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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 811-21753
-------------------------------
Church Capital Investment Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
301 Oxford Valley Road, Suite 801B Yardley, Pennsylvania 19067
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Gregory A. Church
Church Capital Management, LLC 301 Oxford Valley Road Yardley, PA 19067
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (215) 321-1900
Date of fiscal year end: November 30, 2008
-------------------------------
Date of reporting period: May 31, 2008
-------------------------------
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.
CHURCH CAPITAL INVESTMENT TRUST
Church Capital Value Trust
Church Capital Money Market Fund
SEMI-ANNUAL REPORT
May 31, 2008
(Unaudited)
INVESTMENT ADVISER
Church Capital Management, LLC
Yardley, PA
CHURCH CAPITAL VALUE TRUST
SUPPLEMENTARY PORTFOLIO INFORMATION
MAY 31, 2008 (UNAUDITED)
================================================================================
- --------------------------------------------------------------------------------
CHURCH CAPITAL VALUE TRUST VS S&P 500 INDEX
SECTOR DIVERSIFICATION (% OF NET ASSETS)
[BAR CHART OMITTED]
Church Capital S&P 500
Value Trust Index
-------------------------
Consumer Discretionary 7.9% 8.5%
Consumer Staples 8.7% 10.5%
Energy 13.6% 14.3%
Financials 10.9% 15.9%
Health Care 12.6% 11.5%
Industrials 7.2% 11.8%
Information Technology 17.5% 16.6%
Materials 11.9% 3.7%
Telecommunications Services 0.0% 3.5%
Utilities 2.6% 3.7%
Cash Equivalents 7.1% 0.0%
- --------------------------------------------------------------------------------
TOP 10 EQUITY HOLDINGS
- --------------------------------------------------------------------------------
SECURITY DESCRIPTION % OF NET ASSETS
-------------------------------------- ---------------
Cisco Systems, Inc. 4.0%
Bank of America Corp. 3.7%
Nabors Industries Ltd. 3.5%
Genzyme Corp. 3.4%
Genentech, Inc. 3.3%
Electronic Arts, Inc. 3.3%
EMC Corp. 3.2%
Royal Dutch Shell PLC - Class A - ADR 3.2%
Procter & Gamble Co. (The) 3.1%
Goldman Sachs Group, Inc. (The) 3.0%
1
CHURCH CAPITAL MONEY MARKET FUND
SUPPLEMENTARY PORTFOLIO INFORMATION
MAY 31, 2008 (UNAUDITED)
================================================================================
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
% OF NET ASSETS
[PIE CHART OMITTED]
Commercial Paper 90.6%
Money Market Funds and Other 9.4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MATURITY DISTRIBUTION
% OF NET ASSETS
[PIE CHART OMITTED]
0 - 14 Days 66.4%
15 - 29 Days 25.2%
30 + Days 8.4%
- --------------------------------------------------------------------------------
CREDIT ANALYSIS (% OF PORTFOLIO) YIELD ANALYSIS
- ---------------------------------- ------------------------------------
A-1 / P-1 / F-1 88.7% 7-Day Current Yield 1.87%
A-2 / P-2 1.7% 7-Day Effective Yield 1.89%
Money Market Funds 9.6%
2
CHURCH CAPITAL VALUE TRUST
SCHEDULE OF INVESTMENTS
MAY 31, 2008 (UNAUDITED)
================================================================================
SHARES COMMON STOCKS -- 92.9% VALUE
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 3.2%
4,000 Honeywell International, Inc. $ 238,480
12,500 Raytheon Co. 798,250
------------
1,036,730
------------
AIR FREIGHT & LOGISTICS -- 1.1%
5,000 United Parcel Service, Inc. - Class B 355,100
------------
BEVERAGES -- 2.9%
12,000 Diageo PLC - ADR 943,440
------------
BIOTECHNOLOGY -- 6.7%
15,000 Genentech, Inc. (a) 1,063,050
16,000 Genzyme Corp. (a) 1,095,360
------------
2,158,410
------------
CAPITAL MARKETS -- 3.0%
5,500 Goldman Sachs Group, Inc. (The) 970,255
------------
CHEMICALS -- 5.5%
10,000 Agrium, Inc. 874,200
28,000 Cabot Corp. 897,120
------------
1,771,320
------------
COMMUNICATIONS EQUIPMENT -- 6.1%
48,000 Cisco Systems, Inc. (a) 1,282,560
25,000 Corning, Inc. 683,500
------------
1,966,060
------------
COMPUTERS & PERIPHERALS -- 3.2%
60,000 EMC Corp. (a) 1,046,400
------------
CONTAINERS & PACKAGING -- 2.6%
35,000 Sealed Air Corp. 852,600
------------
DIVERSIFIED FINANCIAL SERVICES -- 4.4%
35,000 Bank of America Corp. 1,190,350
10,000 Citigroup, Inc. 218,900
------------
1,409,250
------------
ELECTRIC UTILITIES -- 2.6%
20,000 Progress Energy, Inc. 855,200
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 1.4%
12,000 Agilent Technologies, Inc. (a) 448,680
------------
3
CHURCH CAPITAL VALUE TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 92.9% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES -- 7.7%
9,000 Baker Hughes, Inc. $ 797,580
27,000 Nabors Industries Ltd. (a) 1,135,080
12,000 Weatherford International Ltd. (a) 547,560
------------
2,480,220
------------
FOOD PRODUCTS -- 2.7%
22,000 Archer-Daniels-Midland Co. 873,400
------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 5.2%
15,000 Baxter International, Inc. 916,500
15,000 Covidien Ltd. 751,350
------------
1,667,850
------------
HOTELS, RESTAURANTS & LEISURE -- 2.4%
