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 811-21606
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Tilson Investment Trust
------------------------
(Exact name of registrant as specified in charter)
145 East 57th Street, Suite 1100, New York, New York 10022
----------------------------------------------------------
(Address of principal executive offices) (Zip code)
Julian G. Winters
116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802
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(Name and address of agent for service)
Registrant's telephone number, including area code: 252-972-9922
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Date of fiscal year end: October 31
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Date of reporting period: April 30, 2006
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Item 1. REPORTS TO STOCKHOLDERS.
Semi-Annual Report 2006
Tilson Focus Fund
Tilson Dividend Fund
April 30, 2006
(Unaudited)
Tilson Mutual Funds
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Tilson Funds (the "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., 116 S. Franklin St. Rocky Mount, NC
27804, Phone 1-800-773-3863.
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Investment in the Tilson Funds ("Funds") is subject to investment risks,
including the possible loss of some or all of the principal amount invested.
There can be no assurance that the Funds will be successful in meeting its
investment objective. Generally, the Funds will be subject to the following
additional risks: market risk, management style risk, sector focus risk, foreign
securities risk, non-diversified fund risk, portfolio turnover risk, credit
risk, interest rate risk, maturity risk, investment grade securities risk, junk
bonds or lower-rated securities risk, derivative instruments risk, valuation
risks for non-exchange traded options and real estate securities risk. More
information about these risks and other risks can be found in the Funds'
prospectus. When the Funds sell covered call options, the Funds give up
additional appreciation in the stock above the strike price since there is the
obligation to sell the stock at the covered call option's strike price.
The performance information quoted in this semi-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. The
performance data reflects the maximum sales load and/or fee charges applicable.
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 1-888-4TILSON
(1-888-484-5766). 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 Semi-Annual Report was first distributed to shareholders on or about June
29, 2006.
For More Information on Your Tilson Mutual Funds:
See Our Web site @ www.tilsonmutualfunds.com
or
Call Our Shareholder Services Group Toll-Free at 1-888-4TILSON,
1-888-484-5766
Fund Expenses
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include redemption fees for shares redeemed within one year and
(2) ongoing costs, including management fees and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
invested at the beginning of the period and held for the entire period as
indicated below.
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.
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
redemption fees for shares redeemed within one year. 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.
Beginning Ending
Tilson Focus Fund Account Value Account Value Expenses Paid
Expense Example November 1, 2005 April 30, 2006 During Period*
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Actual $1,000.00 $1,108.10 $10.19
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Hypothetical (5% return before expenses) $1,000.00 $1,015.12 $ 9.74
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Beginning Ending
Tilson Dividend Fund Account Value Account Value Expenses Paid
Expense Example November 1, 2005 April 30, 2006 During Period**
- ----------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,133.70 $10.32
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Hypothetical (5% return before expenses) $1,000.00 $1,015.12 $ 9.74
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* Actual Expenses are based on expenses incurred in the most recent six-month
period. The Fund's annualized six-month expense ratio is 0.45% (exclusive of
interest, taxes, brokerage fees and commissions, investment advisory and/or
variable performance incentive fees paid to the Advisor, extraordinary expenses,
and payments, if any, under a Rule 12b-1 Plan). As a result the Fund's "Total
Annual Fund Operating Expense" (excluding interest, taxes, brokerage fees and
commissions, and extraordinary expenses) will be limited to 2.40% (assuming the
maximum variable performance-based incentive fee of 1.95% as discussed in more
detail in the footnotes) of the Fund's average daily net assets. The values
under "Expenses Paid During Period" are equal to the annualized expense ratio of
1.95% multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period (184 days), then divided by
365 (to reflect the number of days in the current fiscal period).
** Expenses are equal to the Funds' annualized expense ratio of 1.95% multiplied
by the average account value over the period, multiplied by the number of days
in the most recent fiscal half-year divided by 365 (to reflect the semi-annual
period).
