UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-10085
---------
Hillman Capital Management Investment Trust
-------------------------------------------
(Exact name of registrant as specified in charter)
116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Julian G. Winters
116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 252-972-9922
------------
Date of fiscal year end: September 30
------------
Date of reporting period: September 30, 2005
------------------
Item 1. REPORTS TO STOCKHOLDERS.
-----------------------
Annual Report 2005
The Hillman Total Return Fund
The Hillman Focused Advantage Fund
(formerly known as The Hillman Aggressive Equity Fund)
September 30, 2005
[Logo]
HILLMAN
capital management
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Hillman Capital Management Funds
("Funds"). This report is not authorized for distribution to prospective
investors in the Funds 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 Funds nor the
Funds' distributor is a bank.
Distributor: Capital Investment Group, Inc., P.O. Box 4365, Rocky Mount, NC
27803, Phone 1-800-773-3863.
(This page was intentionally left blank)
- --------------------------------------------------------------------------------
Investments in the Hillman Capital Management Funds ("Funds") are subject to
investment risks, including the possible loss of some or the entire principal
amount invested. There can be no assurance that the Funds will be successful in
meeting their investment objective. Investment in the Funds is also subject to
the following risks: market risk, investment advisor risk, credit risk, interest
rate risk, maturity risk, investment-grade securities risk, short sales risk,
management style risk, non-diversified fund risk, and sector focus risk. More
information about these risks and other risks can be found in the Funds'
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.nottinghamco.com.
An investor should consider the investment objectives, risks, and charges and
expenses of the Funds carefully before investing. The prospectus contains this
and other information about the Funds. A copy of the prospectus is available at
www.nottinghamco.com or by calling Shareholder Services at 1-800-773-3863. The
prospectus should be read carefully before investing.
- --------------------------------------------------------------------------------
Stated performance in the Funds was achieved at some or all points during the
year by waiving or reimbursing part of the Funds' total expenses to ensure
shareholders did not absorb expenses significantly greater than the industry
norm.
This Annual Report was first distributed to shareholders on or about November
29, 2005.
For More Information on Your Hillman Capital Management (Hillman) Mutual Funds:
See Our Web site @ www.hillmancapital.com
or
Call Our Shareholder Services Group Toll-Free at 1-800-773-3863
(This page was intentionally left blank)
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, 2005. The Fund achieved a total
return of 13.02% versus the 12.3%^1 total return of the S&P 500 Total Return
Index (the "S&P 500")^2 for the year ended September 30, 2005. Since inception
on December 29, 2000, the Fund has achieved a total return of 36.58% versus the
0.65%^3 of the S&P 500.
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
composition of the S&P 500 and the Fund and also from strong returns from
Corning, Inc., Whole Foods Market, Inc., and Hewlett Packard Co.^4
Corning, Inc., first purchased for the Fund in March of 2002, continued its
dominance as a main supplier to the liquid crystal display (LCD) industry.
Corning is the world's leading supplier of glass substrates used in notebook
computers, computer monitors, and LCD televisions. As the market for flat panels
expands we expect Corning to maintain its' strong market position.
Whole Foods Market, Inc. is a textbook example of the type of company we look to
invest in. Under CEO John Mackey, Whole Foods leads the natural and organic
supermarket niche. With over 170 stores in the United States, Canada, and the
UK, Whole Foods enjoys the strongest brand name in the organic foods industry
while providing excellent products and customer service. We look for Whole Foods
to continue expanding its store base as a likely demographic shift towards
healthier eating takes place.
Hewlett Packard Co. is a company that has been in turmoil since merging with
Compaq in May of 2002. After months of speculation, Carly Fiorina stepped down
from her position as CEO and was replaced with Mark Hurd, former CEO of NCR
Corp. Under Hurd's leadership, Hewlett Packard has been able to better leverage
its strong brand name and leading market positions to turn around some of its
flailing business segments. In the coming quarters we expect Hewlett Packard to
increase earnings by executing its restructuring plan and returning all business
segments to profitability.
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. By using the strategy, we hope the Fund will
outperform the market over time.
We urge our investors to act prudently. We believe the long-term value of an
investment is not defined by temporary 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.
/s/ Mark Hillman
Mark A. Hillman
President
- --------
1 FT Interactive Data Corp.
2 The S&P 500 Total Return Index is the Standard & Poor's Composite Index of 500
stocks and is a widely recognized, unmanaged index of common stock prices. It is
not possible to invest in this index.
3 FT Interactive Data Corp.
4 Please refer to the "Portfolio Investments" section of the attached annual
report for a complete listing of fund holdings and the percentage each
represents of the portfolio.
The Hillman Total Return Fund
Performance Update - $10,000 Investment (Unaudited)
For the fiscal year ended September 30, 2005.
[Line Graph Here]
The Hillman Total S&P 500 Total Performance Returns for the fiscal year ended September 30, 2005.
Return Fund Return Index -----------------------------------------------------------------
------------ ------------- Average Annual One Since
12/29/2000 10,000 10,000 Total Returns Year Inception*
6/30/2001 9,930 9,330 ----------------------------------- -------------- --------------
9/30/2001 8,750 7,961 The Hillman Total Return 13.02% 6.77%
3/31/2002 10,475 8,836 Fund
9/30/2002 8,614 6,330 ----------------------------------- -------------- --------------
3/31/2003 9,053 6,648 Final Value
9/30/2003 10,635 7,874 Cumulative Total Since of $10,000
3/31/2004 12,044 8,983 Investment Returns Inception* Investment
9/30/2004 12,084 8,967 ----------------------------------- -------------- --------------
3/31/2005 12,815 9,584 The Hillman Total Return 36.58% $13,658
9/30/2005 13,658 10,065 Fund
----------------------------------- -------------- --------------
S&P 500 Total Return Index 0.65% $10,065
----------------------------------- -------------- --------------
* The Fund's inception date - December 29, 2000 (Commencement of
Operations).
- ------------------------------------------------------------------------------------------------------------------------------
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 the Fund is a professionally managed mutual fund while the indices are not available for investment
and are unmanaged. The comparison is shown for illustrative purposes only.
- ------------------------------------------------------------------------------------------------------------------------------
Performance quoted above represents past performance, which is no guarantee of
future results. Investment return and principal value will fluctuate so that
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.nottinghamco.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.
Fund Expenses (Unaudited)
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution (12b-1) 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.
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.
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.
Expense Example Beginning Ending
Account Value Account Value Expenses Paid
April 1, 2005 September 30, 2005 During Period*
- -------------------------------------- ------------------------------ ----------------------------- ----------------------------
Actual $1,000.00 $1,065.83 $9.06
- -------------------------------------- ------------------------------ ----------------------------- ----------------------------
Hypothetical (5% return before $1,000.00 $1,016.29 $8.85
expenses)
- -------------------------------------- ------------------------------ ----------------------------- ----------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.75% for the period, multiplied by the average account value
over the period, multiplied by 183/365 (to reflect the one-half year period).
