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 811-10085
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Hillman Capital Management Investment Trust
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(Exact name of registrant as specified in charter)
116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802
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(Address of principal executive offices) (Zip code)
C. Frank Watson III
116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802
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(Name and address of agent for service)
Registrant's telephone number, including area code: 252-972-9922
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Date of fiscal year end: September 30, 2004
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Date of reporting period: September 30, 2004
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Item 1. REPORTS TO STOCKHOLDERS.
________________________________________________________________________________
THE HILLMAN AGGRESSIVE
EQUITY FUND
________________________________________________________________________________
a series of the Hillman Capital Management Investment Trust
Annual Report
FOR THE YEAR ENDED SEPTEMBER 30, 2004
INVESTMENT ADVISOR
Hillman Capital Management, Inc.
613 Third Street
Eastport Maritime Building
Annapolis, Maryland 21403
THE HILLMAN AGGRESSIVE EQUITY FUND
116 South Franklin Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-773-3863
DISTRIBUTOR
Capital Investment Group, Inc.
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-773-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of The Hillman Aggressive Equity Fund
(the "Fund"). This report is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective prospectus.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any
depository institution. Shares are not insured by the FDIC, Federal Reserve
Board or any other agency, and are subject to investment risks, including
possible loss of principal amount invested. Neither the Fund nor the Fund's
distributor is a bank.
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Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of The Hillman Aggressive Equity Fund
("Fund") and of the market in general and statements of the Fund's plans and
objectives for future operations are forward-looking statements. No assurance
can be given that actual results or events will not differ materially from those
projected, estimated, assumed or anticipated in any such forward-looking
statements. Important factors that could result in such differences, in addition
to the other factors noted with such forward-looking statements, include,
without limitation, general economic conditions such as inflation, recession and
interest rates. Past performance is not a guarantee of future results.
An investment in the Fund is subject to investment risks, including the possible
loss of some or all of the principal amount invested. There can be no assurance
that the Fund will be successful in meeting its investment objective. Investment
in the Fund is also subject to the following risks: market risk, investment
advisor risk, management style risk, non-diversified status risk and sector
focus risk. More information about these risks and other risks can be found in
the Fund's prospectus.
The performance information quoted in this annual report represents past
performance, which is not a guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance data quoted. An investor
may obtain performance data current to the most recent month-end by visiting
www.ncfunds.com.
An investor should consider the investment objectives, risks, and charges and
expenses of the Fund carefully before investing. The prospectus contains this
and other information about the Fund. A copy of the prospectus is available at
www.ncfunds.com or by calling Shareholder Services at 1-800-773-3863. The
prospectus should be read carefully before investing.
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[PIE CHART HERE:]
Asset Allocations as of September 30, 2004 (% of total net assets)
Aerospace / Defense - 9.37%
Auto Manufacturers - 5.05%
Commercial Services - 4.85%
Computers - 10.27%
Electric - 4.56%
Food - 4.85%
Healthcare Services - 10.29%
Miscellaneous Manufacturing - 4.93%
Real Estate Investment Trusts - 9.95%
Retail - 10.50%
Telecommunications - 19.77%
Transportation - 5.21%
Investment Company - 2.37%
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[HILLMAN CAPITAL MANAGEMENT, INC. LETTERHEAD]
November 24, 2004
Dear Shareholder of The Hillman Aggressive Equity Fund:
Enclosed please find the annual report for The Hillman Aggressive Equity
Fund (the "Fund") for the fiscal year ended September 30, 2004. For the third
year in a row the Fund outperformed the S&P 500 Total Return Index (the "S&P
500"). The Fund achieved a total return of 22.8% versus the 13.9%1 total return
of the S&P 500 for the year ended September 30, 2004 and an average annual
return of 4.7% and a total return of 18.7% since the Fund's inception on
December 29, 2000 versus the negative 2.9%1 average annual return and negative
10.3%1 total return of the S&P 500 since the Fund's inception.
Maintaining our discipline of investing in companies we believe to have
competitive advantage in their industries at times when their securities are
undervalued again proved a successful strategy. The Fund achieved its
outperformance of the S&P 500 primarily because of differences in the portfolios
of securities comprising the S&P 500 versus the Fund and strong returns from
companies held by the Fund including Aetna (+63.8%^1), LabCorp (+52.9%^1) and
Motorola (+52.5%^1)^2, among others.
Under CEO Dr. John Rowe, Aetna continued to rebuild its business by
trimming unprofitable segments and returning to healthcare enrollment growth.
With its new, singular focus we expect Aetna to continue as a leading managed
health care player and leave its old, slow growing, multi-line insurance model
behind.
LabCorp is the second largest independent clinical lab in the United States
and a leader in esoteric testing. Because of its size it enjoys tremendous
economies of scale over smaller competitors and also maintains one of the
strongest balance sheets in the medical testing industry. We anticipate LabCorp
will continue to utilize its scale and take advantage of an aging population and
an increased focus on preventative testing to fuel further growth.
After a management shakeup where Ed Zander, formerly of Sun Microsystems,
was appointed CEO, Motorola has been able to execute a much more efficient and
profitable business plan. Through the spinoff of its semiconductor unit,
FreeScale, and improved products in the cellular handset marketplace, Motorola
has seen dramatic appreciation in its stock price.
We plan to continue to adhere to this strategy of investing in companies we
believe to have competitive advantage in their industries at times when their
securities are undervalued in our effort to help clients participate in market
advances without unreasonable risk and hope to outperform the market over time.
We urge our investors to invest prudently. We believe the long-term value
of an investment is not defined by investor sentiment but by sound principals of
finance, such as the present value of the cash flows, dividends, or earnings an
underlying asset can produce. We believe that our disciplined focus on quality
companies with competitive advantage will continue to be a favorable investment
strategy into the future.
We appreciate the opportunity to serve as your Fund's Investment Adviser.
Sincerely yours,
/s/ Mark A. Hillman
President
Hillman Capital Management, Inc.
^1 Source: Bloomberg L.P., 499 Park Avenue, New York, NY 10022-1240
^2 These securities represented 5.57%, 4.72%, and 5.01%, respectively, of the
Fund's net assets as of September 30, 2004 and the total returns indicated
reflect performance for the twelve-month period ended September 30, 2004 with
respect to Aetna and Motorola and for the period October 2, 2003 (date the
Fund purchased the security) through September 30, 2004 for LabCorp.
2
THE HILLMAN AGGRESSIVE EQUITY FUND
Performance Update - $10,000 Investment
For the period from December 29, 2000 (Date of Initial Public Investment)
to September 30, 2004
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The Hillman Aggressive S&P 500 Total
Equity Fund Return Index
- --------------------------------------------------------------------------------
12/29/2000 $10,000 $10,000
3/31/2001 8,390 8,814
6/30/2001 9,570 9,330
9/30/2001 7,500 7,961
12/31/2001 8,950 8,811
3/31/2002 9,450 8,836
6/30/2002 8,610 7,652
9/30/2002 6,550 6,330
12/31/2002 7,070 6,864
3/31/2003 7,060 6,648
6/30/2003 9,080 7,671
9/30/2003 9,668 7,874
12/31/2003 10,963 8,833
3/31/2004 11,555 8,983
6/30/2004 11,796 9,137
9/30/2004 11,874 8,967
This graph depicts the performance of The Hillman Aggressive Equity Fund (the
"Fund") versus the S&P 500 Total Return Index. It is important to note that the
Fund is a professionally managed mutual fund while the index is not available
for investment and is unmanaged. The comparison is shown for illustrative
purposes only.
Average Annual Total Returns
---------------- -----------------------------
One Year Since Date of Initial
Public Investment (12/29/00)
---------------- -----------------------------
22.82% 4.68%
---------------- -----------------------------
>> The graph assumes an initial $10,000 investment at December 29, 2000 (Date
of Initial Public Investment). All dividends and distributions are
reinvested.
>> At September 30, 2004, the value of the Fund would have increased to
$11,874 - a cumulative total investment return of 18.74% since December 29,
2000.
>> At September 30, 2004, the value of a similar investment in the S&P 500
Total Return Index would have decreased to $8,967 - a cumulative total
investment return of (10.33)% since December 29, 2000.
The performance information quoted above represents past performance, which is
not a guarantee of future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance data quoted. An investor may obtain performance data
current to the most recent month-end by visiting www.ncfunds.com.
