N-30D 1 j_cmf-se.txt JACOBS & COMPANY JACOBS & COMPANY MUTUAL FUND TICKER SYMBOL: JACOX CUSIP: 007 989 775 SHAREHOLDER SERVICES TOLL FREE (877) 560-6823 SEMI-ANNUAL REPORT JULY 31, 2002 JACOBS & COMPANY MUTUAL FUND SCHEDULE OF INVESTMENTS AT JULY 31, 2002 (UNAUDITED) Shares COMMON STOCKS: 57.3% Market Value ------ -------------------- ------------ AEROSPACE/DEFENSE: 11.6% 13,500 The Boeing Co. # $ 560,520 9,400 United Technologies Corp. # 653,300 ----------- 1,213,820 ----------- AUTOMOBILES: 0.4% 3,000 Ford Motor Co. 40,410 ----------- AIR TRANSPORT: 0.5% 1,000 FedEx Corp. # 50,950 ----------- CHEMICAL (BASIC): 2.0% 5,000 E. I. du Pont de Nemours and Co. # 209,550 ----------- COMPUTER SYSTEMS (DIVERSIFIED): 7.0% 17,000 Hewlett-Packard Co. 240,550 7,000 International Business Machines Corp. # 492,800 ----------- 733,350 ----------- FINANCE: 2.7% 8,000 American Express Co. 282,080 ----------- FOOD (MISCELLANEOUS): 6.3% 26,500 ConAgra Foods, Inc. # 665,415 ----------- MANUFACTURING: 6.3% 3,700 3M Co. # 465,571 6,000 General Electric Co. # 193,200 ----------- 658,771 ----------- PETROLEUM (INTEGRATED): 8.3% 3,000 Amerada Hess Corp. 205,200 3,300 Exxon Mobil Corp.* 121,308 17,000 Marathon Oil Corp. 412,080 2,500 Phillips Petroleum Co.* 129,375 ----------- 867,963 ----------- PHARMACEUTICALS: 3.8% 4,000 Merck & Co., Inc. 198,400 8,000 Schering-Plough Corp. 204,000 ----------- 402,400 ----------- SEMICONDUCTOR: 2.4% 13,600 Intel Corp. # 255,544 ----------- TELECOMMUNICATION SERVICES: 6.0% 9,931 AT&T Wireless Services, Inc.* 46,576 14,400 BellSouth Corp. 386,640 6,000 Verizon Communications, Inc. 198,000 ----------- 631,216 ----------- TOTAL COMMON STOCKS (Cost $7,205,827) 6,011,469 ----------- PREFERRED STOCKS: 19.2% ------------------------ FINANCIAL SERVICES 18,300 City Holding Capital Trust II 448,350 5,000 Corts-TR Verizon Global, 7.375%, 12/01/30 Series 123,000 13,500 Ford Motor Co. Capital Trust II, 6.50%, 1/15/32 Series 685,125 18,000 General Motors, 5.25%, 3/6/32 Series B 439,200 10,000 Saturns-AWE, 9.25%, 3/1/31 Series 194,000 5,000 Sears Roebuck, 7.00%, 7/15/42 Series 123,300 ----------- TOTAL PREFERRED STOCKS (Cost $2,063,442) 2,012,975 ----------- Principal Amount U.S. GOVERNMENT AGENCY: 4.7% --------- ----------------------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION $178,144 6.00%, 1/15/24 182,175 300,000 6.50%, 7/15/32 309,760 Shares ------ 14,728 Government Securities Income Fund Unit, Series 1C-GNMA 611 ----------- TOTAL U.S. GOVERNMENT AGENCY (Cost $487,604) 492,546 ----------- Principal U.S. GOVERNMENT Amount OBLIGATION BONDS: 1.8% --------- ---------------------- $177,866 U.S. Government Treasury Inflation Index, 3.625%, 4/15/28 193,762 ----------- TOTAL U.S. GOVERNMENT OBLIGATION BONDS (Cost $188,644) 193,762 ----------- Shares CORPORATE BONDS: 0.9% ------ ---------------------- SHIPPING 100,000 Sea Containers Ltd., 12.50%, 12/1/2004 96,000 ----------- TOTAL CORPORATE BONDS (Cost $72,159) 96,000 ----------- Contracts PUT OPTIONS PURCHASED: 0.2% --------- ---------------------------- DOW JONES INDUSTRIAL AVERAGE INDEX 100 Expiration September 2002, Exercise Price $76.00 12,000 100 Expiration September 2002, Exercise Price $78.00 11,500 ----------- TOTAL PUT OPTIONS PURCHASED (Cost $80,207) 23,500 ----------- Shares SHORT-TERM INVESTMENTS: 14.3% ------ ------------------------------ 1 Federated Cash Trust Series II Treasury (Cost $1) 1 1,500,000 US Treasury Bill (Cost $1,499,516) 1,499,516 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $1,499,517) 1,499,517 ----------- Total Investments in Securities (Cost $11,597,400): 98.4% 10,329,769 Call Options Written: (1.9%) (195,450) Other Assets in excess of Liabilities: 3.5% 366,279 ----------- Net Assets: 100.0% $10,500,598 ----------- ----------- * Non-income producing security. # Security is subject to written call option. See Notes to Financial Statements. SCHEDULE OF CALL OPTIONS WRITTEN AT JULY 31, 2002 (UNAUDITED) Contracts Underlying Security/Expiration Date/Exercise Price Market Value --------- -------------------------------------------------- ------------ ConAgra Foods, Inc. 100 Expiration September 2002, Exercise Price $25.00 $ (10,000) 165 Expiration December 2002, Exercise Price $25.00 (28,050) E. I. du Pont de Nemours