The Hillman Total Return Fund
Schedule of Investments
As of September 30, 2005
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value Shares Market Value
or Principal (Note 1) or Principal (Note 1)
- ------------------------------------------------------------------- --------------------------------------------------------------
COMMON STOCKS - 78.29% Home Builders - 2.17%
D.R. Horton, Inc. 12,000 $ 434,640
Aerospace/Defense - 3.77% ------------
Goodrich Corporation 8,300 $ 368,022 Leisure Time - 2.17%
The Boeing Company 5,700 387,315 Harley-Davidson, Inc. 9,000 435,960
------------ ------------
755,337
------------ Media - 2.65%
Apparel - 1.51% * Time Warner Inc. 15,000 271,650
Nike, Inc. 3,700 302,216 Walt Disney Company 10,800 260,604
------------ ------------
532,254
Biotechnology - 2.26% ------------
* Amgen, Inc. 5,700 454,119 Miscellaneous Manufacturing - 2.60%
------------ 3M Co. 3,400 249,424
Chemicals - 1.03% General Electric Company 8,100 272,727
El Du Pont de Nemours & Co. 5,300 207,601 ------------
------------ 522,151
------------
Commercial Services - 1.52% Pharmaceuticals - 3.02%
Cendant Corp. 14,800 305,472 Merck & Co. Inc. 11,000 299,310
------------ Pfizer Inc. 12,300 307,131
606,441 ------------
------------
Real Estate Investment Trusts - 6.87%
Computers - 3.81% Apartment Investment &
* EMC Corp. 19,100 247,154 Management Company 9,200 356,776
Hewlett-Packard Company 17,700 516,840 Correctional Properties Trust 9,400 276,454
------------ Equity Office Properties Trust 10,900 356,539
763,994 Host Marriott Corporation 23,000 388,700
------------ ------------
Electric - 3.16% 1,378,469
American Electric Power ------------
Company Inc. 8,600 341,420 Retail - 11.84%
The Southern Company 8,200 293,232 * Brinker International, Inc. 7,300 274,188
------------ Home Depot, Inc. 6,100 232,654
634,652 McDonald's Corporation 8,600 288,014
------------ Outback Steakhouse, Inc. 7,300 267,180
Financial Services - 2.84% Staples, Inc. 15,450 329,394
Allied Capital Corporation 19,900 569,737 * Starbucks Corporation 8,000 400,800
------------ Wal-Mart Stores, Inc. 6,500 284,830
Wendy's International, Inc. 6,600 297,990
Food - 6.10% ------------
Campbell Soup Company 8,600 255,850 2,375,050
HJ Heinz Company 6,900 252,126 ------------
Kellogg Company 5,900 272,167
Whole Foods Market Inc. 3,300 443,685 Software - 1.54%
------------ Microsoft Corporation 12,000 308,760
1,223,828 ------------
------------
Hand/Machine Tools - 1.96% Telecommunications - 8.17%
Black & Decker Corporation 4,800 394,032 * Corning Incorporated 37,400 722,942
------------ Motorola, Inc. 18,500 408,665
SBC Communications Inc. 11,200 268,464
Healthcare - Products - 1.58% Verizon Communications Inc. 7,300 238,637
Johnson & Johnson 5,000 316,400 ------------
------------ 1,638,708
------------
Healthcare - Services - 5.11%
Aetna Inc. 8,000 689,120
* Laboratory Corp. of
America Holdings 6,900 336,099
------------
1,025,219
------------ (Continued)
The Hillman Total Return Fund
Schedule of Investments
As of September 30, 2005
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
or Principal (Note 1)
- ------------------------------------------------------------------- --------------------------------------------------------------
COMMON STOCKS - (Continued) * Non-income producing investment.
(B) Restricted security - A restricted security cannot be
Transportation - 2.61% resold to the general public without prior registration
FedEx Corp. 6,000 $ 522,780 under the Securities Act of 1933. Restricted securities
------------ are valued according to the guidelines and procedures
Total Common Stocks (Cost $12,069,795) 15,707,820 adopted by the Board of Trustees. The Fund currently
------------ holds 897,792 shares of Pamlico Enhanced Cash Trust at a
cost of $897,792. The total fair value of this security
MUTUAL FUND - 2.23% at September 30, 2005 is $897,792, which represents 4.48%
Van Kampen Investment Grade of net assets.
Municipal Trust
(Cost $445,511) 31,144 447,539
------------ Summary of Investments by Industry
% of Net
MONEY MARKET FUND - 4.48% Industry Assets Value
Merrimac Cash Series Trust -------------------------------------------------------------
(Cost $897,792) 897,792 897,792 Aerospace/Defense 3.77% $ 755,337
------------ Apparel 1.51% 302,216
Biotechnology 2.26% 454,119
PRIVATE INVESTMENT COMPANY - 4.48% Chemicals 1.03% 207,601
(B)Pamlico Enhanced Cash Trust Commercial Services 1.52% 305,472
(Cost $897,792) 897,792 897,792 Computers 3.81% 763,994
------------ Corporate Bonds 5.25% 1,054,596
Electric 3.16% 634,652
CORPORATE BONDS - 5.25% Financial Services 2.84% 569,737
DaimlerChrysler NA Holding Corp. Food 6.10% 1,223,828
8.50 %, 01/18/2031 $ 140,000 $ 169,498 Hand/Machine Tools 1.96% 394,032
Ford Motor Credit Co. Healthcare - Products 1.58% 316,400
6.875 %, 02/01/2006 420,000 421,719 Healthcare - Services 5.11% 1,025,219
Merrill Lynch & Co Inc. Home Builders 2.17% 434,640
0.00 %, 03/20/2028 40,000 8,379 Leisure Time 2.17% 435,960
Toys R US Inc. Media 2.65% 532,254
7.625 %, 08/01/2011 500,000 455,000 Miscellaneous Manufacturing 2.60% 522,151
------------ Money Market Fund 4.48% 897,792
Mutual Fund 2.23% 447,539
Total Corporate Bonds (Cost $1,115,895) 1,054,596 Pharmaceuticals 3.02% 606,441
------------ Private Investment Company 4.48% 897,792
Real Estate Investment Trusts 6.87% 1,378,469
U.S. GOVERNMENT OBLIGATIONS - 2.65% Retail 11.84% 2,375,050
United States Treasury Note Software 1.54% 308,760
6.875 %, 05/15/2006 $ 50,000 $ 50,848 Telecommunications 8.17% 1,638,708
2.625 %, 05/15/2008 500,000 480,820 Transportation 2.61% 522,780
------------ U.S. Government Obligations 2.65% 531,668
-------------------------------------------------------------
Total U.S. Government Obligations Total 97.38% $ 19,537,207
(Cost $548,749) 531,668
------------
Total Investments (Cost $15,975,534) - 97.38% $ 19,537,207
Other Assets less Liabilities - 2.62% 526,518
------------
Net Assets - 100.00% $ 20,063,725
============
See Notes to Financial Statements
Dear Shareholder of The Hillman Focused Advantage Fund:
Enclosed please find the annual report for The Hillman Focused Advantage Fund
("the Fund") for the fiscal year ended September 30, 2005. For the fourth year
in a row the Fund outperformed the S&P 500 Total Return Index (the "S&P 500")^1,
achieving a total return of 24.69% versus the 12.3%^2 total return of the S&P
500 for the year ended September 30, 2005. Since inception on December 29, 2000,
the Fund has achieved a total return of 48.06% versus the 0.65%^3 of the S&P
500.
