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: 811-21958
Exact name of registrant
as specified in charger: DGHM Investment Trust
Address of principal
executive offices: 8730 Stony Point Parkway, Suite 205
Richmond, VA 23235
Name and address
of agent for service: The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
with a copy to:
John H. Lively
Husch Blackwell Sanders LLP
4801 Main Street, Suite 1000
Kansas City, MO 64112
Registrant's telephone number,
including area code: 800-653-2839
Date of fiscal year end: Last day of February
Date of reporting period: Februray 28, 2009
Item #1. Reports to Stockholders.
This report and the financial statements contained herein are submitted for
the general information of the shareholders of the DGHM All-Cap Value 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.
Distributor: First Dominion Capital Corp., 8730 Stony Point Parkway, Suite
205, Richmond, VA 23235, Phone 1-800-653-2839.
An investment in the Fund is subject to investment risks, including the
possible loss of some or the entire principal amount invested. There can be no
assurance that the Fund will be successful in meeting its investment
objective. Investment in the Fund is subject to the following risks: market
risk, small-cap, mid-cap and large-cap securities risk, management style risk,
sector risk, issuer risk, ETF risks, and short-term investment 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. To obtain
actual performance data regarding the Fund, including performance data current
to the Fund's most recent month-end, please call 1-800-653-2839.
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 BY
CALLING SHAREHOLDER SERVICES AT 1-800-653-2839. THE PROSPECTUS SHOULD BE READ
CAREFULLY BEFORE INVESTING.
Stated performance in the Fund was achieved at some or all points during the
period by Dalton, Greiner, Hartman, Maher & Co., LLC, the investment adviser
to the Fund, waiving or reimbursing part of the Fund's 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 April 29,
2009.
For more information on your DGHM All-Cap Value Fund:
See Our Website at www.dghm.com
or
Call Our Shareholder Services Group Toll-Free at 1-800-653-2839.
April 24, 2009
Dear Shareholders:
We are pleased to inform you that during a difficult period for the stock
market the DGHM All-Cap Value Fund (the "Fund") outperformed its benchmark
index (the Russell 3000U Value Index) for the fiscal year ended February 28,
2009. Whereas the Russell 3000U Value Index return was -48.8%, the Fund's
Class A Shares' was -32.3% and the Fund's Class C Shares' was -35.7%. While we
are never happy with an outcome that loses money on an absolute basis for our
shareholders, given the extraordinary events that have taken place during the
period covered by this report, we believe the outperformance of the benchmark
reflects the fundamental soundness of our investment processes, and, as a
result, we are pleased with that result.
The Fund's performance was driven by strong stock selection in the Banks,
Healthcare, and Capital Goods sectors.1 Additionally, the Fund's performance
also benefitted from the Fund being underweighted in Financial stocks and from
the Fund avoiding stocks with material exposure to the various bad debt
problems impacting the market. The sectors that materially detracted from
performance during the past year were Energy and Telecom Services. Both of
these sectors were negatively impacted by poor stock selection and by being
underweight versus the benchmark. As we generally seek to be fully invested,
the Fund's average cash position was approximately 3%.
With the many issues currently creating volatility in the stock market
(including the sub-prime mortgages, government bailouts and uncertainty
regarding when the recession is going to end), I would like to remind all of
our shareholders of the investment strategy that generally guides our stock
picking:
- - We use a bottom-up selection process to attempt to identify companies that
appear to be selling at a discount relative to our assessment of their
potential value.
- - We focus on the cash flows, historical profitability, projected future
earnings, and financial condition of individual companies in identifying which
stocks we may purchase.
- - We also consider the following factors in deciding which companies may
appear attractive:
Quality of the business franchise
Competitive advantage
Economic or market conditions
Deployment of capital
Reputation, experience, and competence of the company's management
- - We believe that equity securities purchased at prices below their potential
value not only protect capital, but also offer significant price appreciation
once the market recognizes the particular stock's potential value.
- - Generally, we sell securities when the characteristics and factors we used
to select the security change or the stock has appreciated to the point where
it is no longer attractive versus other potential opportunities.
2
In implementing the investment strategy of the Fund, we invest with a multi-
year investment horizon rather than focusing on the month or quarter end data.
We do not attempt to make macroeconomic calls. (i.e., predict economic growth,
interest rates, currency levels, commodity prices etc.). Additionally, we do
not predict the direction of the stock market.
As I commented in last year's shareholder letter, we believe that the
volatility and weakness in the market during the period covered by this report
has presented us with numerous opportunities across multiple sectors to
purchase stocks that are consistent with the Fund's investment strategy.
We appreciate the opportunity to serve as your Fund's Investment Adviser.
Sincerely,
Jeffrey C. Baker
Executive Vice President
Dalton, Greiner, Hartman, Maher & Co., LLC
The views in the foregoing discussion were those of the Fund's investment
advisor as of the date set forth above and may not reflect its views on the
date this Annual Report is first published or anytime thereafter. These views
are intended to assist shareholders in understanding their investment in the
Fund and do not constitute investment advice.
THE PERFORMANCE INFORMATION QUOTED ABOVE REPRESENTS PAST PERFORMANCE AND PAST
PERFORMANCE DOES NOT GUARANTEE 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.
PERFORMANCE DATA, CURRENT TO THE MOST RECENT MONTH END, MAY BE OBTAINED BY
CALLING THE FUND AT (800) 653-2839. FEE WAIVERS AND EXPENSE REIMBURSEMENTS
HAVE POSITIVELY IMPACTED FUND PERFORMANCE. AN INVESTOR SHOULD CONSIDER THE
FUND'S INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY BEFORE
INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER IMPORTANT
INFORMATION. FOR INFORMATION ON THE FUND'S EXPENSE RATIO, PLEASE SEE THE
FINANCIAL HIGHLIGHTS TABLE FOUND WITHIN THE ACCOMPANYING ANNUAL REPORT.
3
COMPARISON OF $10,000 INVESTMENT IN
DGHM ALL-CAP VALUE FUND VS. THE RUSSELL 3000 VALUE INDEX
CLASS A SHARES
(MAXIMUM SALES LOAD REFLECTED)
[ CLASS A SALES LOAD CHART Graphic ]
6/20/2007 2/29/2008 2/28/2009
DGHM ALL-CAP VALUE FUND 9,500 9,260 5,959
RUSSELL 3000 VALUE INDEX 9,500 8,368 4,288
CLASS A SHARES
-------------------------------
TOTAL RETURN AVERAGE ANNUAL
ONE YEAR ENDED RETURN
2/28/2009 SINCE
INCEPTION
06/20/07 TO
02/28/09
-------------- --------------
DGHM ALL-CAP VALUE FUND - NO SALES LOAD REFLECTED: -32.26% -24.04%
DGHM ALL-CAP VALUE FUND - MAXIMUM SALES LOAD REFLECTED: -35.65% -26.31%
RUSSELL 3000 VALUE INDEX: -48.76% -39.30%
Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of shares. The
total cumulative returns are historical in nature and measure net investment income and capital gain or loss from portfolio
investments assuming reinvestments of dividends.
The Russell 3000 Value Index is generally considered to be representative of
the performance of unmanaged common stocks that comprise the broad value
segment of the U.S. securities markets. You cannot invest directly in this
index. This index does not have an investment advisor and does not pay any
commissions, expenses, or taxes. If this index did pay commissions, expenses,
or taxes, its returns would be lower. The index is not adjusted to reflect
expenses that the SEC requires to be reflected in the Fund's performance.
