-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BG3mwGuRqlOkAzfrNLDcx6s4SmZgaK0fRGMiErivAYHdw6Jg/x7E/V0Cfg508nxP vZTHk+bw5kI/gNjFdi3MeQ== 0000898531-03-000130.txt : 20030317 0000898531-03-000130.hdr.sgml : 20030317 20030317130520 ACCESSION NUMBER: 0000898531-03-000130 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030317 EFFECTIVENESS DATE: 20030317 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVISORS SERIES TRUST CENTRAL INDEX KEY: 0001027596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07959 FILM NUMBER: 03605450 BUSINESS ADDRESS: STREET 1: U.S BANCORP FUND SERVICES, LLC STREET 2: 615 E MICHIGAN STREET CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4147655335 MAIL ADDRESS: STREET 1: 615 E MICHIGAN STREET STREET 2: SUITE 2 CITY: MILWAUKEE STATE: WI ZIP: 53202 N-30D 1 mcf-se.txt MCCARTHY FUND (MGAMX) (MCCARTHY FUND LOGO) Semi-Annual Report December 31, 2002 (Unaudited) MCCARTHY FUND A SERIES OF TRUST FOR INVESTMENT MANAGERS (MGAMX) SEMI-ANNUAL REPORT ENDED DECEMBER 31, 2002 Dear Fellow Shareholder: The McCarthy Fund's performance for various periods ended December 31, 2002 and the performance for the Standard & Poor's 500 Index are shown below: TIME MCCARTHY STANDARD & POOR'S RELATIVE PERIOD FUND 500 INDEX PERFORMANCE ------ -------- ---------------- ----------- Six months ended December 31, 2002 (4.67)% (10.30)% +5.63% Year ended December 31, 2002 (25.12)% (22.09)% (3.03)% Annualized from August 6, 2001 inception (16.39)% (18.63)% +2.24% The U.S. stock market indices were down for a third straight year. This was the first three-year decline since the World War II years of 1939-1941. The McCarthy Fund declined 4.67% for the six months ended December 31, 2002. For comparison, the Standard & Poor's 500 stock index declined by 10.30%. For calendar year 2002, the Fund declined more than the Standard & Poor's 500 stock index. The Fund's out-performance over the last six months has moved the Fund performance ahead of the Index performance since inception. As fellow shareholders we are not pleased with negative returns - even for short time periods. That said our time horizon for stock investments is three to five years. We consider the current environment favorable for accumulating good companies at reasonable prices. We remain confident in our investment process and are optimistic about the performance prospects for the McCarthy Fund portfolio. ARE STOCKS CHEAP OR EXPENSIVE? Our investment process focuses on the valuation of individual companies rather than the valuation of the market. We invest in individual companies - not the market. Further, like a main street businessperson, we believe that a company is worth the value of the cash flow that it can generate for the benefit of its owners. Quantifying the cash flow is an art that we feel is necessary in determining the value of a company and its stock. We utilize multiple scenarios for estimating the future cash flow generation potential of a company. As we review current Wall Street earnings and cash flow estimates for companies we own, we observe that analysts have turned extremely conservative. Their conservatism stands in contrast to their aggressive outlook for earnings toward the stock market peak in early 2000. When we value a company based on cash flows from Wall Street consensus estimates, we may find a company slightly undervalued or fairly valued. If we use our estimate of normalized earnings and cash flow, we may find the same company 40% or more undervalued. There's the rub! Many stocks are compelling values if the economic environment improves and the companies perform in line with their sustainable growth capabilities. If the economy does not improve, the valuation of those companies may not improve for some time. So, are stocks cheap or expensive? We believe that an investor with a three to five year investment time horizon will be pleased with stock purchases made at the