Tilson Focus Fund
Schedule of Investments
(Unaudited)
As of April 30, 2006
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value Shares Market Value
(Note 1) (Note 1)
- ---------------------------------------------------------------- ------------------------------------------------------------------
COMMON STOCKS - 70.23% CALL OPTIONS PURCHASED - 16.32%
Auto Parts & Equipment - 9.65% * Anheuser-Busch Companies Inc., 01/20/2007
Lear Corporation 37,000 $ 872,460 Strike $45.00 4,000 $ 11,200
------------- Strike $50.00 7,000 5,250
Beverages - 2.91% * Anheuser-Busch Companies Inc., 01/19/2008
Anheuser-Busch Companies, Inc. 5,900 263,022 Strike $35.00 12,500 141,250
------------- * Bausch & Lomb, 01/19/2008
Food - 4.59% Strike $40.00 4,400 60,280
H.J. Heinz Company 10,000 415,100 * Costco Wholesale Corporation, 01/20/2007
------------- Strike $35.00 6,000 121,200
Holding Company - Diversified - 4.78% * Foot Locker, Inc., 01/19/2008
Resource America, Inc. 21,500 432,365 Strike $20.00 1,500 7,800
------------- * Freddie Mac, 01/20/2007
Insurance - 11.60% Strike $65.00 3,000 8,550
* Berkshire Hathaway Inc. 355 1,047,960 * H.J. Heinz Company, 01/20/2007
------------- Strike $30.00 9,000 104,400
Oil & Gas - 0.81% * Laboratory Corp., 01/20/2007
Crosstex Energy, Inc. 1,000 73,200 Strike $40.00 1,000 18,500
------------- * McDonald's Corporation, 01/20/2007
Real Estate Investment Trust - 0.08% Strike $25.00 3,000 30,900
* Winthrop Realty Trust, Inc. 1,408 7,491 Strike $30.00 4,000 24,000
------------- * Microsoft Corporation, 01/19/2008
Retail - 30.46% Strike $25.00 40,000 118,000
CKE Restaurants, Inc. 12,500 197,875 * Tyco International , 01/19/2008
Costco Wholesale Corporation 5,800 315,694 Strike $20.00 32,000 249,600
Foot Locker Inc. 11,500 266,570 * Wal-Mart Stores Inc., 01/20/2007
McDonald's Corporation 34,800 1,203,036 Strike $45.00 16,700 58,450
* Sears Holdings Corporation 2,900 416,701 Strike $50.00 7,000 9,100
* Tim Hortons, Inc. 50 1,357 * Wendy's International Inc., 01/20/2007
Wal-Mart Stores, Inc. 7,800 351,234 Strike $35.00 7,000 191,80
------------- Strike $40.00 3,800 86,260
2,752,467 Strike $50.00 16,000 222,400
------------- * Whirlpool Corporation, 01/20/2007
Software - 5.35% Strike $60.00 200 6,140
Microsoft Corporation 20,000 483,000 -----------
-------------
Total Common Stocks (Cost $6,110,402) 6,347,065
-------------- Total Call Options Purchased
(Cost $1,329,289) 1,475,080
---------------
INVESTMENT COMPANY - 2.59%
Evergreen Institutional Money Market Fund
(Cost $234,067) 234,067 234,067
---------------
(Continued)
Tilson Focus Fund
Schedule of Investments
(Unaudited)
As of April 30, 2006
- -------------------------------------------------------------------------------
Market Value
(Note 1)
- -------------------------------------------------------------------------------
Total Investments (Cost $7,673,758) - 89.14% $ 8,056,212
Other Assets less Liabilities - 10.86% 981,612
----------------
Net Assets - 100.00% $ 9,037,824
================
* Non-income producing investment.
Summary of Investments by Industry
% of Net Market
Industry Assets Value
- -------------------------------------------------------------------------------
Auto Parts & Equipment 9.65% $ 872,460
Beverages 4.66% 420,722
Food 5.75% 519,500
Diversified Financial Services 0.09% 8,550
Healthcare and Equipment 0.67% 60,280
Holding Company - Diversified 4.78% 432,365
Home Furnishings 0.07% 6,140
Insurance 11.60% 1,047,960
Investment Company 2.59% 234,067
Medical 0.20% 18,500
Oil & Gas 0.81% 73,200
Real Estate Investment Trust 0.08% 7,491
Retail 41.54% 3,753,977
Software 6.65% 601,000
- -------------------------------------------------------------------------------
Total 89.14% $ 8,056,212
====== ===========
See Notes to Financial Statements
Tilson Dividend Fund
Schedule of Investments
(Unaudited)
As of April 30, 2006
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value Market Value
Shares (Note 1) Shares (Note 1)
- -------------------------------------------------------------- --------------------------------------------------------------------
COMMON STOCKS - 82.93% Semiconductors - 2.42%
* Cypress Semiconductor Corp + 7,800 $ 133,848
-----------
Auto Parts & Equipment - 5.70%
Bandag, Incorporated 6,600 $ 225,390 Software - 8.66%
MileMarker International, Inc. 26,000 89,700 * Intuit Inc. + 5,000 270,850
-------------- Microsoft Corporation 8,600 207,690
315,090 -----------
-------------- 478,540
Biotechnology - 1.47% -----------
* American Oriental Bioengineering, Telecommunications - 6.09%
Inc. 17,200 81,012 * Netgear, Inc. + 15,000 336,750
-------------- -----------
Diversified Financial Services - 1.09% Total Common Stocks (Cost $4,145,374) 4,583,959
Hennessy Advisors, Inc. 2,195 60,363 ===========
-------------- LIMITED PURPOSE TRUST - 5.58%
(a)Sleep Country Canada
Electronics - 1.90% Income Fund
Mesa Laboratories, Inc. 7,200 105,120 (Cost $187,892) 12,600 308,210
-------------- ===========
Food - 8.25% INVESTMENT COMPANIES - 9.55%
u Industrias Bachoco S.A. 8,600 177,160
u Tesco PLC 15,700 278,675 Evergreen Institutional Money Market
-------------- Fund 264,040 264,040
455,835 Merrimac Cash Series 264,041 264,041
--------------
Healthcare - Services - 3.41% Total Investment Companies (Cost $528,081) 528,081
* Laboratory Corporation of America ===========
Holdings + 3,300 188,430
-------------- Total Investments (Cost $4,861,347) - 98.06% $ 5,420,250
Other Assets less Liabilities - 1.94% 106,977
Insurance - 5.29% -----------
Fidelity National Title Group, Inc. 13,500 292,410
-------------- Net Assets - 100.00% $ 5,527,227
===========
Internet - 5.04%
* Netflix Inc. + 9,400 278,616 * Non-income producing investment.
-------------- u ADR.
(a)Canadian security.
Media - 2.69% + Portion of the security is pledged as collateral for call
Value Line, Inc. 3,600 148,500 options written.
--------------
The following acronyms and abbreviations are used in this portfolio:
Mining - 4.75%
Newmont Mining Corporation + 4,500 262,620 ADR - American Depositary Receipt.