and Co. 50 Expiration January 2003, Exercise Price $45.00 (10,500) FedEx Corp. 10 Expiration January 2003, Exercise Price $55.00 (3,100) General Electric Co. 60 Expiration January 2003, Exercise Price $32.50 (16,800) Intel Corp. 50 Expiration January 2003, Exercise Price $20.00 (10,750) 50 Expiration January 2003, Exercise Price $22.50 (6,500) International Business Machines Corp. 70 Expiration October 2002, Exercise Price $75.00 (22,400) 3M Co. 13 Expiration October 2002, Exercise Price $115.00 (19,500) 24 Expiration October 2002, Exercise Price $120.00 (27,360) The Boeing Co. 67 Expiration November 2002, Exercise Price $45.00 (11,390) 68 Expiration November 2002, Exercise Price $47.50 (7,480) United Technologies Corp. 94 Expiration November 2002, Exercise Price $75.00 (21,620) --------- Total Call Options Written (proceeds $166,412) $(195,450) --------- --------- See Notes to Financial Statements. STATEMENT OF ASSETS AND LIABILITIES AT JULY 31, 2002 (UNAUDITED) ASSETS Investments in securities, at value (identified cost $11,597,400) $10,329,769 Cash 77,342 Receivables Dividends and interest 22,509 Due from Advisor 8,132 Prepaid expenses 6,110 Other Assets 291,000 ----------- Total assets 10,734,862 ----------- LIABILITIES Call options written, at value (proceeds $166,412) 195,450 Payables Administration fees 3,058 Distribution fees 4,534 Other accrued expenses 31,222 ----------- Total liabilities 234,264 ----------- NET ASSETS $10,500,598 ----------- ----------- Net asset value, offering and redemption price per share [$10,500,598 / 1,076,399 shares outstanding; unlimited number of shares (par value $0.01) authorized] $9.76 ----- ----- COMPONENTS OF NET ASSETS Paid-in capital $10,728,180 Undistributed net investment income 98,587 Accumulated net realized gain on investments 970,500 Net unrealized appreciation (depreciation) of: Investments (1,267,631) Options written (29,038) ----------- NET ASSETS $10,500,598 ----------- ----------- See Notes to Financial Statements. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JULY 31, 2002 (UNAUDITED) INVESTMENT INCOME Income Dividends $ 115,859 Interest 71,018 ----------- Total income 186,877 ----------- Expenses Advisory fees (Note 3) 51,653 Custody fees 23,436 Fund accounting fees 19,541 Administration fees (Note 3) 17,852 12B-1 fees (Note 4) 12,913 Audit fees 11,259 Transfer agent fees 7,377 Legal fees 5,801 Directors fees 5,665 Other 3,070 Registration fees 2,694 Shareholder reporting 973 ----------- Total expenses 162,234 Less: advisory fee waiver (Note 3) (58,928) ----------- Net expenses 103,306 ----------- NET INVESTMENT INCOME 83,571 ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from security transactions 861,484 Net change in unrealized depreciation on investments (1,420,301) ----------- Net realized and unrealized loss on investments (558,817) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (475,246) ----------- ----------- See Notes to Financial Statements. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended June 11, 2001* July 31, 2002 through (Unaudited) January 31, 2002 ------------- ---------------- INCREASE IN NET ASSETS FROM: OPERATIONS Net investment income $ 83,571 $ 61,511 Net realized gain on security transactions 861,484 153,753 Net change in unrealized (depreciation) appreciation on investments (1,420,301) 123,633 ----------- ---------- NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS (475,246) 338,897 ----------- ---------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income -- (66,565) From net realized gain -- (24,668) ----------- ---------- TOTAL DIVIDENDS AND DISTRIBUTION TO SHAREHOLDERS -- (91,233) ----------- ---------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Net increase in net assets derived from net change in outstanding shares (a) 1,044,588 9,683,592 ----------- ---------- TOTAL INCREASE IN NET ASSETS 569,342 9,931,256 NET ASSETS Beginning of period 9,931,256 0 ----------- ---------- END OF PERIOD $10,500,598 $9,931,256 ----------- ---------- ----------- ----------