The above returns for the Class A Shares of the Fund assumes an initial
investment of $10,000 ($9,500 after maximum sales load of 5.00%) at June 20,
2007 (Commencement of Operations). All dividends and distributions are
reinvested, if any. 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. The Fund's
investment advisor has entered into a contractual arrangement with the Fund to
waive its fees in an amount that limits Total Annual Fund Operating Expenses
of the Fund to not more than 1.50% for the period ending April 30, 2010. There
can be no assurance that this arrangement will continue in the future. For
more information, please see the Fund's prospectus.
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.
4
COMPARISON OF $10,000 INVESTMENT IN
DGHM ALL-CAP VALUE FUND VS. THE RUSSELL 3000 VALUE INDEX
CLASS C SHARES
[ CLASS C COMPARISON CHART Graphic ]
6/20/2007 2/29/2008 2/28/2009
DGHM ALL-CAP VALUE FUND 10,000 9,220 6,200
RUSSELL 3000 VALUE INDEX 10,000 8,368 4,288
CLASS C SHARES
-------------------------------
TOTAL RETURN AVERAGE ANNUAL
ONE YEAR ENDED RETURN
2/28/2009 SINCE
INCEPTION
06/20/07 TO
02/28/09
-------------- --------------
DGHM ALL-CAP VALUE FUND: -32.75% -24.56%
RUSSELL 3000 VALUE INDEX: -48.76% -39.30%
Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of shares. The
total cumulative returns are historical in nature and measure net investment income and capital gain or loss from portfolio
investments assuming reinvestments of dividends.
The Russell 3000 Value Index is generally considered to be representative of
the performance of unmanaged common stocks that comprise the broad value
segment of the U.S. securities markets. You cannot invest directly in this
index. This index does not have an investment advisor and does not pay any
commissions, expenses, or taxes. If this index did pay commissions, expenses,
or taxes, its returns would be lower. The index is not adjusted to reflect
expenses that the SEC requires to be reflected in the Fund's performance.
The above assumes an initial $10,000 investment at June 20, 2007 (Commencement
of Operations). All dividends and distributions are reinvested, if any. 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. The Fund's investment advisor has
entered into a contractual arrangement with the Fund to waive its fees in an
amount that limits Total Annual Fund Operating Expenses of the Fund to not
more than 1.50% for the period ending April 30, 2010. There can be no
assurance that this arrangement will continue in the future. For more
information, please see the Fund's prospectus.
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.
5
DGHM ALL-CAP VALUE FUND (UNAUDITED)
FUND EXPENSES EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front-end sales charges (Class A Shares) and deferred sales
charges on certain redemptions made within one year of purchase (Class C
Shares) and (2) 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,
September 1, 2008, and held for the six months ended February 28, 2009.
ACTUAL EXPENSES EXAMPLE
The first line of the table below provides information about 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 the 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 rate of return of 5% per year 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. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder
reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and contingent deferred sales charges on certain redemptions.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
Expenses Paid During
Period*
September 1, 2008
Beginning Account Value Ending Account Value through February 28,
CLASS A September 1, 2008 February 28, 2009 2009
Actual $ 1,000.00 $ 646.60 $ 7.14
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.25 $ 8.75
6
Expenses Paid During
Period*
September 1, 2008
Beginning Account Value Ending Account Value through February 28,
CLASS C September 1, 2008 February 28, 2009 2009
Actual $ 1,000.00 $ 644.49 $ 10.19
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,012.50 $ 12.47
* Expenses are equal to the Fund's annualized expense ratio of 1.75% for
Class A and 2.50% for Class C, multiplied by the average account value for
the period, multiplied by 181 days in the most recent fiscal half year
divided by 365 days in the current year.
DGHM ALL-CAP VALUE FUND
PORTFOLIO HOLDINGS BY SECTOR, AS PERCENTAGE OF NET ASSETS
AS OF FEBRUARY 28, 2009
(UNAUDITED)
[ PORTFOLIO HOLDINGS Graphic ]
Aerospace/Defense 2.98%
Banks 4.43%
Chemicals 3.60%
Computers 5.34%
Diversified Financial Services 4.96%
E-Commerce 2.12%
Electric 7.13%
Environmental Control 2.77%
Food 6.60%
Healthcare 11.45%
Insurance 5.37%
Investment Companies 6.97%
Media 2.26%
Miscellaneous Manufacturing 9.55%
Oil & Gas Services 17.79%
Real Estate Investment Trust 2.03%
Retail 4.76%
Savings & Loans 3.50%
Telecommunications 3.00%
7
Schedule of InvestmentsDGHM ALL-CAP VALUE FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2009
NUMBER
OF % OF MARKET
SHARES SECURITY DESCRIPTION NET ASSETS VALUE
- ------------ -------------------------------------------------------------------------------- ------------- --------------
COMMON STOCKS: 106.61%
AEROSPACE/DEFENSE: 2.98%
22,886 General Dynamics Corporation $ 1,002,865
--------------
BANKS: 4.43%
26,250 City National Corporation 842,100
55,730 Old National Bancorp 650,369
--------------
1,492,469
--------------
CHEMICALS: 3.60%
23,850 Lubrizol Corporation 655,637
17,905 PPG Industries, Inc. 556,129
--------------
1,211,766
--------------
COMPUTERS: 5.34%
8,715 International Business Machines Corporation 802,041
64,465 Teradata Corporation* 996,629
--------------
1,798,670
--------------
DIVERSIFIED FINANCIAL SERVICES: 4.96%
87,335 Invesco Limited 998,239
29,375 JPMorgan Chase Co. 671,219
--------------
1,669,458
--------------
E-COMMERCE: 2.12%
65,650 e-Bay, Incorporated* 713,616
--------------
ELECTRIC: 7.13%
38,190 NSTAR 1,228,572
42,980 Public Service Enterprise Group, Inc. 1,172,924
--------------
2,401,496
--------------
ENVIRONMENTAL CONTROL: 2.77%
34,470 Waste Management, Inc. 930,690
--------------
8
NUMBER
OF % OF MARKET
SHARES SECURITY DESCRIPTION NET ASSETS VALUE
- ------------ -------------------------------------------------------------------------------- ------------- --------------
FOOD: 6.60%
30,930 Kellogg Company $ 1,203,796
49,210 The Kroger Company 1,017,170
--------------
. 2,220,966
--------------
HEALTHCARE: 11.45%
26,335 Davita, Inc.* 1,235,638
26,050 Quest Diagnostics 1,193,871
42,980 St. Jude Medical, Inc.* 1,425,217
--------------
3,854,726
--------------
INSURANCE: 5.37%
26,400 Reinsurance Group of America, Inc. 718,080
30,150 The Travelers Companies, Inc. 1,089,922
--------------
1,808,002
--------------
MEDIA: 2.26%
99,895 Time Warner, Inc. 762,199
--------------
MISCELLANEOUS MANUFACTURING: 9.55%
26,730 3M Company 1,215,146
29,910 Dover Corporation 745,955
26,385 Teleflex Incorporated 1,253,288
--------------
3,214,389
--------------
OIL GAS SERVICES: 17.79%
35,850 Baker Hughes Incorporated 1,050,763
32,910 EnCana Corporation 1,295,667
27,695 Occidental Petroleum Corporation 1,436,540
61,240 Plains Exploration Production Company* 1,172,134
44,450 Whiting Petroleum Corporation* 1,035,685
--------------
5,990,789
--------------
REAL ESTATE INVESTMENT TRUST: 2.03%
20,880 Vornado Realty Trust 683,402
--------------
RETAIL: 4.76%
22,180 Dollar Tree, Inc.* 861,028
68,830 The Gap, Inc. 742,676
--------------
