SCHWARTZ
VALUE FUND
a series of
SCHWARTZ
INVESTMENT TRUST
[LOGO]
SEMI-ANNUAL REPORT
(UNAUDITED)
for the six months ended
JUNE 30, 1999
<PAGE>
SHAREHOLDER ACCOUNTS CORPORATE OFFICES
c/o Countrywide Fund 3707 W. Maple Road
Services, Inc. Bloomfield Hills, MI 48301
P.O. Box 5354 (248) 644-8500
Cincinnati, OH 45201-5354 Fax (248) 644-4250
1-800-543-0407
[LOGO]
Schwartz Value Fund
Dear Fellow Shareowner:
Is the long-awaited turn in the small-cap market here? It would seem so.
The Schwartz Value Fund was up 14.5% for the second quarter of 1999, which
approximated the returns of the S&P 600 and the Russell 2000 small-cap indices,
while the large-cap S&P 500 was up 7.1%. As an asset class, however, small-caps
are still deeply depressed, on an absolute and relative basis. The future
performance of small-caps may be enhanced by cash flows actually entering,
instead of exiting, the sector.
Earlier this year, the demise of small-cap investing was greatly
exaggerated. When the majority of "experts" proclaim there is no hope for a
particular stock, industry or asset class -- you know its price is near the
bottom. This contrarian principal is one of the most reliable but misunderstood
investment principles I have observed in my 32 years of investment counsel.
"It's always darkest just before dawn," "Buy on the bad news," "Buy when blood
is running in the streets," pick your cliche -- they're all apropos because
there is a direct linkage between investor sentiment and price. Negative
sentiment depresses prices. At a low enough price, even a below-average company
can become an above-average investment. Conversely, at a high enough price, the
stock of an above-average company can become a poor investment.
Emerging markets and commodities are two very recent examples of depressed
asset classes which have rebounded from very distressed levels despite
widespread predictions of doom and gloom. The emerging markets were in crisis as
recently as year-end 1998 and have since recovered dramatically in the face of
economic depression, unstable currencies, loose accounting standards, mismanaged
governments, excess manufacturing capacity, and a host of other problems.
Likewise, commodity prices were decimated over the last year. With supplies
plentiful, pundits were predicting continued price weakness. Oil prices slumped
to about $10 a barrel, while pessimism was widespread based on a glut of supply,
OPEC's lack of discipline, and weak world demand. Analysts were predicting
depressed prices for an extended period of time with some predicting $5 oil.
Within a few months, the price of oil doubled to $20 a barrel. The point is that
market prices almost always discount the future and incorporate all the bad news
at the bottom. As Sir John Templeton says, "Buy at the point of maximum
pessimism." Because of our contrarian bent, Schwartz Value Fund bought depressed
oil stocks near their lows and benefited as prices rebounded. Patterson Energy,
Inc., Diamond Offshore Drilling, Inc., Forest Oil Corporation, and Santa Fe
Snyder Corporation are energy-related holdings which have appreciated 50-200%
from our cost.
The Fund owns numerous other out-of-favor issues, with intrinsic value
meaningfully exceeding the stock prices. As with the energy stocks, it's
impossible to predict exactly when they will turn. In the end, value will out,
but that may be tomorrow, next month, or next year. In the meantime, stocks that
were merely depressed can become inordinately depressed, if they're small-caps
and liquidity is an issue. So, even though the Schwartz Value Fund had a strong
rebound in the second quarter, the portfolio has experienced a significant drag
from some of our large positions, which are down from the start of the year.
Thomas Nelson, Inc., Data Research Associates, Inc., Griffon Corporation and
Rainbow Technologies, Inc. represent four meaningful holdings that have declined
between 20-35% in 1999. Even though these are fine companies, they have held the
Fund's performance back by at least 5% year-to-date. Each company has reported
mildly disappointing earnings and as a result has seen its stock price punished
in the marketplace. The stock price declines have more than factored in each
company's short-term problems. The companies continue to have capable
leadership, strong balance sheets, powerful market positions, and good long-term
prospects. From their current bargain levels, the expected price recovery in
these issues should have a significant positive affect on the portfolio's future
performance.
