MARIA MUTUAL FUNDS
ABOUT YOUR FUNDS' EXPENSES (UNAUDITED)
================================================================================
We believe it is important for you to understand the impact of costs on your
investment. As a shareholder of the Funds, you may incur two types of costs: (1)
transaction costs 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 ongoing costs are expressed as a percentage of its average net
assets. This figure is known as the expense ratio. The ongoing costs reflected
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, 2007) and held until the end of
the period (December 31, 2007).
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 sales loads or redemption
fees.
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.
62
AVE MARIA MUTUAL FUNDS
ABOUT YOUR FUNDS' EXPENSES (UNAUDITED)
(CONTINUED)
================================================================================
AVE MARIA CATHOLIC VALUES FUND
- -------------------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2007 December 31, 2007 During Period*
- -------------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $ 877.30 $7.10
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, 2007 December 31, 2007 During Period*
- -------------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,026.20 $7.66
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, 2007 December 31, 2007 During Period*
- -------------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $ 918.40 $5.13
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,019.86 $5.40
- -------------------------------------------------------------------------------------------
* Expenses are equal to the Ave Maria Rising Dividend Fund's annualized
expense ratio of 1.06% for the period, multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half year
period).
63
AVE MARIA MUTUAL FUNDS
ABOUT YOUR FUNDS' EXPENSES (UNAUDITED)
(CONTINUED)
================================================================================
AVE MARIA OPPORTUNITY FUND
- -------------------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2007 December 31, 2007 During Period*
- -------------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $ 840.00 $5.80
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,018.90 $6.36
- -------------------------------------------------------------------------------------------
* Expenses are equal to the Ave Maria Opportunity 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).
AVE MARIA BOND FUND - CLASS I
- -------------------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2007 December 31, 2007 During Period*
- -------------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,039.70 $2.06
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,022.99 $2.04
- -------------------------------------------------------------------------------------------
* Expenses are equal to the Ave Maria Bond Fund - Class I's annualized
expense ratio of 0.40% 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, 2007 December 31, 2007 During Period*
- -------------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,037.30 $3.44
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,021.68 $3.41
- -------------------------------------------------------------------------------------------
* Expenses are equal to the Ave Maria Bond Fund - Class R's annualized
expense ratio of 0.67% for the period, multiplied by the average account
value over the period, multiplied by 184/365 (to reflect the one-half year
period).
64
AVE MARIA MUTUAL FUNDS
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 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 filings 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.
65
[GRAPHIC OMITTED]
AVE MARIA
MUTUAL
FUNDS
Ave Maria Catholic Values Fund
Ave Maria Growth Fund
Ave Maria Rising Dividend Fund
Ave Maria Opportunity 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.
Joseph M Grace
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
Becky S. Renaud, Chief Compliance Officer
CATHOLIC ADVISORY BOARD
Paul R. Roney, Chairman
Lou Holtz
Lawrence Kudlow
Thomas S. Monaghan
Michael Novak
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, IL 60606
LEGAL COUNSEL
SULLIVAN & WORCESTER LLP
1666 K Street, NW, Suite 700
Washington, D.C. 20006
[GRAPHIC OMITTED]
Schwartz Investment Counsel, Inc.
Established 1980
3707 WEST MAPLE ROAD o SUITE 100 o BLOOMFIELD HILLS, MICHIGAN 48301
www.schwartzinvest.com
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 $98,400 and $91,080 with
respect to the registrant's fiscal years ended December 31, 2007 and
2006, 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 $11,100 and $10,320 with respect to the
registrant's fiscal years ended December 31, 2007 and 2006,
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, 2007 and 2006, aggregate
non-audit fees of $11,100 and $10,320, 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 3, 2008
---------------------------------
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 3, 2008
---------------------------------
By (Signature and Title)* /s/ Timothy S. Schwartz
-----------------------------------------------------
Timothy S. Schwartz, Treasurer
Date March 3, 2008
---------------------------------
* Print the name and title of each signing officer under his or her signature.