(a) A summary of share transactions is as follows: Six Months Ended June 11, 2001* July 31, 2002 through (Unaudited) January 31, 2002 ------------------------ ------------------------- Shares Paid in Capital Shares Paid in Capital ------ --------------- ------ --------------- Shares sold 196,479 $1,979,155 1,002,896 $9,964,113 Shares issued for reinvestment of dividends and distributions 0 0 8,999 91,160 Shares redeemed (95,190) (934,567) (36,785) (371,681) ------- ---------- --------- ---------- Net increase 101,289 $1,044,588 975,110 $9,683,592 ------- ---------- --------- ---------- ------- ---------- --------- ----------
* Commencement of operations. See Notes to Financial Statements. FINANCIAL HIGHLIGHTS - FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD Six Months June 11, 2001* Ended through July 31, 2002 January 31, (Unaudited) 2002 ------------- ----------- Net asset value, beginning of period $10.18 $10.00 ------ ------ Income from investment operations: Net investment income 0.08 0.06 Net realized and unrealized (loss) gain on investments (0.50) 0.21 ------ ------ Total from investment operations (0.42) 0.27 ------ ------ Less Distributions: From net investment income 0.00 (0.07) From net realized gain on investments 0.00 (0.02) ------ ------ Total distributions 0.00 (0.09) ------ ------ Net asset value, end of period $ 9.76 $10.18 ------ ------ ------ ------ TOTAL RETURN (4.13%)+ 2.74%+ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $10,501 $9,931 Ratio of expenses to average net assets: Before expense reimbursement 3.14%** 5.96%** After expense reimbursement 2.00%** 2.00%** Ratio of net investment income to average net assets After expense reimbursement 1.62%** 1.57%** Portfolio turnover rate 67.0% 49.7% * Commencement of operations. + Not Annualized. ** Annualized. See Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS AT JULY 31, 2002 (UNAUDITED) NOTE 1 - ORGANIZATION The Jacobs & Company Mutual Fund (the "Fund") is a series of shares of beneficial interest of the Advisors Series Trust (the "Trust") which is registered under the Investment Company Act of 1940 (the "1940 Act") as a diversified open-end management investment company. The Fund commenced operations on June 11, 2001. The investment objective of the Fund is to seek a combination of current income and growth of capital, consistent with preservation of capital. The Fund seeks to achieve its objective by investing in equity securities of large-capitalization domestic companies that the Advisor believes to be of high-quality, based on its analysis of factors such as potential earnings growth, strength of management, product development and dividend history and fixed income securities. Covered call options written on equity securities to enhance total return and provide additional protection during corrections and consolidations in the equity markets. In selecting fixed-income securities, the Advisor seeks safety of principal, monthly cash flows and above-average yield, with a sensitivity to risk. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America. A. Securities Valuation. Securities traded on a national exchange or Nasdaq are valued at the last reported sale price at the close of regular trading on the last business day of the period; securities traded on an exchange or Nasdaq for which there have been no sales, and other over- the-counter securities, are valued at the mean between the last reported bid and asked prices. Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees. Short-term investments are stated at cost which, when combined with accrued interest, approximates market value. The Fund was invested in non-institutional lots of GNMA securities during the six months ended July 31, 2002, though non were held at July 31, 2002. Prices of GNMA securities are quoted by pricing services based on the institutional market, however sales of these securities in the odd-lot market could not be effected at institutional prices. As a result, the Fund had estimated the fair value of non-institutional GNMA securities using procedures adopted by the Board of Trustees. B. Federal 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 of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. Securities Transactions, Dividend Income and Distributions. Securities transactions are accounted for on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. Discounts and premiums on securities purchased are amortized over the life of the respective security. Paydown gains and losses on mortgage backed securities are recorded as adjustments to interest income. Dividend income and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions to shareholders from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations which differs from accounting principles generally accepted in the United States of America. To the extent these book/tax differences are permanent such amounts are reclassified within the capital accounts based on their federal tax treatment. D. Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets during the reporting period. Actual results could differ from those estimates. E. Options Transactions. The Fund may write call options only if it (i) owns an offsetting position in the underlying security or (ii) maintains cash or other liquid assets in an amount equal to or greater than its obligation under the option. When the Fund writes a call option, an amount equal to the premium received is included in the statement of assets and liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. If an option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security and the proceeds from the sale are increased by the premium originally received. As writer of an option, the Fund has no control over whether the underlying securities are subsequently sold (called) and, as a result, retains the market risk of an unfavorable change in the price of the security underlying the written option. The Fund may purchase put and call options. Put options are purchased to hedge against a decline in the value of securities held in the Fund's portfolio. If such a decline occurs, the put options will permit the Fund to sell the securities underlying such options at the exercise price, or to close out the options at a profit. The premium paid for a put or call option plus any transaction costs will reduce the benefit, if any, realized by the Fund upon exercise of the option, and, unless the price of the underlying security rises or declines sufficiently, the option may expire worthless to the Fund. In addition, in the event that the price of the security in connection with which an option was purchased moves in a direction favorable to the Fund, the benefits realized by the Fund as a result of such favorable to the Fund, the benefits realized by the Fund as a result of such favorable movement will be reduced by the amount of the premium paid for the option and related transaction costs. Written and purchased options are non-income producing securities. NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS Jacobs & Company (the "Advisor") provides the Fund with investment management services under an Investment Advisory Agreement (the "Agreement"). Under the Agreement the Advisor furnishes all investment advice, office space, facilities, and most of the personnel needed by the Fund. As compensation for its services, the Advisor receives a monthly fee at the annual rate of 1.00% of the Fund's average daily net assets. For the six months ended July 31, 2002, the Fund incurred $51,653 in advisory fees. The Fund is responsible for its own operating expenses. The Advisor has contractually agreed to limit the Fund's total operating expenses by reducing all or a portion of its fees and reimbursing the Fund's expenses, for an indefinite period, so that its ratio of expenses to average net assets will not exceed 2.00%. In the case of the Fund's initial period of operations any fee withheld or voluntarily reduced and/or any Fund expense absorbed by the Advisor pursuant to an agreed upon expense cap shall be reimbursed by the Fund to the Advisor, if so requested by the Advisor, anytime before the end of the fifth fiscal year following the year to which the fee waiver and/or expense absorption relates, provided the aggregate amount of the Fund's current operating expenses for such fiscal year does not exceed the applicable limitation on Fund expenses. For the six months ended July 31, 2002, the Advisor absorbed expenses of $58,928. The Fund must pay its current ordinary operating expenses before the Advisor is entitled to any reimbursement of fees and/or expenses. Any such reimbursement is also contingent upon Board of Trustees review and approval prior to the time