The graph and table do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. Average annual
total returns are historical in nature and measure net investment income and
capital gain or loss from portfolio investments assuming reinvestments of
dividends.
THE HILLMAN AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2004
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Value
Shares (note 1)
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COMMON STOCKS - 99.60%
Aerospace / Defense - 9.37%
Goodrich Corporation .................................................... 18,300 $ 573,888
The Boeing Company ...................................................... 10,400 536,848
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1,110,736
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Auto Manufacturers - 5.05%
General Motors Corporation .............................................. 14,100 598,968
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Commercial Services - 4.85%
Cendant Corporation ..................................................... 26,600 574,560
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Computers - 10.27%
(a)EMC Corporation ......................................................... 52,400 604,696
Hewlett-Packard Company ................................................. 32,700 613,125
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1,217,821
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Electric - 4.56%
American Electric Power Co. Inc. ........................................ 16,900 540,124
------------
Food - 4.85%
Whole Foods Market Inc. ................................................. 6,700 574,793
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Healthcare Services - 10.29%
Aetna Inc. .............................................................. 6,600 659,538
(a)Laboratory Corp. of America Holdings .................................... 12,800 559,616
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1,219,154
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Miscellaneous Manufacturing - 4.93%
General Electric Company ................................................ 17,400 584,292
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Real Estate Investment Trusts - 9.95%
Equity Office Properties Trust .......................................... 21,400 583,150
(a)Host Marriot Corp. ...................................................... 42,500 596,275
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1,179,425
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Retail - 10.50%
Outback Steakhouse Inc. ................................................. 14,700 610,491
Sears, Roebuck and Company .............................................. 15,900 633,615
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1,244,106
------------
Telecommunications - 19.77%
(a)Corning Incorporated .................................................... 52,100 577,268
Motorola Incorporated ................................................... 32,900 593,516
SBC Communications Inc. ................................................. 22,700 589,065
Verizon Communications Inc. ............................................. 14,800 582,824
------------
2,342,673
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(Continued)
THE HILLMAN AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2004
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Value
Shares (note 1)
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COMMON STOCKS - (Continued)
Transportation - 5.21%
FedEx Corporation .................................................. 7,200 $ 616,968
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Total Common Stocks (Cost $10,109,063) ............................. 11,803,620
------------
INVESTMENT COMPANY - 2.37%
Evergreen Select Money Market Fund Class I #495 ......................... 280,343 280,343
(Cost $280,343) ------------
Total Value of Investments (Cost $10,389,406 (b)) ............................. 101.97 % $ 12,083,963
Liabilities in Excess of Other Assets ......................................... (1.97)% (233,085)
------------
Net Assets .............................................................. 100.00 % $ 11,850,878
========== ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $10,399,022. Unrealized appreciation/(depreciation) of investments
for federal income tax purposes is as follows:
Aggregate gross unrealized appreciation ......................................... $ 1,795,112
Aggregate gross unrealized depreciation ......................................... (110,171)
------------
Net unrealized appreciation ............................................ $ 1,684,941
============
See accompanying notes to financial statements
THE HILLMAN AGGRESSIVE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2004
ASSETS
Investments, at value (cost $10,389,406) ........................................................ $ 12,083,963
Cash ............................................................................................ 585
Income receivable ............................................................................... 24,781
Receivable for fund shares sold ................................................................. 2,740
Other assets .................................................................................... 6,834
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Total assets ............................................................................... 12,118,903
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LIABILITIES
Accrued expenses ................................................................................ 22,162
Payable for investment purchases ................................................................ 245,863
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Total liabilities .......................................................................... 268,025
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NET ASSETS
(applicable to 1,002,971 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ......................................... $ 11,850,878
============
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($11,850,878 / 1,002,971 shares) ................................................................ $ 11.82
============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $ 10,214,611
Undistributed net investment income ............................................................. 24,820
Accumulated net realized loss on investments .................................................... (83,110)
Net unrealized appreciation on investments ...................................................... 1,694,557
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$ 11,850,878
============
See accompanying notes to financial statements
THE HILLMAN AGGRESSIVE EQUITY FUND
STATEMENT OF OPERATIONS
Year ended September 30, 2004
NET INVESTMENT INCOME
Income
Dividends .................................................................................... $ 177,573
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Investment advisory fees (note 2) ............................................................ 83,285
Fund administration fees (note 2) ............................................................ 10,411
Distribution and service fees (note 3) ....................................................... 20,821
Custody fees (note 2) ........................................................................ 4,776
Fund accounting fees (note 2) ................................................................ 27,833
Audit and tax preparation fees ............................................................... 15,000
Legal fees ................................................................................... 11,824
Securities pricing fees ...................................................................... 1,762
Other accounting fees (note 2) ............................................................... 13,589
Shareholder servicing expenses ............................................................... 1,815
Registration and filing expenses ............................................................. 14,167
Printing expenses ............................................................................ 644
Trustee fees and meeting expenses ............................................................ 5,007
Other operating expenses ..................................................................... 3,995
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Total expenses ........................................................................... 214,929
Less:
Investment advisory fees waived (note 2) ............................................ (33,450)
Fund administration fees waived (note 2) ............................................ (10,411)
Fund accounting fees waived (note 2) ................................................ (12,120)
Other accounting fees waived (note 2) ............................................... (13,589)
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Net expenses ............................................................................. 145,359
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Net investment income ............................................................... 32,214
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions .................................................... 94,656
Change in unrealized appreciation on investments .................................................. 1,201,704
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Net realized and unrealized gain on investments .............................................. 1,296,360
------------
Net increase in net assets resulting from operations ..................................... $ 1,328,574
============
See accompanying notes to financial statements
THE HILLMAN AGGRESSIVE EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended September 30,
---------------------------------------------------
2004 2003
---------------------------------------------------
INCREASE IN NET ASSETS
Net investment income .............................................. $ 32,214 $ 20,446
Net realized gain (loss) from investment transactions .............. 94,656 (87,727)
Change in unrealized appreciation on investments ................... 1,201,704 1,567,764
------------ ------------
Net increase in net assets resulting from operations .......... 1,328,574 1,500,483
------------ ------------
Distributions to shareholders from
Net investment income .............................................. (7,527) (20,313)
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 5,373,150 699,170
------------ ------------
Total increase in net assets ........................... 6,694,197 2,179,340
NET ASSETS
Beginning of year ...................................................... 5,156,681 2,977,341
------------ ------------
End of year (including undistributed net investment income $ 11,850,878 $ 5,156,681
of $24,820 in 2004 and $133 in 2003.) ============ ============
(a) A summary of capital share activity follows:
-------------------------------------------------------------------------
2004 2003
Shares Value Shares Value
-------------------------------------------------------------------------
Shares sold ............................................. 584,052 $ 6,700,855 102,327 $ 855,268
Shares issued for reinvestment of distributions ......... 624 7,383 1,049 10,105
------------ ------------ ------------ ------------
584,676 6,708,238 103,376 865,373
Shares redeemed ......................................... (117,306) (1,335,088) (22,651) (166,203)
------------ ------------ ------------ ------------
Net increase ....................................... 467,370 $ 5,373,150 80,725 $ 699,170
============ ============ ============ ============
See accompanying notes to financial statements
THE HILLMAN AGGRESSIVE EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
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For the Years ended September 30, Period ended
September 30,
2004 2003 2002 2001 (a)
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Net asset value, beginning of period ............................. $ 9.63 $ 6.55 $ 7.51 $ 10.00
Income (loss) from investment operations
Net investment income (loss) ............................. 0.03 0.04 (0.04) (0.12)
Net realized and unrealized gain (loss) on investments ... 2.17 3.08 (0.92) (2.37)
----------- ----------- ----------- -----------
Total from investment operations ...................... 2.20 3.12 (0.96) (2.49)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income .................................... (0.01) (0.04) 0.00 0.00
----------- ----------- ----------- -----------
Net asset value, end of period ................................... $ 11.82 $ 9.63 $ 6.55 $ 7.51
=========== =========== =========== ===========
Total return ..................................................... 22.82% 47.60% (12.67)% (25.00)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................... $11,850,878 $ 5,156,681 $ 2,977,341 $ 2,863,908
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ............ 2.58 % 3.93 % 4.06 % 6.32 %(b)
After expense reimbursements and waived fees ............. 1.75 % 2.10 % 2.12 % 3.90 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ............ (0.45)% (1.30)% (2.41)% (4.96)%(b)
After expense reimbursements and waived fees ............. 0.39 % 0.53 % (0.46)% (2.53)%(b)
Portfolio turnover rate ..................................... 37.80 % 41.37 % 67.29 % 52.56 %
(a) From the period from December 29, 2000 (Date of Initial Public Investment) to September 30, 2001.