Notwithstanding, it is encouraging to see the outperformance of small-caps
versus the S&P 500 in the second quarter. It's particularly nice to see the
recent pick-up in M&A activity of undervalued smaller companies. The Fund has
benefited recently from corporate buyers paying large premiums to acquire
SteriGenics International, Inc., Aviall, Inc., and Whittaker Corporation. This
is the merit of investing in a disciplined fashion and buying pieces of
businesses for significantly less than their intrinsic value. The strategy has
worked for many years and continues to be a sound approach for the future.
On a different matter, your Board of Trustees reduced the Fund's minimum
initial investment requirement from $25,000 to $10,000, effective immediately.
Increasingly, shareholders have expressed interest in opening SVF accounts for
their children and grandchildren, in amounts of $10,000, often related to
gifting. With that thought in mind, a lower minimum may increase the Fund's
assets and spread fixed expenses over a larger shareholder base.
Your continued support is greatly appreciated.
SCHWARTZ VALUE FUND
/s/ George P. Schwartz
George P. Schwartz, CFA
President
July 26, 1999
<PAGE>
SCHWARTZ VALUE FUND
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
================================================================================
Shares COMMON STOCK -- 85.2% Value
- --------------------------------------------------------------------------------
APPAREL & TEXTILES -- 2.8%
20,000 Fruit of the Loom, Inc. -- Class A* .............. $ 195,000
25,000 K-Swiss Inc. -- Class A .......................... 1,162,500
15,000 Nautica Enterprises, Inc.* ....................... 253,125
-----------
1,610,625
-----------
BUILDING MATERIALS & CONSTRUCTION -- 1.1%
25,000 Gardner Denver, Inc.* ............................ 403,125
37,400 Schuler Homes, Inc.* ............................. 243,100
-----------
646,225
-----------
BUSINESS SERVICES -- 1.4%
35,000 HA-LO Industries, Inc.* .......................... 345,625
20,000 NOVA Corporation* ................................ 500,000
-----------
845,625
-----------
CONSUMER PRODUCTS -- DURABLES -- 4.5%
45,000 Craftmade International, Inc. .................... 585,000
250,000 Griffon Corporation* ............................. 1,953,125
50,000 HMI Industries Inc. .............................. 96,875
-----------
2,635,000
-----------
CONSUMER PRODUCTS -- NONDURABLES -- 2.7%
20,000 Helen of Troy Limited* ........................... 358,750
50,000 Pentech International, Inc.* ..................... 39,063
54,500 Velcro Industries N.V ............................ 660,813
24,200 Weyco Group, Inc. ................................ 556,600
-----------
1,615,225
-----------
EDUCATION -- 1.8%
25,000 Childtime Learning Centers, Inc.* ................ 368,750
20,000 Computer Learning Centers, Inc.* ................. 98,750
20,000 Nobel Learning Communities, Inc.* ................ 100,000
15,000 Quest Education Corporation* ..................... 158,438
6,000 Strayer Education, Inc. .......................... 184,125
25,000 Whitman Education Group, Inc.* ................... 150,000
-----------
1,060,063
-----------
2
<PAGE>
SCHEDULE OF INVESTMENTS (continued)
================================================================================
Shares COMMON STOCK -- 85.2% Value
- --------------------------------------------------------------------------------
ELECTRONICS -- 2.6%
20,000 Littelfuse, Inc.* ................................ 385,000
40,000 Universal Electronics Inc.* ...................... 1,122,500
-----------
1,507,500
-----------
ENERGY & MINING -- 9.2%
10,000 Diamond Offshore Drilling, Inc. .................. 283,750
25,000 Forest Oil Corporation* .......................... 314,063
200,000 Golden Star Resources Ltd.* ...................... 162,500
100,000 Inco Limited -- Class VBN ........................ 768,750
250,000 Input/Output, Inc.* .............................. 1,890,625
20,000 Newmont Mining Corporation ....................... 397,500
100,000 Patterson Energy, Inc.* .......................... 987,500
75,000 Sante Fe Snyder Corporation* ..................... 571,875
-----------
5,376,563
-----------
ENVIRONMENTAL SERVICES -- 1.4%
12,400 GZA GeoEnvironmental Technologies, Inc.* ......... 62,000
65,000 Sevenson Environmental Services, Inc. ............ 755,625
-----------
817,625
-----------
FINANCE -- BANKING & THRIFTS -- 6.4%
