N-CSRS 1 ncsrs0307.txt HILLMAN CAPITAL MANAGEMENT INVESTMENT TRUST UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-10085 --------- Hillman Capital Management Investment Trust ------------------------------------------- (Exact name of registrant as specified in charter) 116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) A. Vason Hamrick 116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 252-972-9922 ------------ Date of fiscal year end: September 30 ------------ Date of reporting period: March 31, 2007 -------------- Item 1. REPORTS TO STOCKHOLDERS. Semi-Annual Report 2007 The Hillman Advantage Equity Fund (formerly known as The Hillman Total Return Fund) The Hillman Focused Advantage Fund March 31, 2007 (Unaudited) No Load Shares Class A Shares Class B Shares Class C Shares [Logo Here] HILLMAN CAPITAL MANAGEMENT This report and the financial statements contained herein are submitted for the general information of the shareholders of the Hillman Capital Management Funds ("Funds"). This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus. Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested. Neither the Funds nor the Funds' distributor is a bank. Distributor: Capital Investment Group, Inc., 116 S. Franklin St., Rocky Mount, NC 27804, Phone 1-800-773-3863. ________________________________________________________________________________ Investments in the Hillman Capital Management Funds ("Funds") are subject to investment risks, including the possible loss of some or the entire principal amount invested. There can be no assurance that the Funds will be successful in meeting its investment objective. Investment in the Funds is also subject to the following risks: market risk, investment advisor risk, management style risk. In addition, the Focus Advantage Fund is subject to the following risks: non-diversified status risk, and sector focus risk. More information about these risks and other risks can be found in the Funds' prospectus. The performance information quoted in this 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. An investor may obtain performance data current to the most recent month-end by visiting www.nottinghamco.com. An investor should consider the investment objectives, risks, and charges and expenses of the Funds carefully before investing. The prospectus contains this and other information about the Funds. A copy of the prospectus is available at www.nottinghamco.com or by calling Shareholder Services at 1-800-773-3863. The prospectus should be read carefully before investing. ________________________________________________________________________________ Stated performance in the Funds was achieved at some or all points during the year by waiving or reimbursing part of those 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 May 30, 2007. For More Information on Your Hillman Capital Management (Hillman) Mutual Funds: See Our Website @ www.hillmancapital.com or Call Our Shareholder Services Group Toll-Free at 1-800-773-3863 Fund Expenses (Unaudited) -------------------------------------------------------------------------------- As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments 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 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 sales charges (loads) on purchase payments. Therefore, the last 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. (Continued) Fund Expenses (Unaudited) (Continued) ----------------------------------------------------------------------------------------------------------------------------------- Beginning Ending The Hillman Advantage Equity Fund Account Value Account Value Expenses Paid No Load Class Shares October 1, 2006 March 31, 2007 During Period* ----------------------------------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,058.80 $7.65 ----------------------------------------------------------------------------------------------------------------------------------- Hypothetical (5% annual return before expenses) $1,000.00 $1,017.50 $7.49 ----------------------------------------------------------------------------------------------------------------------------------- Beginning Ending The Hillman Advantage Equity Fund Account Value Account Value Expenses Paid Class A Shares October 1, 2006 March 31, 2007 During Period* ----------------------------------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,059.40 $6.37 ----------------------------------------------------------------------------------------------------------------------------------- Hypothetical (5% annual return before expenses) $1,000.00 $1,018.75 $6.24 ----------------------------------------------------------------------------------------------------------------------------------- Beginning Ending The Hillman Advantage Equity Fund Account Value Account Value Expenses Paid Class B Shares October 1, 2006 March 31, 2007 During Period* ----------------------------------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,057.10 $6.36 ----------------------------------------------------------------------------------------------------------------------------------- Hypothetical (5% annual return before expenses) $1,000.00 $1,018.75 $6.24 ----------------------------------------------------------------------------------------------------------------------------------- Beginning Ending The Hillman Advantage Equity Fund Account Value Account Value Expenses Paid Class C Shares October 1, 2006 March 31, 2007 During Period* ----------------------------------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,057.10 $6.36 ----------------------------------------------------------------------------------------------------------------------------------- Hypothetical (5% annual return before expenses) $1,000.00 $1,018.75 $6.24 ----------------------------------------------------------------------------------------------------------------------------------- *Expenses are equal to the Fund's six month expense ratio (1.49% for the No Load Class, 1.24% for Class A, Class B and Class C) multiplied by the average account value over the period, multiplied by 182 (the number of days in the most recent six months) divided by 365 (to reflect the semi-annual period). Beginning Ending The Hillman Focused Advantage Fund Account Value Account Value Expenses Paid No Load Class Shares October 1, 2006 March 31, 2007 During Period** ----------------------------------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,068.60 $7.68 ----------------------------------------------------------------------------------------------------------------------------------- Hypothetical (5% annual return before expenses) $1,000.00 $1,017.50 $7.49 ----------------------------------------------------------------------------------------------------------------------------------- Beginning Ending The Hillman Focused Advantage Fund Account Value Account Value Expenses Paid Class A Shares October 1, 2006 March 31, 2007 During Period** ----------------------------------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,070.40 $7.69 ----------------------------------------------------------------------------------------------------------------------------------- Hypothetical (5% annual return before expenses) $1,000.00 $1,017.50 $7.49 ----------------------------------------------------------------------------------------------------------------------------------- Beginning Ending The Hillman Focused Advantage Fund Account Value Account Value Expenses Paid Class B Shares October 1, 2006 March 31, 2007 During Period** ----------------------------------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,066.60 $11.54 ----------------------------------------------------------------------------------------------------------------------------------- Hypothetical (5% annual return before expenses) $1,000.00 $1,013.76 $11.25 ----------------------------------------------------------------------------------------------------------------------------------- Beginning Ending The Hillman Focused Advantage Fund Account Value Account Value Expenses Paid Class C Shares October 1, 2006 March 31, 2007 During Period** ----------------------------------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,064.50 $11.53 ----------------------------------------------------------------------------------------------------------------------------------- Hypothetical (5% annual return before expenses) $1,000.00 $1,013.76 $11.25 ----------------------------------------------------------------------------------------------------------------------------------- ** Expenses are equal to the Fund's six month expense ratio (1.49% for the No Load Class and Class A, 2.24% for Class B and Class C) multiplied by the average account value over the period, multiplied by 182 (the number of days in the most recent six months) divided by 365 (to reflect the semi-annual period).