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
composition of the S&P 500 and the Fund and also from strong returns from
Corning, Inc., Whole Foods Market, Inc., and Hewlett Packard Co.^4
Corning, Inc., first purchased for the Fund in March of 2002, continued its
dominance as a main supplier to the liquid crystal display (LCD) industry.
Corning is the world's leading supplier of glass substrates used in notebook
computers, computer monitors, and LCD televisions. As the market for flat panels
expands we expect Corning to maintain its' strong market position.
Whole Foods Market, Inc. is a textbook example of the type of company we look to
invest in. Under CEO John Mackey, Whole Foods leads the natural and organic
supermarket niche. With over 170 stores in the United States, Canada, and the
UK, Whole Foods enjoys the strongest brand name in the organic foods industry
while providing excellent products and customer service. We look for Whole Foods
to continue expanding its store base as a likely demographic shift towards
healthier eating takes place.
Hewlett Packard Co. is a company that has been in turmoil since merging with
Compaq in May of 2002. After months of speculation, Carly Fiorina stepped down
from her position as CEO and was replaced with Mark Hurd, former CEO of NCR
Corp. Under Hurd's leadership, Hewlett Packard has been able to better leverage
its strong brand name and leading market positions to turn around some of its
flailing business segments. In the coming quarters we expect Hewlett Packard to
increase earnings by executing its restructuring plan and returning all business
segments to profitability.
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. By using the strategy, we hope the Fund will
outperform the market over time.
We urge our investors to act prudently. We believe the long-term value of an
investment is not defined by temporary 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.
/s/ Mark Hillman
Mark A. Hillman
President
- --------
1 The S&P 500 Total Return Index is the Standard & Poor's Composite Index of 500
stocks and is a widely recognized, unmanaged index of common stock prices. It is
not possible to invest in this index.
2 FT Interactive Data
3 FT Interactive Data
4 Please refer to the "Portfolio Investments" section of the attached annual
report for a complete listing of fund holdings and the percentage each
represents of the portfolio.
The Hillman Focused Advantage Fund
Performance Update - $10,000 Investment (Unaudited)
For the fiscal year ended September 30, 2005.
The Hillman Focused Advantage Fund
[Line Graph Here]
The Hillman Focused S&P 500 Total Performance Returns for the fiscal year ended September 30, 2005.
Advantage Fund Return Index -----------------------------------------------------------------
--------------- ------------- Average Annual One Since
12/29/2000 10,000 10,000 Total Returns Year Inception*
9/30/2001 7,500 7,961 ----------------------------------- -------------- --------------
3/31/2002 9,450 8,836 The Hillman Focused Advantage 24.69% 8.60%
9/30/2002 6,550 6,330 Fund
3/31/2003 7,060 6,648 ----------------------------------- -------------- --------------
9/30/2003 9,668 7,874 Final Value
3/31/2004 11,555 8,983 Cumulative Total Since of $10,000
9/30/2004 11,874 8,967 Investment Returns Inception* Investment
3/31/2005 13,319 9,584 ----------------------------------- -------------- --------------
9/30/2005 14,806 10,065 The Hillman Focused Advantage 48.06% $14,806
Fund
----------------------------------- -------------- --------------
S&P 500 Total Return Index 0.65% $10,065
----------------------------------- -------------- --------------
* The Fund's inception date - December 29, 2000 (Commencement of
Operations).
- ------------------------------------------------------------------------------------------------------------------------------
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 the Fund is a professionally managed mutual fund while the indices are not available for investment
and are unmanaged. The comparison is shown for illustrative purposes only.
- ------------------------------------------------------------------------------------------------------------------------------
Performance quoted above represents past performance, which is no guarantee of
future results. Investment return and principal value will fluctuate so that
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.nottinghamco.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.
Fund Expenses (Unaudited)
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution (12b-1) 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.
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.
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
Account Value Account Value Expenses Paid
Expense Example April 1, 2005 September 30, 2005 During Period*
- -------------------------------------- ------------------------------ ----------------------------- ----------------------------
Actual $1,000.00 $1,111.70 $9.26
- -------------------------------------- ------------------------------ ----------------------------- ----------------------------
Hypothetical (5% return before $1,000.00 $1,016.29 $8.85
expenses)
- -------------------------------------- ------------------------------ ----------------------------- ----------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.75% for the
period, multiplied by the average account value over the period, multiplied by
183/365 (to reflect the one-half year period).
The Hillman Focused Advantage Fund
Schedule of Investments
As of September 30, 2005
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value Shares Market Value
or Principal (Note 1) or Principal (Note 1)
- ------------------------------------------------------------------- --------------------------------------------------------------
COMMON STOCK - 97.29% Telecommunications - 19.72%
* Corning Inc. 180,100 $ 3,481,333
Aerospace/Defense - 9.93% Motorola, Inc. 143,900 3,178,751
Goodrich Corporation 73,300 $ 3,250,122 SBC Communications Inc. 127,700 3,060,969
The Boeing Company 47,400 3,220,830 Verizon Communications Inc. 95,800 3,131,702
------------ ------------
6,470,952 12,852,755
------------ ------------
Chemicals - 4.81% Transportation - 5.10%
E.I. du Pont de Nemours & Co. 80,000 3,133,600 FedEx Corp. 38,200 3,328,366
------------ ------------
Commercial Services - 4.72% Total Common Stock (Cost $58,826,914) 63,413,491
Cendant Corp. 149,000 3,075,360 ------------
------------
PRIVATE INVESTMENT COMPANY - 1.93%
Computers - 9.93% (B)Pamlico Enhanced Cash Trust
* EMC Corp. 252,600 3,268,644 (Cost $1,260,294) 1,260,294 1,260,294
Hewlett-Packard Company 109,700 3,203,240 ------------
------------
6,471,884 Total Investments (Cost $60,087,208) - 99.22% $ 64,673,785
------------ Other Assets Less Liabilities - 0.78% 505,979
Electric - 4.93% ------------
American Electric Power
Company Inc. 81,000 3,215,700 Net Assets - 100.00% $ 65,179,764
------------ ============
Food - 4.58%
Whole Foods Market Inc. 22,200 2,984,790 * Non-income producing investment.
------------- (B) Restricted security - A restricted security cannot be
resold to the general public without prior registration
Healthcare - Services - 9.50% under the Securities Act of 1933. Restricted securities
Aetna Inc. 39,200 3,376,688 are valued according to the guidelines and procedures
* Laboratory Corp. of adopted by the Board of Trustees. The Fund currently
America Holdings 57,800 2,815,438 holds 1,260,294 shares of the Pamlico Enhanced Cash Trust
------------ at a cost of $1,260,294. The total fair value of this
6,192,126 security at September 30, 2005 is $1,260,294, which
------------ represents 1.93% of net assets.