1,603,704
--------------
9
NUMBER
OF % OF MARKET
SHARES SECURITY DESCRIPTION NET ASSETS VALUE
- ------------ -------------------------------------------------------------------------------- ------------- --------------
SAVINGS LOANS: 3.50%
67,740 People's United Financial $ 1,179,353
--------------
TELECOMMUNICATIONS: 3.00%
34,180 Telephone Data Systems, Inc. 1,008,310
--------------
TOTAL COMMON STOCKS: 99.64%
(Cost: $43,729,118) 33,546,870
--------------
INVESTMENT COMPANIES: 6.97%
2,347,750 Evergreen Institutional Treasury Money Market Fund .33%** 2,347,750
--------------
(Cost: $2,347,750)
TOTAL INVESTMENTS:
(Cost: $ 46,076,868) 106.61% 35,894,620
Liabilities, net of other assets (6.61)% (2,225,374)
------------- --------------
NET ASSETS 100.00% $ 33,669,246
*Non-income producing (security is considered non-income producing if at least one dividend has not been paid during the last year
preceding the date of the Fund's related balance sheet)
** Effective 7 day yield as of February 28, 2009
See Notes to Financial Statements
10
DGHM ALL-CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 2009
ASSETS
Investments at value (identified cost of $46,076,868) (Note 1) $ 35,894,620
Receivable for securities sold 187,812
Receivable for shares sold 8,383
Dividends receivable 103,997
Interest receivable 420
Prepaid expenses 32,477
--------------
TOTAL ASSETS 36,227,709
--------------
LIABILITIES
Payable for securities purchased 2,018,379
Due to custodian 397,873
Payable for shares redeemed 58,254
Accrued investment management fees 32,109
Accrued administration and accounting fees 1,472
Accrued 12b-1 fees 31,682
Other accrued expenses 18,694
--------------
TOTAL LIABILITIES 2,558,463
--------------
NET ASSETS $ 33,669,246
==============
NET ASSETS CONSIST OF:
Paid-in-capital applicable to 5,382,954 $0.001 par value shares of beneficial interest outstanding; unlimited $ 49,183,758
shares authorized
Accumulated net investment income (loss) 45,262
Accumulated net realized gain (loss) on investments (5,377,526)
Net unrealized appreciation (depreciation) of investments (10,182,248)
--------------
$ 33,669,246
NET ASSETS ==============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
CLASS A
($32,222,827 / 5,149,743 shares outstanding;)(a) $ 6.26
==============
MAXIMUM OFFERING PRICE PER SHARE ($6.26 X 100/95) $ 6.59
==============
NET ASSET VALUE, REDEMPTION AND MAXIMUM OFFERING PRICE PER SHARE
CLASS C
($1,446,419 / 233,211 shares outstanding;)(a) $ 6.20
==============
(a) May be subject to a contingent deferred sales charge if redeemed within one year of purchase (see Note 1)
See Notes to Financial Statements
11
DGHM ALL-CAP VALUE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 2009
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividend (Net of foreign tax withheld of $1,821) $ 431,677
Interest 5,861
--------------
Total investment income 437,538
--------------
EXPENSES
Investment management fees (Note 2) 134,042
12b-1 fees, Class A (Note 2) 40,071
12b-1 fees, Class C (Note 2) 18,439
Recordkeeping and administrative services (Note 2) 29,895
Accounting fees (Note 2) 33,737
Custodian fees 8,938
Transfer agent fees (Note 2) 27,532
Professional fees 59,530
Filing and registration fees (Note 2) 53,276
Trustees fees 10,904
Compliance fees 9,656
Shareholder servicing and reports (Note 2) 11,580
Other 14,836
--------------
Total expenses 452,436
Management fee waivers and reimbursed expenses (Note 2) (127,388)
--------------
Net expenses 325,048
--------------
Net investment income (loss) 112,490
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments (5,341,499)
Net increase (decrease) in unrealized appreciation (depreciation) of investments (9,928,493)
--------------
Net realized and unrealized gain (loss) on investments (15,269,992)
--------------
$ (15,157,502)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ==============
See Notes to Financial Statements
12
DGHM ALL-CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED FEBRUARY 28, 2009 FOR THE PERIOD JUNE 20, 2007* TO FEBRUARY 29, 2008
-------------------------------------------- ----------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS
Net investment income $ 112,490 $ (4,504)
(loss)
Net realized gain (5,341,499) (36,027)
(loss) on investments
Change in net (9,928,493) (253,755)
unrealized
appreciation
(depreciation) on
investments -------------------------------------------- ----------------------------------------------------------
Increase (decrease) in (15,157,502) (294,286)
net assets from
operations -------------------------------------------- ----------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income
Class A (67,228) -
Class C - -
-------------------------------------------- ----------------------------------------------------------
Decrease in net assets (67,228) -
from distributions -------------------------------------------- ----------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS (NOTE 5)
Shares sold
Class A 50,251,494 2,229,146
Class C 821,970 2,277,848
Distributions
reinvested
Class A 6,887 -
Class C - -
Shares redeemed
Class A (5,523,582) (250,117)
Class C (766,553) (113,831)
-------------------------------------------- ----------------------------------------------------------
Increase (decrease) in 44,790,216 4,143,046
net assets from
capital share
transactions -------------------------------------------- ----------------------------------------------------------
NET ASSETS
Increase (decrease) 29,565,486 3,848,760
during period
Beginning of period 4,103,760 255,000
-------------------------------------------- ----------------------------------------------------------
END OF PERIOD (INCLUDING $ 33,669,246 $ 4,103,760
ACCUMULATED NET
INVESTMENT INCOME
(LOSS) OF $45,262 AND
$ -, RESPECTIVELY) ============================================ ==========================================================
* Commencement of
operations
See Notes to Financial Statements
13
DGHM ALL-CAP VALUE FUND
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA THROUGHOUT EACH PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
------------------------------------
YEAR ENDED PERIOD JUNE 20,
FEBRUARY 28, 2007* TO
2009 FEBRUARY 29, 2008
--------------- -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.26 $ 10.00
----------- ----------
INVESTMENT ACTIVITIES
Net investment income (loss) 0.02 0.01
Net realized and unrealized gain (loss) on investments (3.01) (0.75)
----------- ----------
(2.99) (0.74)
TOTAL FROM INVESTMENT ACTIVITIES ----------- ----------
DISTRIBUTIONS
Net investment income (0.01) -
----------- ----------
(0.01) -
TOTAL DISTRIBUTIONS ----------- ----------
NET ASSET VALUE, END OF PERIOD $ 6.26 $ 9.26
=========== ==========
TOTAL RETURN(C) (32.26%) (7.40%)***
RATIOS/SUPPLEMENTAL DATA
Ratio to average net assets(A)
Expenses, net(B) 1.75% 1.75%**
Net investment income (loss) 0.71% 0.20%**
Portfolio turnover rate 90.97% 80.71%***
Net assets, end of period (000's) $ 32,223 $ 2,066
*Commencement of operations
**Annualized
***Not annualized
(A)Management fee waivers and reimbursement of expenses reduced the expense ratio and
increased net investment income ratio by 0.72% for the year ended February 28, 2009 and by
6.77% for the period June 20, 2007 to February 29, 2008.
(B)Expense ratio-net reflects the effect of the management fee waivers and reimbursement
of expenses.
(C)Total return does not reflect sales charges, if any.