20,000 Boyd Gaming Corp. 319,000
15,000 CBRL Group, Inc. 441,750
------------
760,750
------------
HOUSEHOLD PRODUCTS -- 3.1%
15,000 Procter & Gamble Co. (The) 990,750
------------
INDUSTRIAL CONGLOMERATES -- 2.8%
30,000 General Electric Co. 921,600
------------
INSURANCE -- 3.6%
10,000 Hartford Financial Services Group, Inc. 710,700
6,000 Prudential Financial, Inc. 448,200
------------
1,158,900
------------
LIFE SCIENCES TOOLS & SERVICES -- 0.4%
4,000 PerkinElmer, Inc. 113,120
------------
MEDIA -- 2.9%
60,000 Time Warner, Inc. 952,800
------------
METALS & MINING -- 3.7%
14,000 Alcoa, Inc. 568,260
16,000 Barrick Gold Corp. 644,640
------------
1,212,900
------------
MUTI-LINE RETAIL -- 1.5%
21,000 Macy's, Inc. 497,070
------------
OIL, GAS & CONSUMABLE FUELS -- 5.9%
13,000 Cimarex Energy Co. 885,820
12,000 Royal Dutch Shell PLC - Class A - ADR 1,025,880
------------
1,911,700
------------
PHARMACEUTICALS -- 0.4%
2,000 Johnson & Johnson 133,480
------------
4
CHURCH CAPITAL VALUE TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 92.9% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 3.5%
25,000 Intel Corp. $ 579,500
17,500 Texas Instruments, Inc. 568,400
------------
1,147,900
------------
SOFTWARE -- 3.3%
21,000 Electronic Arts, Inc. (a) 1,054,200
------------
SPECIALTY RETAIL -- 1.1%
15,000 Lowe's Cos., Inc. 360,000
------------
TOTAL COMMON STOCKS (Cost $28,847,974) $ 30,050,085
------------
================================================================================
SHARES MONEY MARKET FUNDS -- 8.2% VALUE
- --------------------------------------------------------------------------------
1,604,492 AIM Liquid Assets Portfolio (The), 2.632% (b) $ 1,604,492
1,059,086 Fidelity Institutional Money Market Portfolio -
Select Class, 2.654% (b) 1,059,086
------------
TOTAL MONEY MARKET FUNDS (Cost $2,663,578) $ 2,663,578
------------
TOTAL INVESTMENTS AT VALUE -- 101.1%
(Cost $31,511,552) $ 32,713,663
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.1%) (351,239)
------------
NET ASSETS -- 100.0% $ 32,362,424
============
(a) Non-income producing security.
(b) Variable rate security. The rate shown is the effective 7-day yield at
May 31, 2008.
ADR - American Depositary Receipt
See accompanying notes to financial statements.
5
CHURCH CAPITAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
MAY 31, 2008 (UNAUDITED)
================================================================================
PAR VALUE COMMERCIAL PAPER -- 90.6% VALUE
- --------------------------------------------------------------------------------
$2,500,000 Abbey National North America LLC, 2.25%,
due 06/09/08 $ 2,498,750
900,000 Altria Group, Inc., 2.60%, due 06/11/08 899,350
800,000 AstraZeneca PLC, 2.90%, due 06/11/08 799,356
500,000 AstraZeneca PLC, 2.86%, due 06/27/08 498,967
2,200,000 AstraZeneca PLC, 4.06%, due 07/07/08 2,191,068
4,600,000 Brown-Forman Corp., 2.07%, due 07/07/08 4,590,478
4,600,000 Bunge Asset Funding Corp., 2.60%, due 06/02/08 4,599,668
400,000 ConocoPhillips, 2.06%, due 06/24/08 399,474
4,000,000 Daimler AG, 2.60%, due 06/18/08 3,995,089
696,000 Daimler AG, 3.00%, due 06/26/08 694,550
4,000,000 Dollar Thrifty Funding LLC, 2.70%, due 06/18/08 3,994,900
9,200,000 Ecolab, Inc., 2.40%, due 06/12/08 9,193,254
5,000,000 General Electric Capital Co., 2.20%, due 06/02/08 4,999,694
4,500,000 General Electric Capital Co., 2.11%, due 06/10/08 4,497,626
700,000 H.J. Heinz Co., 2.85%, due 06/11/08 699,446
460,000 JP Morgan Chase & Co., 2.85%, due 06/30/08 458,944
470,000 JP Morgan Chase & Co., 2.80%, due 07/21/08 468,172
4,600,000 Pitney Bowes, Inc., 2.02%, due 06/03/08 4,599,484
5,000,000 Salvation Army Eastern Territory (The), 2.55%,
due 06/11/08 4,996,458
4,300,000 Salvation Army Eastern Territory (The), 2.65%,
due 06/18/08 4,294,619
4,500,000 Toyota Capital Corp., 2.15%, due 06/09/08 4,497,850
5,000,000 Verizon Communications, Inc., 2.65%, due 06/03/08 4,999,264
4,800,000 Wheels, Inc., 2.45%, 06/05/08 4,798,693
4,600,000 Wheels, Inc., 2.55%, 06/16/08 4,595,112
4,600,000 YUM! Capital Funding Corp., 2.65%, due 06/18/08 4,594,244
------------
TOTAL COMMERCIAL PAPER (Amortized Cost $82,854,510) $ 82,854,510
------------
================================================================================
SHARES MONEY MARKET FUNDS -- 9.6% VALUE
- --------------------------------------------------------------------------------
4,611,000 AIM Liquid Assets Portfolio (The), 2.632% (a) $ 4,611,000
3,211,246 Fidelity Institutional Money Market Portfolio -
Select Class, 2.654% (a) 3,211,246
940,716 First American Prime Obligations Fund -
Class Y, 2.332% (a) 940,716
------------
TOTAL MONEY MARKET FUNDS (Cost $8,762,962) $ 8,762,962
------------
TOTAL INVESTMENTS -- 100.2%
(Amortized Cost $91,617,472) $ 91,617,472
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.2%) (187,661)
------------
NET ASSETS -- 100.0% $ 91,429,811
============
(a) Variable rate security. The rate shown is the effective 7-day yield at May
31, 2008.