D.R. Horton, Inc. 91,000 3,296,020
------------
Miscellaneous Manufacturer - 4.67%
General Electric Company 90,400 3,043,768
------------
Real Estate Investment Trust - 5.02%
Host Marriott Corporation 193,500 3,270,150
------------
Retail - 9.32%
Outback Steakhouse, Inc. 82,700 3,026,820
The Home Depot, Inc. 80,000 3,051,200
------------
6,078,020
------------
(Continued)
The Hillman Focused Advantage Fund
Schedule of Investments
As of September 30, 2005
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------- --------------------------------------------------------------
Summary of Investments by Industry
% of Net
Industry Assets Value
- ----------------------------------------------------------------
Aerospace/Defense 9.93% $ 6,470,952
Chemicals 4.81% 3,133,600
Commercial Services 4.72% 3,075,360
Computers 9.93% 6,471,884
Electric 4.93% 3,215,700
Food 4.58% 2,984,790
Healthcare - Services 9.50% 6,192,126
Home Builders 5.06% 3,296,020
Miscellaneous Manufacturer 4.67% 3,043,768
Private Investment Company 1.93% 1,260,294
Real Estate Investment Trust 5.02% 3,270,150
Retail 9.32% 6,078,020
Telecommunications 19.72% 12,852,755
Transportation 5.10% 3,328,366
- ----------------------------------------------------------------
Total 99.22% $ 64,673,785
See Notes to Financial Statements
Hillman Capital Management Funds
Statements of Assets and Liabilities
Total Return Focused Advantage
As of September 30, 2005 Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Assets:
Investments, at cost $ 15,975,534 $ 60,087,208
------------ ------------
Investments, at value (note 1) $ 19,537,207 $ 64,673,785
Cash 491,634 -
Receivables:
Investments sold - 2,964,101
Fund shares sold - 689,482
Dividends and Interest 49,969 82,360
Prepaid expenses 11,043 17,213
------------ ------------
Total Assets 20,089,853 68,426,941
------------ ------------
Liabilities:
Payables:
Investments purchased - 3,033,832
Fund shares repurchased 253 179,956
Advisory fees (note 2) 2,722 -
Accrued expenses 23,153 33,389
------------ ------------
Total Liabilities 26,128 3,247,177
------------ ------------
Net Assets $ 20,063,725 $ 65,179,764
============ ============
Net Assets Consist of:
Capital (par value and paid in surplus) $ 16,156,851 $ 58,541,271
Undistributed net investment income 83,578 7,980
Undistributed net realized gain on investments 261,623 2,043,936
Net unrealized appreciation in investments 3,561,673 4,586,577
------------ ------------
Total Net Assets $ 20,063,725 $ 65,179,764
============ ============
Shares Outstanding, no par value (unlimited authorized shares) 1,572,649 4,425,934
Net Asset Value, Offering Price and Redemption Price Per Share $ 12.76 $ 14.73
See Notes to Financial Statements
Hillman Capital Management Funds
Statements of Operations
Total Return Focused Advantage
For the fiscal year ended September 30, 2005 Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income:
Interest $ 101,755 $ 27,017
Dividends 375,672 544,818
------------ ------------
Total Income 477,427 571,835
------------ ------------
Expenses:
Advisory fees (note 2) 186,818 322,653
Administration fees (note 2) 23,352 40,332
Transfer agent fees (note 2) 21,000 21,586
Blue sky administration fees (note 2) 4,041 4,041
Fund accounting fees (note 2) 28,868 30,226
Compliance services fees (note 2) 6,166 6,166
Custody fees (note 2) 6,169 10,040
Distribution and service fees (note 3) 46,705 80,663
Other accounting fees (note 2) 648 1,472
Legal fees 13,005 13,915
Audit and tax preparation fees 18,362 17,739
Registration and filing expenses 30,000 35,000
Shareholder servicing expenses 2,867 5,998
Printing expenses 750 3,092
Trustees' fees and meeting expenses 5,249 5,537
Securities pricing fees 4,917 1,836
Other operating expenses 7,112 8,234
------------ ------------
Total Expenses 406,029 608,530
------------ ------------
Advisory fees waived (note 2) (71,442) (21,341)
Administration fees waived (note 2) (4,843) (10,528)
Transfer agent fees waived (note 2) (1,500) (10,500)
Fund accounting fees waived (note 2) (879) (842)
Other accounting fees waived (note 2) (513) (1,472)
------------ ------------
Net Expenses 326,852 563,847
------------ ------------
Net Investment Income 150,575 7,988
------------ ------------
Net Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions 304,323 2,090,551
Capital gain distributions from other investment companies 37,489 -
Change in unrealized appreciation on investments 1,704,000 2,892,020
------------ ------------
Net Realized and Unrealized Gain on Investments 2,045,812 4,982,571
------------ ------------
Net Increase in Net Assets Resulting from Operations $ 2,196,387 $ 4,990,559
============ ============
See Notes to Financial Statements
Hillman Capital Management Funds
Statements of Changes in Net Assets
Total Return Fund
For the fiscal years ended September 30, 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income $ 150,575 $ 163,709
Net realized gain from investment transactions 304,323 356,595
Capital gain distributions from other investment companies 37,489 -
Change in unrealized appreciation on investments 1,704,000 1,152,025
------------ ------------
Net Increase in Net Assets Resulting from Operations 2,196,387 1,672,329
------------ ------------
Distributions to Shareholders: (note 5)
Net investment income (150,140) (110,069)
Net realized gain from investment transactions (283,131) -
------------ ------------
Decrease in Net Assets Resulting from Distributions (433,271) (110,069)
------------ ------------
Capital Share Transactions: (note 6)
Shares sold 3,932,673 2,911,677
Reinvested dividends and distributions 432,872 110,069
Shares repurchased (1,418,516) (984,519)
------------ ------------
Increase from Capital Share Transactions 2,947,029 2,037,227
------------ ------------
Net Increase in Net Assets 4,710,145 3,599,487
Net Assets:
Beginning of year 15,353,580 11,754,093
------------ ------------
End of year $ 20,063,725 $ 15,353,580
============ ============
Undistributed Net Investment Income $ 83,578 $ 54,438
Focused Advantage Fund
For the fiscal years ended September 30, 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income $ 7,988 $ 32,214
Net realized gain from investment transactions 2,090,551 94,656
Change in unrealized appreciation on investments 2,892,020 1,201,704
------------ ------------
Net Increase in Net Assets Resulting from Operations 4,990,559 1,328,574
------------ ------------
Distributions to Shareholders: (note 5)
Net investment income (10,478) (7,527)
------------ ------------
Decrease in Net Assets Resulting from Distributions (10,478) (7,527)
------------ ------------
Capital Share Transactions: (note 6)
Shares sold 63,962,401 6,700,855
Reinvested dividends and distributions 10,240 7,383
Shares repurchased (15,623,836) (1,335,088)
------------ ------------
Increase from Capital Share Transactions 48,348,805 5,373,150
------------ ------------
Net Increase in Net Assets 53,328,886 6,694,197
Net Assets:
Beginning of year 11,850,878 5,156,681
------------ ------------
End of year $ 65,179,764 $ 11,850,878
============ ============
Undistributed Net Investment Income $ 7,980 $ 24,820
See Notes to Financial Statements
Hillman Capital Management Funds
Financial Highlights