(b) Annualized.
See accompanying notes to financial statements
THE HILLMAN AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Hillman Aggressive Equity Fund (the "Fund") is a non-diversified series
of shares of beneficial interest of the Hillman Capital Management
Investment Trust (the "Trust"), an open-end management investment company.
The Trust was organized on July 14, 2000 as a Delaware Business Trust and
is registered under the Investment Company Act of 1940, as amended (the
"Act"). The Fund received its initial public investment on December 29,
2000 and began operations on January 2, 2001. The investment objective of
the Fund is to seek capital appreciation principally through investments in
equity securities, such as common and preferred stocks, and securities
convertible into common stocks. The following is a summary of significant
accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are carried
at value. Securities listed on an exchange or quoted on a national
market system are valued at the last sales price as of 4:00 p.m.
Eastern time on the day of valuation. Other securities traded in the
over-the-counter market and listed securities for which no sale was
reported on that date are valued at the most recent bid price.
Securities for which market quotations are not readily available or
which cannot be accurately valued using the Fund's normal pricing
procedures, if any, are valued following procedures approved by the
Board of Trustees of the Trust (the "Trustees"). Short-term
investments are valued at cost, which approximates value.
B. Federal Income Taxes - No provision has been made for federal income
taxes since substantially all taxable income has been distributed to
shareholders. It is the policy of the Fund to comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies and to make sufficient distributions of taxable
income to relieve it from all federal income taxes.
The Fund has a capital loss carryforward for federal income tax
purposes of $48,357, which expires in the year 2009. It is the
intention of the Trustees not to distribute any realized gains until
the carryforwards have been offset or expire.
C. Investment Transactions - Investment transactions are recorded on the
trade date. Realized gains and losses are determined using the
specific identification cost method. Interest income is recorded daily
on an accrual basis. Dividend income is recorded on the ex-dividend
date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on a date
selected by the Trustees. In addition, distributions may be made
annually in December out of net realized gains through October 31 of
that year. Distributions to shareholders are recorded on the
ex-dividend date. The Fund may make a supplemental distribution
subsequent to the end of its fiscal year.
E. Use of 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 amounts of assets, liabilities, expenses
and revenues reported in the financial statements. Actual results
could differ from those estimates.
(Continued)
THE HILLMAN AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Hillman Capital Management,
Inc. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies and the purchase and sale of securities.
As compensation for its services, the Advisor receives a fee at the annual
rate of 1.00% of the Fund's average daily net assets. The Advisor has
voluntarily waived a portion of its fee in the amount of $33,450 ($0.05 per
share) for the year ended September 30, 2004. There can be no assurance
that the foregoing fee waiver will continue.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for the
overall management and day-to-day operations of the Fund pursuant to a fund
accounting and compliance agreement with the Trust. As compensation for its
services, the Administrator receives a fee at the annual rate of 0.125% of
the Fund's first $50 million of average daily net assets, 0.10% of the next
$50 million of average daily net assets, and 0.075% of average daily net
assets over $100 million. The contract with the Administrator provides that
the aggregate fees for the aforementioned administration services shall not
be less than $2,000 per month. The Administrator also receives a monthly
fee of $2,250 for accounting and record-keeping services, plus 0.01% of the
average annual net assets. The Administrator also received the following to
procure and pay the custodian for the Trust: 0.002% on the first $100
million of the Fund's net assets and 0.009% on all assets over $100
million, plus transaction fees, with a minimum aggregate annual fee of
$4,800. The Administrator also charges the Fund for certain expenses
involved with the daily valuation of portfolio securities, which are
believed to be immaterial in amount. The Administrator has voluntarily
waived a portion of these fees amounting to $10,411 in administrative fees,
$13,589 in other accounting fees and $12,120 in fund accounting fees for
the year ended September 30, 2004. There can be no assurance that the
foregoing fee waivers will continue.
NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's
transfer, dividend paying, and shareholder servicing agent. The Transfer
Agent maintains the records of each shareholder's account, answers
shareholder inquiries concerning accounts, processes purchases and
redemptions of the Fund shares, acts as dividend and distribution
disbursing agent, and performs other shareholder servicing functions.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the distributor or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Trustees, including a majority of the Trustees who are not "interested
persons" of the Trust as defined in the Act, adopted a distribution plan
with respect to all shares pursuant to Rule 12b-1 of the Act (the "Plan").
Rule 12b-1 regulates the manner in which a regulated investment company may
assume costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.25%, for each year elapsed subsequent to adoption of the Plan, for
payment to the distributor and others for items such as advertising
expenses, selling expenses, commissions, travel or other expenses
reasonably intended to result in sales of shares of the Fund or support
servicing of shareholder accounts. The Fund incurred $20,821 in
distribution and service fees under the Plan for the year ended September
30, 2004.
(Continued)
THE HILLMAN AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
NOTE 4 - INFORMATION ABOUT SHAREHOLDER EXPENSES
As a shareholder of the Fund, you incur ongoing costs, including management
fees and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period as indicated below.
A. Actual Expenses - The first line of the table below provides
information about the actual account values and actual expenses. You
may use the information in this line, together with the amount you
invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account
during this period.
B. Hypothetical Example for Comparison Purposes - The second line of the
table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an
assumed annual rate of return of 5% before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses
you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds by comparing
this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds.
Beginning Ending
Total Account Value Account Value Expenses Paid
Return October 1, 2003 September 30, 2004 During Period*
------ --------------- ------------------ --------------
Actual return of 22.82% $ 1,000.00 $ 1,228.20 $ 19.50
Hypothetical return before expreses of 5.00% $ 1,000.00 $ 1,032.50 $ 17.78
* Expenses are equal to the Fund's annualized expense ratio of 1.75% multiplied by the average account value
over the period.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $8,497,286 and $3,117,707, respectively, for the year ended
September 30, 2004.
(Continued)
THE HILLMAN AGGRESSIVE EQUITY FUND
ADDITIONAL INFORMATION
September 30, 2004
(Unaudited)
PROXY VOTING POLICY
A copy of the Trust's Proxy Voting and Disclosure Policy and the Advisor's
Proxy Voting and Disclosure Policy are included as Appendix B to the Fund's
Statement of Additional Information and is available, without charge, upon
request, by calling 1-800-773-3863. After June 30, 2004, information
regarding how the Fund voted proxies relating to portfolio securities
during the most recent 12-month period ended June 30 will be available (1)
without charge, upon request, by calling the Fund at the number above and
(2) on the SEC's website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the SEC's website, beginning with the December
31, 2004 reports, at http://www.sec.gov. You may review and make copies at
the SEC's Public Reference Room in Washington, D.C. You may also obtain
copies after paying a duplicating fee by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102 or by electronic request to
publicinfo@sec.gov. Information on the operation of the Public Reference
Room may be obtained by calling the SEC at 202-942-8090.
INFORMATION ABOUT TRUSTEES AND OFFICERS
The business and affairs of the Fund and the Trust are managed under the
direction of the Trustees. Information concerning the Trustees and officers
of the Trust and Fund is set forth below. Generally, each Trustee and
officer serves an indefinite term or until certain circumstances such as
their resignation, death, or otherwise as specified in the Trust's
organizational documents. Any Trustee may be removed at a meeting of
shareholders by a vote meeting the requirements of the Trust's
organizational documents. The Statement of Additional Information of the
Fund includes additional information about the Trustees and officers and is
available, without charge, upon request by calling the Fund toll-free at
1-800-773-3863. The address of each Trustee and officer, unless otherwise
indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina
27804. The Independent Trustees received aggregate compensation of $3,400
during the fiscal year ended September 30, 2004 from the Fund for their
services to the Fund and Trust. The Interested Trustee and officers did not
receive compensation from the Fund for their services to the Fund and
Trust.