-------------- PLC - Public Limited Company (British).
SA - Sociedad Anonima (Mexican).
Oil & Gas - 15.02%
Exxon Mobil Corporation 5,500 346,940
Precision Drilling Trust 8,800 312,752
* The Meridian Resource Corp. + 44,000 170,720
--------------
830,412
--------------
Retail - 11.15%
Ark Restaurants Corp. 5,600 169,848
Barnes & Noble, Inc. 3,200 144,256
Costco Wholesale Corporation + 3,500 190,505
The Home Depot, Inc. + 2,800 111,804
--------------
616,413
--------------
(Continued)
Tilson Dividend Fund
Call Options Written
(Unaudited)
As of April 30, 2006
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------ ----------------------------------------------------------------
Shares Summary of Investments by Industry
Subject to Market Value % of Net Market
Call (Note 1) Industry Assets Value
- ------------------------------------------------------------------ ----------------------------------------------------------------
Auto Parts & Equipment 5.70% $ 315,090
Common Stocks, Expiration Date, Exercise Price Biotechnology 1.47% 81,012
Diversified Financial Services 1.09% 60,363
* Costco Wholesale Corporation, 7/22/2006 Electronics 1.90% 105,120
Strike $52.50 800 $ 2,480 Food 8.25% 455,835
* Costco Wholesale Corporation, 1/20/2007 Healthcare - Services 3.41% 188,430
Strike $55.00 2,700 10,800 Insurance 5.29% 292,410
* Cypress Semiconductor Corp, 1/20/2007 Internet 5.04% 278,616
Strike $17.50 7,800 17,550 Investment Companies 9.55% 528,081
* Intuit Inc., 7/22/2006 Limited Purpose Trust 5.58% 308,210
Strike $55.00 1,000 2,380 Media 2.69% 148,500
* Intuit Inc., 1/20/2007 Mining 4.75% 262,620
Strike $55.00 4,000 20,000 Oil & Gas 15.02% 830,412
* Laboratory Corporation of America Holdings, 8/19/2006 Retail 11.15% 616,413
Strike $60.00 600 810 Semiconductors 2.42% 133,848
* Netflix Inc., 9/16/2006 Software 8.66% 478,540
Strike $30.00 7,000 19,600 Telecommunications 6.09% 336,750
* Netgear, Inc., 9/16/2006 ----------------------------------------------------------------
Strike $20.00 6,000 21,600 Total 98.06% $ 5,420,250
* Netgear, Inc., 12/16/2006 ====== ============
Strike $22.50 9,000 25,200
* Newmont Mining Corporation, 1/20/2007
Strike $55.00 4,500 40,950
* The Home Depot, Inc., 1/20/2007
Strike $42.50 2,800 6,580
* The Meridian Resource Corporation, 7/22/2006
Strike $5.00 13,000 650
* The Meridian Resource Corporation, 10/21/2006
Strike $5.00 23,500 5,875
----------
Total (Premiums Received $156,025) $ 174,475
==========
See Notes to Financial Statements
Tilson Funds
Statements of Assets and Liabilities
(Unaudited)
Focus Dividend
As of April 30, 2006 Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Assets:
Investments, at cost ................................................................ $ 7,673,758 $ 4,861,347
Investments, at value (note 1) ...................................................... $ 8,056,212 $ 5,420,250
Cash ................................................................................ 541 523,842
Receivables:
Investments sold ................................................................ 969,009 6,818
Fund shares sold ................................................................ 25,375 --
Dividends ....................................................................... 1,876 7,558
Prepaid expenses .................................................................... 32,307 27,569
Due from affiliates:
Advisor (note 2) ................................................................ -- 2,137
--------- ---------
Total Assets ........................................................................ 9,085,320 5,988,174
--------- ---------
Liabilities:
Call options written, at value (Premiums received $156,025) ......................... -- 174,475
Payables:
Investments purchased ........................................................... -- 250,074
Fund shares repurchased ......................................................... 15,984 28,961
Accrued expenses .................................................................... 7,306 7,437
Due to affiliates:
Advisor (note 2) ................................................................ 24,206 --
--------- ---------
Total Liabilities ................................................................... 47,496 460,947
--------- ---------
Net Assets ................................................................................ $ 9,037,824 $ 5,527,227
========= =========
Net Assets Consist of:
Capital (par value and paid in surplus) ............................................. $ 8,477,779 $ 4,871,567
Accumulated net realized (loss) gain on investments
and foreign currency translations ............................................... (16,990) 970
Accumulated net realized gain on investments ........................................ 194,581 114,224
Net unrealized appreciation on investments and
translation of assets and liabilities in foreign currencies ..................... 382,454 540,466
--------- ---------
Total Net Assets .................................................................... $ 9,037,824 $ 5,527,227
========= =========
Shares Outstanding, no par value (unlimited authorized shares) ...................... 838,762 472,358
Net Asset Value, Maximum Offering Price and Redemption Price Per Share .............. $ 10.78 $ 11.70
See Notes to Financial Statements
Tilson Funds
Statements of Operations
(Unaudited)
Focus Dividend
For the six month period ended April 30, 2006 Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income:
Dividends (net of foreign withholding tax of $0 and $2,338, respectively) ............... $ 59,136 $ 45,597
------- -------
Total Income ............................................................................ 59,136 45,597
------- -------
Expenses:
Advisory fees (note 2) .................................................................. 55,472 34,336
Administration fees (note 2) ............................................................ 6,835 4,006
Transfer agent fees (note 2) ............................................................ 10,500 10,500
Registration and filing administration fees (note 2) .................................... 3,955 3,955
Fund accounting fees (note 2) ........................................................... 13,890 13,729
Compliance services fees (note 2) ....................................................... 3,875 3,875