For a share outstanding during the Total Return Fund
fiscal years or period ended September 30, 2005 2004 2003 2002 2001 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of period $ 11.56 $ 10.25 $ 8.51 $ 8.77 $ 10.00
Income from Investment Operations:
Net investment income 0.09 0.13 0.14 0.10 0.01
Net realized and unrealized
gains (losses) on securities 1.40 1.27 1.83 (0.25) (1.24)
------------ ------------ ------------ ------------ ------------
Total from Investment Operations 1.49 1.40 1.97 (0.15) (1.23)
------------ ------------ ------------ ------------ ------------
Less Distributions:
Dividends (from net investment income) (0.10) (0.09) (0.15) (0.11) -
Distributions (from capital gains) (0.19) - (0.08) - -
------------ ------------ ------------ ------------ ------------
Total Distributions (0.29) (0.09) (0.23) (0.11) -
------------ ------------ ------------ ------------ ------------
Net Asset Value, End of period $ 12.76 $ 11.56 $ 10.25 $ 8.51 $ 8.77
============ ============ ============ ============ ============
Total Return 13.02% 13.63% 23.46% (1.56)% (12.50)%
Net Assets, End of Period (in thousands) $ 20,064 $ 15,354 $ 11,754 $ 6,288 $ 5,926
Average Net Assets for the Period (in thousands) $ 18,682 $ 14,244 $ 8,448 $ 6,715 $ 4,220
Ratio of Gross Expenses to Average Net Assets 2.18% 2.24% 2.61% 2.83% 4.22% (b)
Ratio of Net Expenses to Average Net Assets 1.75% 1.75% 1.83% 1.80% 2.78% (b)
Ratio of Net Investment
Income to Average Net Assets 0.81% 1.15% 1.62% 1.11% 0.27% (b)
Portfolio Turnover Rate 12.11% 17.14% 19.71% 40.37% 6.03%
For a share outstanding during the Focused Advantage Fund
fiscal years or period ended September 30, 2005 2004 2003 2002 2001 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of period $ 11.82 $ 9.63 $ 6.55 $ 7.51 $ 10.00
Income from Investment Operations:
Net investment income (loss) - 0.03 0.04 (0.04) (0.12)
Net realized and unrealized
gains (losses) on securities 2.92 2.17 3.08 (0.92) (2.37)
------------ ------------ ------------ ------------ ------------
Total from Investment Operations 2.92 2.20 3.12 (0.96) (2.49)
------------ ------------ ------------ ------------ ------------
Less Distributions:
Dividends (from net investment income) (0.01) (0.01) (0.04) - -
------------ ------------ ------------ ------------ ------------
Total Distributions (0.01) (0.01) (0.04) - -
------------ ------------ ------------ ------------ ------------
Net Asset Value, End of period $ 14.73 $ 11.82 $ 9.63 $ 6.55 $ 7.51
============ ============ ============ ============ ============
Total Return 24.69% 22.82% 47.60% (12.67)% (25.00)%
Net Assets, End of Period (in thousands) $ 65,180 $ 11,851 $ 5,157 $ 2,977 $ 2,864
Average Net Assets for the Period (in thousands) $ 32,265 $ 8,329 $ 3,879 $ 3,628 $ 2,351
Ratio of Gross Expenses to Average Net Assets 1.89% 2.58% 3.93% 4.06% 6.32% (b)
Ratio of Net Expenses to Average Net Assets 1.75% 1.75% 2.10% 2.12% 3.90% (b)
Ratio of Net Investment
Income (Loss) to Average Net Assets 0.02% 0.39% 0.53% (0.46)% (2.53)%(b)
Portfolio Turnover Rate 39.94% 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 Notes to Financial Statements
Hillman Capital Management Funds
Notes to Financial Statements
________________________________________________________________________________
1. Organization and Significant Investment Transactions and Investment
Accounting Policies Income
Investment transactions are accounted
The Hillman Total Return Fund and The for as of the date purchased or sold
Hillman Focused Advantage Fund, (trade date). Dividend income is
formerly known as The Hillman recorded on the ex-dividend date.
Aggressive Equity Fund, (collectively Certain dividends from foreign
the "Funds" and individually a "Fund") securities will be recorded as soon as
are series funds. The Funds are part the Trust is informed of the dividend
of the Hillman Capital Management if such information is obtained
Investment Trust (the "Trust"), which subsequent to the ex-dividend date.
was organized as a Delaware Business Interest income is recorded on the
Trust and is registered under the accrual basis and includes
Investment Company Act of 1940, (the amortization of discounts and
"Act"), as amended, as an open-ended premiums. Gains and losses are
management investment company. determined on the identified cost
basis, which is the same basis used
The Hillman Total Return Fund ("Total for federal income tax purposes.
Return Fund") commenced operations on
December 29, 2000. The investment Expenses
objective of the Fund is to seek total The Funds bear expenses incurred
return through a combination of specifically on their behalf as well
capital appreciation and current as a portion of general trust
income. expenses, which are allocated
according to methods approved annually
The Hillman Focused Advantage Fund by the Trustees.
("Focused Advantage Fund") commenced
operations on December 29, 2000. The Restricted Security Transactions
investment objective of the Fund is to Although Pamlico Enhanced Cash Trust
seek long-term capital appreciation. ("Pamlico") meets the definition of a
restricted security as defined in Reg.
The following accounting policies have ss.210.6-03 (f) of Regulation S-X of
been consistently followed by the the Securities and Exchange
Funds and are in conformity with Commission, the Board has determined
accounting principles generally that a restricted security, as
accepted in the United States of indicated as a fundamental limitation
America in the investment company of the Fund, must also be illiquid
industry. (i.e. the fund cannot reasonably
expect to receive the amount at which
Investment Valuation it values the security within seven
The Funds' investments in securities days). Pamlico is designed as an
are carried at value. Securities overnight sweep instrument for the
listed on an exchange or quoted on a funds and as such, investments in this
national market system are valued at security are available on demand.
the last sales price as of 4:00 p.m.
Eastern Time. Securities traded in the Dividend Distributions
NASDAQ over-the-counter market are The Funds may declare and distribute
generally valued at the NASDAQ dividends from net investment income
Official Closing Price. Other (if any) at the end of each calendar
securities traded in the quarter. Distributions from capital
over-the-counter market and listed gains (if any) are generally declared
securities for which no sale was and distributed annually.
reported on that date are valued at
the most recent bid price. Securities Estimates
and assets for which representative The preparation of financial
market quotations are not readily statements in conformity with
available (e.g., if the exchange on accounting principles generally
which the portfolio security is accepted in the United States of
principally traded closes early or if America requires management to make
trading of the particular portfolio estimates and assumptions that affect
security is halted during the day and the amount of assets, liabilities,
does not resume prior to the Funds' expenses and revenues reported in the
net asset value calculation) or which financial statements. Actual results
cannot be accurately valued using the could differ from those estimates.