See Notes to Financial Statements
14
DGHM ALL-CAP VALUE FUND
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA THROUGHOUT EACH PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
--------------------------------------
PERIOD JUNE 20,
YEAR ENDED 2007* TO
FEBRUARY 28, 2009 FEBRUARY 29, 2008
------------------ -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.22 $ 10.00
----------- ----------
INVESTMENT ACTIVITIES
Net investment income (loss) -(C) (0.03)
Net realized and unrealized gain (loss) on investments (3.02) (0.75)
----------- ----------
(3.02) (0.78)
TOTAL FROM INVESTMENT ACTIVITIES ----------- ----------
DISTRIBUTIONS
Net investment income - -
Net realized gain - -
----------- ----------
- -
TOTAL DISTRIBUTIONS ----------- ----------
NET ASSET VALUE, END OF PERIOD $ 6.20 $ 9.22
=========== ==========
TOTAL RETURN(D) (32.75%) (7.80%)***
RATIOS/SUPPLEMENTAL DATA
Ratio to average net assets(A)
Expenses, net(B) 2.50% 2.50%**
Net investment income (loss) (0.04%) (0.55%)**
Portfolio turnover rate 90.97% 80.71%***
Net assets, end of period (000's) $ 1,446 $ 2,038
*Commencement of operations
**Annualized
***Not annualized
(A)Management fee waivers and reimbursement of expenses reduced the expense ratio and
increased net investment income ratio by 0.72% for the year ended February 28, 2009 and
by 6.77% for the period June 20, 2007 to February 29, 2008.
(B)Expense ratio-net reflects the effect of the management fee waivers and
reimbursement of expenses.
(C) Less than $0.01 per share.
(D)Total return does not reflect sales charges, if any.
See Notes to Financial Statements
15
DGHM ALL-CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2009
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The DGHM All-Cap Value Fund (the "Fund") is a series of the DGHM
Investment Trust (the "Trust"). The Trust was organized as a Delaware
statutory trust and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified open-end management company. The
Fund commenced operations on June 20, 2007.
The investment objective of the Fund is to provide long-term capital
appreciation through investments that Dalton, Greiner, Hartman, Maher Co.,
LLC, the Fund's investment advisor ("Advisor"), believes are undervalued.
The following is a summary of significant accounting policies
consistently followed by the Fund. The policies are in conformity with
accounting principles generally accepted in the United States of America.
SECURITY VALUATION
The Fund's securities are valued at current market prices. Investments
traded on a principal exchange (U.S. or foreign) or included in the NASDAQ
National Market System are valued at the last reported sales price on the
exchange on which the securities are traded as of the close of business on the
last day of the period or, lacking any sales, at the last available bid price.
In cases where securities are traded on more than one exchange, the securities
are valued on the exchange designated by or under the authority of the Fund's
Board of Trustees (the "Trustees"). Short-term debt securities (less than 60
days to maturity) are valued at their fair market value using amortized cost.
Securities traded in the over-the-counter market are valued at the last
available sale price in the over-the-counter market prior to time of
valuation. 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 are valued on a consistent basis at fair value as determined in good
faith under procedures approved by the Fund's Trustees. Fair value pricing may
be used, for example, in situations where (i) a portfolio security is so
thinly traded that there have been no transactions for that security over an
extended period of time; (ii) the exchange on which the portfolio security is
principally traded closes early; or (iii) trading of the portfolio security is
halted during the day and does not resume prior to the Fund's net asset value
calculation. A portfolio security's "fair value" price may differ from the
price next available for that portfolio security using the Fund's normal
pricing procedures. Investment companies are valued at net asset value. If
values of foreign securities have been materially affected by events occurring
after the close of a foreign market, foreign securities may be valued by
another method that the Trustees believe reflects fair value. Generally,
trading in corporate bonds, U.S. government securities and money market
instruments is substantially completed each day at various times before the
scheduled close of the New York Stock Exchange. The value of these securities
used in computing the Fund's net asset value is determined as of such times.
16
The Fund adopted Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"),
effective March 1, 2008. In accordance with FAS 157, "fair value" is defined
as the price that a Fund would receive upon selling an investment in an
orderly transaction to an independent buyer in the principal or most
advantageous market for the investment. Various inputs are used in determining
the value of a Fund's investments. FAS 157 established a three-tier hierarchy
of inputs to establish a classification of fair value measurements for
disclosure purposes. Level 1 includes quoted prices in active markets for
identical securities. Level 2 includes other significant observable inputs
(including quoted prices for similar securities, interest rates, prepayment
speeds, credit risk, etc.) Level 3 includes significant unobservable inputs
(including the Fund's own assumptions in determining fair value of
investments).
The following is a summary of the inputs used to value the Fund's
investments as of February 28, 2009:
Valuation Inputs Investment in Securities
--------------------------------------------------------------------------------------------------- ------------------------
Level 1- Quoted Prices $ 35,894,620
Level 2- Other Significant Observable Inputs -
Level 3- Significant Unobservable Inputs -
------------------------
Total $ 35,894,620
========================
In March 2008, the FASB issued Statement of Financial Accounting
Standards No. 161, "Disclosures about Derivative Instruments and Hedging
Activities" ("SFAS 161"). SFAS 161 is effective for fiscal years beginning
after November 15, 2008. SFAS 161 amends and expands disclosures about
derivative instruments and hedging activities. SFAS 161 requires qualitative
disclosures about the objectives and strategies of derivative instruments,
quantitative disclosures about the fair value amounts of and gains and losses
on derivative instruments, and disclosures of credit-risk-related contingent
features in hedging activities. Management is currently evaluating the impact
that adopting SFAS 161 will have on the financial statement disclosures.
SECURITY TRANSACTIONS AND INCOME
Security transactions are accounted for on the trade date. The cost of
securities sold is determined generally on a specific identification basis.
Dividends are recorded on the ex-dividend date. Interest income is recorded on
an accrual basis and includes amortization of discounts and premiums.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents, if any, consist of overnight deposits with the
custodian bank which earn interest at the current market rate.
ACCOUNTING ESTIMATES
In preparing financial statements in conformity with accounting
principles generally accepted in the United States of America, management
makes estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of increases and decreases
in the net assets during the reporting period. Actual results could differ
from those estimates.
17
FEDERAL INCOME TAXES
The Fund intends to comply with the requirements of Sub Chapter M of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no
federal income tax provision is required.
The Fund adopted the provisions of Financial Accounting Standards Board
("FASB") Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in
Income Taxes" on June 20, 2007. FIN 48 requires an evaluation of tax positions
taken (or expected to be taken) in the course of preparing the Fund's tax
returns to determine whether these positions meet a "more-likely-than-not"
standard that, based on the technical merits, have a more than fifty percent
likelihood of being sustained by a taxing authority upon examination. A tax
position that meets the "more-likely-than-not" recognition threshold is
measured to determine the amount of benefit to recognize in the financial
statements. FIN 48 requires management of the Fund to analyze all open tax
years, currently 2007 and 2008, as defined by Statute of Limitations, for all
major jurisdictions, including federal tax authorities and certain state tax
authorities. As of and during the fiscal year ended February 28, 2009, the
Fund did not have a liability for any unrecognized tax benefits. The Fund has
no examinations in progress and management is not aware of any tax positions
for which it is reasonably possible that the total amounts of unrecognized tax
benefits will significantly change in the next twelve months. Interest and
penalties, if any, associated with any federal or state income tax
obligations, are recorded as income tax expense.
RECLASSIFICATION OF CAPITAL ACCOUNTS
Accounting principles generally accepted in the United States of America
require that certain components of net assets relating to permanent
differences be reclassified between financial and tax reporting. These
reclassifications have no effect on net assets or net asset value per share.
As of February 28, 2009, there were no reclassifications.
CLASS NET ASSET VALUES AND EXPENSES
The Fund has two classes of shares: Class A shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge structures
and ongoing distribution and service fees. Income, expenses (other than
distribution and service fees), and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative net
assets. Both classes have equal voting privileges, except where otherwise
required by law or when the Board of Trustees determines that the matter to be
voted on affects only the interests of the shareholders of a particular class.