Dear Shareholder: Enclosed please find the semi-annual report for The Hillman Capital Management Funds ("the Funds") for the six months ending March 31, 2007. The investment team here at Hillman Capital Management (HCM) focuses on a company's products and processes and their ability to do business in a manner against which it is difficult to compete. We believe that this philosophy of buying attractively priced industry leaders will lead to strong performance over extended periods of time. We feel we have benefited immensely in the past from this disciplined approach and our long-term view. Therefore, we give little credence to economic forecasting but do pay attention to the fundamentals of the economy, key sectors and the relationship between these themes and the operating environments of the companies in which we invest. We prefer to diligently examine the data at hand and consequently, on a case by case basis, examine the current, intrinsic value of the equities in our qualified universe. The past two quarters in the equity markets were dissimilar in that the fiscal first quarter (the calendar fourth quarter) saw strong equity market performance with little volatility. On the other hand, the funds' second quarter (the first calendar quarter) saw significant volatility, including one of the largest single-day losses in the history of the Dow Jones Industrial Average. Our opinion of the market environment as well as our larger view of the economy and notable sectors is discussed below. Equity markets made headlines in October as the Dow Jones Industrial Average (the Dow) surpassed the 12,000 mark for the first time in history and continued on a torrid pace for the remainder of the calendar year. Likewise, the S&P500, a widely followed market proxy, turned in a solid calendar fourth quarter. The most recent quarter, however, served as a poignant reminder of the short-term risks inherent in equity investing as markets were quite volatile. On Tuesday, February 27th of this year, the Dow Jones Industrial Average (the Dow) experienced the seventh-largest point decline ever^1, 416.02 points, while the S&P 500 lost 50.33 points to 1399.04. Similarly, the NASDAQ Composite Index and the Russell 2000 Index lost 3.9% and 3.8% respectively. A hotly debated topic is the state of, and the continued, surprising resilience of the U.S. consumer. Economists and market prognosticators have long foretold the fall of the U.S. consumer and subsequently a recession. While we acknowledge that this is entirely possible, especially as home price values decline and the full effects of Federal Reserve tightening run their course, we also note that the key factors that have historically driven consumer spending remain positive. These factors include growth of real disposable incomes, low real interest rates, and the fact that real household net worth, net of all debt, is at an all time high^2. In fact, personal income has increased 5.9% year-over-year as of the end of 2006^3. The Commerce Department recently released that personal incomes rose 0.6% in February following a 1% increase in January - we believe these data points suggest that the consumer will remain defiant of forecasts, at least for the near-term. For example, a recent Commerce Department report also noted that consumer spending rose 0.6% for the month of February - double the ------------------------------------ ^1 The Wall Street Journal ^2 CapitalEyes: Bank of America ^3 Ibid consensus forecast by economists^4. All this being said and given our reluctance to bet against the consumer, it is also worth noting that we believe a perfect storm of higher energy prices and decreasing home values may pose a significant challenge for consumers going forward. Again, the extent and timing of these events and their effect on consumers cannot be fully known but rather are worth mentioning as potential reasons for a slowdown in consumer spending. Closely linked to, and often mentioned as a driver of, consumer spending is the housing market. In the broader economic picture, housing is one of the wild cards. The monthly data has yet to tell a consistent story about the health of the housing sector. Despite the near-term fluctuations, we believe that rising monthly mortgage payments and declines in housing demand may causes prices to continue to fall in many regions. A major driver of the home price increases we saw in recent years was tied to not only low interest rates but also the extension of credit to "sub-prime" borrowers. We agree with Federal Reserve Chairman Ben Bernanke when he commented that "the impact on the broader economy and financial markets of the problems in the sub-prime markets seems to be contained." This does not imply zero impact on the markets or that the erosion of wealth in this category is to be ignored, but rather that its affects are limited in scope and the economy can absorb a slowdown in this industry. The flexibility of the U.S. economy has continued to impress economists and market participants alike. Over the last 12 months, the U.S. economy has absorbed numerous shocks, all of which seemed like an end to the current expansion. These events include: high oil prices, the popping of the housing bubble, numerous interest rate increases, the sub-prime fallout, declines in refinancing activity, continued geopolitical woes, slower growth of corporate profits - albeit from all-time highs - a sustained and growing budget deficit, waning consumer confidence, slightly higher inflation and a change of leadership at the Federal Reserve Bank. All that being said, in the fourth quarter of 2006 the U.S. economy grew at a 2.5% annualized rate. The 2.5% growth rate brings the 2006 annual rate to 3.3%, compared to 3.2% in 2005 and 3.9% in 2004^5. On a year-over-year basis, it is clear that the economy is slowing and we believe that the cumulative affects of the above mentioned headwinds are taking their toll on top-line GDP growth. Economic performance in 2006 was a solid year with growth above the 15-year average, historically low unemployment, export growth that outpaced import growth for the first time in a decade, and rising wages^6. Looking ahead to the remainder of 2007, we believe the economy is less solid than in years past and expect to see continued slowing of GDP growth. Like the housing market, the economic indicators continue to be mixed and the precise direction of the economy cannot be determined with certainty. However, former Federal Reserve Chairman Alan Greenspan commented in February that a recession is increasingly likely in the near future. Among the reasons he cited for a domestic slowdown include the looming budget deficit and the stabilization of corporate profit margins - a historically accurate indicator of a late-cycle decline. Similarly, the growth rate of corporate profits, a widely followed measure of broad business and economic health, has slowed after having reached an all time high in the third quarter of 2006. ------------------------------------ ^4 The Wall Street Journal: "Consumer Spending Strength." Accessed on 3/31/2007 ^5 The Wall Street Journal: "Fourth-Quarter GDP Revised Up." Accessed on 3/29/2007 ^6 Department of Commerce Irrespective of where we believe we are in the larger economic cycle, the state of the consumer, or the health of the housing sector, our philosophy here at HCM remains unchanged: we believe that relentlessly focusing on the individual, competitive merits of the companies which we invest in is the most prudent attempt to achieve market out-performance over time. We plan to continue to adhere to our strategy of investing in companies we believe to have competitive advantage in their industries at times when their securities are undervalued in our effort to help clients participate in market advances without unreasonable risk. By using the approach, we hope the Funds will outperform the market over time. We urge our investors to act prudently. We believe the long-term value of an investment is not defined by temporary investor sentiment but by sound principals of finance, such as the present value of cash flows, dividends, or earnings an underlying asset can produce. We believe that our disciplined focus on quality companies with competitive advantage will continue to be a favorable investment strategy into the future. We appreciate the opportunity to serve as your Funds' Investment Adviser. Sincerely, /s/ Mark Hillman An investor should consider the investment objectives, risks, and charges and expenses of the Funds carefully before investing. The prospectus contains this and other information about the Funds. A copy of the prospectus is available at www.nottinghamco.com or by calling Shareholder Services at 1-800-773-3863. The prospectus should be read carefully before investing. Hillman Capital Management, Inc. is a registered investment advisor. More information about the about the advisor can be obtained by visiting www.hillmancapital.com. Statements contained herein that reflect projections or expectations of future financial or economic performance of the Funds and of the market in general and statements of the Funds' plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include general economic conditions such as inflation, recession and interest rates. The information presented here should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities transactions, holdings or sectors discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. All recommendations within the preceding 12 months or applicable period are available upon request. Underwriter and Distributor: Capital Investment Group, Inc. 116 South Franklin Street Rocky Mount, NC 27804 Phone (800) 773-3863 The Hillman Advantage Equity Fund Schedule of Investments (Unaudited) As of March 31, 2007 ----------------------------------------------------------------------------------------------------------------------------------- Market Value Market Value Shares (Note 1) Shares (Note 1) ---------------------------------------------------------- ------------------------------------------------------------------ COMMON STOCKS - 99.01% Hand/Machine Tools - 1.94% Black & Decker Corporation 6,000 $ 