See accompanying notes to financial statements.
6
CHURCH CAPITAL INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 2008 (UNAUDITED)
============================================================================================
CHURCH CAPITAL
CHURCH CAPITAL MONEY MARKET
VALUE TRUST FUND
- --------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
At amortized cost $ 31,511,552 $ 91,617,472
============ ============
At value (Note 2) $ 32,713,663 $ 91,617,472
Dividends and interest receivable 46,887 24,500
Receivable for investment securities sold 273,439 --
Receivable for capital shares sold 33,417 --
Other assets 17,287 17,113
------------ ------------
TOTAL ASSETS 33,084,693 91,659,085
------------ ------------
LIABILITIES
Distributions payable -- 153,104
Payable for investment securities purchased 401,878 --
Payable for capital shares redeemed 276,340 --
Payable to Adviser (Note 4) 29,161 54,550
Payable to administrator (Note 4) 7,060 12,660
Other accrued expenses 7,830 8,960
------------ ------------
TOTAL LIABILITIES 722,269 229,274
------------ ------------
NET ASSETS $ 32,362,424 $ 91,429,811
============ ============
NET ASSETS CONSIST OF:
Paid-in capital $ 30,894,402 $ 91,429,811
Accumulated undistributed net investment income 71,281 --
Accumulated net realized gains from security transactions 194,630 --
Net unrealized appreciation on investments 1,202,111 --
------------ ------------
NET ASSETS $ 32,362,424 $ 91,429,811
============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 3,025,725 91,429,811
============ ============
Net asset value, redemption price and offering
price per share (Note 2) $ 10.70 $ 1.00
============ ============
See accompanying notes to financial statements.
7
CHURCH CAPITAL INVESTMENT TRUST
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED)
================================================================================
CHURCH CAPITAL
CHURCH CAPITAL MONEY MARKET
VALUE TRUST FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividend income $ 298,449 $ 175,092
Foreign withholding taxes on dividends (3,314) --
Interest income -- 1,223,669
------------ ------------
TOTAL INVESTMENT INCOME 295,135 1,398,761
------------ ------------
EXPENSES
Investment advisory fees (Note 4) 164,880 206,069
Administration fees (Note 4) 16,518 41,336
Professional fees 20,603 20,603
Fund accounting fees (Note 4) 16,654 19,138
Custody fees 9,200 15,887
Trustees' fees and expenses 8,506 8,506
Transfer agent fees (Note 4) 9,000 7,500
Insurance expense 4,173 7,429
Compliance service fees (Note 4) 4,500 4,500
Postage and supplies 4,347 1,839
Registration fees 1,718 3,238
Shareholder report printing fees 875 735
Other expenses 3,958 1,426
------------ ------------
TOTAL EXPENSES 264,932 338,206
Fees waived by the Adviser (Note 4) (58,832) (66,198)
------------ ------------
NET EXPENSES 206,100 272,008
------------ ------------
NET INVESTMENT INCOME 89,035 1,126,753
------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains from security transactions 235,158 --
Net change in unrealized appreciation/
depreciation on investments (500,486) --
------------ ------------
NET REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS (265,328) --
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ (176,293) $ 1,126,753
============ ============
See accompanying notes to financial statements.
8
CHURCH CAPITAL VALUE TRUST
STATEMENTS OF CHANGES IN NET ASSETS
======================================================================================================
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2008 NOVEMBER 30,
(UNAUDITED) 2007
- ------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 89,035 $ 204,199
Net realized gains from security transactions 235,158 2,167,650
Net change in unrealized appreciation/depreciation on investments (500,486) (91,263)
------------ ------------
Net increase (decrease) in net assets from operations (176,293) 2,280,586
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (214,080) (222,886)
From net realized gains from security transactions (2,202,681) (235,745)
------------ ------------
Net decrease in net assets from distributions to shareholders (2,416,761) (458,631)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 1,678,212 10,360,826
Net asset value of shares issued in reinvestment of
distributions to shareholders 1,357,767 278,002
Payments for shares redeeemed (4,379,603) (8,141,101)
------------ ------------
Net increase (decrease) in net assets from capital share transactions (1,343,624) 2,497,727
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,936,678) 4,319,682
NET ASSETS
Beginning of period 36,299,102 31,979,420
------------ ------------
End of period $ 32,362,424 $ 36,299,102
============ ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME $ 71,281 $ 196,326
============ ============
CAPITAL SHARE ACTIVITY
Shares sold 161,387 915,678
Shares reinvested 127,610 25,812
Shares redeemed (422,776) (727,223)
------------ ------------
Net increase (decrease) in shares outstanding (133,779) 214,267
Shares outstanding, beginning of period 3,159,504 2,945,237
------------ ------------
Shares outstanding, end of period 3,025,725 3,159,504
============ ============
See accompanying notes to financial statements.
9
CHURCH CAPITAL MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
===========================================================================================
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2008 NOVEMBER 30,
(UNAUDITED) 2007
- -------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 1,126,753 $ 2,650,191
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (1,126,753) (2,650,191)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 98,815,917 88,674,084
Net asset value of shares issued in reinvestment of
distributions to shareholders 15,867 51,853
Payments for shares redeeemed (76,518,626) (71,127,511)
------------ ------------
Net increase in net assets from capital share transactions 22,313,158 17,598,426
------------ ------------
TOTAL INCREASE IN NET ASSETS 22,313,158 17,598,426
NET ASSETS
Beginning of period 69,116,653 51,518,227
------------ ------------
End of period $ 91,429,811 $ 69,116,653
============ ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME $ -- $ --
============ ============
CAPITAL SHARE ACTIVITY
Shares sold 98,815,917 88,674,084
Shares reinvested 15,867 51,853
Shares redeemed (76,518,626) (71,127,511)
------------ ------------
Net increase in shares outstanding 22,313,158 17,598,426
Shares outstanding, beginning of period 69,116,653 51,518,227
------------ ------------
Shares outstanding, end of period 91,429,811 69,116,653
============ ============
See accompanying notes to financial statements.