Custody fees (note 2) ................................................................... 2,566 1,994
Other accounting fees (note 2) .......................................................... 5,165 7,994
Legal fees .............................................................................. 6,866 6,943
Audit and tax preparation fees .......................................................... 6,586 6,695
Registration and filing expenses ........................................................ 4,591 3,001
Shareholder servicing expenses .......................................................... 2,480 1,289
Printing expenses ....................................................................... 371 347
Trustees' fees and meeting expenses ..................................................... 3,471 3,472
Securities pricing fees ................................................................. 793 892
Other operating expenses ................................................................ 4,463 4,463
------- -------
Total Expenses .......................................................................... 131,879 107,491
------- -------
Expenses reimbursed by Advisor (note 2) ................................................. (55,753) (62,864)
Net Expenses ............................................................................ 76,126 44,627
------- -------
Net Investment (Loss) Income ................................................................. (16,990) 970
------- -------
Realized and Unrealized Gain from Investments and Foreign Currency:
Net realized gain from:
Investments ......................................................................... 166,956 119,818
Options ............................................................................. 30,715 16,380
Foreign currency transactions ....................................................... -- 4
Change in unrealized appreciation on investments and
translation of assets and liabilities in foreign currencies ......................... 552,369 425,388
------- -------
Realized and Unrealized Gain on Investments ................................................. 750,040 561,590
------- -------
Net Increase in Net Assets Resulting from Operations ......................................... $ 733,050 $ 562,560
======= =======
See Notes to Financial Statements
Tilson Funds
Statements of Changes in Net Assets
Focus Fund
April 30, October 31,
For the six months and fiscal year ended 2006 (a) 2005 (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment loss ............................................................. $ (16,990) $ (38,413)
Net realized gain from investment transactions .................................. 166,956 88,666
Net realized gain (loss) from options ........................................... 30,715 (318)
Change in unrealized appreciation on investments ................................ 552,369 (169,915)
--------- ----------
Net Increase (Decrease) in Net Assets Resulting from Operations ..................... 733,050 (119,980)
--------- ----------
Distributions to Shareholders: (note 5)
Net realized gain from investment transactions .................................. (53,025) --
--------- ----------
Decrease in Net Assets Resulting from Distributions ................................. (53,025) --
--------- ----------
Capital Share Transactions: (note 6)
Shares sold ..................................................................... 2,385,652 6,340,300
Redemption fees (note 1) ........................................................ 5,451 790
Reinvested dividends and distributions .......................................... 50,767 --
Shares repurchased .............................................................. (358,329) (46,852)
--------- ----------
Increase from Capital Share Transactions ............................................ 2,083,541 6,294,238
--------- ----------
Net Increase in Net Assets .......................................................... 2,763,566 6,174,258
--------- ----------
Net Assets:
Beginning of Period ............................................................. 6,274,258 100,000
--------- ----------
End of Period ................................................................... $ 9,037,824 $ 6,274,258
========= ==========
Accumulated Net Investment Loss ...................................................... $ (16,990) $ --
========= ==========
Dividend Fund
April 30, October 31,
For the six months and fiscal year ended 2006 (a) 2005 (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income (loss) ........................................................... $ 970 $ (2,269)
Net realized gain from investment transactions and foreign currency translations ....... 119,822 16,589
Net realized gain (loss) from options .................................................. 16,380 (38,504)
Change in unrealized appreciation on investments and
translation of assets and liabilities in foreign currencies ......................... 425,388 115,078
--------- ----------
Net Increase in Net Assets Resulting from Operations ....................................... 562,560 90,894
--------- ----------
Capital Share Transactions: (note 6)
Shares sold ............................................................................ 1,201,690 3,794,414
Redemption fees (note 1) ............................................................... 1,216 81
Shares repurchased ..................................................................... (72,988) (50,640)
--------- ----------
Increase from Capital Share Transactions ................................................... 1,129,918 3,743,855
--------- ----------
Net Increase in Net Assets ................................................................. 1,692,478 3,834,749
--------- ----------
Net Assets:
Beginning of Period .................................................................... 3,834,749 --
--------- ----------
End of Period .......................................................................... $ 5,527,227 $ 3,834,749
========= ==========
Accumulated Net Investment Income ........................................................... $ 970 $ --
========= ==========
(a) Unaudited.
(b) For the period from March 16, 2005 (Date of Initial Public Investment) to
October 31, 2005.