489,720 Aerospace/Defense - 5.11% ------------ Goodrich Corporation 13,000 $ 669,240 The Boeing Company 7,000 622,370 Healthcare - Products - 1.91% ------------ Johnson & Johnson 8,000 482,080 1,291,610 ------------ ------------ Apparel - 2.52% Healthcare - Services - 4.55% Nike, Inc. 6,000 637,560 Aetna Inc. 13,000 569,270 ------------ * Laboratory Corporation of America Holdings 8,000 581,040 Biotechnology - 1.75% ------------ * Amgen Inc. 7,900 441,452 1,150,310 ------------ ------------ Chemicals - 2.54% Home Builders - 1.91% E.I. du Pont de Nemours D.R. Horton, Inc. 22,000 484,000 and Company 13,000 642,590 ------------ ------------ Household Products/Wares - 2.02% Computers - 6.87% The Clorox Company 8,000 509,520 * EMC Corporation 44,000 609,400 ------------ Hewlett-Packard Company 14,000 561,960 International Business Machines Internet - 2.23% Corporation 6,000 565,560 * Yahoo! Inc. 18,000 563,220 ------------ ------------ 1,736,920 ------------ Media - 4.52% Time Warner Inc. 30,000 591,600 Cosmetics/Personal Care - 2.00% The Walt Disney Company 16,000 550,880 The Procter & Gamble ------------ Company 8,000 505,280 1,142,480 ------------ ------------ Diversified Financial Services - 7.46% Miscellaneous Manufacturing - 4.21% Citigroup Inc. 10,000 513,400 3M Co. 7,000 535,010 JPMorgan Chase & Co. 11,300 546,694 General Electric Company 15,000 530,400 The Goldman Sachs Group, Inc. 4,000 826,520 ------------ ------------ 1,065,410 1,886,614 ------------ ------------ Oil & Gas - 2.39% Electric - 2.17% Exxon Mobil Corporation 8,000 603,600 Southern Company 15,000 549,750 ------------ ------------ Pharmaceuticals - 3.96% Financial Services - 2.28% Merck & Co., Inc. 11,000 485,870 Allied Capital Corporation 20,000 576,200 Pfizer Inc. 20,400 515,304 ------------ ------------ 1,001,174 Food - 10.49% ------------- Campbell Soup Company 14,000 545,300 H.J. Heinz Company 12,000 565,440 Real Estate Investment Trust - 2.39% Kellogg Company 11,000 565,730 Host Hotels & Resorts 23,000 605,130 McCormick & Company, ------------ Incorporated 13,000 500,760 Whole Foods Market, Inc. 10,600 475,410 Retail - 10.65% ------------ Brinker International, Inc. 18,000 588,600 2,652,640 McDonald's Corporation 13,000 585,650 ------------ Target Corporation 9,000 533,340 The Home Depot, Inc. 14,000 514,360 Wal-Mart Stores, Inc. 10,000 469,500 ------------ 2,691,450 ------------ (Continued)
The Hillman Advantage Equity Fund Schedule of Investments (Unaudited) As of March 31, 2007 ----------------------------------------------------------------------------------------------------------------------------------- Market Value Shares (Note 1) ------------------------------------------------------------- ---------------------------------------------------------------- COMMON STOCKS - (Continued) Summary of Investments by Industry % of Net Market Semiconductors - 1.89% Industry Assets Value Intel Corporation 25,000 $ 478,250 --------------------------------------------------------------- ------------ Aerospace/Defense 5.11% $ 1,291,610 Apparel 2.52% 637,560 Software - 2.15% Biotechnology 1.75% 441,452 * Oracle Corporation 30,000 543,900 Chemicals 2.54% 642,590 ------------ Computers 6.87% 1,736,920 Cosmetics/Personal Care 2.00% 505,280 Telecommunications - 6.98% Diversified Financial Services 7.46% 1,886,614 AT&T Inc. 18,000 709,740 Electric 2.17% 549,750 Motorola, Inc. 27,500 485,925 Financial Services 2.28% 576,200 Verizon Communications Inc. 15,000 568,800 Food 10.49% 2,652,640 ------------ Hand/Machine Tools 1.94% 489,720 1,764,465 Healthcare - Products 1.91% 482,080 ------------ Healthcare - Services 4.55% 1,150,310 Home Builders 1.91% 484,000 Transportation - 2.12% Household Products/Wares 2.02% 509,520 FedEx Corp. 5,000 537,150 Internet 2.23% 563,220 ------------ Investment Company 0.78% 198,197 Media 4.52% 1,142,480 Total Common Stocks (Cost $20,252,262) 25,032,475 Miscellaneous Manufacturing 4.21% 1,065,410 ------------ Oil & Gas 2.39% 603,600 Pharmaceuticals 3.96% 1,001,174 INVESTMENT COMPANY - 0.78% Real Estate Investment Trust 2.39% 605,130 Evergreen Institutional Money Market Fund Retail 10.65% 2,691,450 (Cost $198,197) 198,197 198,197 Semiconductors 1.89% 478,250 ------------ Software 2.15% 543,900 Telecommunications 6.98% 1,764,465 Total Investments (Cost $20,450,459) - 99.79% $ 25,230,672 Transportation 2.12% 537,150 Other Assets Less Liabilities - 0.21% 50,178 --------------------------------------------------------------- ------------ Total 99.79% $ 25,230,672 Net Assets - 100.00% $ 25,280,850 ============ * Non-income producing investment.
See Notes to Financial Statements The Hillman Focused Advantage Fund Schedule of Investments (Unaudited) As of March 31, 2007 ----------------------------------------------------------------------------------------------------------------------------------- Market Value Market Value Shares (Note 1) Shares (Note 1) ---------------------------------------------------------- ------------------------------------------------------------------ COMMON STOCKS - 94.89% Telecommunications - 14.58% AT&T Inc. 125,000 $ 4,928,750 Aerospace/Defense - 9.39% Motorola, Inc. 285,000 5,035,950 Goodrich Corporation 100,000 $ 5,148,000 Verizon Communications, Inc. 130,000 4,929,600 The Boeing Corporation 50,000 4,445,500 -------------- -------------- 14,894,300 9,593,500 -------------- -------------- Transportation - 4.73% Chemicals - 4.84% FedEx Corp. 45,000 4,834,350 E.I. du Pont de Nemours -------------- Company 100,000 4,943,000 -------------- Total Common Stocks (Cost $91,178,353) 96,937,906 -------------- Computers - 9.79% * EMC Corporation 360,000 4,986,000 INVESTMENT COMPANIES - 8.52% Hewlett-Packard Company 125,000 5,017,500 -------------- Evergreen Institutional Money 10,003,500 Market Fund 4,964,177 4,964,177 -------------- Merrimac Cash Series Fund 3,736,576 3,736,576 Diversified Financial Services - 9.35% Total Investment Companies Citigroup Inc. 89,510 4,595,444 (Cost $8,700,753) 8,700,753 The Goldman Sachs Group, -------------- Inc. 24,000 4,959,120 Total Investments -------------- (Cost $99,879,106) - 103.41% $ 105,638,659 9,554,564 Liabilities in Excess of Other Assets - (3.41%) (3,484,442) -------------- -------------- Financial Services - 4.65% Net Assets - 100.00% $ 102,154,217 Allied Capital Corporation 165,010 4,753,938 ============== -------------- * Non-income producing investment. Food - 4.61% Summary of Investments by Industry Whole Foods Market, Inc. 105,000 4,709,250 -------------- Healthcare - Services - 9.69% Aetna Inc. 110,000 4,816,900 % of Net Market * Laboratory Corporation of Industry Assets Value America Holdings 70,000 5,084,100 ------------------------------------------------------------- -------------- Aerospace/Defense 9.39% $ 9,593,500 9,901,000 Chemicals 4.84% 4,943,000 -------------- Computers 9.79% 10,003,500 Diversified Financial Services 9.35% 9,554,564 Home Builders - 4.69% Financial Services 4.65% 4,753,938 D.R. Horton, Inc. 217,780 4,791,160 Food 4.61% 4,709,250 -------------- Healthcare - Services 9.69% 9,901,000 Home Builders 4.69% 4,791,160 Miscellaneous Manufacturing - 4.82% Investment Companies 8.52% 8,700,753 General Electric Company 139,150 4,920,344 Miscellaneous Manufacturing 4.82% 4,920,344 -------------- Oil & Gas 4.43% 4,527,000 Real Estate Investment Trust 4.64% 4,735,800 Oil & Gas - 4.43% Retail 4.68% 4,776,200 Exxon Mobil Corporation 60,000 4,527,000 Telecommunications 14.58% 14,894,300 -------------- Transportation 4.73% 4,834,350 ------------------------------------------------------------- Real Estate Investment Trust - 4.64% Total 103.41% $ 105,638,659 Host Hotels & Resorts 180,000 4,735,800 -------------- Retail - 4.68% The Home Depot, Inc. 130,000 4,776,200 --------------
See Notes to Financial Statements Hillman Capital Management Funds Statements of Assets and Liabilities (Unaudited) Advantage Equity Focused Advantage As of March 31, 2007 Fund Fund ----------------------------------------------------------------------------------------------------------------------------------- Assets: Investments, at cost ............................................................... $ 20,450,459 $ 99,879,106 Investments, at value (note 1) ..................................................... $ 25,230,672 $ 105,638,659 Cash ............................................................................... 1,500 637 Receivables: Fund shares sold ................................................................... 479 219,329 Dividends and Interest, at value (note 1) .......................................... 28,340 128,521 Prepaid expenses: Fund accounting fees ............................................................... 4,500 4,500 Compliance fees .................................................................... 646 646 Other expenses ..................................................................... 41,470 34,492 -------------- --------------- Total Assets ....................................................................... 25,307,607 106,026,784 -------------- --------------- Liabilities: Payables: Investments purchased .............................................................. 3,008 3,037,323 Fund shares repurchased ............................................................ - 796,395 Accrued expenses ................................................................... 23,749 38,849 -------------- --------------- Total Liabilities .................................................................. 26,757 3,872,567 -------------- --------------- Net Assets ......................................................................... $ 25,280,850 $ 102,154,217 Net Assets Consist of: Capital ............................................................................ 20,184,211 94,447,106 Accumulated net investment income .................................................. 93,527 401,700 Accumulated net realized gain on investments ....................................... 222,899 1,545,858 Net unrealized appreciation in investments ......................................... 