The Fund's Class C shares are sold without an initial sales charge; however,
both Class A and C shares are subject to a contingent deferred sales charge.
Class A shares sold are subject to a maximum initial sales charge of 5%, as
well as a contingent deferred sales charge of 0.5% imposed on transactions
over $1,000,000 that are redeemed within one year of the purchase date. Class
C shares impose a 1% contingent deferred sales charge on proceeds that are
redeemed within one year of the purchase date. The contingent deferred sales
charge is payable to the principal underwriter of the Trust. Class C shares
automatically convert into Class A shares after seven years.
18
NOTE 2 - INVESTMENT ADVISORY AND DISTRIBUTION AGREEMENTS AND OTHER
TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement, the Advisor provides
investment advisory services for an annual fee of 0.75% on the average daily
net assets of the Fund. For the year ended February 28, 2009, the Advisor
earned $134,042 in advisory fees, of which $127,388 was waived.
In the interest of limiting the operating expenses of the Fund, the
Advisor contractually agreed to waive or reduce its fees and to assume other
expenses of the Fund through February 28, 2009, if necessary, in amounts that
limit the Fund's total operating expenses to 1.50% of average daily net assets
of the Fund. The limit did not apply to interest, taxes, brokerage fees, other
expenditures capitalized in accordance with generally accepted accounting
principles, other extraordinary expenses not incurred in the ordinary course
of the Fund's business, and amounts, if any, payable pursuant to a plan
adopted in accordance with Rule 12b-1 of the 1940 Act.
The Trustees also have approved a new expense limitation agreement with
the Advisor effective March 1, 2009 where the Advisor has agreed to waive or
reduce its fees and to assume other expenses of the Fund through April 30,
2010, if necessary, in amounts that limit the Fund's total operating expenses
to 1.50% of average daily net assets of the Fund. The limit does not apply to
interest, taxes, brokerage commissions, other expenditures capitalized in
accordance with generally accepted accounting principles, other extraordinary
expenses not incurred in the ordinary course of the Fund's business, dividend
expense on short sales and amounts, if any, payable pursuant to a plan adopted
in accordance with Rule 12b-1 of the 1940 Act. In determining the Fund's total
operating expenses, expenses that the Fund would have incurred but did not
actually pay because of expense offset or brokerage/services arrangements
shall be added to the aggregate expenses so as not to benefit the Advisor.
Additionally, fees reimbursed to the Fund relating to brokerage/services
arrangements shall not be taken into account in determining the Fund's total
operating expenses so as to benefit the Advisor. Finally, these expense
limitation arrangements exclude any "acquired fund fees and expenses" as that
term is described in the prospectus of the Fund. In addition, the Advisor may
be entitled to reimbursement of fees waived or remitted by the Advisor to the
Fund after March 1, 2009. The total amount of reimbursement shall be the sum
of all fees previously waived or reduced by the Advisor and all other payments
remitted by the Advisor to the Fund during any of the previous three fiscal
years (beginning March 1, 2009), less any reimbursement previously paid by the
Fund to the Advisor with respect to such waivers, reductions and payments.
Amounts reimbursed may not cause the Fund to exceed its expense limit.
The Fund has adopted plans of distribution in accordance with Rule 12b-1
under the 1940 Act (each a "Plan" and collectively, the "Plans"). Pursuant to
the Plans, the Fund compensates the Fund's principal underwriter for services
rendered and expenses borne in connection with activities primarily intended
to result in the sale of the Fund's shares. The Plans provide that the Fund
will pay the annual rate of up to 0.25% of the average daily net assets of the
Fund's Class A Shares and 1.00% of the average daily net assets of the Fund's
Class C Shares for activities primarily intended to result in the sale of
those shares. These activities include reimbursement to entities for providing
distribution and shareholder servicing with respect to the Fund's shares. The
0.25% fee for the Class A Shares is a service fee. The 1.00% fee for the Class
C Shares is comprised of a 0.25% service fee and a 0.75% distribution fee. The
Fund incurred $40,071 and $18,439, in 12b-1 fees under the Plans with respect
to Class A Shares and Class C Shares, respectively, for the year ended
February 28, 2009.
19
Effective October 1, 2008, First Dominion Capital Corporation (the
"FDCC") acts as the Fund's principal underwriter and distributor. For the
period October 1, 2008 through February 28, 2009, FDCC received $1,714 in
commissions and underwriting fees from the sale of Fund shares. In addition,
FDCC receives a contingent deferred sales charge ("CDSC") of 0.5% of Class A
share redemptions and 1% of Class C share redemptions occurring within one
year of purchase. Shares redeemed subject to a CDSC will receive a lower
redemption value per share. For the period October 1, 2008 through February
28, 2009, FDCC received $144 of CDSC fees.
Prior to October 1, 2008, Capital Investment Group, Inc. (the "Previous
Distributor") acted as the Fund's principal underwriter and distributor. The
Previous Distributor received any sales charges imposed on purchases of Class
A shares and re-allocated a portion of such charges to dealers through whom
the sale was made, if any. For the period March 1, 2008 through September 30,
2008, the Previous Distributor retained sales charges in the amount of $6.
Effective October 1, 2008, Commonwealth Shareholder Services, Inc.
("CSS"), provides shareholder, recordkeeping, administrative and blue-sky
filing services as the administrative agent for the Fund. For such
administrative services, CSS receives 0.10% per annum of the average daily net
assets of the Fund on the first $75 million and 0.07% per annum of the average
daily net assets over $75 million. For the period October 1, 2008 through
February 28, 2009, CSS earned $14,717 for its services and at February 28,
2009, was due $724 from the Fund.
Prior to October 1, 2008, the Nottingham Company (the "Previous
Administrator") provided shareholder, recordkeeping, administrative and blue-
sky filing services to the Fund. For such administrative services, the
Previous Administrator received 0.175% of the Fund's average daily net assets
up on the first $50 million, 0.150% on the next $50 million, 0.125% on the
next $50 million, 0.100% on the next $50 million and 0.075% for average daily
net assets over $200 million, subject to a monthly minimum of $2,000. The
Previous Administrator also received a fee to procure and pay the custodian
for the Fund. For the period March 1, 2008 through September 30, 2008, the
total amount paid to the Previous Administrator was $9,472 for blue sky
administration fees and $5,706 for other administration fees.
Effective October 1, 2008, Commonwealth Fund Services, Inc. ("CFSI") is
the Fund's transfer and dividend disbursing agent. For such services, CFSI
receives the greater of a) 0.06% per annum of the Fund's average daily net
assets up to $50 million plus 0.04% per annum of average daily net assets in
excess of $50 million or b) $16 per annum per open account and $3 per annum
per closed account, subject to a $10,000 minimum per year. CFSI earned $11,782
for its services for the period October 1, 2008 through February 28, 2009.
Prior to October 1, 2008, North Carolina Shareholder Services, LLC
("Previous Transfer Agent") served as transfer, dividend paying, and
shareholder servicing agent for the Fund. It received compensation for its
services based upon a $15 per shareholder per year, subject to a minimum fee
of $1,750 per month, plus $500 per month for each additional class of shares.
For the period March 1, 2008 through September 30, 2008, the total amount paid
to the Previous Transfer Agent was $15,750.
Effective October 1, 2008, Commonwealth Fund Accounting ("CFA") is the
Fund's pricing agent. CFA earned $9,120 for its services for the period
October 1, 2008 through February 28, 2009 and at February 28, 2009, was due
$748 from the Fund.
20
Prior to October 1, 2008, the Nottingham Company (the "Previous
Accountant") provided the fund accounting services. For such services, the
Previous Accountant received 0.01% of the Fund's average daily net assets,
subject to a $2,700 monthly minimum for the first class and $750 for each
additional class. For the period March 1, 2008 through September 30, 2008, the
Previous Accountant was paid $24,617.