10
CHURCH CAPITAL VALUE TRUST
FINANCIAL HIGHLIGHTS
==================================================================================================================
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
MAY 31, 2008 NOVEMBER 30, NOVEMBER 30,
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD: (UNAUDITED) 2007 2006 (a)
- ------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 11.49 $ 10.86 $ 10.00
---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.03 0.07 0.07
Net realized and unrealized gains (losses) on investments (0.05) 0.72 0.79
---------- ---------- ----------
Total from investment operations (0.02) 0.79 0.86
---------- ---------- ----------
Less distributions:
From net investment income (0.07) (0.08) --
From net realized gains on investments (0.70) (0.08) --
---------- ---------- ----------
Total distributions (0.77) (0.16) --
---------- ---------- ----------
Net asset value at end of period $ 10.70 $ 11.49 $ 10.86
========== ========== ==========
Total return (b) -0.11%(c) 7.38% 8.60%(c)
========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) $ 32,362 $ 36,299 $ 31,979
========== ========== ==========
Ratio of total expenses to average net assets 1.61%(e) 1.55% 1.75%(e)
Ratio of net expenses to average net assets (d) 1.25%(e) 1.25% 1.25%(e)
Ratio of net investment income to average net assets (d) 0.54%(e) 0.59% 1.04%(e)
Portfolio turnover rate 27%(c) 90% 127%(c)
- ------------------------------------------------------------------------------------------------------------------
(a) Represents the period from the commencement of operations (January 19,
2006) through November 30, 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) Ratio was determined after advisory fee waivers (Note 4).
(e) Annualized.
See accompanying notes to financial statements.
11
CHURCH CAPITAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
==============================================================================================================
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
MAY 31, 2008 NOVEMBER 30, NOVEMBER 30,
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD: (UNAUDITED) 2007 2006 (a)
- --------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000
Net investment income 0.014 0.046 0.037
Dividends from net investment income (0.014) (0.046) (0.037)
---------- ---------- ----------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000
========== ========== ==========
Total return (b) 1.44%(c) 4.74% 3.80%(c)
========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) $ 91,430 $ 69,117 $ 51,518
========== ========== ==========
Ratio of total expenses to average net assets 0.82%(e) 0.85% 0.89%(e)
Ratio of net expenses to average net assets (d) 0.66%(e) 0.66% 0.66%(e)
Ratio of net investment income to average net assets (d) 2.73%(e) 4.63% 4.35%(e)
- --------------------------------------------------------------------------------------------------------------
(a) Represents the period from the commencement of operations (January 20,
2006) through November 30, 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, if any, 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) Ratio was determined after advisory fee waivers (Note 4).
(e) Annualized.
See accompanying notes to financial statements.
12
CHURCH CAPITAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2008 (UNAUDITED)
================================================================================
1. ORGANIZATION
Church Capital Value Trust and Church Capital Money Market Fund (the "Funds")
are each a diversified series of Church Capital Investment Trust (the "Trust"),
an open-end management investment company established as an Ohio business trust
under a Declaration of Trust dated April 6, 2005. Church Capital Value Trust and
Church Capital Money Market Fund commenced operations on January 19, 2006 and
January 20, 2006, respectively.
The investment objective of Church Capital Value Trust is capital appreciation.
The investment objective of Church Capital Money Market Fund is to maximize
current income consistent with the preservation of capital and maintenance of
liquidity by investing in high quality short-term money market instruments.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Funds' significant accounting policies:
SECURITIES VALUATION - Church Capital Value Trust values its portfolio
securities as of the end of the regular session of trading on the New York Stock
Exchange (the "Exchange") (normally 4:00 p.m., Eastern time) on each day the
Exchange is open for business. Equity securities are valued at their market
value when reliable market quotations are readily available. Securities that are
traded on any stock exchange are generally valued at the last quoted sale price.
Lacking a last sale price, an exchange traded security is generally valued at
its last bid price. Securities which are quoted by NASDAQ are valued at the
NASDAQ Official Closing Price. When reliable market quotations are not readily
available, when the investment adviser determines that a market quotation does
not accurately reflect the current market value or when restricted securities
are being valued, such securities are valued as determined in good faith by the
investment adviser, in conformity with guidelines adopted by and subject to
review by the Board of Trustees of the Trust. Short-term investments (those with
maturities of 60 days or less) are valued at amortized cost, which the Board of
Trustees has determined best represents a fair value.
Church Capital Money Market Fund values its portfolio instruments at amortized
cost, which means they are valued at their acquisition cost, as adjusted for
amortization of premium or discount, which is believed to reflect fair value.
The Financial Accounting Standards Board's ("FASB") Statement of Financial
Accounting Standards ("SFAS") No. 157, "Fair Value Measurements" establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and requires additional disclosures about fair value
measurements.
Various inputs are used in determining the value of the Funds' investments.