(Continued)
THE HILLMAN AGGRESSIVE EQUITY FUND
ADDITIONAL INFORMATION
September 30, 2004
(Unaudited)
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Number of
Portfolios
in Fund
Position(s) Complex
Name, Age, held with Length of Time Principal Occupation(s) Overseen by Other Directorships
and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Independent Trustees
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Jack E. Brinson, 72 Trustee Since 12/2000 Retired since January 2000; 2 Independent Trustee of the
Previously, President, Brinson following - de Leon Funds
Investment Co. (personal Trust for the one series of
investments) and President, that trust; Gardner Lewis
Brinson Chevrolet, Inc. (auto Investment Trust for the
dealership) three series of that trust;
The Nottingham Investment
Trust II for the seven
series of that trust; New
Providence Investment Trust
for the one series of that
trust; MurphyMorris
Investment Trust for the one
series of that trust; Merit
Advisors Investment Trust
for the one series of that
trust; and Merit Advisors
Investment Trust II for the
one series of that trust
(all registered investment
companies)
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Theo H. Pitt, Jr., 68 Trustee and Since 12/2000 Senior Partner, Community 2 Independent Trustee of the
Chairman Financial Institutions following - de Leon Funds
Consulting, Rocky Mount, North Trust for the one series of
Carolina since 1997 and Account that Trust; Gardner Lewis
Administrator, Holden Wealth Investment Trust for the
Management Group of Wachovia three series of that trust;
Securities (money management MurphyMorris Investment
firm) since September 2003. Trust for the one series of
that Merit Advisors
Investment Trust for the
one series of that trust;
and Merit Advisors
Investment Trust II for
the one series of that trust
(all registered investment
companies)
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Interested Trustee
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Mark A. Hillman, 42 Trustee and Since 12/2000 President, Hillman Capital 2 None
613 Third Street President Management, Inc. (investment
Eastport Maritime (Principal advisor of the Funds);
Building Executive previously, Chief Investment
Annapolis, MD 21403 Officer) Officer, Menocal Capital
Management, Inc.
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Basis of Interestedness. Mr. Hillman is a Interested Trustee because he is an officer of Hillman Capital Management, Inc., the
investment advisor of the Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Other Officers
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Fletcher D. Perkins, 26 Treasurer Since 12/2002 Analyst, Hillman Capital n/a n/a
26 (Principal Management, Inc., since 2002;
613 Third Street Financial Account Manager, Netivity
Eastport Maritime Officer) Solutions (computer network
Building service) from 01/2001 to
Annapolis, MD 21403 10/2001; previously, student,
Saint Mary's College
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
C. Frank Watson III, 34 Secretary Since President and Chief Operating n/a n/a
12/2000 Officer since 1999, The
Nottingham Company
(administrator to the Funds);
previously, Chief Operating
Officer, The Nottingham Company
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Julian G. Winters, 35 Assistant Assistant Vice President-Compliance n/a n/a
Secretary Secretary since Administration, The Nottingham
and 12/2000; Company
Assistant Assistant
Treasurer Treasurer since
12/2002
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Hillman Capital Management Investment Trust and
Shareholders of The Hillman Aggressive Equity Fund:
We have audited the accompanying statement of assets and liabilities of The
Hillman Aggressive Equity Fund (the "Fund"), including the portfolio of
investments, as of September 30, 2004, and the related statement of operations
for the year then ended, the statements of changes in net assets for the years
ended September 30, 2004 and 2003, and the financial highlights for each of the
periods presented. 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2004, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Hillman Aggressive Equity Fund as of September 30, 2004, the results of its
operations for the year then ended, the changes in its net assets for the years
ended September 30, 2004 and 2003, and the financial highlights for each of the
periods presented, in conformity with accounting principles generally accepted
in the United States of America.
/s/ Deloitte & Touche LLP
November 2, 2004
Member of
Deloitte Touche Tohmatsu
________________________________________________________________________________
THE HILLMAN AGGRESSIVE
EQUITY FUND
________________________________________________________________________________
a series of the Hillman Capital Management Investment Trust
This Report has been prepared for shareholders and
may be distributed to others only if preceded or
accompanied by a current prospectus.
________________________________________________________________________________
THE HILLMAN TOTAL RETURN FUND
________________________________________________________________________________
a series of the Hillman Capital Management Investment Trust
Annual Report
FOR THE YEAR ENDED SEPTEMBER 30, 2004
INVESTMENT ADVISOR
Hillman Capital Management, Inc.
613 Third Street
Eastport Maritime Building
Annapolis, Maryland 21403
THE HILLMAN TOTAL RETURN FUND
116 South Franklin Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-773-3863
DISTRIBUTOR
Capital Investment Group, Inc.
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-773-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of The Hillman Total Return Fund (the
"Fund"). This report is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus. Mutual
fund shares are not deposits or obligations of, or guaranteed by, any depository
institution. Shares are not insured by the FDIC, Federal Reserve Board or any
other agency, and are subject to investment risks, including possible loss of
principal amount invested. Neither the Fund nor the Fund's distributor is a
bank.
- --------------------------------------------------------------------------------
Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of The Hillman Total Return Fund
("Fund") and of the market in general and statements of the Fund's plans and
objectives for future operations are forward-looking statements. No assurance
can be given that actual results or events will not differ materially from those
projected, estimated, assumed or anticipated in any such forward-looking
statements. Important factors that could result in such differences, in addition
to the other factors noted with such forward-looking statements, include,
without limitation, general economic conditions such as inflation, recession and
interest rates. Past performance is not a guarantee of future results.
An investment in the Fund is subject to investment risks, including the possible
loss of some or all of the principal amount invested. There can be no assurance
that the Fund will be successful in meeting its investment objective. Investment
in the Fund is also subject to the following risks: market risk, investment
advisor risk, credit risk, interest rate risk, maturity risk, investment-grade
securities risk and short sales risk. More information about these risks and
other risks can be found in the Fund's prospectus.
The performance information quoted in this annual report represents past
performance, which is not a guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance data quoted. An investor
may obtain performance data current to the most recent month-end by visiting
www.ncfunds.com.
An investor should consider the investment objectives, risks, and charges and
expenses of the Fund carefully before investing. The prospectus contains this
and other information about the Fund. A copy of the prospectus is available at
www.ncfunds.com or by calling Shareholder Services at 1-800-773-3863. The
prospectus should be read carefully before investing.
- --------------------------------------------------------------------------------
[PIE CHART HERE]
Common Stocks - 78.78%
Aerospace / Defense - 3.61%
Apparel - 1.90%
Auto Manufacturers - 1.85%
Biotechnology - 1.37%
Chemicals - 1.48%
Commercial Services - 1.38%
Computers - 2.87%
Electric Companies - 3.39%
Financial Services - 3.16%
Food - 6.57%
Hand / Machine Tools - 2.42%
Healthcare Services - 4.57%
Lodging - Hotels - 2.10%
Media - 3.16%
Miscellaneous Manufacturing - 3.54%
Pharmaceutical - 1.45%
Real Estate Investment Trusts - 7.77%
Restaurant - 6.47%
Retail - 6.86%
Software - 1.80%
Telecommunications - 9.22%
Transportation - 1.84%
U.S. Government Obligations - 3.56%
Corporate Obligations - 8.64%
[HILLMAN CAPITAL MANAGEMENT, INC. LETTERHEAD]
November 24, 2004
Dear Shareholder of The Hillman Total Return Fund:
Enclosed please find the annual report for The Hillman Total Return Fund
(the "Fund") for the fiscal year ended September 30, 2004. The Fund achieved a
total return of 13.6% versus the 13.9%1 total return of the S&P 500 Total Return
Index (the "S&P 500") for the year ended September 30, 2004 and an average
annual return of 5.2% and a total return of 20.8% since the Fund's inception on
December 29, 2000 versus the negative 2.9%1 average annual return and negative
10.3%1 total return of the S&P 500 since the Fund's inception.
Maintaining our discipline of investing in companies we believe to have
competitive advantage in their industries at times when their securities were
undervalued again proved a successful strategy. The Fund achieved its
outperformance of the S&P 500 primarily because of differences in the portfolios
of securities comprising the S&P 500 versus the Fund and strong returns from
companies held by the Fund including Aetna (63.8%1), LabCorp (48.6%1) and
Motorola (52.5%1)2, among others.
Under CEO Dr. John Rowe, Aetna continued to rebuild its business by
trimming unprofitable segments and returning to healthcare enrollment growth.
With its new, singular focus we expect Aetna to continue as a leading managed
health care player and leave its old, slow growing, multi-line insurance model
behind.