9,375 Chemical Financial Corporation ................... 326,367
137,500 Ottawa Financial Corporation ..................... 2,956,250
30,000 Republic Bancorp Inc. ............................ 455,625
-----------
3,738,242
-----------
FINANCE -- INSURANCE -- 5.3%
70,000 Acceptance Insurance Companies Inc.* ............. 1,054,375
27,500 PICO Holdings, Inc.* ............................. 696,094
75,000 Queensway Financial Holdings Limited* ............ 354,718
100,000 Unico American Corporation ....................... 1,018,750
-----------
3,123,937
-----------
HEALTHCARE -- 9.7%
120,000 America Service Group Inc.* ...................... 1,830,000
20,000 Brookdale Living Communities, Inc.* .............. 296,250
15,000 HCR Manor Care, Inc.* ............................ 362,813
10,000 IMPATH Inc.* ..................................... 270,000
3
<PAGE>
SCHEDULE OF INVESTMENTS (continued)
================================================================================
Shares COMMON STOCK -- 85.2% Value
- --------------------------------------------------------------------------------
50,000 SteriGenics International, Inc.* ................. 1,318,750
65,000 STERIS Corporation* .............................. 1,259,375
10,000 Sunrise Assisted Living, Inc.* ................... 348,750
-----------
5,685,938
-----------
INDUSTRIAL PRODUCTS & SERVICES -- 5.7%
10,000 Crown Cork & Seal Company, Inc. .................. 285,000
20,000 Greif Bros. Corporation -- Class A ............... 510,000
50,000 Kaydon Corporation ............................... 1,681,250
50,000 Maritrans Inc. ................................... 281,250
25,000 United Dominion Industries Limited ............... 606,250
-----------
3,363,750
-----------
PRINTING & PUBLISHING -- 3.9%
200,000 Thomas Nelson, Inc. .............................. 2,225,000
465 The Detroit Legal News Company ................... 69,750
-----------
2,294,750
-----------
REAL ESTATE -- 2.9%
16,499 I. Gordon Realty Corporation* .................... 148,491
15 Lafourche Realty Company, Inc. ................... 96,000
94,000 Malan Realty Investors, Inc. ..................... 1,451,125
-----------
1,695,616
-----------
RETAIL -- 1.9%
100,000 Charming Shoppes, Inc.* .......................... 609,375
20,000 Miami Computer Supply Corporation* ............... 377,500
20,000 The Good Guys, Inc.* ............................. 150,000
-----------
1,136,875
-----------
TECHNOLOGY & ELECTRONICS -- 18.3%
15,000 Advanced Communication Systems, Inc.* ............ 205,312
242,200 Data Research Associates, Inc. ................... 2,512,825
30,000 LoJack Corporation* .............................. 251,250
45,000 Mechanical Dynamics, Inc.* ....................... 270,000
150,000 Perceptron, Inc.* ................................ 684,375
165,000 Rainbow Technologies, Inc.* ...................... 1,949,062
33,100 Security Dynamics Technologies, Inc.* ............ 703,375
139,900 SPSS Inc.* ....................................... 3,593,681
4
<PAGE>
SCHEDULE OF INVESTMENTS (continued)
================================================================================
Shares COMMON STOCK -- 85.2% Value
- --------------------------------------------------------------------------------
85,000 X-Rite, Incorporated ............................. 547,187
-----------
10,717,067
-----------
TRANSPORTATION -- 3.6%
10,000 Aviation Sales Company* .......................... 395,000
40,000 Providence & Worcester Railroad Company .......... 565,000
135,000 The Morgan Group, Inc. -- Class A ................ 1,181,250
-----------
2,141,250
-----------
TOTAL COMMON STOCK (Cost -- $41,682,536) ............. 50,011,876
-----------
PREFERRED STOCK -- 0.2% (Cost -- $132,739)
Telos Corporation, 12% Cumulative
35,000 Exchangable Preferred* ......................... 105,000
-----------
CLOSED-END FUNDS -- 2.9% (Cost -- $1,835,557)
350,000 Royce Focus Trust, Inc. .......................... 1,728,125
-----------
Face Amount Value
- ----------- -----
REPURCHASE AGREEMENTS((1)) -- 11.6% (Cost $6,779,549)
Fifth Third Bank, 4.10%, dated 6/30/99, due 7/01/99,
$6,779,549 repurchase proceeds: $6,780,321 ................ 6,779,549
-----------
TOTAL INVESTMENTS -- 99.9% (Cost $50,430,381) ........ 58,624,550
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% ........ 55,469
-----------
NET ASSETS -- 100.0% ................................. $58,680,019
===========
* Non-income producing security.