See Notes to Financial Statements
Tilson Funds
Financial Highlights
Focus Fund
For a share outstanding during the April 30, October 31,
six months and fiscal year ended 2006 (a) 2005 (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period ............................................... $ 9.79 $ 10.00
--------- ---------
Income from Investment Operations:
Net investment loss .......................................................... (0.02) (0.06)
Net realized and unrealized gain (loss) on securities ........................ 1.09 (0.15)
--------- ---------
Total from Investment Operations ................................................... 1.07 (0.21)
--------- ---------
Less Distributions and Other:
Distributions (from capital gains) ........................................... (0.08) --
Redemption fees .............................................................. 0.00 (c) 0.00 (c)
--------- ---------
Total Distributions and Other ...................................................... (0.08) 0.00
--------- ---------
Net Asset Value, End of Period ..................................................... $ 10.78 $ 9.79
========= =========
Total Return ....................................................................... 10.81% (2.10)%
Net Assets, End of Period (in thousands) ........................................... $ 9,038 $ 6,274
Average Net Assets for the Period (in thousands) ................................... $ 7,876 $ 4,558
Ratio of Gross Expenses to Average Net Assets ...................................... 3.37% (d) 6.22% (d)
Ratio of Net Expenses to Average Net Assets ........................................ 1.95% (d) 1.95% (d)
Ratio of Net Investment Loss to Average Net Assets ................................. (0.44)%(d) (1.33)%(d)
Portfolio Turnover Rate ............................................................ 37.34% 79.96%
Dividend Fund
For a share outstanding during the April 30, October 31,
six months and fiscal year ended 2006 (a) 2005 (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period ................................................ $ 10.32 $ 10.00
--------- ---------
Income from Investment Operations:
Net investment income (loss) .................................................. -- (0.01)
Net realized and unrealized gain on securities and
foreign currency translations ............................................. 1.38 0.33
--------- ---------
Total from Investment Operations .................................................... 1.38 0.32
--------- ---------
Less Distributions and Other:
Redemption fees ............................................................... 0.00 (c) 0.00 (c)
--------- ---------
Total Distributions and Other ....................................................... 0.00 0.00
--------- ---------
Net Asset Value, End of Period ...................................................... $ 11.70 $ 10.32
========= =========
Total Return ........................................................................ 13.37% 3.20%
Net Assets, End of Period (in thousands) ............................................ $ 5,527 $ 3,835
Average Net Assets for the Period (in thousands) .................................... $ 16 $ 2,559
Ratio of Gross Expenses to Average Net Assets ....................................... 4.70% (d) 9.52% (d)
Ratio of Net Expenses to Average Net Assets ......................................... 1.95% (d) 1.95% (d)
Ratio of Net Investment Income (Loss) to Average Net Assets ......................... 0.04% (d) (0.14)%(d)
Portfolio Turnover Rate ............................................................. 27.65% 31.13%
(a) Unaudited.
(b) For the period from March 16, 2005 (Date of Initial Public Investment) to
October 31, 2005.
(c) Redemption fees aggregated less than $.01 on a per share basis.
(d) Annualized.
See Notes to Financial Statements
Tilson Funds
Notes to Financial Statements (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Tilson Focus Fund and the Tilson Dividend Fund Foreign Currency Translation
(collectively the "Funds" and individually a "Fund") are series Portfolio securities and other assets and liabilities
funds. The Funds are part of the Tilson Investment Trust (the denominated in foreign currencies are translated into U.S.
"Trust"), which was organized as a Delaware statutory trust and dollars based on the exchange rate of such currencies against
is registered under the Investment Company Act of 1940 (the U.S. dollars on the date of valuation. Purchases and sales of
"1940 Act"), as amended, as an open-ended management investment securities and income items denominated in foreign currencies
company. Each of the Funds in this report are classified as a are translated into U.S. dollars at the exchange rate in effect
"non-diversified" company as defined in the 1940 Act. on the transaction date.
The Tilson Focus Fund (the "Focus Fund") commenced operations The Funds do not separately report the effect of changes in
on March 16, 2005. The investment objective of the Fund is to foreign exchange rates from changes in market prices on
seek long-term capital appreciation through investment in securities held. Such changes are included in net realized and
equity securities of companies that the Advisor believes are unrealized gain or loss from investments.
undervalued in the securities market.
Realized foreign exchange gains or losses arise from sales of
The Tilson Dividend Fund (the "Dividend Fund") commenced foreign currencies, currency gains or losses realized between
operations on March 16, 2005. The investment objective of the the trade and settlement dates on securities transactions and
Fund is to seek maximum total return through a combination of the difference between the recorded amounts of dividends,
capital appreciation and current income. The Fund invests in interest, and foreign withholding taxes, and the U.S. dollar
common stocks of companies that the Advisors believe to be equivalent of the amounts actually received or paid. Net
undervalued in their respective markets, but which also offer unrealized foreign exchange gains and losses arise from changes
high dividend yields relative to the average yields of the in foreign exchange rates on foreign denominated assets and
broad market. liabilities other than investments in securities held at the
end of the reporting period.
The following accounting policies have been consistently
followed by the Funds and are in conformity with accounting Investment Transactions and Investment Income
principles generally accepted in the United States of America Investment transactions are accounted for as of the date
in the investment company industry. purchased or sold (trade date). Dividend income is recorded on
the ex-dividend date. Certain dividends from foreign securities
Investment Valuation will be recorded as soon as the Trust is informed of the
The Funds' investments in securities are carried at value. dividend if such information is obtained subsequent to the
Securities listed on an exchange or quoted on a national market ex-dividend date. Interest income is recorded on the accrual
system are valued at the last sales price as of 4:00 p.m. basis and includes amortization of discounts and premiums.
Eastern Time. Securities traded in the NASDAQ over-the-counter Gains and losses are determined on the identified cost basis,
market are generally valued at the NASDAQ Official Closing which is the same basis used for federal income tax purposes.