LabCorp is the second largest independent clinical lab in the United States
and a leader in esoteric testing. Because of its size it enjoys tremendous
economies of scale over smaller competitors and also maintains one of the
strongest balance sheets in the medical testing industry. We anticipate LabCorp
will continue to utilize its scale and take advantage of an aging population and
an increased focus on preventative testing to fuel further growth.
After a management shakeup where Ed Zander, formerly of Sun Microsystems,
was appointed CEO, Motorola has been able to execute a much more efficient and
profitable business plan. Through the spinoff of its semiconductor unit,
FreeScale, and improved products in the cellular handset marketplace, Motorola
has seen dramatic appreciation in its stock price.
We plan to continue to adhere to this strategy of investing in companies we
believe to have competitive advantage in their industries at times when their
securities were undervalued in our effort to help clients participate in market
advances without unreasonable risk and outperform the market over time.
In addition to following our equity discipline we were also able to take
advantage of positive equity returns by decreasing fixed income holdings. As a
percentage of the total net assets of the Fund, equity holdings increased from
67.9% to 78.7% while fixed income holdings dropped from 22.7% to 12.3% as of
September 30, 2004. Going forward we believe the Fund is structured to take
advantage of the equity markets as excesses of the late 1990's continue to be
worked through the economy while also enjoying the positive yields of fixed
income investments.
We urge our investors to invest prudently. We believe the long-term value
of an investment is not defined by investor sentiment but by sound principals of
finance, such as the present value of cash flows, dividends, or earnings an
underlying asset can produce. We believe that our disciplined focus on quality
companies with competitive advantage will continue to be a favorable investment
strategy into the future.
We appreciate the opportunity to serve as your Fund's Investment Adviser.
Sincerely yours,
/s/ Mark A. Hillman
Hillman Capital Management, Inc.
^1 Source: Bloomberg L.P., 499 Park Avenue, New York, NY 10022-1240
^2 These securities represented 2.60%,1.96%, and 1.94%, respectively, of the
Fund's net assets as of September 30, 2004 and the total returns indicated
reflect performance for the twelve-month period ended September 30, 2004 with
respect to Aetna and Motorola and for the period October 15, 2003 (date the
Fund purchased the security) through September 30, 2004 for LabCorp.
THE HILLMAN TOTAL RETURN FUND
Performance Update - $10,000 Investment
For the period from December 29, 2000 (Date of Initial Public Investment) to
September 30, 2004
- --------------------------------------------------------------------------------
The Hillman Total Return Fund S&P 500 Total Return Index
- --------------------------------------------------------------------------------
12/29/2000 $10,000 $10,000
3/31/2001 9,250 8,814
6/30/2001 9,930 9,330
9/30/2001 8,750 7,961
12/31/2001 9,902 8,811
3/31/2002 10,475 8,836
6/30/2002 10,063 7,652
9/30/2002 8,614 6,330
12/31/2002 9,136 6,864
3/31/2003 9,053 6,648
6/30/2003 10,313 7,671
9/30/2003 10,635 7,874
12/31/2003 11,565 8,833
3/31/2004 12,044 8,983
6/30/2004 11,981 9,137
9/30/2004 12,084 8,967
This graph depicts the performance of The Hillman Total Return Fund (the "Fund")
versus the S&P 500 Total Return Index. It is important to note that the Fund is
a professionally managed mutual fund while the index is not available for
investment and is unmanaged. The comparison is shown for illustrative purposes
only.
Average Annual Total Returns
--------------- ---------------------------
One Year Since 12/29/00 (Date of
Initial Public Investment
--------------- ---------------------------
13.63% 5.17%
--------------- ---------------------------
>> The graph assumes an initial $10,000 investment at December 29, 2000 (Date
of Initial Public Investment). All dividends and distributions are
reinvested.
>> At September 30, 2004, the value of the Fund would have increased to
$12,084 - a cumulative total investment return of 20.84% since December 29,
2000.
>> At September 30, 2004, the value of a similar investment in the S&P 500
Total Return Index would have decreased to $8,967 - a cumulative total
investment return of (10.33)% since December 29, 2000.
The performance information quoted above represents past performance, which is
not a guarantee of future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance data quoted. An investor may obtain performance data
current to the most recent month-end by visiting www.ncfunds.com.
The graph and table do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. Average annual
total returns are historical in nature and measure net investment income and
capital gain or loss from portfolio investments assuming reinvestments of
dividends.
THE HILLMAN TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
September 30, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 78.78%
Aerospace / Defense - 3.61%
Goodrich Corporation .................................................... 8,300 $ 260,288
The Boeing Company ...................................................... 5,700 294,234
------------
554,522
------------
Apparel - 1.90%
Nike Inc. ............................................................... 3,700 291,560
------------
Auto Manufacturers - 1.85%
General Motors Corporation .............................................. 6,700 284,616
------------
Biotechnology - 1.37%
(a)Amgen Inc. .............................................................. 3,700 209,716
------------
Chemicals - 1.48%
E.I. Du Pont de Nemours & Company ....................................... 5,300 226,840
------------
Commercial Services - 1.38%
Cendant Corporation ..................................................... 9,800 211,680
------------
Computers - 2.87%
(a)EMC Corporation ......................................................... 19,100 220,414
Hewlett-Packard Company ................................................. 11,700 219,375
------------
439,789
------------
Electric Companies - 3.39%
American Electric Power Company, Inc. ................................... 8,600 274,856
The Southern Company .................................................... 8,200 245,836
------------
520,692
------------
Financial Services - 3.16%
Allied Capital Corporation .............................................. 19,900 485,361
------------
Food - 6.57%
Campbell Soup Company ................................................... 8,600 226,094
HJ Heinz Company ........................................................ 6,900 248,538
Kellogg Company ......................................................... 5,900 251,694
Whole Foods Market Inc. ................................................. 3,300 283,107
------------
1,009,433
------------
Hand / Machine Tools - 2.42%
Black & Decker Corporation .............................................. 4,800 371,712
------------
(Continued)
THE HILLMAN TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
September 30, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Healthcare Services - 4.57%
Aetna Inc. .............................................................. 4,000 $ 399,720
(a)Laboratory Corporation of America Holdings .............................. 6,900 301,668
------------
701,388
------------
Lodging - Hotels - 2.10%
(a)Host Marriott Corporation ............................................... 23,000 322,690
------------
Media - 3.16%
(a)Time Warner Inc. ........................................................ 15,000 242,100
Walt Disney Company ..................................................... 10,800 243,540
------------
485,640
------------
Miscellaneous Manufacturing - 3.54%
3M Co. .................................................................. 3,400 271,898
General Electric Company ................................................ 8,100 271,998
------------
543,896
------------
Pharmaceutical - 1.45%
Pfizer Inc. ............................................................. 7,300 223,380
------------
Real Estate Investment Trusts - 7.77%
Apartment Investment & Management Company ............................... 9,200 319,976
Correctional Properties Trust ........................................... 9,400 256,620
Equity Office Properties Trust .......................................... 10,900 297,025
Equity Residential ...................................................... 10,300 319,300
------------
1,192,921
------------
Restaurant - 6.47%
(a)Brinker International, Inc. ............................................. 7,300 227,395
McDonald's Corporation .................................................. 8,600 241,058
Outback Steakhouse Inc. ................................................. 7,300 303,169
Wendy's International Inc. .............................................. 6,600 221,760
------------
993,382
------------
Retail - 6.86%
Home Depot Inc. ......................................................... 6,100 239,120
Sears, Roebuck and Company .............................................. 6,700 266,995
(a)Staples Inc. ............................................................ 10,300 307,146
Wal-Mart Stores Inc. .................................................... 4,500 239,400
------------
1,052,661
------------
Software - 1.80%
Microsoft Corp. ......................................................... 10,000 276,500
------------
(Continued)
THE HILLMAN TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
September 30, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Telecommunications - 9.22%
(a)AT&T Wireless Services, Inc. ................................................ 19,700 $ 291,166
(a)Corning Incorporated ........................................................ 22,400 248,192
Motorola Incorporated ....................................................... 16,500 297,660
SBC Communications Inc. ..................................................... 11,200 290,640
Verizon Communications Inc. ................................................. 7,300 287,474
------------
1,415,132
------------
Transportation - 1.84%
FedEx Corporation ........................................................... 3,300 282,777
------------
Total Common Stocks (Cost $10,240,831) ...................................... 12,096,288
------------
Interest Maturity
Principal Rate Date
--------- ---- ----
U.S. GOVERNMENT OBLIGATIONS - 3.56%
United States Treasury Note .................................... $ 50,000 6.875% 05/15/06 53,508
United States Treasury Note .................................... 500,000 2.625% 05/15/08 492,676
------------
Total U.S. Government Obligations (Cost $548,921) ........................... 546,184
------------
CORPORATE OBLIGATIONS - 8.64%
DaimlerChrysler NA Holdings Corp. .............................. 140,000 8.500% 01/18/31 171,137
Ford Motor Credit Co. .......................................... 420,000 6.875% 02/01/06 439,497
General Motors Acceptance Corp. ................................ 200,000 7.500% 07/15/05 207,461
Merrill Lynch & Co., Inc. ...................................... 40,000 0.000% 03/20/28 8,163
Toys R US Inc. ................................................. 500,000 7.625% 08/01/11 500,000
------------
Total Corporate Obligations (Cost $1,321,305) ............................... 1,326,258
------------
INVESTMENT COMPANIES - 8.98% Shares
--------
Evergreen Institutional Money Market Fund ........................................ 705,151 705,151
Merrimac Cash Series Fund ........................................................ 673,246 673,246
------------
Total Investment Companies (Cost $1,378,397) ................................ 1,378,397
------------
Total Value of Investments (Cost $13,489,454 (b)) ...................................... 99.96 % $ 15,347,127
Other Assets Less Liabilities .......................................................... 0.04 % 6,453
-------- ------------
Net Assets ....................................................................... 100.00 % $ 15,353,580
======== ============
(Continued)
THE HILLMAN TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
September 30, 2004
(a) Non-income producing investment.