the reimbursement is initiated. Cumulative expenses subject to recapture expire are as follows: Year Amount ---- ------ 2007 $124,518 2008 $ 58,928 U.S. Bancorp Fund Services, L.L.C. (the "Administrator") acts as the Fund's administrator under an Administration Agreement. The Administrator prepares various federal and state regulatory filings, reports and returns; prepares reports and materials to be supplied to the trustees; monitors the activities of the Fund's custodian, transfer agent and accountant; coordinates the preparation and payment of Fund expenses and reviews the Fund's expense accruals. For its services, the Administrator receives a monthly fee at the following annual rates: Fund Asset Level Fee rate ---------------- -------- Less than $24 million $36,000 $24 to $100 million 0.15% of average daily net assets $100 to $150 million 0.10% of average daily net assets More than $150 million 0.05% of average daily net assets For the six months ended July 31, 2002, the Fund incurred $17,852 in administration fees. U.S. Bancorp Fund Services, L.L.C. provides fund accounting and transfer agency services for the Fund. Quasar Distributors, L.L.C. (the "Distributor") acts as the Fund's principal underwriter in a continuous public offering of the Fund's shares. The Distributor is an affiliate of the Administrator. Certain officers of the Trust are officers of the Administrator and the Distributor. NOTE 4 - DISTRIBUTION COSTS The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 (the "Plan"). The Plan permits the Fund to pay for distribution and related expenses at an annual rate of up to 0.25% of the Fund's average daily net assets annually. The expenses covered by the Plan may include the cost of preparing and distributing prospectuses and other sales material, advertising and public relations expenses, payments to financial intermediaries and compensation of personnel to the Plan will represent compensation for distribution and service activities, not reimbursements for specific expenses incurred. Pursuant to a distribution coordination agreement adopted under the Plan, distribution fees are paid to the Advisor as "Distribution Coordinator". For the six months ended July 31, 2002, the Fund paid the Distribution Coordinator $12,913. NOTE 5 - OPTION CONTRACTS WRITTEN The number of option contracts written and the premiums received by the Jacob & Company Mutual Fund during the six months ended July 31, 2002, were as follows: NUMBER OF CONTRACTS PREMIUMS RECEIVED ------------------- ----------------- Options outstanding, beginning of period 700 $143,094 Options written 3,140 687,410 Options exercised (73) (15,289) Options expired (405) (82,821) Options closed (2,541) (565,982) ------ -------- Options outstanding, end of period 821 $166,412 ------ -------- ------ -------- NOTE 6 - PURCHASES AND SALES OF SECURITIES During the six months ended July 31, 2002, the aggregate purchases and sales of securities (excluding short-term investments) were: PURCHASES SALES --------- ----- Long Transactions $6,502,757 $5,792,480 NOTE 7 - INCOME TAXES At July 31, 2002, gross unrealized depreciation of investments for tax purposes were as follows: Appreciation $ 373,973 Depreciation (1,511,887) ----------- Net unrealized depreciation on investments $(1,137,914) ----------- ----------- At July 31, 2002, the cost of investments for federal income tax purposes was $11,467,683. ADVISOR Jacobs & Company 300 Summers Street, Suite 970 Charleston, WV 25301 DISTRIBUTOR Quasar Distributors, LLC 615 E. Michigan St., 2nd Floor Milwaukee, WI 53202 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street Cincinnati, OH 45202 TRANSFER AGENT U.S. Bancorp Fund Services, LLC 615 E. Michigan St., 2nd Floor Milwaukee, WI 53202 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker, LLP 555 South Flower Street Los Angeles, CA 90071 INDEPENDENT PUBLIC ACCOUNTANTS PricewaterhouseCoopers, LLP 1177 Avenue of Americas New York, NY 10036 This report is intended for the shareholders of the Fund and may not be used as sales literature unless preceded or accompanied by a current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Share price and returns will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are dated and are subject to change.