current time. We exercise discipline in making stock purchases. Although we find many compelling values, pockets of over-valuation continue to exist. Several of the largest market capitalization companies exhibit this over- valuation. In our last report we discussed three stocks that had hurt portfolio performance in the first six months of 2002. We are pleased to report that those stocks (Liberty Media, Tyco International and Qwest Communications) each out-performed the market over the last six months of 2002. Liberty Media was down 9.24% ($9.84-$8.94) while the Standard & Poor's 500 Index lost 10.30% for the six months ended December 31, 2002. Tyco International and Qwest Communications rose 26% ($13.51-$17.08) and 78% ($2.80-$5.00) respectively from very depressed price levels. New additions to the McCarthy Fund portfolio included Kroger Co. and Safeway, Inc. Both are food retailers that should benefit from an improving economy yet provide defensive characteristics if the economy remains weak. Also added to the portfolio were several smaller capitalization companies including Insituform Technologies, Shaw Group Inc., Advent Software Inc., Applebee's International Inc., Convergys Corp., Insight Communications Co., NCO Group Inc. and Intrado Inc. Eliminations from the McCarthy Fund portfolio, due to valuation, included Energizer Holdings Inc., Sybase Inc., ChevronTexaco Corp., Dean Foods Co., McCormick & Co., Johnson & Johnson, Freddie Mac and H & R Block. Eliminations because we judged that risk exceeded reward or that fundamentals were deteriorating included Global Imaging Systems, PerkinElmer Inc., Adobe Systems Inc., Brooktrout, Inc. and TeeKay Shipping Corp. Thank you again for joining the Adviser's affiliated companies, our employees and our families as shareholders of the Fund. A significant percentage of the Fund's assets represent investments by our affiliates. The portfolio manager has invested, and continues to invest, his personal money, including all of his retirement assets, in the Fund. We stress to you, as a fellow shareholder, that we do not invest our own money like the McCarthy Fund; we invest our money in ---- -- the McCarthy Fund. We believe our investment in the Fund properly aligns our interests with yours. The companies that comprise the Fund's top ten holdings are listed on the following page. Thank you again for being our partners in the McCarthy Fund! Sincerely, McCarthy Group Asset Management, Inc. Richard L. Jarvis Art N. Burtscher Chairman - Chief Investment Officer President PAST PERFORMANCE OF THE FUND AND THE S&P 500 INDEX IS NOT INDICATIVE OF FUTURE PERFORMANCE. The 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 the original investment. The S&P 500 Index is an unmanaged capitalization- weighted index of 500 stocks designed to represent the broad domestic economy. Indexes are not available for direct investment and do not incur expenses. Fund sector allocations and portfolio holdings are subject to change and are not recommendations to buy or sell any security. The information contained in this report is authorized for use when proceeded or accompanied by a prospectus for the McCarthy Fund, which includes more complete information on the risks, charges and expenses related to an ongoing investment in the Fund. Please read the prospectus carefully before you invest or send money. The Fund is distributed by Quasar Distributors, LLC. 02/03 TEN LARGEST HOLDINGS (REPRESENT 38.4% OF NET ASSETS AT DECEMBER 31, 2002) LIBERTY MEDIA CORP CL A (L) 8.4% Holding company with subsidiaries and investments operating in the media, communications and entertainment industries. Brands and investments include Encore, STARZ!, Discovery, TV Guide, Fox, USA, QVC, AOL, CNN, TBS, Motorola and Sprint PCS. TYCO INTERNATIONAL LTD. (TYC) 4.9% Diversified manufacturing and service company that provides electrical and electronic components, energy solutions and power