(b) Aggregate cost for financial reporting and federal income tax purposes is the same. Unrealized appreciation/
(depreciation) of investments for financial reporting and federal income tax purposes is as follows:
Aggregate gross unrealized appreciation .......................................... $ 2,198,022
Aggregate gross unrealized depreciation .......................................... (340,349)
------------
Net unrealized appreciation ..................................................... $ 1,857,673
============
See accompanying notes to financial statements
THE HILLMAN TOTAL RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2004
ASSETS
Investments, at value (cost $13,489,454) ......................................................... $ 15,347,127
Cash ............................................................................................. 88
Income receivable ................................................................................ 43,596
Receivable for fund shares sold .................................................................. 15,141
Other asset ...................................................................................... 5,987
------------
Total assets ................................................................................ 15,411,939
------------
LIABILITIES
Accrued expenses ................................................................................. 27,965
Payable for fund shares redeemed ................................................................. 30,394
------------
Total liabilities ........................................................................... 58,359
------------
NET ASSETS
(applicable to 1,328,392 shares outstanding; unlimited
shares of no par value beneficial interest authorized) .......................................... $ 15,353,580
============
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($15,353,580 / 1,328,392 shares) ................................................................. $ 11.56
============
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $ 13,205,262
Undistributed net investment income .............................................................. 54,438
Undistributed net realized gain on investments ................................................... 236,207
Net unrealized appreciation on investments ....................................................... 1,857,673
$ 15,353,580
============
See accompanying notes to financial statements
THE HILLMAN TOTAL RETURN FUND
STATEMENT OF OPERATIONS
Year ended September 30, 2004
NET INVESTMENT INCOME
Income
Interest ..................................................................................... $ 123,068
Dividends .................................................................................... 290,323
------------
Total income ............................................................................. 413,391
------------
Expenses
Investment advisory fees (note 2) ............................................................ 142,444
Fund administration fees (note 2) ............................................................ 17,805
Distribution and service fees (note 3) ....................................................... 35,611
Custody fees (note 2) ........................................................................ 4,920
Fund accounting fees (note 2) ................................................................ 28,424
Audit and tax preparation fees ............................................................... 15,377
Legal fees ................................................................................... 12,435
Securities pricing fees ...................................................................... 5,057
Shareholder recordkeeping fees (note 2) ...................................................... 19,750
Other accounting fees (note 2) ............................................................... 6,195
Shareholder servicing expenses ............................................................... 1,699
Registration and filing expenses ............................................................. 19,577
Printing expenses ............................................................................ 622
Trustee fees and meeting expenses ............................................................ 5,313
Other operating expenses ..................................................................... 4,056
------------
Total expenses ........................................................................... 319,285
Less:
Investment advisory fees waived (note 2) ............................................ (48,507)
Fund administration fees waived (note 2) ............................................ (11,727)
Fund accounting fees waived (note 2) ................................................ (1,424)
Shareholder recordkeeping fees waived (note 2) ...................................... (1,750)
Other accounting fees waived (note 2) ............................................... (6,195)
------------
Net expenses ............................................................................. 249,682
------------
Net investment income ............................................................... 163,709
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions .................................................... 356,595
Change in unrealized appreciation on investments .................................................. 1,152,025
-----------
Net realized and unrealized gain on investments .............................................. 1,508,620
-----------
Net increase in net assets resulting from operations ..................................... $ 1,672,329
===========
See accompanying notes to financial statements
THE HILLMAN TOTAL RETURN FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended September 30,
---------------------------------------------------
2004 2003
---------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income .............................................. $ 163,709 $ 136,767
Net realized gain (loss) from investment transactions .............. 356,595 (119,864)
Change in unrealized appreciation on investments ................... 1,152,025 1,718,571
------------ ------------
Net increase in net assets resulting from operations .......... 1,672,329 1,735,474
------------ ------------
Distributions to shareholders from
Net investment income .............................................. (110,069) (140,116)
Net realized gain from investment transactions ..................... 0 (65,194)
------------ ------------
Decrease in net assets resulting from distributions ........... (110,069) (205,310)
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 2,037,227 3,936,359
------------ ------------
Total increase in net assets ........................... 3,599,487 5,466,523
NET ASSETS
Beginning of year ...................................................... 11,754,093 6,287,570
------------ ------------
End of year (including undistributed net investment income $ 15,353,580 $ 11,754,093
of $54,438 in 2004 and $798 in 2003) ============ ============
(a) A summary of capital share activity follows:
-------------------------------------------------------------------------
2004 2003
Shares Value Shares Value
-------------------------------------------------------------------------
Shares sold ............................................ 258,446 $ 2,911,677 433,509 $ 4,147,763
Shares issued for reinvestment of distributions ........ 9,644 110,069 16,936 158,126
------------ ------------ ------------ ------------
268,090 3,021,746 450,445 4,305,889
Shares redeemed ........................................ (86,541) (984,519) (42,340) (369,530)
------------ ------------ ------------ ------------
Net increase ...................................... 181,549 $ 2,037,227 408,105 $ 3,936,359
============ ============ ============ ============
See accompanying notes to financial statements
THE HILLMAN TOTAL RETURN FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years ended September 30, Period ended
September 30,
2004 2003 2002 2001 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ........................... $ 10.25 $ 8.51 $ 8.77 $ 10.00
Income (loss) from investment operations
Net investment income ................................. 0.13 0.14 0.10 0.01
Net realized and unrealized gain (loss) on investments 1.27 1.83 (0.25) (1.24)
----------- ----------- ----------- -----------
Total from investment operations ................... 1.40 1.97 (0.15) (1.23)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................................ (0.09) (0.15) (0.11) 0.00
Net realized gain from investment transactions ....... 0.00 (0.08) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions ................................ (0.09) (0.23) (0.11) 0.00
----------- ----------- ----------- -----------
Net asset value, end of period ................................ $ 11.56 $ 10.25 $ 8.51 $ 8.77
=========== =========== =========== ===========
Total return .................................................. 13.63 % 23.46 % (1.56)% (12.50)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................ $15,353,580 $ 11,754,09 $ 6,287,570 $ 5,925,796
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ......... 2.24 % 2.61 % 2.83 % 4.22 %(b)
After expense reimbursements and waived fees .......... 1.75 % 1.83 % 1.80 % 2.78 %(b)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees ......... 0.66 % 0.83 % 0.08 % (1.17)%(b)
After expense reimbursements and waived fees .......... 1.15 % 1.62 % 1.11 % 0.27 %(b)
Portfolio turnover rate ................................... 17.14 % 19.71 % 40.37 % 6.03 %
(a) For the period from December 29, 2000 (Date of Initial Public Investment) to September 30, 2001.