Prior to October 1, 2008, Nottingham Compliance Services, LLC, a wholly
owned affiliate of the Previous Administrator, provided services which
assisted the Trust's Chief Compliance Officer in monitoring and testing the
policies and procedures of the Trust pursuant to Rule 38a-1 under the 1940
Act. For the period March 1, 2008 through September 30, 2008, Nottingham
Compliance Services, LLC earned $4,521 for its services.
Certain Trustees and officers of the Trust are also officers of the
Advisor. During the period March 1, 2008 through September 30, 2008, certain
officers of the Trust were also officers of the Previous Administrator. As of
October 1, 2008, certain officers of the Trust are also officers and/or
directors of FDCC, CSS, CFA and CFSI.
NOTE 3 - INVESTMENTS
The cost of purchases and proceeds from the sales of securities other
than short-term notes for the year ended February 28, 2009, were $61,234,596
and $16,364,059, respectively.
NOTE 4 - DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
Distributions from net investment income and realized gains, if any, are
recorded on the ex-dividend date. Income distributions and capital gain
distributions are determined in accordance with income tax regulations, which
may differ from accounting principles generally accepted in the United States
of America.
The tax character of distributions during the year ended February 28,
2009 and the period June 20, 2007 (commencement of operations) to February 29,
2008 were as follows:
PERIOD JUNE
20, 2007*
YEAR ENDED TO FEBRUARY
FEBRUARY 28, 2009 29, 2008
------------------- --------------
Distributions paid from:
Ordinary income $ 67,228 $ -
------------------- --------------
$ 67,228 $ -
=================== ==============
* Commencement of operations
21
As of February 28, 2009, the components of distributable earnings on a
tax basis were as follows:
Undistributed net investment income (loss) $ 45,262
Accumulated net realized gain (loss) on investments (1,039,355)
Other book/tax differences (3,511,929)
Unrealized appreciation (depreciation) (11,008,490)
-------------------------
$ (15,514,512)
=========================
The difference between components of distributable earnings on a book and
tax basis is primarily related to wash sale losses and deferral of post-
October losses.
As of February 28, 2009, the Fund has a capital loss carryforward of
$1,039,355 available to offset future capital gains, if any. To the extent
that these carryforwards are used to offset future capital gains, it is
probable that the amount, which is offset, will not be distributed to
shareholders. Capital loss carryforwards expire as follows:
02/28/2017 $ 1,036,017
02/29/2016 3,338
----------------------
$ 1,039,355
======================
Cost of securities for Federal Income tax purpose is $46,903,110 and the
related tax-based net unrealized appreciation (depreciation) consists of:
Gross unrealized appreciation $ 478,327
Gross unrealized depreciation (11,486,817)
-------------------------
Net unrealized depreciation $ (11,008,490)
=========================
NOTE 5 - CAPITAL SHARE TRANSACTIONS
Capital share transactions for the fund were:
CLASS A SHARES CLASS C SHARES
YEAR ENDED YEAR ENDED
FEBRUARY 28, 2009 FEBRUARY 28, 2009
------------------------------- -------------------------------
SHARES VALUE SHARES VALUE
-------------- -------------- -------------- --------------
Shares sold 5,682,757 $ 50,251,494 98,672 $ 821,970
Shares reinvested 971 6,887 - -
Shares redeemed (757,159) (5,523,582) (86,607) (766,553)
-------------- -------------- -------------- --------------
Net increase (decrease) 4,926,569 $ 44,734,799 12,065 $ 55,417
============== ============== ============== ==============
22
CLASS A SHARES CLASS C SHARES
JUNE 20, 2007* JUNE 20, 2007*
TO FEBRUARY 29, 2008 TO FEBRUARY 29, 2008
------------------------------- -------------------------------
SHARES VALUE SHARES VALUE
-------------- -------------- -------------- --------------
Shares sold 228,769 $ 2,229,146 228,136 $ 2,277,848
Shares redeemed (25,995) (250,117) (12,090) (113,831)
-------------- -------------- -------------- --------------
Net increase (decrease) 202,774 $ 1,979,029 216,046 $ 2,164,017
============== ============== ============== ==============
*Commencement of operations.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Under the Trust's organizational documents, its officers and Trustees are
indemnified against certain liabilities arising out of the performance of
their duties to the Fund. In addition in the normal course of business, the
Trust entered into contracts with its vendors, on behalf of the Fund, and
others that provide for general indemnifications. The Fund's maximum exposure
under these arrangements is unknown, as this would involve future claims that
may be made against the Fund. The Fund expects that risk of loss to be remote.
23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES OF DGHM INVESTMENT TRUST
AND THE SHAREHOLDERS OF DGHM ALL-CAP VALUE FUND
We have audited the accompanying statement of assets and liabilities of DGHM
All-Cap Value Fund, a series of shares of beneficial interest of DGHM
Investment Trust, including the schedule of investments, as of February 28,
2009, and the related statement of operations for the year then ended and the
statement of changes in net assets and the financial highlights for the year
then ended and for the period from June 20, 2007 (commencement of operations)
through February 29, 2008. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of February 28, 2009
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 DGHM
All-Cap Value Fund as of February 28, 2009, the results of its operations for
the year then ended, and the changes in its net assets and the financial
highlights for the year then ended and for the period from June 20, 2007
through February 29, 2008, in conformity with accounting principles generally
accepted in the United States of America.
BRIGGS, BUNTING & DOUGHERTY, LLP
PHILADELPHIA, PENNSYLVANIA
APRIL 27, 2009
24
DGHM INVESTMENT TRUST
(THE "TRUST")
SUPPLEMENTAL INFORMATION (UNAUDITED)
Information pertaining to the Trustees and officers of the Trust is set forth
below. The names, addresses and years of birth of the Trustees and officers of
the Trust, together with information as to their principal occupations during
the past five years, are listed below. The Trustee who is considered an
"interested person" as defined in Section 2(a)(19) of the 1940 Act, as well as
those persons affiliated with the investment adviser and the principal
underwriter, and officers of the Trust, are noted with an asterisk (*). The
Statement of Additional Information (the "SAI") includes additional
information about the Trustees and the officers and is available, without
charge, upon request by calling, toll-free, (800) 773-3863. The address of
each Trustee and officer of the Trust, unless otherwise indicated, is 8730
Stony Point Parkway, Suite 205, Richmond, Virginia 23235.
NAME, ADDRESS AND AGE POSITION(S) HELD NUMBER OF FUNDS PRINCIPAL OCCUPATION(S) DURING THE PAST OTHER
WITH TRUST AND IN TRUST OVERSEEN FIVE (5)YEARS DIRECTORSHIPS BY
TENURE TRUSTEES AND
NUMBER OF FUNDS
IN THE COMPLEX
OVERSEEN
INTERESTED TRUSTEES:
Jeffrey C. Baker* Trustee, 1 Executive Vice President, Dalton, None
565 Fifth Avenue President, and Greiner, Hartman, Maher & Co., LLC
Suite 2101 Principal (investment advisor to the
New York, NY Executive Officer Fund) since 2005; previously,
10017 since 04/07 Senior Vice President, Dalton, Greiner,
42 Hartman, Maher & Co., LLC, 2002 to
2005; and Vice President, Dalton,
Greiner,Hartman, Maher &
Co., LLC, 2000 to 2002.