(1) Repurchase agreements are fully collateralized by U.S. Government
obligations.
See notes to financial statements.
5
<PAGE>
SCHWARTZ VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
================================================================================
ASSETS
Investments, at market value (cost of $50,430,381) (Note 1) .. $ 58,624,550
Cash ......................................................... 2,424
Receivable for securities sold ............................... 18,749
Receivable for capital shares sold ........................... 150,000
Dividends receivable ......................................... 80,995
Interest receivable .......................................... 772
Other assets ................................................. 13,738
------------
TOTAL ASSETS ............................................. 58,891,228
------------
LIABILITIES
Payable for capital shares redeemed .......................... 2,270
Accrued investment advisory fees (Note 2) .................... 205,283
Other accrued expenses and liabilities ....................... 3,656
------------
TOTAL LIABILITIES ........................................ 211,209
------------
NET ASSETS ................................................... $ 58,680,019
============
NET ASSETS CONSIST OF
Paid-in capital .............................................. $ 47,308,616
Accumulated net investment loss .............................. (160,119)
Accumulated net realized gains from security transactions .... 3,337,353
Net unrealized appreciation on investments ................... 8,194,169
------------
NET ASSETS ................................................... $ 58,680,019
============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ................. 2,601,541
============
Net asset value, redemption price, and
offering price per share ................................... $ 22.56
============
See notes to financial statements.
6
<PAGE>
SCHWARTZ VALUE FUND
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999 (Unaudited)
================================================================================
INVESTMENT INCOME
Dividends .................................................... $ 305,811
Interest ..................................................... 105,250
-----------
TOTAL INVESTMENT INCOME .................................... 411,061
-----------
EXPENSES
Investment advisory fees (Note 2) ............................ 430,027
Administration, accounting and transfer agent fees (Note 2) .. 60,368
Trustees' fees and expenses .................................. 37,140
Legal and audit fees ......................................... 20,507
Insurance expense ............................................ 10,063
Registration fees ............................................ 9,157
Other expenses ............................................... 3,918
-----------
TOTAL EXPENSES ............................................. 571,180
-----------
NET INVESTMENT LOSS ............................................ (160,119)
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains on investments ............................ 4,016,450
Net change in unrealized appreciation/depreciation
on investments ............................................. (1,458,707)
-----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ............... 2,557,743
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ..................... $ 2,397,624
===========
See notes to financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
SCHWARTZ VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Periods Ended June 30, 1999 and December 31, 1998
==========================================================================================
Six Months Ended Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
------------ ------------
FROM OPERATIONS
<S> <C> <C>
Net investment loss ................................... $ (160,119) $ (263,130)
Net realized gains (losses) on investments ............ 4,016,450 (542,124)
Net change in unrealized appreciation/depreciation
on investments ...................................... (1,458,707) (7,053,405)
------------ ------------
Net increase (decrease) in net assets from operations ... 2,397,624 (7,858,659)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............................ -- --
From net realized gains on investments ................ -- --
------------ ------------
Net decrease in net assets from distributions to
shareholders .......................................... -- --
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............................. 4,003,741 8,246,596
Payments for shares redeemed .......................... (10,418,775) (7,657,068)
------------ ------------
Net increase (decrease) in net assets from capital
share transactions .................................... (6,415,034) 589,528
------------ ------------
TOTAL DECREASE IN NET ASSETS ............................ (4,017,410) (7,269,131)
NET ASSETS
Beginning of period ................................... 62,697,429 69,966,560
------------ ------------
End of period ......................................... $ 58,680,019 $ 62,697,429
============ ============
ACCUMULATED NET INVESTMENT LOSS ......................... $ (160,119) $ --
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold ........................................... 186,994 344,319
Shares redeemed ....................................... (502,187) (343,575)
------------ ------------
Net increase (decrease) in shares outstanding ......... (315,193) 744
Shares outstanding, beginning of period ............... 2,916,734 2,915,990
------------ ------------