These inputs are summarized in the three broad levels listed below:
o Level 1 - quoted prices in active markets for identical securities
o Level 2 - other significant observable inputs
o Level 3 - significant unobservable inputs
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
13
CHURCH CAPITAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2008 (UNAUDITED)
================================================================================
The following is a summary of the inputs used to value each Fund's net assets as
of May 31, 2008:
CHURCH CAPITAL
CHURCH CAPITAL MONEY MARKET
VALUATION INPUTS VALUE TRUST FUND
- -------------------------------------------- ------------ ------------
Level 1 - Quoted Prices $ 32,713,663 $ 8,762,962
Level 2 - Other Significant Observable Inputs -- 82,854,510
------------ ------------
TOTAL $ 32,713,663 $ 91,617,472
============ ============
SHARE VALUATION - The net asset value per share of each Fund is calculated daily
by dividing the total value of each Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of each Fund is equal to the net asset value per share.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned and includes, where applicable, the
pro-rata amortization of premium or accretion of discount.
SECURITY TRANSACTIONS - Security transactions are accounted for on the trade
date. Gains and losses on securities sold are determined on a specific
identification basis.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends arising from net investment income are
declared and paid at least annually to shareholders of Church Capital Value
Trust. Dividends arising from net investment income are declared daily and paid
monthly, on the last business day of each month, to shareholders of Church
Capital Money Market Fund. Net realized capital gains, if any, are distributed
by each Fund at least annually. The amount of distributions from net investment
income and net realized gains are determined in accordance with federal income
tax regulations, which may differ from accounting principles generally accepted
in the United States of America and are recorded on the ex-dividend date. These
"book/tax" differences are either temporary or permanent in nature and are
primarily due to differing book/tax treatment of short-term capital gains. The
tax character of distributions paid by the Funds during the periods ended May
31, 2008 and November 30, 2007 was as follows:
- ---------------------------------------------------------------------------------------
ORDINARY LONG-TERM TOTAL
PERIOD ENDED INCOME CAPITAL GAINS DISTRIBUTIONS
- ---------------------------------------------------------------------------------------
Church Capital May 31, 2008 $ 1,651,386 $ 765,375 $ 2,416,761
Value Trust November 30, 2007 $ 458,631 $ -- $ 458,631
Church Capital May 31, 2008 $ 1,126,753 $ -- $ 1,126,753
Money Market Fund November 30, 2007 $ 2,650,191 $ -- $ 2,650,191
- ---------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - The Funds may enter into repurchase agreements
(agreements to purchase securities subject to the seller's agreement to
repurchase them at a specified time and price) with well-established registered
securities dealers or banks. Repurchase agreements may be deemed to be loans by
the Funds. It is each Fund's policy to take possession of U.S. Government
obligations as collateral under a repurchase agreement and, on a daily basis,
mark-to-market such obligations to ensure that their value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under the
repurchase agreement.
14
CHURCH CAPITAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2008 (UNAUDITED)
================================================================================
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 the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
income and expenses during the reporting period. Actual results could differ
from those estimates.
FEDERAL INCOME TAX - 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 net income, the Fund (but
not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes is required.
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 (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended November 30) plus undistributed amounts from prior years.
The following information is computed on a tax basis for each item as of May 31,
2008:
----------------------------------------------------------------------
CHURCH CAPITAL CHURCH CAPITAL
VALUE TRUST MONEY MARKET FUND
----------------------------------------------------------------------
Tax cost of portfolio investments $ 31,549,614 $ 91,617,472
============ ============
Gross unrealized appreciation $ 3,195,524 $ --
Gross unrealized depreciation (2,031,475) --
------------ ------------
Net unrealized appreciation $ 1,164,049 $ --
Undistributed ordinary income 300,770 153,104
Undistributed long-term gains 3,203 --
Other temporary differences -- (153,104)
------------ ------------
Accumulated earnings $ 1,468,022 $ --
============ ============
----------------------------------------------------------------------
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for the Church Capital Value Trust is due to
certain timing differences in the recognition of capital gains or 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 either due to the tax deferral of losses on wash sales or the
differences in the timing of the deduction for dividends paid.
FASB's Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in Income
Taxes" 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 booked as a tax benefit or
expense in the current year. The Funds have adopted FIN 48 with this semi-annual
report. Based on management's analysis, the adoption of FIN 48 does not have a
material impact on the financial statements. The statute of limitations on the
Funds' tax returns remains open for the years ended November 30, 2006 and
November 30, 2007.
15
CHURCH CAPITAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2008 (UNAUDITED)
================================================================================
3. INVESTMENT TRANSACTIONS
During the six months ended May 31, 2008, cost of purchases and proceeds from
sales of investment securities, other than short-term investments and U.S.
government securities, were as follows:
--------------------------------------------------------------------------
CHURCH
CHURCH CAPITAL
CAPITAL MONEY
VALUE TRUST MARKET FUND
--------------------------------------------------------------------------
Cost of purchases of investment securities $ 8,317,083 $ --
============ ==========
Proceeds from sales of investment securities $ 11,960,820 $ --
============ ==========
--------------------------------------------------------------------------
4. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
Church Capital Management LLC (the "Adviser") serves as the investment adviser
to the Fund. For these services, Church Capital Value Trust pays the Adviser a
monthly fee at the annual rate of 1.00% of its average daily net assets and
Church Capital Money Market Fund pays the Adviser a monthly fee at the annual
rate of 0.50% of its average daily net assets. On April 4, 2008, Sterling
Financial Corporation, the parent company of the Adviser, merged with and into
The PNC Financial Services Group, Inc. ("PNC"). As a result of this merger, the
Adviser is a wholly-owned subsidiary of PNC. The merger resulted in a change of
control at the Adviser and effectively terminated the investment advisory
agreement between the Funds and the Adviser. The Adviser continues to manage the
Funds under an Interim Investment Advisory Agreement (the "Interim Agreement")
that has been approved by the Board of Trustees of the Trust. The terms of the
Interim Agreement, including the amount of compensation payable to the Adviser,
are substantially identical to those of the recently terminated investment
advisory agreement except that (i) the Interim Agreement has a maximum term of
150 days, (ii) the Trustees or a majority of each of the Fund's outstanding
shares may terminate the Interim Agreement at any time, without penalty, on not
more than 10 days' written notice, and (iii) compensation earned by the Adviser
under the Interim Agreement will be held in an escrow account until the change
of control of the Adviser has been approved by shareholders. Upon approval of
the change of control by shareholders, it is expected that the amounts held in
the escrow account will be paid to the Adviser.