4,780,213 5,759,553 -------------- --------------- Total Net Assets ................................................................... $ 25,280,850 $ 102,154,217 ============== =============== No Load Shares Outstanding, no par value (unlimited shares authorized) ............. 1,863,517 6,640,205 Net Assets- No Load Shares ......................................................... $ 25,246,048 $ 101,450,289 Net Asset Value, Maximum Offering Price and Redemption Price Per Share ............. $ 13.55 $ 15.28 Class A Shares Outstanding, no par value (unlimited shares authorized) ............. 852 12,424 Net Assets- Class A Shares ......................................................... $ 11,602 $ 190,586 Net Asset Value and Redemption Price Per Share ..................................... $ 13.61 (b) $ 15.34 Offering Price Per Share (Net Asset Value / 0.9425) ................................ $ 14.44 $ 16.28 Class B Shares Outstanding, no par value (unlimited shares authorized) ............. 851 1,123 Net Assets- Class B Shares (a) ..................................................... $ 11,600 $ 17,148 Net Asset Value, Maximum Offering Price and Redemption Price Per Share ............. $ 13.63 $ 15.27 Class C Shares Outstanding, no par value (unlimited shares authorized) ............. 851 32,562 Net Assets- Class C Shares (a) ..................................................... $ 11,600 $ 496,194 Net Asset Value, Maximum Offering Price and Redemption Price Per Share ............. $ 13.63 $ 15.24 (a) Class B and C shares have a contengent deferred sales charge (note 1). (b) Due to rounding of shares outstanding, the Net Assets divided by shares does not equal the Net Asset Value per share. See Notes to Financial Statements
Hillman Capital Management Funds Statements of Operations (Unaudited) Advantage Equity Focused Advantage For the six month period ended March 31, 2007 Fund Fund ----------------------------------------------------------------------------------------------------------------------------------- Investment Income: Dividends ............................................................................ $ 280,148 $ 1,077,853 ----------- ------------- Total Investment Income .............................................................. 280,148 1,077,853 ----------- ------------- Expenses: Advisory fees (note 2) ............................................................... 125,326 445,702 Administration fees (note 2) ......................................................... 15,666 50,803 Transfer agent fees (note 2) ......................................................... 19,500 19,596 Registration and filing administration fees (note 2) ................................. 15,558 15,632 Fund accounting fees (note 2) ........................................................ 28,253 31,457 Compliance services fees (note 2) .................................................... 3,875 3,875 Custody fees (note 2) ................................................................ 3,268 12,405 Distribution and service fees - No Load Class Shares (note 3) ........................ 31,289 111,024 Distribution and service fees - Class A Shares (note 3) .............................. - 97 Distribution and service fees - Class B Shares (note 3) .............................. - 82 Distribution and service fees - Class C Shares (note 3) .............................. - 1,137 Legal fees ........................................................................... 11,405 11,293 Audit and tax preparation fees ....................................................... 8,291 7,730 Registration and filing expenses ..................................................... 15,155 33,507 Shareholder servicing expenses ....................................................... 1,496 6,483 Printing expenses .................................................................... 622 1,745 Trustees' fees and meeting expenses .................................................. 2,493 2,493 Securities pricing fees .............................................................. 2,244 349 Other operating expenses ............................................................. 4,738 17,951 Total Expenses ....................................................................... 289,179 773,361 ----------- ------------- Advisory fees waived (note 2) ........................................................ (93,558) (107,548) Transfer agent fees waived (note 2) .................................................. (9,000) (1,699) Net Expenses ......................................................................... 186,621 664,114 ----------- ------------- Net Investment Income ................................................................ 93,527 413,739 ----------- ------------- Net Realized and Unrealized Gain from Investments: Net realized gain from Investments ................................................... 222,600 1,734,208 Change in unrealized appreciation on investments ..................................... 1,074,190 3,337,069 Net Realized and Unrealized Gain on Investments ...................................... 1,296,790 5,071,277 ----------- ------------- Net Increase in Net Assets Resulting from Operations ................................. $ 1,390,317 $ 5,485,016 =========== ============= See Notes to Financial Statements
Hillman Capital Management Funds Statements of Changes in Net Assets Advantage Equity Fund Focused Advantage Fund March 31, September 30, March 31, September 30, For the six month period or fiscal year ended 2007 (a) 2006 2007 (a) 2006 ----------------------------------------------------------------------------------------------------------------------------------- Operations: Net investment income $ 93,527 $ 140,134 $ 413,739 $ 505,183 Net realized gain from investment transactions 222,600 1,767,879 1,734,208 5,812,827 Capital gain distributions from other investment companies - 27,760 - 30,500 Change in unrealized appreciation on investments 1,074,190 144,350 3,337,069 (2,164,093) Net Increase in Net Assets Resulting from Operations 1,390,317 2,080,123 5,485,016 4,184,417 ----------- ------------ ------------ ------------ Distributions to Shareholders: (note 5) Net investment income - No Load Class Shares - (251,827) (17,799) (506,930) Net investment income - Class A Shares - (16) (116) (14) Net investment income - Class B Shares - - (30) - Net investment income - Class C Shares - - (313) - Net realized gain from investment transactions - No Load Class Shares (1,765,102) (261,624) (5,767,892) (2,294,247) ----------- ------------ ------------ ------------ Net realized gain from investment transactions - Class A Shares (806) - (1,823) - Net realized gain from investment transactions - Class B Shares (805) - (1,090) - Net realized gain from investment transactions - Class C Shares (805) - (10,561) - Decrease in Net Assets Resulting from Distributions (1,767,518) (513,467) (5,799,624) (2,801,191) Capital Share Transactions: (note 6) No Load Shares Shares sold 1,012,909 3,860,040 37,322,369 76,442,383 Reinvested dividends and distributions 1,739,975 509,863 4,708,454 2,603,468 Shares repurchased (673,809) (2,453,740) (18,425,219) (67,461,663) Class A Shares Shares sold - 10,000 187,867 10,000 Reinvested dividends and distributions 806 16 1,939 14 Shares repurchased - - (7,000) - Class B Shares Shares sold - 10,000 5,300 10,000 Reinvested dividends and distributions 805 - 1,120 - Shares repurchased - - - - Class C Shares Shares sold - 10,000 500,825 10,000 Reinvested dividends and distributions 805 - 10,874 - Shares repurchased - - (14,896) - Increase from Capital Share Transactions 2,081,491 1,946,179 24,291,633 11,614,202 ----------- ------------ ------------ ------------ Net Increase in Net Assets 1,704,290 3,512,835 23,977,025 12,997,428 ----------- ------------ ------------ ------------ Net Assets: Beginning of Period 23,576,560 20,063,725 78,177,192 65,179,764 ----------- ------------ ------------ ------------ End of Period $25,280,850 $ 23,576,560 $102,154,217 $ 78,177,192 =========== ============ ============ ============ Accumulated Net Investment Income $ 93,526 $ - $ 401,700 $ 6,219 (a) Unaudited. See Notes to Financial Statements
Hillman Capital Management Funds Advantage Equity Fund Financial Highlights No Load September 30, For a share outstanding during the March 31, -------------------------------------------------------------- six month period or fiscal years ended 2007 (a) 2006 2005 2004 2003 2002 ----------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 13.75 $ 12.76 $ 11.56 $ 10.25 $ 8.51 $ 8.77 --------- --------- --------- --------- -------- -------- Income from Investment Operations: Net investment income 0.05 0.08 0.09 0.13 0.14 0.10 Net realized and unrealized gain (loss) on securities 0.77 1.23 1.40 1.27 1.83 (0.25) Total from Investment Operations 0.82 1.31 1.49 1.40 1.97 (0.15) --------- --------- --------- --------- -------- -------- Less Distributions: Dividends (from net investment income) - (0.15) (0.10) (0.09) (0.15) (0.11) Distributions (from capital gains) (1.02) (0.17) (0.19) - (0.08) - Total Distributions (1.02) (0.32) (0.29) (0.09) (0.23) (0.11) --------- --------- --------- --------- -------- -------- Net Asset Value, End of Period $ 13.55 $ 13.75 $ 12.76 $ 11.56 $ 10.25 $ 8.51 ========= ========= ========= ========= ======== ======== Total Return 5.88% 10.41% 13.02% 13.63% 23.46% (1.56)% Net Assets, End of Period (in thousands) $ 25,246 $ 23,544 $ 20,064 $ 15,354 $ 11,754 $ 6,288 Average Net Assets for the Period (in thousands) $ 25,100 $ 20,994 $ 18,682 $ 14,244 $ 8,448 $ 6,715 Ratio of Gross Expenses to Average Net Assets (e) 2.24% (d) 2.11% 2.18% 2.24% 2.61% 2.83% Ratio of Net Expenses to Average Net Assets (e) 1.49% (d) 1.61% 1.75% 1.75% 1.83% 1.80% Ratio of Net Investment Income to Average Net Assets 0.75% (d) 0.67% 0.81% 1.15% 1.62% 1.11% Portfolio Turnover Rate 5.07% 38.18% 12.11% 17.14% 19.71% 40.37% Focused Advantage Fund No Load September 30, For a share outstanding during the March 31, -------------------------------------------------------------- six month period or fiscal years ended 2007 (a) 2006 2005 2004 2003 2002 ----------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 15.26 $ 14.73 $ 11.82 $ 9.63 $ 6.55 $ 7.51 --------- --------- --------- --------- -------- -------- Income from Investment Operations: Net investment income (loss) 0.06 0.09 - 0.03 0.04 (0.04) Net realized and unrealized gain (loss) on securities 1.00 0.95 2.92 2.17 3.08 (0.92) Total from Investment Operations 1.06 1.04 2.92 2.20 3.12 (0.96) --------- --------- --------- --------- -------- -------- Less Distributions: Dividends (from net investment income) 0.00 (c) (0.09) (0.01) (0.01) (0.04) - Distributions (from capital gains) (1.04) (0.42) - - - - Total Distributions (1.04) (0.51) (0.01) (0.01) (0.04) - --------- --------- --------- --------- -------- -------- Net Asset Value, End of Period $ 15.28 $ 15.26 $ 14.73 $ 11.82 $ 9.63 $ 6.55 ========= ========= ========= ========= ======== ======== Total Return 6.86% 7.15% 24.69% 22.82% 47.60% (12.67)% Net Assets, End of Period (in thousands) $ 101,450 $ 78,144 $ 65,180 $ 11,851 $ 5,157 $ 2,977 Average Net Assets for the Period (in thousands) $ 89,063 $ 88,103 $ 32,265 $ 8,329 $ 3,879 $ 3,628 Ratio of Gross Expenses to Average Net Assets (e) 1.73% (d) 1.62% 1.89% 2.58% 3.93% 4.06% Ratio of Net Expenses to Average Net Assets (e) 1.49% (d) 1.53% 1.75% 1.75% 2.10% 2.12% Ratio of Net Investment Income (loss) to Average Net Assets 0.93% (d) 0.57% 0.02% 0.39% 0.53% (0.46)% Portfolio Turnover Rate 20.09% 43.27% 39.94% 37.80% 41.37% 67.29% (a) Unaudited. (b) For the period from July 18, 2006 (Date of Initial Public Offering) to September 30, 2006. (c) Actual amount is less than $0.01 per share. (d) Annualized. (e) The expense ratios listed reflect the total expenses prior to any waivers (gross expense ratio) and after any waviers (net expense ratio). (f) Total return does not reflect payment of sales charge. See Notes to Financial Statements (Continued)
Hillman Capital Management Funds Financial Highlights Advantage Equity Fund Class A Class B Class C March 31, September 30, March 31, September 30, March 31, September 30, 2007 (a) 2006 (b) 2007 (a) 2006 (b) 2007 (a) 2006 (b) ----------------------------------- ----------------------------------- ----------------------------------- $ 13.79 $ 12.62 $ 13.81 $ 12.62 $ 13.81 $ 12.62 ---------- ---------- ---------- ---------- ---------- ---------- 0.06 0.02 0.06 0.02 0.06 0.02 0.78 1.17 0.78 1.17 0.78 1.17 0.84 1.19 0.84 1.19 0.84 1.19 ---------- ---------- ---------- ---------- ---------- ---------- - (0.02) - - - - (1.02) - (1.02) - (1.02) - (1.02) (0.02) (1.02) - (1.02) - ---------- ---------- ---------- ---------- ---------- ---------- $ 13.61 $ 13.79 $ 13.63 $ 13.81 $ 13.63 $ 13.81 ========== ========== ========== ========== ========== =========== 5.94% (f) 9.43% (f) 5.71% 9.43% 5.71% 9.43% $ 12 $ 11 $ 12 $ 11 $ 12 $ 11 $ 12 $ 10 $ 12 $ 10 $ 12 $ 10 1.98% (d) 2.23% (d) 1.98% (d) 2.23% (d) 1.98% (d) 2.23% 1.24% (d) 1.24% (d) 1.24% (d) 1.24% (d) 1.24% (d) 1.24% 1.00% (d) 0.91% (d) 1.00% (d) 0.91% (d) 1.00% (d) 0.91% 5.07% 38.18% 5.07% 38.18% 5.07% 38.18% Focused Advantage Fund Class A Class B Class C March 31, September 30, March 31, September 30, March 31, September 30, 2007 (a) 2006 (b) 2007 (a) 2006 (b) 2007 (a) 2006 (b) ----------------------------------- ----------------------------------- ----------------------------------- $ 15.31 $ 13.97 $ 15.33 $ 13.97 $ 15.33 $ 13.97 ---------- ---------- ---------- ---------- ---------- ---------- 0.03 0.03 0.01 0.03 - 0.03 1.06 1.33 0.99 1.33 0.97 1.33 1.09 1.36 1.00 1.36 0.97 1.36 ---------- ---------- ---------- ---------- ---------- ---------- (0.02) (0.02) (0.02) - (0.02) - (1.04) - (1.04) - (1.04) - (1.06) (0.02) (1.06) - (1.06) - ---------- ---------- ---------- ---------- ---------- ---------- $ 15.34 $ 15.31 $ 15.27 $ 15.33 $ 15.24 $ 15.33 ========== ========== ========== ========== ========== =========== 7.04% (f) 9.74% (f) 6.66% 9.74% 6.45% 9.74% $ 191 $ 11 $ 17 $ 11 $ 496 $ 11 $ 78 $ 10 $ 16 $ 10 $ 228 $ 10 2.03% (d) 1.58% (d) 2.46% (d) 1.58% (d) 2.72% (d) 1.58% (d) 1.49% (d) 1.24% (d) 2.24% (d) 1.24% (d) 2.24% (d) 1.24% (d) 0.86% (d) 0.93% (d) 0.18% (d) 0.93% (d) 0.20% (d) 0.93% (d) 20.09% 43.27% 20.09% 43.27% 20.09% 43.27% See Notes to Financial Statements
Hillman Capital Management Funds Notes to Financial Statements (Unaudited) ------------------------------------------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Hillman Advantage Equity Fund, formerly known as Load, Class A, Class B, and Class C shares are subject The Hillman Total Return Fund, and The Hillman Focused to distribution plan fees as described in Note 3. Class Advantage Fund, formerly known as The Hillman B shares automatically convert into Class A shares Aggressive Equity Fund, (collectively the "Funds" and after eight years, and Class C shares are automatically individually a "Fund") are series funds. The Funds are converted into the No Load shares after ten years. part of the Hillman Capital Management Investment Trust (the "Trust"), which was organized as a Delaware The following accounting policies have been Business Statutory Trust and is registered under the consistently followed by the Funds and are in Investment Company Act of 1940, (the "1940 Act"), as conformity with accounting principles generally amended, as an open-ended management investment accepted in the United States of America in the company. investment company industry. The Hillman Advantage Equity Fund ("Advantage Equity Investment Valuation Fund") commenced operations on December 29, 2000. The The Funds' investments in securities are carried at investment objective of the Fund is to seek maximum value. Securities listed on an exchange or quoted on a total return through a combination of long-term capital national market system are valued at the last sales appreciation and current income. price as of 4:00 p.m. Eastern Time. Securities traded in the NASDAQ over-the-counter market are generally The Hillman Focused Advantage Fund ("Focused Advantage valued at the NASDAQ Official Closing Price. Other Fund") commenced operations on December 29, 2000. The securities traded in the over-the-counter market and investment objective of the Fund is to seek long-term listed securities for which no sale was reported on capital appreciation. that date are valued at the most recent bid price. Securities and assets for which representative market The Board of Trustees of the Trust (the "Trustees") quotations are not readily available or which cannot be approved, on February 14, 2006, a plan to authorize accurately valued using the Funds' normal pricing three new classes of shares for both Funds designated procedures are valued at fair value as determined in as Class A Shares, Class B Shares, and Class C Shares. good faith under policies approved by the Trustees. On July 18, 2006, the Class A Shares, Class B Shares, Fair value pricing may be used, for example, in and Class C Shares became effective. The Funds situations where (i) a portfolio security is so thinly currently have an unlimited number of authorized traded that there have been no transactions for that shares, which are divided into four classes - No Load security over an extended period of time; (ii) the Shares, Class A Shares, Class B Shares, and Class C exchange on which the portfolio security is principally Shares. traded closes early; or (iii) trading of the portfolio security is halted during the day and does not resume Each class of shares has equal rights as to assets of prior to the Funds' net asset value calculation. A the Fund, and the classes are identical except for portfolio security's "fair value" price may differ from differences in their sales charge structures and the price next available for that portfolio security ongoing distribution and service fees. Income, expenses using the Funds' normal pricing procedures. Instruments (other than distribution and service fees), and with maturities of 60 days or less are valued at realized and unrealized gains or losses on investments amortized cost, which approximates market value. are allocated to each class of shares based upon its relative net assets. All classes have equal voting Investment Transactions and Investment Income privileges, except where otherwise required by law or Investment transactions are accounted for as of the when the Trustees determine that the matter to be voted date purchased or sold (trade date). Dividend income is on affects only the interests of the shareholders of a recorded on the ex-dividend date. Certain dividends particular class. The Funds' Class B and Class C shares from foreign securities will be recorded as soon as the are sold without an initial sales charge; however, they Trust is informed of the dividend if such information are subject to a contingent deferred sales charge. is obtained subsequent to the ex-dividend date. Class B shares are charged at the rate of 5% in the Interest income is recorded on the accrual basis and first year and declining to 0% over a six-year period, includes amortization of discounts and premiums. Gains and Class C shares at a rate of 1% if redeemed in the and losses are determined on the identified cost basis, first year, which is payable to the Distributor of the which is the same basis used for federal income tax Trust. Class A shares are sold with an initial sales purposes. charge of up to 5.75% of the amount invested. The No Expenses The Funds bear expenses incurred specifically on their behalf as well as a portion of general trust expenses, (Continued)