Shares outstanding, end of period ..................... 2,601,541 2,916,734
============ ============
</TABLE>
See notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
SCHWARTZ VALUE FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Six Months Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
June 30, 1999 Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Unaudited) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ............. $ 21.50 $ 23.99 $ 21.19 $ 19.66 $ 18.12 $ 20.97
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) ..................... (0.06) (0.09) 0.06 (0.02) (0.03) (0.05)
Net realized and unrealized gains (losses) on
investments .................................... 1.12 (2.40) 5.88 3.61 3.09 (1.37)
------- ------- ------- ------- ------- -------
Total from investment operations ................... 1.06 (2.49) 5.94 3.59 3.06 (1.42)
------- ------- ------- ------- ------- -------
Less distributions:
From net investment income ....................... -- -- (0.06) -- -- --
From net realized gains on investments ........... -- -- (3.03) (2.06) (1.52) (1.36)
In excess of net realized gains on investments ... -- -- (0.05) -- -- (0.07)
------- ------- ------- ------- ------- -------
Total distributions ................................ -- -- (3.14) (2.06) (1.52) (1.43)
------- ------- ------- ------- ------- -------
Net asset value at end of period ................... $ 22.56 $ 21.50 $ 23.99 $ 21.19 $ 19.66 $ 18.12
======= ======= ======= ======= ======= =======
Total return ....................................... 4.9%(A) (10.4)% 28.0% 18.3% 16.9% (6.8)%
======= ======= ======= ======= ======= =======
Ratios/Supplementary Data:
Ratio of expenses to average net assets ............ 1.99%(B) 1.94% 1.91% 1.97% 2.00% 2.01%
Ratio of net investment income (loss) to average net
assets ........................................... (0.56)%(B) (0.39)% 0.24% (0.08)% (0.18)% (0.36)%
Portfolio turnover rate ............................ 55%(B) 54% 47% 50% 70% 78%
Net assets at end of period (000's) ................ $58,680 $62,697 $69,967 $55,105 $53,137 $45,097
</TABLE>
- ----------------
(A) Not annualized.
(B) Annualized.
9
<PAGE>
SCHWARTZ VALUE FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 (Unaudited)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Schwartz Value Fund (the Fund) is a series of Schwartz Investment Trust, a
diversified open-end management investment company established as an Ohio
Business Trust under a Declaration of Trust dated August 31, 1992. The Fund is
registered under the Investment Company Act of 1940 and commenced operations on
July 20, 1993. The Fund determines and makes available for publication the net
asset value of its shares on a daily basis.
The investment objective of the Fund is to seek long-term capital appreciation
through investment primarily in small cap value stocks. This investment in
stocks, by definition, entails the risk of loss of capital to shareholders. See
the Prospectus for more detailed information regarding the investment objectives
of the Fund.
The following is a summary of significant accounting policies followed by the
Fund:
(a) VALUATION OF INVESTMENTS -- Securities which are traded on stock
exchanges or are quoted by NASDAQ are valued at the last reported sale
price as of the close of business on the day of valuation, or, if not
traded on a particular day, at the average of the highest current
independent bid and lowest current independent offer; securities traded in
the over-the-counter market, not quoted by NASDAQ, are valued at the
average of the highest current independent bid and lowest current
independent offer as of the close of trading on the day of valuation; and
securities (and other assets) for which market quotations are not readily
available are valued at their fair market value as determined in good faith
pursuant to procedures established by the Board of Trustees. Short-term
securities are valued at amortized cost, which approximates market value.
(b) INCOME TAXES -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to distribute substantially all taxable income to the shareholders.
Therefore, no provision for income or excise taxes is necessary.
The Fund files a tax return annually using tax accounting methods required
under provisions of the Code, which may differ from generally accepted
accounting principles (GAAP), the basis on which these financial statements
are prepared. The differences arise primarily from the deferral of certain
losses under Federal income tax regulations. Accordingly, the amount of net
investment income or loss and net realized capital gain or loss reported in
the financial statements may differ from that reported in the Fund's tax
return and, consequently, the character of distributions to shareholders
reported in the statements of changes and financial highlights may differ
from that reported to shareholders for Federal income tax purposes.
Distributions which exceed net realized gains for financial reporting
purposes but not for tax purposes, if any, are shown as distributions in
excess of net realized gains in the accompanying statements. Net investment
losses, for tax purposes, are reclassified to paid-in capital.
(c) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions
are accounted for on the trade date. Dividend income is recorded on the
ex-dividend date. Interest income is recognized on the accrual basis.
Realized gains and losses on security transactions are determined on the
identified cost basis. Discounts and premiums on securities purchased are
amortized in accordance with income tax regulations which approximate GAAP.