The Adviser has contractually agreed to reduce its fees and/or to reimburse
expenses to the extent necessary to limit the ordinary operating expenses
(excluding brokerage costs, taxes, interest and extraordinary expenses) to 1.25%
of Church Capital Value Trust's average daily net assets and to 0.66% of Church
Capital Money Market Fund's average daily net assets. These contractual
limitations are in place through January 19, 2009 for Church Value Trust and
through January 20, 2009 for Church Money Market Fund. The Adviser's agreement
to cap the Funds' ordinary operating expenses does not include indirect
expenses, such as fees and expenses of underlying investment companies in which
the Funds may invest. Any such fee reductions by the Adviser, or payments by the
Adviser of expenses which are the Funds' obligations, are subject to repayment
by the Funds, provided that the repayments do not cause each Fund's ordinary
operating expenses to exceed the expense limitation noted above, and provided
further that the fees and expenses which are the subject of repayment were
incurred within three years of the repayment. During the six months ended May
31, 2008, the Adviser reduced its investment advisory fees by $58,832 and
$66,198 for Church Capital Value Trust and Church Capital Money Market Fund,
respectively. However, due to the change in control discussed above, all fee
reductions by the Adviser prior to April 4, 2008 may no longer be recovered by
the Adviser. Therefore, as of May 31, 2008, the amounts of fee reductions
16
CHURCH CAPITAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2008 (UNAUDITED)
================================================================================
available for reimbursement to the Adviser are $26,404 and $26,875 for Church
Capital Value Trust and Church Capital Money Market Fund, respectively. The
Adviser may recapture such fee reductions no later than May 31, 2011.
The Chief Compliance Officer (the "CCO") of the Trust is an officer of the
Adviser and of Bainbridge Securities, Inc. (the "Distributor"), the principal
underwriter to the Funds. Each Fund pays the Adviser $9,000 annually for
providing CCO services.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement with the Trust, Ultimus Fund
Solutions, LLC ("Ultimus") provides executive and administrative services and
internal regulatory compliance services for the Funds. Ultimus supervises the
preparation of tax returns, reports to shareholders of the Funds, reports to and
filings with the Securities and Exchange Commission and state securities
commissions and materials for meetings of the Board of Trustees. For these
services, each Fund pays to Ultimus a monthly fee equal to 0.10% per annum of
its average daily net assets up to $500 million, 0.075% of such assets from $500
million to $1 billion and 0.05% of such assets in excess of $1 billion,
provided, however, that the minimum fee is $2,000 per month with respect to each
Fund.
FUND ACCOUNTING AGREEMENT
Under the terms of a Fund Accounting Agreement, Ultimus calculates the daily net
asset value per share and maintains the financial books and records of the
Funds. For these services, each Fund pays to Ultimus a base fee of $2,500 per
month, plus an asset-based fee at the annual rate of .01% of each Fund's average
daily net assets. In addition, the Funds pay all costs of external pricing
services.
TRANSFER AGENT AND SHAREHOLDER SERVICES AGREEMENT
Under the terms of a Transfer Agent and Shareholder Services Agreement, Ultimus
maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchase and redemption of each
Fund's shares, acts as dividend and distribution disbursing agent and performs
other shareholder service functions. For these services, Ultimus receives from
each Fund a fee, payable monthly, at an annual rate of $24 per account,
provided, however, that the minimum fee with respect to each Fund is $1,000 per
month if a Fund has 25 shareholder accounts or less, $1,250 per month if a Fund
has between 26 and 100 shareholder accounts, and $1,500 per month if a Fund has
more than 100 shareholder accounts. In addition, the Funds pay out-of-pocket
expenses, including but not limited to, postage and supplies.
DISTRIBUTION AGREEMENT
Under the terms of a Distribution Agreement, the Distributor serves as principal
underwriter to the Funds. The Distributor is an affiliate of the Adviser. The
Distributor receives no compensation from the Funds for acting as principal
underwriter, but the Distributor executes brokerage transactions for the Funds
as described under "PORTFOLIO TRANSACTIONS" below.
TRUSTEES AND OFFICERS
Certain officers of the Trust are directors and officers of the Adviser or the
Distributor, or of Ultimus. Each Independent Trustee receives from the Trust an
annual retainer of $4,000, payable quarterly, and a fee of $1,000 for attendance
at each meeting of the Board of Trustees, plus reimbursement of travel and other
expenses incurred in attending meetings.
17
CHURCH CAPITAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2008 (UNAUDITED)
================================================================================
PORTFOLIO TRANSACTIONS
A majority of Church Capital Value Trust's portfolio transactions were executed
through the Distributor. During the six months ended May 31, 2008, brokerage
commissions of $21,125 were paid by Church Capital Value Trust to the
Distributor with respect to transactions totaling $17,196,891.
5. 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. Each Fund's 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.
6. SUBSEQUENT EVENT
At a meeting held on July 16, 2008, the Board of Trustees of the Trust approved
the mandatory redemption of all shares of Church Capital Money Market Fund. It
is anticipated that all outstanding shares of the Fund will be redeemed and that
the Fund will discontinue operations on or about August 8, 2008. The Adviser
will continue to waive fees and reimburse expenses of the Fund, as necessary, in
order to maintain fees and expenses at their current level.
18
CHURCH CAPITAL INVESTMENT TRUST
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 incur ongoing costs, including
management fees and other Fund operating expenses. These ongoing costs, which
are deducted from each Fund's gross income, directly reduce the investment
returns of the 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 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. The expense examples in the table are based on an investment
of $1,000 made at the beginning of the period shown and held for the entire
period (December 1, 2007 through May 31, 2008).