Funds' normal pricing procedures are
valued at fair value as determined in Federal Income Taxes
good faith under policies approved by No provision for income taxes is
the Trustees. A portfolio security's included in the accompanying financial
"fair value" price may differ from the statements, as the Funds intend to
price next available for that distribute to shareholders all taxable
portfolio security using the Funds' investment income and realized gains
normal pricing procedures. Instruments and otherwise comply with Subchapter M
with maturities of 60 days or less are of the Internal Revenue Code
valued at amortized cost, which applicable to regulated investment
approximates market value. companies.
(Continued)
Hillman Capital Management Funds
Notes to Financial Statements
________________________________________________________________________________
Indemnifications and the Focused Advantage Fund,
Under the Funds' organizational respectively.
documents, its officers and Trustees
are indemnified against certain Administrator
liabilities arising out of the Each Fund pays a monthly
performance of their duties to the administration fee to The Nottingham
Funds. In addition, in the normal Company ("the Administrator") based
course of business, the Funds entered upon the average daily net assets of
into contracts with their vendors and the Fund and calculated at the annual
others that provide for general rates as shown in the following
indemnifications. The Funds' maximum schedule which is subject to a minimum
exposure under these arrangements is of $2,000 per month per fund. The
unknown, as this would involve future Administrator also receives a fee to
claims that may be made against the procure and pay the custodian for the
Funds. The Funds expect that risk of fund, additional compensation for fund
loss to be remote. accounting and recordkeeping services,
and additional compensation for
2. Transactions with Affiliates certain costs involved with the daily
valuation of securities and as
Advisor The Funds pay a monthly reimbursement for out-of-pocket
advisory fee to Hillman Capital expenses. A breakdown of these is
Management, Inc. (the "Advisor") based provided in the following schedule.
upon the average daily net assets of The Administrator has voluntarily
each Fund and calculated at the annual waived a portion of its fees for the
rate of 1.00%. For the year ended fiscal year ended September 30, 2005.
September 30, 2005, the Advisor has There can be no assurance that the
voluntarily waived $71,442 and $21,341 foregoing voluntary waiver will
of its fees for the Total Return Fund continue in the future.
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Fund Accounting
Administration Fees (1) Custody Fees Accounting Asset Based Blue Sky
Average Annual Average Annual Fees (2) Average Annual Administration
Net Assets Rate Net Assets Rate (monthly) Net Assets Rate Fees (annual)
- --------------------- ----------- --------------------- ------------ -------------- --------------- ------------ -------------------
First $50 million 0.125% First $100 million 0.020% $2,250 All Assets 0.01% $150 per state
Next $50 million 0.100% Over $100 million 0.009%
Over $100 million 0.075%
- --------------------- ----------- --------------------- ------------ -------------- ---------------------------- -------------------
(1) The Administrator waived administration fees for the Total Return Fund
and the Focused Advantage Fund in the amount of $4,843 and $10,528,
respectively, as well as $513 and $1,472 of related minimum fees for
the Total Return Fund and the Focused Advantage Fund, respectively,
for the fiscal year ended September 30, 2005.
(2) The Administrator waived fund accounting fees for the Total Return
Fund and the Focused Advantage Fund in the amount of $879 and $842,
respectively, for the fiscal year ended September 30, 2005.
Compliance Services the year ended September 30, 2005, the
The Nottingham Compliance Services, Transfer Agent has voluntarily waived
LLC, a fully owned affiliate of The $1,500 and $10,500 of its fees for the
Nottingham Company, provides services Total Return Fund and the Focused
which assists the Trust's Chief Advantage Fund, respectively.
Compliance Officer in monitoring and
testing the policies and procedures of Certain Trustees and officers of the
the Trust in conjunction with Trust are also officers of the
requirements under Rule 38a-1 of the Advisor, the Distributor or the
Securities and Exchange Commission. It Administrator.
receives compensation for this service
at an annual rate of $7,750. The Board 3. Distribution and Service Fees
of Trustees approved this expense to
begin on December 14, 2004. The Trustees, including a majority of
the Trustees who are not "interested
Transfer Agent persons" of the Trust as defined in
North Carolina Shareholder Services, the Act, adopted a distribution plan
LLC ("Transfer Agent") serves as with respect to all shares pursuant to
transfer, dividend paying, and Rule 12b-1 of the Act (the "Plan").
shareholder servicing agent for the Rule 12b-1 regulates the manner in
Funds. It receives compensation for which a regulated investment company
its services based upon $15 per may assume costs of distributing and
shareholder per year, subject to a promoting the sales of its shares and
minimum fee of $1,750 per month. For servicing of its shareholder accounts.
(Continued)
Hillman Capital Management Funds
Notes to Financial Statements
________________________________________________________________________________
The Plan provides that the Funds may ----------------------------------------------------
incur certain costs, which may not Table 1 Undistributed
exceed 0.25%, for each year elapsed -------------
subsequent to adoption of the Plan, Long-Term Net
for payment to the distributor and Ordinary Capital Tax
others for items such as advertising Fund Income Gains Appreciation
expenses, selling expenses, -------------- --------- ----------- ---------------
commissions, travel or other expenses Total Return $220,865 $124,336 $3,561,673
reasonably intended to result in sales -------------- --------- ----------- ---------------
of shares of the Funds or support Focused $856,065 $1,270,942 $4,511,486
servicing of shareholder accounts. The Advantage
Total Return Fund incurred $46,705 in -------------- --------- ----------- ---------------
distribution and service fees under
the Plan for the fiscal year ended As a result of permanent differences
September 30, 2005. The Focused between the financial statement and
Advantage Fund incurred $80,663 in income tax reporting requirements, the
distribution and service fees under following reclassifications, shown
the Plan for the fiscal year ended below in Table 2, were made for the
September 30, 2005. year ended September 30, 2005. These
reclassifications had no effect on the
4. Purchases and Sales of Investment net assets or the net asset value of
Securities the Funds.
For the fiscal year ended September ----------------------------------------------------
30, 2005 the aggregate cost of Table 2 Increase (Decrease) in
purchases and proceeds from sales of ----------------------
investment securities (excluding Undistributed
short-term securities) were as -------------
follows: Net Net Realized
Paid-in Investment Gain on
- ----------- ------------- ------------ Fund Capital Income Investments
Proceeds -------------- --------- ----------- ---------------
Purchases from Total Return $4,560 $28,705 ($33,265)
of Sales of -------------- --------- ----------- ---------------
Fund Securities Securities Focused ($22,145) ($14,350) $36,495
- ----------- ------------- ------------ Advantage
Total -------------- --------- ----------- ---------------
Return $3,759,070 $1,986,880
- ----------- ------------- ------------ The aggregate cost of investments and
Focused the composition of unrealized
Advantage $59,177,364 $12,550,064 appreciation and depreciation of
- ----------- ------------- ------------ investment securities for federal
income tax purposes as of September
There were no purchases or sales of 30, 2005 are noted below, in Table 3.
long-term U.S. Government Obligations The primary difference between book
for either Fund during the fiscal year and tax appreciation or depreciation
ended September 30, 2005. of investments is wash sale loss
deferrals.