Price. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that Option Writing
date are valued at the most recent bid price. Securities and When the Funds write an option, an amount equal to the premium
assets for which representative market quotations are not received by the Funds is recorded as a liability and is
readily available (e.g., if the exchange on which the portfolio subsequently adjusted to the current fair value of the option
security is principally traded closes early or if trading of written. Premiums received from writing options that expire
the particular portfolio security is halted during the day and unexercised are treated by the Funds on the expiration date as
does not resume prior to the Funds' net asset value realized gains from investments. The difference between the
calculation) or which cannot be accurately valued using the premium and the amount paid on effecting a closing purchase
Funds' normal pricing procedures are valued at fair value as transaction, including brokerage commissions, is also treated
determined in good faith under policies approved by the as a realized gain or loss (depending on if the premium is less
Trustees. A portfolio security's "fair value" price may differ than the amount paid for the closing purchase transaction). If
from the price next available for that portfolio security using a call option is exercised, the premium is added to the
the Funds' normal pricing procedures. Instruments with proceeds from the sale of the underlying security or currency
maturities of 60 days or less are valued at amortized cost, in determining whether the Funds have realized a gain or loss.
which approximates market value. If a put option is exercised, the premium reduces the cost
(Continued)
Tilson Funds
Notes to Financial Statements (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
basis of the securities purchased by the Funds. The Funds, as Indemnifications
the writer of an option, bear the market risk of an unfavorable Under the Trust organizational documents, its officers and
change in the price of the security underlying the written Trustees are indemnified against certain liabilities arising
option. out of the performance of their duties to the Funds. In
addition, in the normal course of business, the Trust entered
Expenses into contracts with its vendors and others on behalf of the
The Funds bear expenses incurred specifically on its behalf as Funds that provide for general indemnifications. The Funds'
well as a portion of general Trust expenses, which are maximum exposure under these arrangements is unknown, as this
allocated according to methods approved annually by the would involve future claims that may be made against the Funds.
Trustees. The Funds expect that risk of loss to be remote.
Dividend Distributions 2. Transactions with Affiliates
The Funds may declare and distribute dividends from net
investment income (if any) at the end of each calendar quarter. Advisor (Both Funds)
Distributions from capital gains (if any) are generally
declared and distributed annually. The Funds pay a monthly advisory fee to T2 Partners Management
L.P. (the "Advisor") based upon the average daily net assets of
Estimates each Fund. The Advisor has entered into contractual agreements
The preparation of financial statements in conformity with ("Expense Limitation Agreement") with the Funds under which it
accounting principles generally accepted in the United States has agreed to reduce the amount of the investment advisory fee
of America requires management to make estimates and to be paid to the Advisor by the Funds for certain months and
assumptions that affect the amount of assets, liabilities, to assume other expenses of each of the Funds, if necessary, in
expenses and revenues reported in the financial statements. an amount that limits the Funds' total operating expenses
Actual results could differ from those estimates. (exclusive of interest, taxes, brokerage fees and commissions,
investment advisory and/or variable performance incentive fees
Fees on Redemptions paid to the Advisor, extraordinary expenses, and payments, if
The Funds charge a redemption fee of 2.00% (the "Redemption any, under a Rule 12b-1 Plan) to not more than a specified
Fee") of the amount redeemed on redemptions of the Funds' percentage of the average daily assets of each Fund for the
shares occurring within one year following the issuance of such current fiscal year. There can be no assurance the Expense
shares. The Redemption Fee is not a fee to finance sales or Limitation Agreement will continue in the future. The Advisor
sales promotion expenses, but is paid to the Funds to defray will not be able to recoup any fees waived or reimbursed to
the costs of liquidating an investor and to discourage meet the Expense Limitation for both the Focus Fund and the
short-term trading of the Funds' shares. No Redemption Fee will Dividend Fund during previous periods. The expense limitation
be imposed on the redemption of shares representing dividends percentages for the period ended April 30, 2006 were 0.45% for
or capital gains distributions, or on amounts representing each fund. The expenses reimbursed during this period are
capital appreciation of shares. The redemption fees returned $55,753 and $62,864 for the Focus Fund and Dividend Fund,
for this period are $5,451 and $1,216 for the Focus Fund and respectively.
Dividend Fund, respectively.
Advisor (Focus Fund)
Federal Income Taxes As full compensation for investment advisory services, the
No provision for income taxes is included in the accompanying Advisor receives monthly compensation in the form of a Variable
financial statements, as the Funds intend to distribute to Advisory Fee. The fee is comprised of two component fees: (i) a
shareholders all taxable investment income and realized gains fixed rate of 1.50% of the average daily net assets of the
and otherwise comply with Subchapter M of the Internal Revenue Focus Fund ("Fulcrum Fee") and (ii) a performance incentive fee
Code applicable to regulated investment companies. ("Performance Fee").
(Continued)
Tilson Funds
Notes to Financial Statements (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
The Fulcrum Fee is calculated by multiplying 1.50% by the Sub-Advisor (Dividend Fund)
average net assets of the Focus Fund for the fiscal year to The Dividend Fund's sub-advisor is Centaur Capital Partners,
date divided by the number of days in the year multiplied by L.P., ("Sub-Advisor"). The Sub-Advisor serves in that capacity
the number of days in the calendar month. The Performance Fee pursuant to an investment sub-advisory contract with the
is calculated by multiplying the "Performance Adjustment Rate" Advisor as approved by the Trustees. The Sub-Advisor, with
(as described below) by the average daily net assets of the oversight from the Advisor, makes day-to-day investment
Focus Fund over the Measuring Period. While the Performance Fee decisions for the Dividend Fund and selects broker-dealers for
is calculated on the 12-month Measuring Period, it is pro-rated executing portfolio transactions, subject to the brokerage
to a monthly payment to correspond with the Focus Fund's policies established by the Trustees.
monthly payment of the Variable Advisory Fee.