The table below illustrates each Fund's costs in two ways:
ACTUAL FUND RETURN - This line provides information about actual expenses and
actual account values. The "Ending Account Value" shown on the first line 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 line is intended to help you compare each Fund's
costs with those of other mutual funds, based on the Fund's respective actual
expense ratio and an assumed annual rate of return of 5% before expenses during
the period shown. In this case, because the return used is not the actual return
of either Fund, you should not use the hypothetical account value or expenses to
estimate your actual ending account balance or expenses you paid for the period.
The example is useful in making comparisons among various mutual funds because
the Securities and Exchange Commission requires all mutual funds to calculate
expenses based on a hypothetical 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 transaction fees, such as
purchase or redemption fees, nor do they carry a "sales load." Therefore, the
information provided for the hypothetical 5% return is useful in comparing
ongoing costs only and will not help you determine the relative total costs of
owning different funds.
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 annual expense ratios, can
be found in this report. For additional information on operating expenses and
other shareholder costs, please refer to each Fund's prospectus.
19
CHURCH CAPITAL INVESTMENT TRUST
ABOUT YOUR FUNDS' EXPENSES (UNAUDITED) (CONTINUED)
================================================================================
- ----------------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid
December 1, 2007 May 31, 2008 During Period*
- ----------------------------------------------------------------------------------------
CHURCH CAPITAL VALUE TRUST
- ----------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $ 998.90 $6.25
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,018.75 $6.31
- ----------------------------------------------------------------------------------------
CHURCH CAPITAL MONEY MARKET FUND
- ----------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,014.40 $3.32
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,021.70 $3.34
- ----------------------------------------------------------------------------------------
* Expenses are equal to the Funds' annualized expense ratios (after waivers
and reimbursement) stated below, multiplied by the average account value
over the period, multiplied by 183/366 (to reflect the one-half year
period).
Church Capital Value Trust 1.25%
Church Capital Money Market Fund 0.66%
OTHER INFORMATION (Unaudited)
================================================================================
A description of the policies and procedures that the Funds use to vote proxies
relating to portfolio securities is available without charge upon request by
calling 1-877-742-8061, 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 1-877-742-8061,
or on the SEC's website at http://www.sec.gov.
The Trust files a complete listing of portfolio holdings of the Funds with the
SEC as of the end of the first and third quarters of each fiscal year on Form
N-Q. The filings are available without charge upon request by calling
1-877-742-8061. 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. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
20
CHURCH CAPITAL INVESTMENT TRUST
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
(UNAUDITED)
================================================================================
The Board of Trustees, including the Independent Trustees voting separately,
have reviewed and approved Interim Investment Advisory Agreements (hereafter
referred to as the "Advisory Agreements") with the Adviser for the Church
Capital Value Trust (the "Value Fund") and the Church Capital Money Market Fund
(the "Money Market Fund"). The Advisory Agreements each have a term of 150 days
and were put in place due to a change of control at the Adviser. The change of
control occurred when the parent company of the Adviser merged into The PNC
Financial Group, Inc. ("PNC"). Prior to the expiration of the Advisory
Agreements, shareholders will be asked, at a Special Meeting of Shareholders, to
approve new investment advisory agreements for the Funds.
The approvals of the Advisory Agreements took place at an in-person meeting held
on April 4, 2008, at which all of the Independent Trustees were present. At this
meeting the Trustees were advised by experienced counsel of their fiduciary
obligations in approving the Advisory Agreements and the Trustees requested such
information from the Adviser as they deemed reasonably necessary to evaluate the
terms of the Advisory Agreements and to determine whether the Advisory
Agreements are in the best interests of the Funds and their shareholders. The
Trustees reviewed: (i) the nature, extent and quality of the services provided
by the Adviser; (ii) the investment performance of each Fund and the Adviser;
(iii) the costs of the services to be provided and profits to be realized by the
Adviser and its affiliates from their relationship with the Funds; and (iv) the
extent to which economies of scale would be realized as the Funds grow and
whether advisory fee levels reflect these economies of scale for the benefit of
Fund shareholders. The Trustees reviewed the background, qualifications,
education and experience of the Adviser's investment and operational personnel.
The Trustees also discussed and considered the quality of administrative and
other services provided to the Trust, the Adviser's compliance program, and the
Adviser's role in coordinating such services and programs. The Independent
Trustees were advised by experienced counsel throughout the process.
Below are summaries of the discussions and findings of the Independent Trustees
in regard to the approvals of the Advisory Agreements.
(i) THE NATURE, EXTENT, AND QUALITY OF THE SERVICES PROVIDED BY THE ADVISER.
In this regard, the Independent Trustees reviewed the services being
provided to the Funds by the Adviser. They discussed the responsibilities
of the Adviser under the Advisory Agreements and the Adviser's
compensation. The Independent Trustees reviewed the background and
experience of the Adviser's key investment and operating personnel. They
also considered the Adviser's commitment to maintain a qualified
professional staff. The Independent Trustees also noted the
representations by PNC that no immediate changes are expected at the
professional staff level for the Adviser. After reviewing the foregoing
information, the Independent Trustees concluded that the quality, extent
and nature of the services provided by the Adviser were satisfactory for
the Value Fund and the Money Market Fund.