10
<PAGE>
(d) DIVIDENDS AND DISTRIBUTIONS -- Dividends from net investment income and
net capital gains, if any, are declared and paid annually in December.
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
(e) REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements
(agreements to purchase securities subject to the seller's agreement to
repurchase them at a specified time and price) with well-established
registered securities dealers or banks. Repurchase agreements are the
equivalent of loans by the Fund. The Fund's policy is to take possession of
the underlying securities and, on a daily basis, mark to market such
securities to ensure that the value, including accrued interest, is at
least equal to the amount to be repaid to the Fund under the agreement.
(f) ESTIMATES -- The preparation of financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES
The President of the Fund is also the President and Chief Investment Officer of
Schwartz Investment Counsel, Inc. (the Adviser). The Chairman of the Board of
the Fund is also the President and CEO of Gregory J. Schwartz & Co., Inc. (the
Distributor). Certain other trustees and officers of the Fund are officers of
the Adviser or of Countrywide Fund Services, Inc. (CFS), the administrative,
accounting and transfer agent for the Fund. The Distributor is the primary agent
for the distribution of the Fund and receives fees from the Adviser, not the
Fund or its shareholders.
Pursuant to an Investment Advisory Agreement between the Fund and the Adviser,
the Adviser is responsible for the management of the Fund and provides
investment advice along with the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund. For such
services, the Fund pays the Adviser a quarterly fee equal to the annual rate of
1.5% of average daily net assets up to $75 million; 1.25% of such assets from
$75 million to $100 million; and 1% of such assets in excess of $100 million.
Pursuant to an Administration, Accounting and Transfer Agency Agreement between
the Fund and CFS, CFS supplies regulatory and compliance services, calculates
the daily net asset value per share, maintains the financial books and records
of the Fund, maintains the records of each shareholder's account, and processes
purchases and redemptions of the Fund's shares. For the performance of these
services, the Fund pays CFS a fee, payable monthly, at an annual rate of 0.22%
of average daily net assets up to $25 million; 0.20% of such assets from $25
million to $100 million; and 0.15% of such assets in excess of $100 million.
3. INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales and maturities of investments, other
than short-term investments, for the six months ended June 30, 1999, were
$14,828,316 and $26,862,244, respectively.
4. FEDERAL INCOME TAXES
As of June 30, 1999, net unrealized appreciation of securities was $7,944,172
for federal income tax purposes of which $11,250,871 related to appreciated
securities and $3,306,699 related to depreciated securities. The aggregate cost
of investments at June 30, 1999 for federal income tax purposes was $50,680,378.
At December 31, 1998, the Fund had a capital loss carryforward of $18,170 for
federal income tax purposes, expiring December 31, 2006. This carryforward is
available to offset future capital gains, if any.
11
<PAGE>
SCHWARTZ VALUE FUND
a series of
Schwartz Investment Trust
3707 W. Maple Road
Bloomfield Hills, Michigan 48301
(248) 644-8500
BOARD OF TRUSTEES
Donald J. Dawson, Jr.
Fred A. Erb
John J. McHale
Sidney F. McKenna
George P. Schwartz, CFA
Gregory J. Schwartz
OFFICERS
Gregory J. Schwartz, Chairman of the Board
George P. Schwartz, CFA, President
Richard L. Platte, Jr., CFA, V.P./Secretary/Treasurer
Tina D. Hosking, Assistant Secretary
Brian J. Manley, Assistant Secretary
Robert L. Bennett, Assistant Treasurer
INVESTMENT ADVISER
SCHWARTZ INVESTMENT COUNSEL, INC.
3707 W. Maple Road
Bloomfield Hills, Michigan 48301
DISTRIBUTOR
GREGORY J. SCHWARTZ & CO., INC.
3707 W. Maple Road
Bloomfield Hills, Michigan 48301
CUSTODIAN
FIFTH THIRD BANK
38 Fountain Square Plaza
Cincinnati, Ohio 45263
ADMINISTRATOR
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
AUDITORS
DELOITTE & TOUCHE LLP
1700 Courthouse Plaza Northeast
Dayton, Ohio 45402
LEGAL COUNSEL
SULLIVAN & WORCESTER LLP
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
SCHWARTZ VALUE FUND is a 100% no-load diversified investment company (a mutual
fund). The investment objective is long-term capital appreciation.