Hillman Capital Management Funds Notes to Financial Statements (Unaudited) ------------------------------------------------------------------------------------------------------------------- which are allocated according to methods reviewed which is subject to a minimum of $2,000 per month per annually by the Trustees. Fund. The Administrator also receives a fee to procure and pay the custodian for each Fund, additional Dividend Distributions compensation for fund accounting and recordkeeping The Funds may declare and distribute dividends from net services, and additional compensation for certain costs investment income (if any) at the end of each calendar involved with the daily valuation of securities and as quarter. Distributions from capital gains (if any) are reimbursement for out-of-pocket expenses. A breakdown generally declared and distributed annually. of these fees is provided in the following schedule. Estimates Compliance Services The preparation of financial statements in conformity Nottingham Compliance Services, LLC, a fully owned with accounting principles generally accepted in the affiliate of The Nottingham Company, provides services United States of America requires management to make which assist the Trust's Chief Compliance Officer in estimates and assumptions that affect the amount of monitoring and testing the policies and procedures of assets, liabilities, expenses and revenues reported in the Trust in conjunction with requirements under Rule the financial statements. Actual results could differ 38a-1 of the Securities and Exchange Commission. It from those estimates. receives compensation for this service at an annual rate of $7,750 per Fund. Federal Income Taxes No provision for income taxes is included in the Transfer Agent accompanying financial statements, as the Funds intend North Carolina Shareholder Services, LLC ("Transfer to distribute to shareholders all taxable investment Agent") serves as transfer, dividend paying, and income and realized gains and otherwise comply with shareholder servicing agent for the Funds. It receives Subchapter M of the Internal Revenue Code applicable to compensation for its services based upon $15 per regulated investment companies. shareholder per year, subject to a minimum fee of $1,750 per month per Fund, plus $500 per month for each 2. Transactions with Affiliates additional class of shares. The Transfer Agent has voluntarily waived a portion of its fees for the six Advisor month ended March 31, 2007 in the amounts of $9,000 and The Funds pay a monthly advisory fee to Hillman Capital $1,699 for the Advantage Equity Fund and the Focused Management, Inc. (the "Advisor") based upon the average Advantage Fund, respectively. daily net assets of each Fund and calculated at the annual rate of 1.00%. For the six month period ended Distributor March 31, 2007, the Advisor has voluntarily waived a Capital Investment Group, Inc. (the "Distributor") portion of these fees in the amounts of $93,558 and serves as the Fund's principal underwriter and $107,548 for the Advantage Equity Fund and the Focused distributor. The Distributor receives any sales charges Advantage Fund, respectively. imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the Administrator sale was made, if any. For the six month period ended Each Fund pays a monthly administration fee to The March 31, 2007, the Distributor retained no sales Nottingham Company (the "Administrator") based upon the charges. average daily net assets of each Fund and calculated at the annual rates as shown in the following schedule Certain Trustees and officers of the Trust are also officers of the Advisor, the Distributor or the Administrator. ----------------------------------------------------------------------------------------------------------------------------------- Fund Accounting Administration Fees (1) Custody Fees (2) Fund Asset Based ---------------------------- ----------------------------- Accounting Blue Sky Average Annual Average Annual Fees Average Annual Administration Net Assets Rate Net Assets Rate (monthly) Net Assets Rate Fees (annual) ----------------------------------------------------------------------------------------------------------------------------------- First $50 million 0.125% First $100 million 0.020% $2,250 All Assets 0.01% $150 per state Next $50 million 0.100% Over $100 million 0.009% $750 (3) Over $100 million 0.075% ----------------------------------------------------------------------------------------------------------------------------------- (1) Subject to a minimum fee of $2,000 per month (2) Subject to a minimum fee of $400 per month (3) For each additional class. (Continued)
Hillman Capital Management Funds Notes to Financial Statements (Unaudited) ----------------------------------------------------------------------------------------------------------------------------------- 3. Distribution and Service Fees The Trustees, including a majority of the Trustees who 5. Federal Income Tax are not "interested persons" (as defined in the 1940 Act), of the Trust adopted distribution and service The tax components of capital shown in Table 1 plans pursuant to Rule 12b-1 of the 1940 Act (the represent the distribution requirements the Funds must "Plans") applicable to the No Load Shares, Class A satisfy under the income tax regulations as of Shares, Class B Shares, and Class C Shares. The 1940 September 30, 2006. Act regulates the manner in which a regulated investment company may assume costs of distributing and Other book tax differences in the current year promoting the sales of its shares and servicing of its primarily consist of adjustments due to shareholder accounts. The Plans provide that the Fund reclassifications of income received from investments may incur certain costs, which may not exceed 0.25% per in real estate investment trusts and different book and annum of the average daily net assets of the No Load tax treatment of short-term capital gains. Shares and Class A Shares or 1.00% per annum of the average daily net assets of the Class B Shares or Class ----------------------------------------------------------------------- C Shares for each year elapsed subsequent to adoption Table 1 Undistributed of the Plans, for payment to the Distributor and others ---------------------------------- for items such as advertising expenses, selling ----------------------------------------------------------------------- expenses, commissions, travel, or other expenses Long-Term reasonably intended to result in sales of No Load Ordinary Capital Net Tax Shares, Class A Shares, Class B Shares, and Class C Fund Income Gains Appreciation Shares in the Funds or support servicing of those ----------------------------------------------------------------------- classes' shareholder accounts. See the table below for Advantage Equity $139,192 $1,628,315 $3,706,023 a breakout of the 12b-1 fees incurred for the Advantage Equity Fund and the Focused Advantage Fund for the six Focused Advantage $1,008,783 $4,778,775 $2,234,161 month period ended March 31, 2007. ----------------------------------------------------------------------- -------------------------------------------------------- The aggregate cost of investments and the composition 12b-1 fees incurred of unrealized appreciation and depreciation of ----------------------------------------- investment securities for federal income tax purposes Class Class Class as of March 31, 2007 are noted below in Table 2. The No Load A B C primary difference between book and tax appreciation or Fund Shares Shares Shares Shares depreciation of investments is wash sale loss -------------------------------------------------------- deferrals. Advantage Equity $31,289 $ - $ - $ - ----------------------------------------------------------------------- -------------------------------------------------------- Aggregate Gross Focused Unrealized Advantage $111,024 $97 $82 $1,137 Table 2 ------------------------ -------------------------------------------------------- Federal Tax Fund Cost Appreciation Depreciation 4. Purchases and Sales of Investment Securities ----------------------------------------------------------------------- Advantage Equity $20,450,459 $5,387,829 ($607,616) For the six month period ended March 31, 2007 the ----------------------------------------------------------------------- aggregate cost of purchases and proceeds from sales of Focused Advantage $100,093,916 $10,469,559 ($4,924,816) investment securities (excluding short-term securities) ----------------------------------------------------------------------- were as follows: The amount of dividends and distributions from net investment income and net realized capital gains are -------------------------------------------------------- determined in accordance with federal income tax Proceeds from regulations which may differ from accounting principles Purchases of Sales of generally accepted in the United States of America. Fund Securities Securities These differences are due to differing treatments for -------------------------------------------------------- items such as net short-term gains, deferral of wash Advantage Equity $1,717,529 $1,255,775 sale losses, net investment losses and capital loss -------------------------------------------------------- carry-forwards. Permanent differences such as tax Focused Advantage $32,019,497 $17,536,519 returns of capital and net investment losses, if any, -------------------------------------------------------- would be reclassified against capital. There were no purchases or sales of long-term U.S. Government Obligations for either Fund during the six month period ended March 31, 2007. (Continued)