(b) Annualized.
See accompanying notes to financial statements
THE HILLMAN TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Hillman Total Return Fund (the "Fund") is a diversified series of
shares of beneficial interest of the Hillman Capital Management Investment
Trust (the "Trust"), an open-end management investment company. The Trust
was organized on July 14, 2000 as a Delaware Business Trust and is
registered under the Investment Company Act of 1940, as amended (the
"Act"). The Fund received its initial public investment on December 29,
2000 and began operations on January 2, 2001. The investment objective of
the Fund is to seek capital appreciation principally through investments in
equity securities, such as common and preferred stocks, and securities
convertible into common stocks. The following is a summary of significant
accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are carried
at value. Securities listed on an exchange or quoted on a national
market system are valued at the last sales price as of 4:00 p.m.
Eastern time on the day of valuation. Other securities traded in the
over-the-counter market and listed securities for which no sale was
reported on that date are valued at the most recent bid price.
Securities for which market quotations are not readily available or
which cannot be accurately valued using the Fund's normal pricing
procedures, if any, are valued following procedures approved by the
Board of Trustees of the Trust (the "Trustees"). Short-term
investments are valued at cost, which approximates value.
B. Federal Income Taxes - No provision has been made for federal income
taxes since substantially all taxable income has been distributed to
shareholders. It is the policy of the Fund to comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies and to make sufficient distributions of taxable
income to relieve it from all federal income taxes.
C. Investment Transactions - Investment transactions are recorded on the
trade date. Realized gains and losses are determined using the
specific identification cost method. Interest income is recorded daily
on an accrual basis. Dividend income is recorded on the ex-dividend
date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on a date
selected by the Trustees. In addition, distributions may be made
annually in December out of net realized gains through October 31 of
that year. Distributions to shareholders are recorded on the
ex-dividend date. The Fund may make a supplemental distribution
subsequent to the end of its fiscal year.
E. Use of 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 amounts of assets, liabilities, expenses
and revenues reported in the financial statements. Actual results
could differ from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Hillman Capital Management,
Inc. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies and the purchase and sale of securities.
As compensation for its services, the Advisor receives a fee at the annual
rate of 1.00% of the Fund's average daily net assets. The Advisor has
voluntarily waived a portion of its fee in the amount of $48,507 ($0.04 per
share) for the year ended September 30, 2004. There can be no assurance
that the foregoing fee waiver will continue.
(Continued)
THE HILLMAN TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for the
overall management and day-to-day operations of the Fund pursuant to a fund
accounting and compliance agreement with the Trust. As compensation for its
services, the Administrator receives a fee at the annual rate of 0.125% of
the Fund's first $50 million of average daily net assets, 0.10% of the next
$50 million of average daily net assets, and 0.075% of average daily net
assets over $100 million. The contract with the Administrator provides that
the aggregate fees for the aforementioned administration services shall not
be less than $2,000 per month. The Administrator also receives a monthly
fee of $2,250 for accounting and record-keeping services, plus 0.01% of the
average annual net assets. The Administrator also receives the following to
procure and pay the custodian for the Trust: 0.002% on the first $100
million of the Fund's net assets and 0.009% on all assets over $100
million, plus transaction fees, with a minimum aggregate annual fee of
$4,800. The Administrator also charges the Fund for certain expenses
involved with the daily valuation of portfolio securities, which are
believed to be immaterial in amount. The Administrator has voluntarily
waived a portion of these fees amounting to $11,727 in administrative fees,
$6,195 in other accounting fees and $1,424 in fund accounting fees for the
year ended September 30, 2004. There can be no assurance that the foregoing
voluntary fee waivers will continue.
NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's
transfer, dividend paying, and shareholder servicing agent. The Transfer
Agent maintains the records of each shareholder's account, answers
shareholder inquiries concerning accounts, processes purchases and
redemptions of the Fund shares, acts as dividend and distribution
disbursing agent, and performs other shareholder servicing functions. The
Transfer Agent is compensated based upon a $15 fee per shareholder per
year, subject to a minimum fee of $1,750 per month per fund. The Transfer
Agent has voluntarily waived a portion of this fee amounting to $1,750 for
the year ended September 30, 2004.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the distributor or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Trustees, including a majority of the Trustees who are not "interested
persons" of the Trust as defined in the Act, adopted a distribution plan
with respect to all shares pursuant to Rule 12b-1 of the Act (the "Plan").
Rule 12b-1 regulates the manner in which a regulated investment company may
assume costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.25%, for each year elapsed subsequent to adoption of the Plan, for
payment to the distributor and others for items such as advertising
expenses, selling expenses, commissions, travel or other expenses
reasonably intended to result in sales of shares of the Fund or support
servicing of shareholder accounts. The Fund incurred $35,611 in
distribution and service fees under the Plan for the year ended September
30, 2004.
(Continued)
THE HILLMAN TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
NOTE 4 - INFORMATION ABOUT SHAREHOLDER EXPENSES
As a shareholder of the Fund, you incur ongoing costs, including management
fees and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period as indicated below.
A. Actual Expenses - The first line of the table below provides
information about the actual account values and actual expenses. You
may use the information in this line, together with the amount you
invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account
during this period.
B. Hypothetical Example for Comparison Purposes - The second line of the
table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an
assumed annual rate of return of 5% before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses
you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds by comparing
this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds.
Beginning Ending
Total Account Value Account Value Expenses Paid
Return October 1, 2003 September 30, 2004 During Period*
------ --------------- ------------------ --------------
Actual return of 13.63% $ 1,000.00 $ 1,136.30 $ 18.69
Hypothetical return before expreses of 5.00% $ 1,000.00 $ 1,032.50 $ 17.78
* Expenses are equal to the Fund's annualized expense ratio of 1.75% multiplied
by the average account value over the period.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $4,137,635 and $2,301,461, respectively, for the year ended
September 30, 2004. Purchases and sales of long-term U.S. government
securities aggregated $0 and $491,250, respectively, for the year ended
September 30, 2004.
(Continued)
THE HILLMAN TOTAL RETURN FUND
ADDITIONAL INFORMATION
September 30, 2004
(Unaudited)
PROXY VOTING POLICY
A copy of the Trust's Proxy Voting and Disclosure Policy and the Advisor's
Proxy Voting and Disclosure Policy are included as Appendix B to the Fund's
Statement of Additional Information and is available, without charge, upon
request, by calling 1-800-773-3863. After June 30, 2004, information
regarding how the Fund voted proxies relating to portfolio securities
during the most recent 12-month period ended June 30 will be available (1)
without charge, upon request, by calling the Fund at the number above and
(2) on the SEC's website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the SEC's website, beginning with the December
31, 2004 reports, at http://www.sec.gov. You may review and make copies at
the SEC's Public Reference Room in Washington, D.C. You may also obtain
copies after paying a duplicating fee by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102 or by electronic request to
publicinfo@sec.gov. Information on the operation of the Public Reference
Room may be obtained by calling the SEC at 202-942-8090.
INFORMATION ABOUT TRUSTEES AND OFFICERS
The business and affairs of the Fund and the Trust are managed under the
direction of the Trustees. Information concerning the Trustees and officers
of the Trust and Fund is set forth below. Generally, each Trustee and
officer serves an indefinite term or until certain circumstances such as
their resignation, death, or otherwise as specified in the Trust's
organizational documents. Any Trustee may be removed at a meeting of
shareholders by a vote meeting the requirements of the Trust's
organizational documents. The Statement of Additional Information of the
Fund includes additional information about the Trustees and officers and is
available, without charge, upon request by calling the Fund toll-free at
1-800-773-3863. The address of each Trustee and officer, unless otherwise
indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina
27804. The Independent Trustees received aggregate compensation of $3,400
during the fiscal year ended September 30, 2004 from the Fund for their
services to the Fund and Trust. The Interested Trustee and officers did not
receive compensation from the Fund for their services to the Fund and
Trust.