25
INDEPENDENT TRUSTEES:
Jack E. Brinson Trustee since 04/07 1 Retired since January 2000; previously, Independent
76 President, Brinson Investment Co. Trustee of the
(personal investments) and President, following:
Brinson Chevrolet, Inc. (auto Gardner Lewis
dealership). Investment Trust
for the two
series of that
trust; The
Nottingham
Investment Trust
II for the six
series of that
trust; Hillman
Capital
Management
Investment Trust
for the two
series of that
trust; New
Providence
Investment Trust
for the one
series of that
Trust; and Tilson
Investment Trust
for the two
series of that
trust (all
registered
investment
companies).
26
INDEPENDENT TRUSTEES:
Theo H. Pitt, Jr. Trustee and 1 Senior Partner, Community Financial Independent
72 Chairman since Institutions Consulting (bank consulting) Trustees of the
04/07 since 1997 and Account Administrator, following:
Holden Wealth Management Group of Gardner Lewis
Wachovia Securities (money management Investment Trust
firm) 2003 to 2008. for the two
series of that
trust (all
registered
investment
companies).
OFFICERS:
Thomas F. Gibson Treasurer and N/A Vice President, Chief Financial Officer, N/A
565 Fifth Avenue Principal and Chief Compliance Officer, Dalton,
Suite 2101 Financial Officer Greiner, Hartman, Maher & Co., LLC since
New York, NY 10017 since 04/07 2005; previously, Chief Compliance
45 Officer, DGHM Investment Trust 2007 to
2008; Chief Financial Officer and Chief
Compliance Officer, Bingham Legg
Advisers, LLC, 1999 to 2005.
Julia J. Gibbs Assistant N/A Managing Director of Client Services and N/A
28 Secretary since Compliance, The Commonwealth Companies,
11/08 2005- present; previously, Associate,
Commonwealth Shareholder Services, 2002
to 2005.
Karen M. Shupe Secretary and N/A Managing Director of Fund Operations, N/A
45 Assistant Commonwealth Shareholder Services, Inc.,
Treasurer since since 2003; previously, Financial
11/08 Reporting Manager, Commonwealth
Shareholder Services, Inc., 2001 to 2003.
Julian G. Winters Chief Compliance N/A Managing Member of Watermark Solutions N/A
40 Officer since 11/08 (investment compliance and consulting)
since March 2007; previously, Vice-
President - Compliance Administration,
the Nottingham Company, 1998 to 2007.
* Mr. Baker is an Interested Trustee because he is a Member of the Advisor.
27
SUPPLEMENTAL INFORMATION (unaudited)
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
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, (1) upon
request, by calling 1-800-653-2839 and (2) on the SEC's website at http://www.
sec.gov. Information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 is
available without charge, (1) upon request, by calling the Fund at the number
above and (2) on the SEC's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS
The Fund files with the SEC a complete schedule of its portfolio holdings, as
of the close of the first and third quarters of its fiscal year, on "Form N-
Q". These filings are available on the SEC's website at http://www.sec.gov.
The Fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
APPROVAL OF THE RENEWAL OF INVESTMENT ADVISORY AGREEMENTS
Dalton, Greiner, Hartman, Maher & Co., LLC (the "Advisor") supervises the
investments of the DGHM All-Cap Value Fund (the "Fund"), a series portfolio of
the DGHM Investment Trust (the "Trust"), pursuant to an Investment Advisory
Agreement (the "Agreement") between the Advisor and the Trust with respect to
the Fund. At the quarterly meeting of the Board of Trustees of the Trust (the
"Board" or "Trustees") that was held on February 26, 2009, the Trustees,
including a majority of the Trustees who are not parties to the Agreement or
"interested persons" of any such party as such term is defined under the
Investment Company Act of 1940, as amended (the "Independent Trustees"),
voting separately, unanimously approved the renewal of the Agreement for a
one-year period from March 1, 2009 until February 28, 2010, under the terms
and for the compensation described therein.
In considering whether to approve the Agreement, the Trustees reviewed and
considered such information as they deemed reasonably necessary, including the
following material factors: (i) the nature, extent, and quality of the
services provided by the Advisor; (ii) the investment performance of the Fund;
(iii) the costs of the services to be provided and profits to be realized by
the Advisor from the relationship with the Fund; (iv) the extent to which
economies of scale would be realized as the Fund grows and whether advisory
fee levels reflect those economies of scale for the benefit of the Fund's
investors; (v) the Advisor's practices regarding brokerage and portfolio
transactions; and (vi) the Advisor's practices regarding possible conflicts of
interest.
In assessing the factors described above and reaching its decision, the Board
took into consideration information furnished for the Board's review and
consideration throughout the year at regular Board meetings, as well as
information specifically prepared and/or presented in connection with the
annual renewal process. At the meeting, the Trustees reviewed various
informational materials including, without limitation, copies of the Agreement
and a proposed Expense Limitation Agreement between the Advisor and the Trust
with respect to the Fund (the "Expense Limitation Agreement"); materials
provided by the Advisor to the Trustees containing information about the
Advisor, its business, its finances, its personnel, its services to the Fund,
and comparative performance and expense ratio information for other mutual
funds with a strategy similar to the Fund; and a memorandum from Husch
28
Blackwell Sanders LLP (counsel to the Fund) that summarized the fiduciary
duties and responsibilities of the Board in reviewing and approving the
Agreement, including the types of information and factors that should be
considered in order to make an informed decision.
Provided below is an overview of the factors the Board considered at its
Meeting. The Board did not identify any particular information that was most
relevant to its consideration to approve the Agreement and each Trustee may
have afforded different weight to the various factors.
1. NATURE, EXTENT AND QUALITY OF THE SERVICES PROVIDED BY THE ADVISOR.
In considering the nature, extent, and quality of the services provided by the
Advisor, the Trustees reviewed the responsibilities of the Advisor under the
Agreement. The Trustees reviewed the services being provided by the Advisor to
the Fund including, without limitation, the quality of its investment advisory
services (including research and recommendations with respect to portfolio
securities); the Advisor's procedures for formulating investment
recommendations and assuring compliance with the Fund's investment objectives
and limitations, as well as for ensuring compliance with regulatory
requirements; its coordination of services for the Fund among the Fund's
service providers and the Independent Trustees; and its efforts to promote the
Fund, grow the Fund's assets, and assist in the distribution of Fund shares.
The Trustees evaluated the Advisor's personnel, including the education and
experience of the Advisor's personnel. The Trustees noted that several of the
officers of the Trust, including the principal executive officer and principal
financial officer for the Trust were employees of the Advisor, and they served
the Trust without additional compensation. After reviewing the foregoing
information and further information in the Advisor's memorandum (e.g.,
descriptions of the Advisor's business, the Advisor's compliance programs, and
the Advisor's Form ADV), the Board of Trustees concluded that, in light of all
the facts and circumstances, the quality, extent, and nature of the services
to be provided by the Advisor were satisfactory and adequate for the Fund.
2. INVESTMENT PERFORMANCE OF THE FUND AND THE ADVISOR.
In considering the investment performance of the Fund and the Advisor, the
Trustees compared the performance of the Fund for various periods during the
Fund's existence with the performance of funds with similar objectives managed
by other investment advisors, as well as with aggregated peer group data (e.
g., Lipper peer group data). The Trustees also considered the consistency of
the Advisor's management of the Funds with the investment objectives and
policies. The Trustees noted that the Fund's performance in the short-term was
generally better than that of its specifically identified peers and during the
short time that the Fund has been in existence. The Trustees also considered
the Fund's performance relative to other accounts managed by the Advisor, all
of which are managed in the same manner as the Fund. The Trustees noted that
the Fund's year-to-date performance was generally comparable to the
performance of other accounts managed by the Advisor. After reviewing and
discussing the performance of the Fund further, the Advisor's experience
managing the Fund, the Advisor's historical investment performance, and other
relevant factors, the Board concluded, in light of all the facts and
circumstances, that the investment performance of the Fund and the Advisor was
satisfactory.
3. COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE
ADVISOR.
In considering the costs of the services to be provided and profits to be
realized by the Advisor and its affiliates from the relationship with the
Fund, the Trustees considered the Advisor's staffing, personnel, and methods
of operating; the financial condition of the Advisor and the level of
commitment to the Fund by the Advisor and its principals; the asset levels of
the Fund; and the overall expenses of the Fund, including the nature and
frequency of advisory fee payments. The Trustees considered financial
29
statements of the Advisor and discussed the financial stability and
productivity of the firm. The Trustees also considered potential benefits for
the Advisor in managing the Fund, including the potential for the Advisor to
generate soft dollars from Fund trades that may benefit the Advisor's other
clients. The Trustees considered the fees and expenses of the Fund (including
the management fee) to other funds comparable in terms of the type of fund,
the nature of its investment strategy, its style of investment management, and
its size, among other factors. The Board determined that the Fund's expenses,
including the management fee, were higher than some of the comparable funds
and lower than others. Based on the foregoing, the Board concluded that the
fees to be paid to the Advisor by the Fund, the costs of the services to be
provided, and the profits that may be realized by the Advisor, in light of all
the facts and circumstances, were fair and reasonable in relation to the
nature and quality of the services provided by the Advisor.
4. ECONOMIES OF SCALE.
In considering the extent to which economies of scale would be realized as the
Fund grows and whether advisory fee levels reflect those economies of scale
for the benefit of the Fund's investors, the Trustees considered the Fund's
fee arrangements with the Advisor. The Trustees determined that although the
management fee would stay the same as asset levels increased, the shareholders
of the Fund would benefit from a potential expense limitation arrangement
until the Fund's expenses fell below the expense cap. The Trustees also noted
that the Fund would benefit from economies of scale under its agreements with
some of its service providers other than the Advisor. Following further
discussion of the Fund's asset levels, expectations for growth, and levels of
fees, the Board determined that the Fund's fee arrangements, in light of all
the facts and circumstances, were fair and reasonable and that the potential
expense limitation arrangement provided potential savings or protection for
the benefit of the Fund's investors.
5. ADVISOR'S PRACTICES REGARDING BROKERAGE AND PORTFOLIO TRANSACTIONS.
In considering the Advisor's practices regarding brokerage and portfolio
transactions, the Trustees reviewed the Advisor's standards for seeking best
execution for Fund portfolio transactions. The Trustees also considered a
discussion of historical and anticipated portfolio turnover rates for the
Fund; the process by which evaluations are made of the overall reasonableness
of commissions paid; the method and basis for selecting and evaluating the
broker-dealers used; and any anticipated allocation of portfolio business to
persons affiliated with the Advisor. The Trustees noted that the Advisor
considers a number of factors when seeking best execution, including, but not
limited to, the firm's research provided, execution capability, commission
rate, financial responsibility, and responsiveness. Additionally, the Board
noted that the Advisor utilizes alternative trading venues, such as ECNs, to
decrease the average cost of transactions to the Fund. After further review
and discussion, the Board determined that the Advisor's practices regarding
brokerage and portfolio transactions were satisfactory.
6. ADVISOR'S PRACTICES REGARDING POSSIBLE CONFLICTS OF INTEREST.
In considering the Advisor's practices regarding conflicts of interest, the
Trustees evaluated the potential for conflicts of interest and considered such
matters as the experience and ability of the advisory and compliance personnel
assigned to the Fund; the basis for soft dollar payments with broker-dealers;
the basis of decisions to buy or sell securities for the Fund and/or the
Advisor's other accounts; and the substance and administration of the
Advisor's code of ethics. Based on the foregoing, the Board determined that
the Advisor's standards and practices relating to the identification and
mitigation of possible conflicts of interest were satisfactory.
30
Based upon all of the foregoing considerations, the Board, including a
majority of the Independent Trustees, voting separately, unanimously approved
the renewal of the Agreement for a one-year period from March 1, 2009 until
February 28, 2010, under the terms and for the compensation described therein.
31
INVESTMENT ADVISER:
Dalton, Greiner, Hartman, Maher & Co., LLC
565 Fifth Avenue, Suite 2101
New York, New York 10017-2413
DISTRIBUTOR:
First Dominion Capital Corp.
8730 Stony Point Parkway, Suite 205
Richmond, Virginia 23235
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM:
Briggs, Bunting & Dougherty, LLP
1835 Market Street, 26th Floor
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL:
Husch Blackwell Sanders LLP
4801 Main Street
Suite 1000
Kansas City, Missouri 64112
TRANSFER AGENT:
For account information, wire purchase or redemptions, call or write to DGHM
All-Cap Value Fund's Transfer Agent:
Commonwealth Fund Services, Inc.
8730 Stony Point Parkway, Suite 205
Richmond, Virginia 23235
(800) 653-2839 Toll Free
ANNUAL REPORT TO SHAREHOLDERS
DGHM ALL-CAP VALUE FUND
A series of the DGHM Investment Trust
A "Series" Investment Company
FOR THE YEAR ENDED FEBRUARY 28, 2009
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 the registrant's principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party.
(b) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party, and
that relates to any element of the code of ethics description.
(c) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party, that
relates to one or more of the items set forth in paragraph (b) of this item's
instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant does not have an audit committee financial expert
serving on its audit committee.
(a)(2) Not applicable.
(a)(3) At this time, the registrant believes that the collective experience
provided by the members of the audit committee together offer the registrant
adequate oversight for the registrant's level of financial complexity.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit of the
registrant's annual financial statements or services that are normally provided
by the accountant in connection with statutory and regulatory filings or
engagements for those fiscal years are $3,500 for 2009 and $3,000 for 2008.
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are reasonably
related to the performance of the audit of the registrant's financial statements
and are not reported under paragraph (a) of this Item are $0 for 2009 and $0
for 2008.
(c) The aggregate 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 $2,000 for 2009 and $2,000 for 2008.
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than the
services reported in paragraphs (a) through (c) of this Item are and $0 for
2009 and $0 for 2008.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter, the registrant's Audit Committee must pre-approve
all audit and non-audit services to be provided to the registrant. The Audit
Committee also pre-approves any non-audit services provided by the registrant's
principal accountant to the Fund.
(e)(2) The percentage of services described in each of paragraphs (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 are as follows:
(b) NA
(c)100%
(d) NA
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's investment
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for each of the last
two fiscal years of the registrant was $0 for 2009 and $0 for 2008.
(h) Not applicable. The Audit Committee pre-approved all non-audit services
rendered to the registrant's investment adviser and any control affiliates that
provide ongoing services to the registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule filed under Item 1 of the 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.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing date of
the report that includes the disclosure required by this paragraph, based on
their evaluation of these controls and procedures required by Rule 30a-3(b)
under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a- 15(b) or 15d-15(b) under
the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d- 15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's last fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 are attached hereto.
(a)(3) Not applicable. There were no solicitations to purchase securities
under Rule 23c-1 under the Act sent or given during the period covered by
this report by or on behalf of the registrant.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): DGHM Investment Trust
By: /s/ Jeffrey C. Baker
---------------------
Jeffrey C. Baker
President and Principal Executive Officer
Date: May 8, 2009
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: /s/ Jeffrey C. Baker
---------------------
Jeffrey C. Baker
President and Principal Executive Officer,
DGHM Investment Trust
Date: May 8, 2009
By: /s/ Thomas F. Gibson
---------------------
Thomas F. Gibson
Principal Financial Officer,
DGHM Investment Trust
Date: May 8, 2009