Hillman Capital Management Funds Notes to Financial Statements (Unaudited) ----------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------- ----------------------------------------------------------------------- For the year ended For the year ended September 30, 2006 Distributions from September 30, 2005 Distributions from -------------------------------------------------------- ----------------------------------------------------------------------- Ordinary Long-Term Ordinary Long-Term Fund Income Capital Gains Fund Income Capital Gains Advantage Equity $389,131 $124,336 Advantage Equity $150,140 $283,131 Focused Advantage $1,355,046 $1,446,145 Focused Advantage $10,478 $ - -------------------------------------------------------- ----------------------------------------------------------------------- 6. Capital Share Transactions ----------------------------------------------------------------------------------------------------------------------------------- Advantage Equity Fund No Load Shares Class A Shares ---------------------------------------------------------------------- March 31, September 30, March 31, September 30, For the six month period or fiscal years ended 2007 2006 (2) 2007 2006 (1,2) ----------------------------------------------------------------------------------------------------------------------------------- Transactions in Capital Shares Shares sold 71,303 288,671 - 793 Reinvested distributions 127,471 38,825 58 1 Shares repurchased (48,109) (187,293) - - Net Increase in Capital Shares Transactions 150,665 140,203 58 794 Shares Outstanding, Beginning of Period 1,712,852 1,572,649 794 - Shares Outstanding, End of Period 1,863,517 1,712,852 852 794 ----------------------------------------------------------------------------------------------------------------------------------- (1) For the period from July 18, 2006 (Date of Initial Public Offering) to September 30, 2006. (2) Audited. ----------------------------------------------------------------------------------------------------------------------------------- Advantage Equity Fund Class B Shares Class C Shares ---------------------------------------------------------------------- March 31, September 30, March 31, September 30, For the six month period or fiscal years ended 2007 2006 (2) 2007 2006 (1,2) ----------------------------------------------------------------------------------------------------------------------------------- Transactions in Capital Shares Shares sold - 792 - 792 Reinvested distributions 59 - 59 - Shares repurchased - - - - Net Increase in Capital Shares Transactions 59 792 59 792 Shares Outstanding, Beginning of Period 792 - 792 - Shares Outstanding, End of Period 851 792 851 792 ----------------------------------------------------------------------------------------------------------------------------------- (1) For the period from July 18, 2006 (Date of Initial Public Offering) to September 30, 2006. (2) Audited. ----------------------------------------------------------------------------------------------------------------------------------- Focused Advantage Fund No Load Shares Class A Shares ---------------------------------------------------------------------- March 31, September 30, March 31, September 30, For the six month period or fiscal years ended 2007 2006 (2) 2007 2006 (1,2) ----------------------------------------------------------------------------------------------------------------------------------- Transactions in Capital Shares Shares sold 2,401,309 5,099,562 12,010 716 Reinvested distributions 304,163 174,545 124 1 Shares repurchased (1,187,363) (4,577,945) (427) - Net Increase in Capital Shares Transactions 1,518,109 696,162 11,707 717 Shares Outstanding, Beginning of Period 5,122,096 4,425,934 717 - Shares Outstanding, End of Period 6,640,205 5,122,096 12,424 717 ----------------------------------------------------------------------------------------------------------------------------------- (1) For the period from July 18, 2006 (Date of Initial Public Offering) to September 30, 2006. (2) Audited. (Continued)
Hillman Capital Management Funds Notes to Financial Statements (Unaudited) ----------------------------------------------------------------------------------------------------------------------------------- Focused Advantage Fund Class B Shares Class C Shares ---------------------------------------------------------------------- March 31, September, March 31, September 30, For the six month period or fiscal years ended 2007 2006 (1,2) 2007 2006 (1,2) ----------------------------------------------------------------------------------------------------------------------------------- Transactions in Capital Shares Shares sold 335 716 32,108 716 Reinvested distributions 72 - 701 - Shares repurchased - - (963) - Net Increase in Capital Shares Transactions 407 716 31,846 716 Shares Outstanding, Beginning of Period 716 - 716 - Shares Outstanding, End of Period 1,123 716 35,562 716 ----------------------------------------------------------------------------------------------------------------------------------- (1) For the period from July 18, 2006 (Date of Initial Public Offering) to September 30, 2006. (2) Audited. 7. New Accounting Pronouncements In September 2006, the Financial Accounting Standards 31, 2007 and is to be applied to all open tax years. At Board (FASB) issued Statement on Financial Accounting this time, management is evaluating the implications of Standards (SFAS) No. 157, "Fair Value Measurements". FIN 48. Although not yet determined, management does This standard establishes a single authoritative not expect FIN 48 to have a material impact on the definition of fair value, sets out a framework for financial statements. measuring fair value and requires additional disclosure about fair value measurements. SFAS No. 157 applies to 8. Commitments and Contingencies fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for Under the Trust's organizational documents, its financial statements issued for fiscal years beginning officers and Trustees are indemnified against certain after November 15, 2007 and interim periods within liabilities arising out of the performance of their those fiscal years. The changes to current generally duties to the Funds. In addition, in the normal course accepted accounting principles from the application of of business, the Funds entered into contracts with this Statement relate to the definition of fair value, their vendors and others that provide for general the methods used to measure fair value, and the indemnifications. The Funds' maximum exposure under expanded disclosures about fair value measurements. As these arrangements is unknown, as this would involve of March 31, 2007, the Funds do not believe the future claims that may be made against the Funds. The adoption of SFAS No. 157 will impact the amounts Funds expect that risk of loss to be remote. reported in the financial statements, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements reported on the statement of changes in net assets for a fiscal period. On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. FIN 48 is to be implemented no later than August
Hillman Capital Management funds Additional information (Unaudited) ----------------------------------------------------------------------------------------------------------------------------------- 1. Proxy Voting Policies and Voting Record A copy of the Trust's Proxy Voting and Disclosure (vi) the Advisor's practices regarding possible Policy and the Advisor's Proxy Voting and Disclosure conflicts of interest. Policy are included as Appendix B to the Funds' Statement of Additional Information and is available, At the meeting, the Trustees reviewed various without charge, upon request, by calling informational materials including, without limitation, 1-800-773-3863. Information regarding how the Funds a copy of the Investment Advisory Agreement for the voted proxies relating to portfolio securities during Funds; a memorandum from the Advisor to the Trustees the most recent 12-month period ended June 30, is containing information about the Advisor, its business, available (1) without charge, upon request, by calling its finances, its personnel, its services to the Funds, the Funds at the number above and (2) on the SEC's and comparative expense ratio information for other website at http://www.sec.gov. mutual funds with strategies similar to the Funds; and a memorandum from Parker Poe Adams & Bernstein LLP 2. Quarterly Portfolio Holdings (counsel to the Funds) that summarized the fiduciary duties and responsibilities of the Board of Trustees in The Funds file their complete schedule of portfolio reviewing and approving the Investment Advisory holdings with the SEC for the first and third quarters Agreement, including the types of information and of each fiscal year on From N-Q. The Funds' Form N-Q is factors that should be considered in order to make an available on the SEC's website at http://www.sec.gov. informed decision. You may review and make copies at the SEC's Public Reference Room in Washington, D.C. You may also obtain In considering the nature, extent, and quality of the copies after paying a duplicating fee by writing the services provided by the Advisor to the Funds, the SEC's Public Reference Section, Washington, D.C. Trustees reviewed the services being provided by the 20549-0102 or by electronic request to Advisor to the Funds including, without limitation, the publicinfo@sec.gov, or is available without charge, quality of its investment advisory services since each upon request, by calling the Funds at 1-800-773-3863. Fund's inception (including research and Information on the operation of the Public Reference recommendations with respect to portfolio securities); Room may be obtained by calling the SEC at its procedures for formulating investment 202-942-8090. recommendations and assuring compliance with each Fund's investment objectives and limitations; its 3. Approval of Advisory Agreements During the Period coordination of services for the Funds among the Funds' service providers; and its efforts to promote the The Advisor supervises the investments of the Funds Funds, grow the Funds' assets, and assist in the pursuant to an Investment Advisory Agreement. At the distribution of Fund shares. The Trustees noted that annual meeting of the Funds' Board of Trustees on the Funds' principal executive officer, principal November 28, 2006, the Trustees unanimously approved financial officer, and chief compliance officer were the renewal of the Investment Advisory Agreement for employees of the Advisor and serve the Funds without another year. In considering whether to approve the additional compensation from the Funds. After reviewing renewal of the Investment Advisory Agreement, the the foregoing information and further information in Trustees reviewed and considered such information as the memorandum from the Advisor (e.g., descriptions of they deemed reasonably necessary, including the the Advisor's business, the Advisor's compliance following material factors: (i) the nature, extent, and programs, and the Advisor's Form ADV), the Board of quality of the services provided by the Advisor; (ii) Trustees concluded that the nature, extent, and quality the investment performance of the Funds and the of the services provided by the Advisor were Advisor; (iii) the costs of the services to be provided satisfactory and adequate for the Funds. and profits to be realized by the Advisor and its affiliates from the relationship with the Funds; (iv) In considering the investment performance of the Funds the extent to which economies of scale would be and the Advisor, the Trustees compared the short and realized as the Funds grow and whether advisory fee long-term performance of each Fund with the performance levels reflect those economies of scale for the benefit of its benchmark index, comparable funds with similar of the Funds' investors; (v) the Advisor's practices objectives and sizes managed by other investment regarding brokerage and portfolio transactions; and advisors, and comparable peer group indices (e.g., Morningstar category averages). The Trustees also considered the consistency of the Advisor's management of each Fund with its investment objective and policies. After reviewing the short and long-term (Continued)