For its sub-advisory services to the Dividend Fund, the
The Performance Adjustment Rate will vary with the Focus Fund's Sub-Advisor receives from the Advisor quarterly compensation
performance as compared to the performance of the Wilshire 5000 based on the Dividend Fund's average daily net assets at the
Index as published on the close of the market on the last day rate of 0.75% less certain of the Advisor's marketing and
of the Measuring Period, with dividends reinvested, and will operating expenses, as agreed to between the Advisor and
range from -0.45% to +0.45%. The Performance Adjustment Rate Sub-Advisor. The Sub-Advisor has also agreed to allow the
will be calculated at 4.50% of the cumulative difference Advisor to withhold from that compensation up to one-half of
between the performance of the Focus Fund and that of the the Advisor's expenses under the Expense Limitation Agreement
Wilshire 5000 Index over the Measuring Period, except that no as it relates to the Dividend Fund. The Dividend Fund does not
performance adjustment will be paid if the cumulative pay a direct fee to the Sub-Advisor.
difference between the Focus Fund's performance and that of the
Wilshire 5000 index is +/- 2.00%. The factor of 4.50% is Administrator
derived from the fact that the Advisor will achieve the maximum The Funds pay a monthly administration fee to The Nottingham
/ minimum Performance Adjustment Rate when the cumulative total Company (the "Administrator") based upon the average daily net
return difference between the Focus Fund and the Wilshire 5000 assets of each Fund and calculated at the annual rates as shown
Index is +/- 10.00% over the Measuring Period (i.e., 0.45% in the following schedule which is subject to a minimum of
divided by 10.00%=4.50%). During the first full twelve calendar $2,000 per month per Fund. The Administrator also receives a
months following the effective date of the Trust's registration fee to procure and pay the custodian for the Funds, additional
statement, the Advisor is entitled to receive only the Fulcrum compensation for fund accounting and recordkeeping services,
Fee. and additional compensation for certain costs involved with the
daily valuation of securities and as reimbursement for
Advisor (Dividend Fund) out-of-pocket expenses. A breakdown of these fees is provided
As full compensation for the investment advisory services in the schedule below.
provided to the Dividend Fund, the Advisor receives monthly
compensation based on the Dividend Fund's average daily net
assets at the annual rate of 1.50%.
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Fund
Administration Fees* Custody fees* Accounting Accounting Blue Sky
Average Net Annual Average Net Annual Fees Fees (on Administration
Assets Rate Assets Rate (monthly) all assets) Fees (annual)
- ------------------------------------------------------------------------------------------------------------------------------------
All Funds First $50 million 0.175% First $100 million 0.020% $2,250 0.01% $150 per state
Next $50 million 0.150% Over $100 million 0.009%
Next $50 million 0.125%
Next $50 million 0.100%
Over $200 million 0.075%
- ------------------------------------------------------------------------------------------------------------------------------------
*Minimum monthly fees of $2,000 and $400 for Administration and
Custody, respectively.
(Continued)
Tilson Funds
Notes to Financial Statements (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Compliance Services 3. Purchases and Sales of Investment Securities
Nottingham Compliance Services, LLC, a wholly owned affiliate
of The Nottingham Company, provides services which assists the For the period ended April 30, 2006, the aggregate cost of
Trust's Chief Compliance Officer in monitoring and testing the purchases and proceeds from sales of investment securities
compliance policies and procedures of the Trust in conjunction (excluding short-term securities) were as follows:
with requirements under Rule 38a-1 of the Securities and
Exchange Commission. It receives compensation for this service --------------------------------------------------------------
at an annual rate of $7,750 per fund. Fund Proceeds from
Purchases of Sales of
Transfer Agent Securities Securities
North Carolina Shareholder Services, LLC ("Transfer Agent") --------------------------------------------------------------
serves as transfer, divided paying, and shareholder servicing Focus Fund $4,196,913 $2,527,337
agent for the Funds. It receives compensation for its services --------------------------------------------------------------
based upon $15 per shareholder per year, subject to a minimum Dividend Fund $1,869,690 $1,031,091
fee of $1,750 per month. --------------------------------------------------------------
Certain Trustees and officers of the Trust are also officers of There were no purchases or sales of long-term U.S Government
the Advisor, the Distributor or the Administrator. Obligations during the period ended April 30, 2006.