(Continued)
THE HILLMAN TOTAL RETURN FUND
ADDITIONAL INFORMATION
September 30, 2004
(Unaudited)
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Number of
Portfolios
in Fund
Position(s) Complex
Name, Age, held with Length of Time Principal Occupation(s) Overseen by Other Directorships
and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Independent Trustees
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Jack E. Brinson, 72 Trustee Since 12/2000 Retired since January 2000; 2 Independent Trustee of the
Previously, President, Brinson following - de Leon Funds
Investment Co. (personal Trust for the one series of
investments) and President, that trust; Gardner Lewis
Brinson Chevrolet, Inc. (auto Investment Trust for the
dealership) three series of that trust;
The Nottingham Investment
Trust II for the seven
series of that trust; New
Providence Investment Trust
for the one series of that
trust; MurphyMorris
Investment Trust for the one
series of that trust; Merit
Advisors Investment Trust
for the one series of that
trust; and Merit Advisors
Investment Trust II for the
one series of that trust
(all registered investment
companies)
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Theo H. Pitt, Jr., 68 Trustee and Since 12/2000 Senior Partner, Community 2 Independent Trustee of the
Chairman Financial Institutions following - de Leon Funds
Consulting, Rocky Mount, North Trust for the one series of
Carolina since 1997 and Account that Trust; Gardner Lewis
Administrator, Holden Wealth Investment Trust for the
Management Group of Wachovia three series of that trust;
Securities (money management MurphyMorris Investment
firm) since September 2003. Trust for the one series of
that Merit Advisors
Investment Trust for the
one series of that trust;
and Merit Advisors
Investment Trust II for
the one series of that trust
(all registered investment
companies)
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Interested Trustee
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Mark A. Hillman, 42 Trustee and Since 12/2000 President, Hillman Capital 2 None
613 Third Street President Management, Inc. (investment
Eastport Maritime (Principal advisor of the Funds);
Building Executive previously, Chief Investment
Annapolis, MD 21403 Officer) Officer, Menocal Capital
Management, Inc.
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Basis of Interestedness. Mr. Hillman is a Interested Trustee because he is an officer of Hillman Capital Management, Inc., the
investment advisor of the Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Other Officers
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Fletcher D. Perkins, 26 Treasurer Since 12/2002 Analyst, Hillman Capital n/a n/a
26 (Principal Management, Inc., since 2002;
613 Third Street Financial Account Manager, Netivity
Eastport Maritime Officer) Solutions (computer network
Building service) from 01/2001 to
Annapolis, MD 21403 10/2001; previously, student,
Saint Mary's College
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
C. Frank Watson III, 34 Secretary Since President and Chief Operating n/a n/a
12/2000 Officer since 1999, The
Nottingham Company
(administrator to the Funds);
previously, Chief Operating
Officer, The Nottingham Company
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Julian G. Winters, 35 Assistant Assistant Vice President-Compliance n/a n/a
Secretary Secretary since Administration, The Nottingham
and 12/2000; Company
Assistant Assistant
Treasurer Treasurer since
12/2002
- ----------------------- ------------- ---------------- --------------------------------- -------------- ----------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Hillman Capital Management Investment Trust
and Shareholders of The Hillman Total Return Fund:
We have audited the accompanying statement of assets and liabilities of The
Hillman Total Return Fund (the "Fund"), including the portfolio of investments,
as of September 30, 2004, and the related statement of operations for the year
then ended, the statements of changes in net assets for the years ended
September 30, 2004 and 2003, and the financial highlights for each of the
periods presented. 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2004, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Hillman Total Return Fund as of September 30, 2004, the results of its
operations for the year then ended, the changes in its net assets for the years
ended September 30, 2004 and 2003, and the financial highlights for each of
periods presented, in conformity with accounting principles generally accepted
in the United States of America.
/s/ Deloitte & Touche LLP
November 2, 2004
Member of
Deloitte Touche Tohmatsu
________________________________________________________________________________
THE HILLMAN TOTAL RETURN FUND
________________________________________________________________________________
a series of the Hillman Capital Management Investment Trust
This Report has been prepared for
shareholders and may be distributed to
others only if preceded or accompanied by
a current prospectus.
Item 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to its Principal Executive
Officer, Principal Financial Officer, and Principal Accounting
Officer(s), or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third
party.
(c) There have been no amendments during the period covered by this report.
(d) The registrant has not granted, during the period covered by this
report, any waivers, including an implicit waiver.
(f)(1) A copy of the code of ethics that applies to the registrant's Principal
Executive Officer and Principal Financial Officer is filed pursuant to
Item 11.(a)(1) below.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's board of directors has determined that the registrant
does not have an audit committee financial expert serving on its audit
committee.
(a)(2) Not applicable.
(a)(3) The registrant believes that the registrant's current audit committee
has sufficient knowledge and experience to meet its obligations as an
audit committee of the registrant, but the registrant's Board of
Trustees has determined that it would consider naming or finding a
qualified candidate who meets the requirements of an audit committee
financial expert should there be a need or desire to appoint such a
person in the future.
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees - Audit fees billed for the registrant for the last two
fiscal years are described in the table below. These amounts represent
aggregate fees billed by the registrants' independent accountant,
Deloitte & Touche LLP ("Accountant"), in connection with the annual
audits of the registrant's financial statements and for services
normally provided by the Accountant in connection with the statutory
and regulatory filings.
-------------------------------------- --------------- -------------
Fund 2003 2004
-------------------------------------- --------------- -------------
The Hillman Aggressive Equity Fund $9,600 $13,000
-------------------------------------- --------------- -------------
The Hillman Total Return Fund $9,600 $13,000
-------------------------------------- --------------- -------------
(b) Audit-Related Fees - There were no additional fees billed in the fiscal
years ended September 30, 2003 and September 30, 2004 for assurance and
related services by the Accountant that were reasonably related to the
performance of the audit of the registrant's financial statements that
were not reported under paragraph (a) of this Item.
(c) Tax Fees - The tax fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are described in the table
below. These services were for the completion of each fund's federal,
state, and excise tax returns.
-------------------------------------- --------------- -------------
Fund 2003 2004
-------------------------------------- --------------- -------------
The Hillman Aggressive Equity Fund $4,650 $4,875
-------------------------------------- --------------- -------------
The Hillman Total Return Fund $4,650 $4,875
-------------------------------------- --------------- -------------
(d) All Other Fees -There were no other fees billed by the Accountant,
which were not disclosed in Items (a) through (c) above during the last
two fiscal years.
(e)(1) The registrant's Board of Trustees pre-approved the engagement of the
Accountant for the last two fiscal years at an audit committee meeting
of the Board of Trustees called for such purpose and will pre-approve
the Accountant for each fiscal year thereafter at an audit committee
meeting called for such purpose. The charter of the audit committee
states that the audit committee should pre-approve any audit services
and, when appropriate, evaluate and pre-approve any non-audit services
provided by the Accountant to the registrant and to pre-approve, when
appropriate, any non-audit services provided by the Accountant to the
registrant's investment adviser, or any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant if the engagement relates directly
to the operations and financial reporting of the registrant.
(2) There were no services as described in each of paragraph (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable.
(g) There were no non-audit fees billed by the Accountant for services
rendered to the registrant, the registrant's investment advisers, or
any other entity controlling, controlled by, or under common control
with the registrant's investment advisers.
(h) Not applicable.
Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
Item 6. SCHEDULE OF INVESTMENTS.
A copy of the schedule of investments of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this Form.
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
Item 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
Item 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.
Not applicable.
Item 10. CONTROLS AND PROCEDURES.
(a) The Principal Executive Officer and the Principal Financial Officer
have concluded that the registrant's disclosure controls and procedures
are effective based on their evaluation of the disclosure controls and
procedures as of a date within 90 days of the filing of this report.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's fiscal
half-year that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 11. EXHIBITS.
(a)(1) Code of Ethics required by Item 2 of Form N-CSR is filed herewith as
Exhibit 11.(a)(1).
(a)(2) Certifications required by Item 11.(a)(2) of Form N-CSR are filed
herewith as Exhibit 11.(a)(2).
(a)(3) Not applicable.
(b) Certifications required by Item 11.(b) of Form N-CSR are filed herewith
as Exhibit 11.(b).
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.
Hillman Capital Management Investment Trust
By: (Signature and Title) /s/ Mark A. Hillman
--------------------------------
Mark A. Hillman, Trustee, President
and Principal Executive Officer
Date: November 30, 2004
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/ Mark A. Hillman
--------------------------------
Mark A. Hillman, Trustee, President
and Principal Executive Officer
Date: November 30, 2004
By: (Signature and Title) /s/ Fletcher D. Perkins
--------------------------------
Fletcher D. Perkins, Treasurer and
Principal Financial Officer
Date: November 30, 2004