5. Federal Income Tax
----------------------------------------------------
The tax components of capital shown in Table 3 Aggregate Gross Unrealized
Table 1 represent: (1) distribution --------------------------
requirements the Funds must satisfy Federal
under the income tax regulations, (2) Fund Tax Cost Appreciation Depreciation
losses or deductions the Funds may be ------------- ----------- ------------ -------------
able to offset against income and Total Return $15,975,534 $4,097,476 ($535,803)
gains realized in future years, and ------------- ----------- ------------ -------------
(3) unrealized appreciation or Focused $60,162,299 $6,100,268 ($1,588,782)
depreciation of investments for Advantage
federal income tax purposes as of ------------- ----------- ------------ -------------
September 30, 2005.
The amount of dividends and
Other book tax differences in the distributions from net investment
current year primarily consist of income and net realized capital gains
adjustments due to reclassifications are determined in accordance with
of income received from investments in federal income tax regulations which
real estate investment trusts and may differ from accounting principles
different book and tax treatment of generally accepted in the United
short-term capital gains. States of America. These differences
are due to differing treatments for
items such as net short-term gains,
deferral of wash sale losses, net
investment losses and capital loss
carry-forwards. Permanent differences
such as tax returns of capital and net
investment losses, if any, would be
reclassified against capital.
(Continued)
Hillman Capital Management Funds
Notes to Financial Statements
________________________________________________________________________________
- ------------------------------------------------------
For the year ended
September 30, 2004 Distributions from
- --------------------- --------------------------------
Ordinary Long-Term
Fund Income Capital Gains
- --------------------- ------------ -------------------
Total Return $110,069 $ -
- --------------------- ------------ -------------------
Focused Advantage $ 7,527 $ -
- --------------------- ------------ -------------------
- ------------------------------------------------------
For the year ended
September 30, 2005 Distributions from
- --------------------- --------------------------------
Ordinary Long-Term
Fund Income Capital Gains
- --------------------- ------------ -------------------
Total Return $150,140 $238,131
- --------------------- ------------ -------------------
Focused Advantage $ 10,478 $ -
- --------------------- ------------ -------------------
6. Capital Share Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return Fund Focused Advantage Fund
For the fiscal years ended
September 30, 2005 2004 2005 2004
- ---------------------------------------------------- ------------------- ------------------- ------------------- -------------------
Transactions in Fund Shares
Shares sold 323,550 258,446 4,506,830 584,052
Reinvested distributions 35,269 9,644 769 624
Shares repurchased (114,562) (86,541) (1,084,636) (117,306)
Net Increase in Capital Shares Transactions 244,257 181,549 3,422,963 467,370
Shares Outstanding, Beginning of year 1,328,392 1,146,843 1,002,971 535,601
Shares Outstanding, End of year 1,572,649 1,328,392 4,425,934 1,002,971
- ---------------------------------------------------- ------------------- ------------------- ------------------- -------------------
7. Change in Independent Registered
Public Accounting Firm
On December 14, 2004, the Board of and 2003. Such reports did not contain
Trustees engaged Briggs, Bunting & an adverse opinion or a disclaimer of
Dougherty, LLP ("BBD") as its new opinion, nor were they qualified or
independent registered public modified as to uncertainty, audit
accounting firm. At no time preceding scope, or accounting principles.
the engagement of BBD did the Funds
consult the firm regarding either (i) At no time preceding the removal of
the application of accounting Deloitte & Touche LLP were there any
principles to a specified transaction, disagreements with Deloitte & Touche
either completed or proposed, or the LLP on any matter of accounting
type of audit opinion that might be principles or practices, financial
rendered on the Funds' financial statement disclosure, or auditing
statements, or (ii) any matter that scope or procedure, which
was either subject of a disagreement disagreements, if not resolved to the
or a reportable event, as such terms satisfaction of Deloitte & Touche LLP,
are defined in Item 304 of Regulation would have caused it to make reference
S-K. to the subject matter of the
disagreements in connection with its
Prior to this date, Deloitte & Touche report. At no time preceding the
LLP ("Deloitte") served as the removal of Deloitte & Touche LLP did
independent registered public any of the events enumerated in
accounting firm for the Trust and paragraphs (1)(v)(A) through (D) of
issued reports on the Funds' financial Item 304(a) of Regulation S-K occur.
statements as of September 30, 2004
(Continued)
Hillman Capital Management Funds
Additional Information (Unaudited)
________________________________________________________________________________
1. Proxy Voting Policies and Voting dividend income. Corporate
Record shareholders may exclude up to 70% of
qualifying dividends. For the purposes
A copy of the Trust's Proxy Voting and of computing this exclusion, all of
Disclosure Policy and the Advisor's the dividends paid by the fund from
Proxy Voting and Disclosure Policy are ordinary income earned during the
included as Appendix B to the Funds' fiscal year represent qualifying
Statement of Additional Information dividends.
and is available, without charge, upon
request, by calling 1-800-773-3863. Dividends and distributions received
Information regarding how the Funds by retirement plans such as IRAs,
voted proxies relating to portfolio Keogh-type plans and 403(b) plans need
securities during the most recent not be reported as taxable income.
12-month period ended June 30, 2005 However, many retirement plans may
will be available (1) without charge, need this information for their annual
upon request, by calling the Funds at information reporting.
the number above and (2) on the SEC's
website at http://www.sec.gov. 4. Information about Trustees and
Officers
2. Quarterly Portfolio Holdings
The business and affairs of the Funds
The Funds file their complete schedule and the Trust are managed under the
of portfolio holdings with the SEC for direction of the Trustees. Information
the first and third quarters of each concerning the Trustees and officers
fiscal year on From N-Q. The Funds' of the Trust and the Funds is set
Form N-Q are available on the SEC's forth below. Generally, each Trustee
website at http://www.sec.gov. You may and officer serves an indefinite term
review and make copies at the SEC's or until certain circumstances such as
Public Reference Room in Washington, their resignation, death, or otherwise
D.C. You may also obtain copies after as specified in the Trust's
paying a duplicating fee by writing organizational documents. Any Trustee
the SEC's Public Reference Section, may be removed at a meeting of
Washington, D.C. 20549-0102 or by shareholders by a vote meeting the
electronic request to requirements of the Trust's
publicinfo@sec.gov, or is available organizational documents. The
without charge, upon request, by Statement of Additional Information of
calling the Funds at 1-800-773-3863. the Funds include additional
Information on the operation of the information about the Trustees and
Public Reference Room may be obtained officers and is available, without
by calling the SEC at 202-942-8090. charge, upon request by calling the
Funds toll-free at 1-800-773-3863. The
3. Tax Information address of each Trustee and officer,
unless otherwise indicated below, is
We are required to advise you within 116 South Franklin Street, Rocky
60 days of the Funds' fiscal year-end Mount, North Carolina 27804. The
regarding the federal tax status of Independent Trustees received
certain distributions received by aggregate compensation of $4,100
shareholders during each fiscal year. during the fiscal year ended September
The following information is provided 30, 2005 from each Fund for their
for the Funds' fiscal year ending, services to the Funds and the Trust.