Hillman Capital Management Funds Additional Information (Unaudited) ----------------------------------------------------------------------------------------------------------------------------------- investment performance of the Funds, the Advisor's Advisor involved only the management fee. The Trustees experience managing the Funds and other advisory noted that, while the management fees remained the same accounts, the Advisor's historical investment at all asset levels, the Funds' shareholders had performance, and other factors, the Board of Trustees experienced benefits from the Advisor's voluntary concluded that the investment performance of the Funds waiver of advisory fees for the Funds and would benefit and the Advisor was satisfactory. from economies of scale under the Funds' agreements with service providers other than the Advisor. In considering the costs of the services to be provided Following further discussion of the Funds' asset and profits to be realized by the Advisor and its levels, expectations for growth, and fee levels, the affiliates from the relationship with the Funds, Board of Trustees determined that the Funds' fee including any benefits derived or to be derived by the arrangements were fair and reasonable in relation to Advisor from the relationship with the Funds, the the nature and quality of the services provided by the Trustees considered the Advisor's staffing, personnel, Advisor, and that the Advisor's voluntary waiver of and methods of operating; the education and experience advisory fees for the Funds provided potential savings of the Advisor's personnel; the Advisor's compliance or protection for the benefit of the Funds' investors. policies and procedures; the financial condition of the Advisor and the level of commitment to the Funds and In considering the Advisor's practices regarding the Advisor by the principals of the Advisor; the asset brokerage and portfolio transactions, the Trustees level of each Fund; and the overall expenses of each reviewed the Advisor's standards, and performance in Fund, including certain prior fee waivers and utilizing those standards, for seeking best execution reimbursements by the Advisor on behalf of the Funds for Fund portfolio transactions, including the use of and the nature and frequency of advisory fee payments. alternative markets (e.g., direct purchases from The Trustees reviewed the financial statements for the issuers or underwriters or, as to equity securities, Advisor and discussed the financial stability and "third market" for listed securities and principal profitability of the firm. The Trustees discussed the market makers for over-the-counter securities). The Advisor's prior fee waivers in detail, including the Trustees noted that the Funds' fixed income portfolio nature and scope of cost allocation for such fees. The transactions are normally principal transactions Trustees also considered potential benefits for the executed in over-the-counter markets on a "net" basis. Advisor in managing the Funds, including promotion of The Trustees also considered the anticipated portfolio the Advisor's name, the ability for the Advisor to turnover rate for the Funds; the extent to which the place small accounts into the Funds, and the potential Funds allocate portfolio business to broker-dealers who for the Advisor to generate soft dollars from certain provide research, statistical, or other services (soft of the Funds' trades that may benefit the Advisor's dollars) to the Funds compared with broker-dealers who other clients as well. The Trustees then compared the provide only execution services; the difference between fees and expenses of each Fund (including the "full service" and "bare bones" commission rates, management fee) to other funds comparable in terms of including consideration, each quarter, of whether the the type of fund, the nature of its investment higher rates are reasonable in relation to the value of strategy, its style of investment management, and its the services provided; the process by which evaluations size, among other factors. With respect to each Fund, are made of the overall reasonableness of commissions the Trustees determined that the management fee was paid; the method and basis for selecting and evaluating higher than the comparable funds and the net expense the broker-dealers used; any anticipated allocation of ratio, while higher than some of the comparable funds portfolio business to persons affiliated with the and lower than others, was higher than the industry Advisor; the general nature and quality of the average. Following this comparison and upon further research, statistical, and other services received (or consideration and discussion of the foregoing, the expected to be received) by the Advisor or the Funds in Board of Trustees concluded that the fees to be paid to return for commissions paid by the Funds or by any the Advisor by the Funds were fair and reasonable in other account advised by the Advisor. The Trustees then relation to the nature and quality of the services considered whether such services and soft dollars provided by the Advisor. provide lawful and appropriate assistance to the Advisor in the performance of its investment In considering the extent to which economies of scale decision-making responsibilities and whether any would be realized as the Funds grow and whether the payments are made for such services through the use of advisory fee levels reflect these economies of scale concessions or mark-ups charged by underwriters or for the benefit of the Funds' investors, the Trustees dealers in a principal (including riskless principal) considered that each Fund's fee arrangements with the capacity; the extent to which any soft dollar payment is allocated for products or services that provide both a research and a non-research function; the extent to which such services benefit other accounts, if any, advised by the Advisor; the extent to which such (Continued)
Hillman Capital Management Funds Additional Information (Unaudited) -------------------------------------------------------------------------------- services enable the Advisor to avoid expenses that it otherwise would be required to bear under the Investment Advisory Agreement with the Funds; the alternatives to "paying up for research" (e.g., paying for research with cash, enlarging the investment staff, etc.); and the opportunities for the Advisor to recapture brokerage or related fees (e.g., as to equity funds, tender offer fees, underwriting fees, etc.) and credit it against the fees of the Funds. After further review and discussion, the Board of Trustees determined that the Advisor's practices regarding brokerage and portfolio transactions were satisfactory. In considering possible conflicts of interest, the Trustees evaluated the potential for conflicts of interest and considered such matters as the experience and ability of the advisory personnel assigned to the Funds; the basis for soft dollar payments with broker-dealers, including any broker-dealers affiliated with the Advisor; the basis of decisions to buy or sell securities for the Funds and/or the Advisor's other accounts; the method for bunching of portfolio securities transactions; and the substance and administration of the Advisor's code of ethics. Following further consideration and discussion, the Board of Trustees indicated that the Advisor's standards and practices relating to the identification and mitigation of possible conflicts of interests were satisfactory. Based upon all of the foregoing considerations, the Board, including a majority of the Trust's independent trustees, approved the renewal of the Investment Advisory Agreement. The Hillman Capital Management Mutual Funds are a series of the Hillman Capital Management Investment Trust For Shareholder Service Inquiries: For Investment Advisor Inquiries: Documented: Documented: NC Shareholder Services, LLC Hillman Capital Management, Inc. 116 South Franklin Street 7600 Wisconsin Avenue Post Office Drawer 4365 Suite 650 Rocky Mount, North Carolina 27803 Bethesda, Maryland 20814 Toll-Free Telephone: Toll-Free Telephone: 1-800-773-3863 1-800-773-3863 World Wide Web @: World Wide Web @: nottinghamco.com hillmancapital.com [Logo Here] HILLMAN CAPITAL MANAGEMENT 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 Principal Executive Officer and the Principal Financial Officer have concluded that the registrant's disclosure controls and procedures are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing of this report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. EXHIBITS. (a)(1) 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. Hillman Capital Management Investment Trust By: (Signature and Title) /s/ Mark A. Hillman _________________________________________________ Mark A. Hillman, Trustee, President and Principal Executive Officer Date: May 29, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: (Signature and Title) /s/ Mark A. Hillman ________________________________________________ Mark A. Hillman, Trustee, President and Principal Date: May 29, 2007 Executive Officer By: (Signature and Title) /s/ Fletcher D. Parkins _________________________________________________ Fletcher D. Perkins, Treasurer and Principal Financial Officer Date: May 29, 2007