products; operates and maintains undersea cable communications systems; installs and services fire detection and suppression systems; provides electronic security systems; specialty valves; and disposable medical supplies and other specialty products. WASHINGTON MUTUAL, INC. (WM) 4.6% Financial services company that serves consumers and small to mid-sized businesses. Through its subsidiaries, Washington Mutual engages in consumer banking, mortgage banking, commercial banking, financial services and consumer finance. AOL TIME WARNER (AOL) 3.6% Diversified media and communications company. Business segments consist of America Online (internet), Cable Television, Filmed Entertainment, Networks, Music, and Publishing. CITIZENS COMMUNICATIONS CO. (CZN) 3.5% Telecommunications company providing wireline communications services to rural areas and small and medium-sized towns and cities, including the Rochester, New York, metropolitan area, as an incumbent local exchange carrier. APOGENT TECHNOLOGIES, INC. (AOT) 3.1% Designs, manufactures and markets value-added laboratory and life science products for the clinical, research and industrial markets worldwide. IMS HEALTH, INC. (RX) 2.8% Provider of information solutions to the healthcare and pharmaceuticals industries, as well as a provider of solutions for software development and e- business maintenance. WASTE MANAGEMENT, INC. (WMI) 2.8% World's largest provider of solid waste services such as collection, transfer, disposal and recycling. COMVERSE TECHNOLOGY (CMVT) 2.4% Designs, develops, manufactures, markets and supports computer and telecommunications systems and software for multimedia communications and information processing applications. REPUBLIC SERVICES, INC. (RSG) 2.3% U.S. provider of non-hazardous solid waste services such as collection, transfer, disposal and recycling. Portfolio holdings are as of December 31, 2002, are subject to change at any time and are not recommendations to buy or sell any security. SCHEDULE OF INVESTMENTS AT DECEMBER 31, 2002 (UNAUDITED) SHARES COMMON STOCKS: 94.17% MARKET VALUE ------ --------------------- ------------ ADVERTISING SERVICES: 0.74% 6,435 R.H. Donnelley Corp.* $ 188,610 ----------- BANKS: 5.35% 8,801 U.S. Bancorp 186,757 33,988 Washington Mutual, Inc. 1,173,606 ----------- 1,360,363 ----------- BROADCAST SERVICE/PROGRAM: 8.35% 237,440 Liberty Media Corp. - Class A* 2,122,714 ----------- BUILDING & CONSTRUCTION - MISC.: 1.07% 16,004 Insituform Technologies, Inc. - Class A* 272,868 ----------- CABLE TV: 1.45% 86,246 Charter Communications, Inc. - Class A* 101,770 21,574 Insight Communications Company, Inc.* 267,086 ----------- 368,856 ----------- COMMERCIAL SERVICES: 2.92% 31,699 Convergys Corp.* 480,240 16,404 NCO Group, Inc.* 261,644 ----------- 741,884 ----------- COMPUTER SERVICES: 3.89% 14,816 Electronic Data Systems Corp. 273,059 8,504 FactSet Research Systems, Inc. 240,408 18,675 The Reynolds & Reynolds Co. - Class A 475,652 ----------- 989,119 ----------- CONSUMER PRODUCTS/MISCELLANEOUS: 1.16% 6,000 The Scotts Co. - Class A* 294,240 ----------- DATA PROCESSING/MANAGEMENT: 1.22% 34,012 eFunds Corp.* 309,849 ----------- DIVERSIFIED OPERATIONS: 7.84% 52,075 Cendant Corp.* 545,746 11,868 FirstService Corp.* 190,837 73,531 Tyco International Ltd. # 1,255,909 ----------- 1,992,492 ----------- ENTERPRISE SOFTWARE - SERVICES: 2.56% 21,525 Advent Software, Inc.* 293,386 106,906 Novell, Inc.* 357,066 ----------- 650,452 ----------- FOOD: 2.56% 13,166 Safeway, Inc.* 307,558 22,248 The Kroger Co.* 343,732 ----------- 651,290 ----------- GAS - DISTRIBUTION: 0.80% 6,957 Energen Corp. 202,449 ----------- IDENTIFICATION SYSTEMS/DEVELOPMENT: 0.35% 6,095 Paxar Corp.* 89,901 ----------- INSURANCE: 3.82% 229 Berkshire Hathaway Inc. - Class B* 554,867 11,349 Torchmark Corp. 414,579 ----------- 969,446 ----------- MEDIA: 3.58% 69,400 AOL Time Warner, Inc.