September 30, 2005. The Interested Trustee and officers
did not receive compensation from the
During the fiscal year, the Total Funds for their services to the Funds
Return Fund paid a long-term capital and the Trust.
gain distribution of $238,131.
Individual shareholders are eligible
for reduced tax rates on qualified
dividend income. For the purposes of
computing the dividends eligible for
reduced tax rates, all of the
dividends paid by the funds from
ordinary income earned during the
fiscal year are considered qualified
(Continued)
Hillman Capital Management Funds
Additional Information (Unaudited)
________________________________________________________________________________
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Number of
Portfolios
in Fund
Position(s) Length of Complex
Name, Age, held with Time Served Principal Occupation(s) Overseen by Other Directorships
and Address Fund/Trust During Past 5 Years Trustee Held by Trustee
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Independent Trustees
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Jack E. Brinson, 73 Trustee Since Retired since January 2000; 2 Independent Trustee of the
12/2000 Previously, President, Brinson following - Gardner Lewis
Investment Co. (personal investments) Investment Trust for the
and President, Brinson Chevrolet, three series of that
Inc. (auto dealership) trust; The Nottingham
Investment Trust II for
the six series of that
trust; New Providence
Investment Trust for the
one series of that trust;
Tilson Investment Trust
for the two series of that
trust; The Piedmont
Investment Trust for the
one series of that trust
(all registered investment
companies)
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Theo H. Pitt, Jr., 69 Trustee Since Senior Partner, Community Financial 2 Independent Trustee of the
and 12/2000 Institutions Consulting, Rocky Mount, following - Gardner Lewis
Chairman North Carolina since 1997 and Account Investment Trust for the
Administrator, Holden Wealth three series of that
Management Group of Wachovia trust; Tilson Investment
Securities (money management firm) Trust for the two series
since September 2003 of that trust; The
Piedmont Investment Trust
for the one series of that
trust (all registered
investment companies)
- ------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Interested Trustee
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Mark A. Hillman, 43 Trustee, Trustee President, Hillman Capital 2 None
4733 Bethesda Avenue President and Management, Inc. (investment advisor
Suite 325 (Principal President of the Funds); previously, Chief
Bethesda, MD 20814 Executive since Investment Officer, Menocal Capital
Officer), 12/2000; Management, Inc.
and Chief Chief
Compliance Compliance
Officer Officer
since
10/2004
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Basis of Interestedness. Mr. Hillman is a Interested Trustee because he is an officer of Hillman Capital Management, Inc., the
investment advisor of the Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Other Officers
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Fletcher D. Perkins, 27 Treasurer Since Analyst, Hillman Capital Management, n/a n/a
4733 Bethesda Avenue (Principal 12/2002 Inc., since 2002; Account Manager,
Suite 325 Financial Netivity Solutions (computer network
Bethesda, MD 20814 Officer) service) from 01/2001 to 10/2001;
previously, student, Saint Mary's
College
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Tracey L. Hendricks, 38 Assistant Since Vice President of Financial n/a n/a
Secretary 12/2004 Reporting, Tax, Internal, Audit, and
Compliance of The Nottingham Company
(Administrator to the Fund) since
2004; previously, Vice President of
Special Projects of The Nottingham
Company from 2001 to 2004
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
Julian G. Winters, 36 Secretary Secretary Vice President-Compliance n/a n/a
and since Administration, The Nottingham
Assistant 12/2004; Company
Treasurer Assistant
Treasurer
since
12/2002
- -------------------------- ------------ ------------ ------------------------------------- -------------- --------------------------
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
and The Hillman Focused Advantage Fund
We have audited the accompanying statements of assets and liabilities of The
Hillman Total Return Fund and The Hillman Focused Advantage Fund, each a series
of shares of Hillman Capital Management Investment Trust, including the
schedules of investments, as of September 30, 2005, and the related statements
of operations, the statements of changes in net assets and the financial
highlights for the year then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The statements of changes in net assets for the year ended
September 30, 2004 and the financial highlights for each of the four years or
periods ended September 30, 2004 were audited by other auditors whose report
dated November 2, 2004 expressed an unqualified opinion on such financial
statements and financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes 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, 2005 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Hillman Total Return Fund and The Hillman Focused Advantage Fund as of September
30, 2005, the results of their operations, the changes in their net assets and
their financial highlights for year then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Briggs, bunting & Dougherty, LLP
BRIGGS, BUNTING & DOUGHERTY, LLP
Philadelphia, Pennsylvania
October 14, 2005
The Hillman Capital Management
Mutual Funds are a series of the
Hillman Capital Management Investment Trust
For Shareholder Service Inquiries: For Investment Advisor Inquiries:
Documented: Documented:
NC Shareholder Services Hillman Capital Management, Inc.
116 South Franklin Street 4733 Bethesda Avenue
Post Office Drawer 4365 Suite 325
Rocky Mount, North Carolina 27802 Bethesda, Maryland 20814
Toll-Free Telephone: Toll-Free Telephone:
1-800-773-3863 1-800-773-3863
World Wide Web @: World Wide Web @:
nottinghamco.com hillmancapital.com
HILLMAN
capital management
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
12.(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 for the fiscal year ended September 30, 2004 and Briggs, Bunting &
Dougherty, LLP for the fiscal year ended September 30, 2005 ("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 registrant's statutory and regulatory filings.
------------------------------------------------- ------------- ------------
Fund 2004 2005
------------------------------------------------- ------------- ------------
The Hillman Focused Advantage Fund (formerly $14,362 $11,500
known as The Hillman Aggressive Equity Fund)
------------------------------------------------- ------------- ------------
The Hillman Total Return Fund $14,362 $12,500
------------------------------------------------- ------------- ------------
(b) Audit-Related Fees - There were no additional fees billed in the fiscal
years ended September 30, 2004 and September 30, 2005 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 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 2004 2005
------------------------------------------------- ------------- ------------
The Hillman Focused Advantage Fund (formerly $4,875 $5,000
known as The Hillman Aggressive Equity Fund)
------------------------------------------------- ------------- ------------
The Hillman Total Return Fund $4,875 $5,000
------------------------------------------------- ------------- ------------
(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 adviser, or any other entity
controlling, controlled by, or under common control with the registrant's
investment adviser.
(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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
----------------------------------------------------------------
Not applicable.
Item 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
--------------------------------------------------------------------
Not applicable.
Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
---------------------------------------------------
None.
Item 11. 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 second fiscal quarter of
the period covered by this report that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control
over financial reporting.
Item 12. EXHIBITS.
--------
(a)(1)Code of Ethics required by Item 2 of Form N-CSR is filed herewith as
Exhibit 12.(a)(1).
(a)(2)Certifications required by Item 12.(a)(2) of Form N-CSR are filed
herewith as Exhibit 12.(a)(2).
(a)(3)Not applicable.
(b) Certifications required by Item 12.(b) of Form N-CSR are filed herewith as
Exhibit 12.(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 29, 2005
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 29, 2005
By: (Signature and Title)
/s/ Fletcher D. Perkins
__________________________________
Fletcher D. Perkins, Treasurer and Principal
Financial Officer
Date: November 29, 2005