(ii) THE INVESTMENT PERFORMANCE OF THE FUNDS AND ADVISER. In this regard, the
Independent Trustees compared the performance of the Value Fund, over
various periods ended December 31, 2007, with comparative performance
statistics of the universe of funds categorized by Morningstar as "large
blend" funds, which is the category to which the Value Fund has been
assigned. The Independent Trustees also compared the Value Fund's
performance to the S&P 500 Index, the Fund's primary benchmark (the
"Benchmark"), noting that the Value Fund outperformed the Benchmark over
the one year period ended December 31, 2007. The Independent Trustees also
considered the Value Fund's performance through February 29, 2008, noting
that the Value Fund's one year return of 0.88% was significantly ahead of
the S&P 500 Index's return of -3.60%. The Independent Trustees also
considered the consistency of the Adviser's management of the Value Fund
with the Fund's investment objective and policies. The Independent
Trustees were provided with information on how the Adviser's similarly
managed accounts performed. After considerable discussion, the Independent
Trustees concluded that the investment performance of the Value Fund has
been satisfactory.
21
CHURCH CAPITAL INVESTMENT TRUST
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
(UNAUDITED) (CONTINUED)
================================================================================
The Independent Trustees reviewed the performance of the Money Market
Fund. Its performance was first compared to a group of other money market
funds selected by the Adviser based on the Adviser's familiarity with the
funds and their similar investment objectives (hereafter referred to as
the "Peer Group"). The Independent Trustees also considered the
consistency of the Adviser's management of the Money Market Fund with the
Fund's investment objective and policies and the Adviser's commitment to
compliance with regards to the management of the Fund. The Independent
Trustees noted that the Adviser does not manage any other products with a
similar investment objective. After considerable discussion, the
Independent Trustees concluded that the investment performance of the
Money Market Fund has been satisfactory.
(iii) THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE
ADVISER AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE FUNDS. In this
regard, the Independent Trustees considered the Adviser's staffing,
personnel and methods of operating; the financial condition of PNC; the
asset levels of each Fund; and the overall expenses of each Fund. The
Independent Trustees reviewed the rate of the advisory fees to be paid by
the Funds under the Advisory Agreements and compared them to the average
advisory fee ratios of similar mutual funds, according to statistics
derived from Morningstar, Inc. They also compared the total operating
expense ratios of the Funds with average expense ratios of representative
funds. It was noted by the Independent Trustees that the Value Fund's
advisory fee of 1.00% and its overall net expense ratio of 1.25% were each
higher than the average advisory fee (0.52%) and average expense ratio
(1.11%) for the funds categorized by Morningstar as large blend funds. The
Independent Trustees also compared the Value Fund's advisory fee and
overall expense ratio to the averages for large blend funds with less than
$50 million in net assets, noting that large blend funds with $50 million
or less in net assets had an average advisory fee of 0.65%, and that the
average expense ratio of such funds (1.33%) was higher than the Value
Fund's overall expense ratio, net of fee waivers. The Independent Trustees
performed a similar comparison for the Money Market Fund, finding that the
Money Market Fund's advisory fee of 0.50% was higher than the average
management fee charged by its Peer Group (0.37%). It was noted, however,
that the Money Market Fund's overall expense ratio of 0.68%, after fee
waivers, was lower than each of the funds within the Peer Group. The
Independent Trustees were presented with information regarding the
financial condition of PNC, and concluded that the Adviser has the
necessary financial resources to serve as the Funds' investment adviser
and maintain the expense cap commitments for each Fund. The Independent
Trustees also considered the "fallout benefits" to the Adviser, and in
particular the brokerage commissions received by Bainbridge Securities
Inc. ("Bainbridge"), an affiliated broker-dealer, for executing portfolio
trades of the Value Fund. The Independent Trustees considered that
Bainbridge has been paid $125,874 in brokerage commissions by the Value
Fund from the Fund's inception through December 31, 2007. Following
consideration of the foregoing, the Independent Trustees concluded that
the fees paid by each Fund to the Adviser are reasonable.
(iv) THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS THE FUNDS GROW
AND WHETHER ADVISORY FEE LEVELS REFLECT THESE ECONOMIES OF SCALE FOR THE
BENEFIT OF THE FUNDS' INVESTORS. In this regard, the Independent Trustees
considered that the Adviser is not currently collecting its full advisory
fees from either Fund due to its commitment to cap their overall expenses.
The Independent Trustees concluded that, at current asset levels, it would
not be relevant to consider the extent to which economies of scale are
being realized. It was noted by the Independent Trustees that, to the
extent that the Funds continue to grow, this factor will likely become a
more important consideration at future contract renewals. The Independent
Trustees also considered the impact that PNC's acquisition may have on the
growth of Fund assets.
22
CHURCH CAPITAL INVESTMENT TRUST
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
(UNAUDITED) (CONTINUED)
================================================================================
The Independent Trustees concluded that, based on each Fund's performance record
and the other services provided by the Adviser, they believe that the Adviser
has provided high quality advisory services to the Funds. The Independent
Trustees indicated that, although the advisory fees of the Funds are in the
higher range of fees for other comparably managed funds, they believe the fees
to be reasonable given the Funds' performance records, the quality of services
provided by the Adviser, and the relatively small size of each Fund.
In conclusion, the Trustees did not identify any single factor as all-important
or controlling in their determination to approve the Advisory Agreements. The
Trustees concluded that the terms of the Advisory Agreements were fair and
reasonable, that the Adviser's fees were reasonable in light of the services
provided to the Funds and the benefits received by the Adviser, and that the
Advisory Agreements are in the best interests of the Funds and their
shareholders.
23
ITEM 2. CODE OF ETHICS.
Not required
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required
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 has not adopted procedures by which shareholders may recommend
nominees to the registrant's board of trustees.
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: Not required
(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.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) Church Capital Investment Trust
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By (Signature and Title)* /s/ Gregory A. Church
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Gregory A. Church, President
Date August 4, 2008
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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/ Gregory A. Church
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Gregory A. Church, President
Date August 4, 2008
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By (Signature and Title)* /s/ Mark J. Seger
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Mark J. Seger, Treasurer
Date August 4, 2008
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* Print the name and title of each signing officer under his or her signature.