4. Options Written
As of April 30, 2006, portfolio securities valued at
$1,589,032 were held in escrow by the custodian to cover
call options written by the Dividend Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Option Contracts Written for the Period from November 1, 2005 to
April 30, 2006 (Dividend Fund only). Number of Contracts Premiums Received
- ------------------------------------------------------------------------------------------------------------------------------------
Options Outstanding, Beginning of Period 475 $ 60,551
Options written 1,357 223,052
Options closed (1,005) (127,578)
Options exercised - -
Options expired - -
--------------------------------------------------
Options Outstanding, End of Period 827 $156,025
- ------------------------------------------------------------------------------------------------------------------------------------
5. Federal Income Tax ----------------------------------------------------------------
Capital
The tax components of capital shown in the following tables Undistributed Loss Net Tax
represent: (1) tax components of capital, (2) losses or Ordinary Carry- Appreciation/
deductions the Fund may be able to offset against income and Funds Income Forwards (Depreciation)
gains realized in future years, and (3) unrealized ----------------------------------------------------------------
appreciation or depreciation of investments for federal Focus Fund $52,056 $0 ($172,036)
income tax purposes as of October 31, 2005. ----------------------------------------------------------------
Dividend Fund $0 ($21,978) $115,078
----------------------------------------------------------------
(Continued)
Tilson Funds
Notes to Financial Statements (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated capital losses noted below represent net capital The amount of dividends and distributions from net
loss carry-forwards, as of October 31, 2005, that may be investment income and net realized capital gains are
available to offset realized capital gains and thereby determined in accordance with federal income tax regulations
reduce future taxable gains distributions. The following which may differ from generally accepted accounting
table shows the expiration dates of the carryovers. principles. These differences are due to differing
treatments for items such as net short-term gains, deferral
- ------------------------------------------------------------ of wash sale losses, foreign currency transactions, net
Capital Loss Carry-forward Expiration Schedule investment losses and capital loss carry-forwards. Permanent
For the period ended October 31, 2005 differences such as tax returns of capital and net
Fund October 31, 2013 investment losses, if any, would be reclassified against
- ------------------------------------------------------------ capital. For the period ended April 30, 2006, there was a
Focus Fund $0 short-term capital gain distribution in the amount of
- ------------------------------------------------------------ $53,025 in the Focus Fund. There were no dividends or
Dividend Fund $21,978 distributions of net investment income or net realized gains
- ------------------------------------------------------------ paid by Dividend Fund during the period ending April 30,
2006. There were no dividends or distributions of net
investment income or net realized gains paid by either Fund
The aggregate cost of investments and the composition of during the period ending October 31, 2005.
unrealized appreciation and depreciation of investment
securities for federal income tax purposes as of April 30,
2006, are shown in table below.
- ------------------------------------------------------------
Federal Aggregate Gross Unrealized
Fund Tax Cost Appreciation Depreciation
- ------------------------------------------------------------
Focus $7,673,758 $628,126 ($245,672)
Fund
Dividend $4,705,322 $645,913 ($105,460)
Fund
- ------------------------------------------------------------
6. Capital Share Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Focus Fund Dividend Fund
April 30, October 31, April 30, October 31,
For the period and fiscal year ended: 2006 2005* 2006 2005*
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares
Shares sold 227,114 635,904 107,112 376,648
Reinvested distributions 4,803 - -
Shares repurchased (34,264) (4,795) (6,383) (5,019)
-------- ------- ------- -------
Net Increase in Capital Share Transactions 197,653 631,109 100,729 371,629
======== ======= ======= =======
Shares Outstanding, Beginning of Period 641,109 10,000 371,629 -
Shares Outstanding, End of Period 838,762 641,109 472,358 371,629
- ------------------------------------------------------------------------------------------------------------------------------------
* Audited.
Tilson Funds
Additional Information (Unaudited)
- --------------------------------------------------------------------------------
1. Proxy Voting Policies and Voting Record
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 Funds' Statement of Additional
Information and is available, without charge, upon request,
by calling 1-888-4TILSON, 1-888-484-5766. Information
regarding how the Funds voted proxies relating to portfolio
securities during the most recent 12-month period ended June
30 is available (1) without charge, upon request, by calling
the Funds at the number above and (2) on the SEC's website
at http://www.sec.gov.
2. Quarterly Portfolio Holdings
The Funds file their complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal
year on Form N-Q. The Funds' Forms N-Q are available on the
SEC's website at http://www.sec.gov. You may review and make
copies at the SEC's Public Reference Room in Washington,
D.C. You may also obtain copies after paying a duplicating
fee by writing the SEC's Public Reference Section,
Washington, D.C. 20549-0102 or by electronic request to
publicinfo@sec.gov, or is available without charge, upon
request, by calling the Fund at 1-888-4TILSON,
1-888-484-5766. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at
202-942-8090.
(This Page was intentinally left blank.)
The Tilson Mutual
Funds are a series of the
Tilson Investment Trust
For Shareholder Service Inquiries: For Investment Advisor Inquiries:
Documented: Documented:
NC Shareholder Services T2 Partners Management LP
116 South Franklin Street 145 East 57th Street,
Post Office Drawer 4365 Suite 1100
Rocky Mount, North Carolina 27803 New York, New York 10022
Toll-Free Telephone: Toll-Free Telephone:
1-888-4TILSON, 1-888-484-5766 1-888-4TILSON, 1-888-484-5766
World Wide Web @: World Wide Web @:
nottinghamco.com tilsonmutualfunds.com
Tilson Mutual Funds
Item 2. CODE OF ETHICS.
Not applicable.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
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 SECURITYHOLDERS.
None
Item 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures are effective based on their evaluation of these 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) Not applicable.
(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.
Tilson Investment Trust
By: (Signature and Title) /s/ Whitney R. Tilson
_____________________________________________
Whitney R. Tilson
Trustee, President, and Principal Executive Officer
Date: June 23, 2006
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/ Whitney R. Tilson
_____________________________________________
Whitney R. Tilson
Trustee, President, and Principal Executive Officer
Tilson Investment Trust
Date: June 23, 2006
By: (Signature and Title) /s/ Glenn H. Tongue
_____________________________________________
Glenn H. Tongue
Vice President, Treasurer, and Principal Financial
Officer
Tilson Investment Trust
Date: June 26, 2006