* 909,140 ----------- MEDICAL - DRUGS: 7.24% 30,043 Applera Corp. - Celera Genomics Group* 286,911 13,828 Biogen, Inc.* 553,950 8,516 Merck & Co., Inc. 482,091 42,442 Perrigo Co.* 515,670 ----------- 1,838,622 ----------- MEDICAL - INFORMATION SYSTEMS: 2.77% 44,020 IMS Health, Inc. 704,320 ----------- MEDICAL - INSTRUMENTS: 5.20% 38,101 Apogent Technologies, Inc.* 792,501 6,918 Cantel Medical Corp.* 87,582 13,120 CONMED Corp.* 257,021 6,190 Vital Signs, Inc. 184,957 ----------- 1,322,061 ----------- OIL - EXPLORATION & PRODUCTION: 6.15% 9,056 Apache Corp. 516,101 11,292 Devon Energy Corp. 518,303 7,447 Newfield Exploration Co.* 268,464 7,814 Stone Energy Corp.* 260,675 ----------- 1,563,543 ----------- PRINTING - COMMERCIAL: 0.63% 5,401 Valassis Communications, Inc.* 158,951 ----------- PHYSICAL PRACTICE MANAGEMENT: 0.95% 22,153 Orthodontic Centers of America, Inc.* 241,689 ----------- REAL ESTATE INVESTMENT TRUSTS: 3.73% 1,987 Apartment Investment & Management Co. 74,473 4,900 Archstone-Smith Trust 115,346 5,531 Arden Realty, Inc. 122,512 1,759 Avalonbay Communities, Inc. 68,847 3,000 Chateau Communities, Inc. 69,000 5,000 Cousins Properties, Inc. 123,500 7,200 FelCor Lodging Trust, Inc. 82,368 11,400 Host Marriott Corp.* 100,890 3,413 Kilroy Realty Corp. 78,670 3,000 Vornado Realty Trust 111,600 ----------- 947,206 ----------- RETAIL: 1.97% 18,980 Casey's General Stores, Inc. 231,746 8,423 Zale Corp.* 268,694 ----------- 500,440 ----------- RETAIL - RESTAURANTS: 2.16% 10,000 Applebee's International, Inc. 231,910 13,184 IHOP Corp.* 316,416 ----------- 548,326 ----------- STEEL PIPE & TUBE: 1.11% 17,200 The Shaw Group, Inc.* 282,940 ----------- TELECOMMUNICATIONS: 7.92% 85,386 Citizens Communications Co.* 900,822 59,905 Comverse Technology, Inc.* 600,248 19,458 Intrado, Inc.* 190,688 64,242 Qwest Communications International, Inc.* 321,210 ----------- 2,012,968 ----------- TOYS: 1.60% 21,247 Mattel, Inc. 406,880 ----------- WASTE DISPOSAL: 5.08% 28,142 Republic Services, Inc.* 590,419 30,600 Waste Management, Inc. 701,352 ----------- 1,291,771 ----------- TOTAL COMMON STOCKS (cost $26,804,014) 23,933,390 ----------- PREFERRED STOCKS: 0.01% ------------------------ 9,000 Acceptance Insurance Companies, Inc.* (cost $225,000) 3,600 ----------- SHORT-TERM INVESTMENT: 2.87% ---------------------------- MONEY MARKET INVESTMENT: 729,004 Cash Trust Series II - Treasury Fund (cost $729,004) 729,004 ----------- TOTAL INVESTMENTS IN SECURITIES (cost $27,758,018): 97.05% 24,665,994 Other Assets in Excess of Liabilities: 2.95% 749,202 ----------- NET ASSETS: 100.00% $25,415,196 ----------- ----------- * Non-income producing security. # U.S. security of foreign issuer. See notes to financial statements. STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2002 (UNAUDITED) ASSETS Investments, at market value (cost $27,758,018) $24,665,994 Cash 173,139 Receivables: Securities sold 534,540 Fund shares issued 57,553 Dividends receivable 15,979 Prepaid expenses 7,961 ----------- Total Assets 25,455,166 ----------- LIABILITIES Payables: Due to Advisor 3,225 Administration fees 3,252 Accrued expenses 33,493 ----------- Total Liabilities 39,970 ----------- NET ASSETS $25,415,196 ----------- ----------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE [$25,415,196 / 3,278,781 shares outstanding; unlimited number of shares (par value $0.01) authorized] $7.75 ----- ----- COMPONENTS OF NET ASSETS Paid-in capital $29,851,827 Accumulated net realized loss on investments (1,344,607) Net unrealized depreciation on investments (3,092,024) ----------- Total Net Assets $25,415,196 ----------- ----------- See notes to financial statements. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2002 (UNAUDITED) INVESTMENT INCOME Dividend income $ 115,800 ----------- EXPENSES Advisory fees (Note 3) 117,854 Administration fees (Note 3) 18,832 Fund accounting fees 13,248 Professional fees 13,064 Transfer agent fees 10,304 Custody fees 5,152 Trustee fees 3,312 Registration fees 3,312 Shareholder reporting 2,944 Miscellaneous 1,669 Insurance 736 ----------- Total expenses 190,427 Less: advisory fee waiver (Note 3) (35,343) ----------- Net expenses 155,084 ----------- NET INVESTMENT LOSS (39,284) ----------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS Net realized gain on investments 71,859 Change in net unrealized (depreciation)/appreciation on investments (1,379,523) ----------- Net realized and unrealized loss on investments (1,307,664) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,346,948) ----------- ----------- See notes to financial statements. STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED DECEMBER 31, 2002 PERIOD ENDED (UNAUDITED) JUNE 30, 2002* ----------------- ------------------ OPERATIONS Net investment (loss)/income $ (39,284) $ 35,894 Net realized gain/(loss) on investments 71,859 (1,394,470) Change in net unrealized depreciation on investments (1,379,523) (1,712,501) ----------- ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (1,346,948) (3,071,077) ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income -- (44,980) From net realized gains -- (22,042) ----------- ----------- TOTAL DECREASE IN NET ASSETS RESULTING FROM DISTRIBUTIONS -- (67,022) ----------- ----------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold 1,950,888 29,651,582 Proceeds from reinvestment of dividends 0 66,980 Cost of shares redeemed (1,439,971) (329,236) ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS 510,917 29,389,326 ----------- ----------- TOTAL (DECREASE)/INCREASE IN NET ASSETS (836,031) 26,251,227 NET ASSETS Beginning of period 26,251,227 -- ----------- ----------- End of period $25,415,196 $26,251,227 ----------- ----------- ----------- ----------- CHANGES IN SHARES OUTSTANDING Shares sold 256,335 3,256,949 Shares reinvested -- 6,685 Shares redeemed (206,273) (34,915) ----------- ----------- Net increase in shares outstanding 50,062 3,228,719 ----------- ----------- ----------- -----------
* Commenced operations on August 6, 2001. See notes to financial statements. FINANCIAL HIGHLIGHTS For a fund share outstanding throughout the period SIX MONTHS ENDED DECEMBER 31, 2002 PERIOD ENDED (UNAUDITED) JUNE 30, 2002* ----------------- ------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 8.13 $10.00 ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment (loss)/income (0.01) 0.02 Net realized and unrealized loss on investments (0.37) (1.85) ------ ------ Total from investment operations (0.38) (1.83) ------ ------ LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income -- (0.03) From net realized gains -- (0.01) ------ ------ Total decrease from distributions -- (0.04) ------ ------ NET ASSET VALUE, END OF PERIOD $ 7.75 $ 8.13 ------ ------ ------ ------ TOTAL RETURN (4.67%)1 (18.40)%1 SUPPLEMENTAL DATA AND RATIOS: Net assets, end of period (in millions) $25.4 $26.3 Ratio of net expenses to average net assets: Before expense reimbursement 1.53%2 1.85%2 After expense reimbursement 1.25%2 1.25%2 Ratio of net investment (loss)/income to average net assets: Before expense reimbursement (0.60%)2 (0.41)%2 After expense reimbursement (0.32%)2 0.19%2 Portfolio turnover rate 29%1 46%1
* Commenced operations on August 6, 2001. 1 Not annualized. 2 Annualized. See notes to financial statements. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 (UNAUDITED) NOTE 1 - ORGANIZATION The McCarthy Fund (the "Fund") is a series of shares of beneficial interest of Advisor 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 August 6, 2001. The investment objective of the Fund is to seek long-term growth of capital. The Fund pursues this objective by investing primarily in equity securities. 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. U.S. Government securities with less than 60 days remaining to maturity when acquired by the Fund are valued on an amortized cost basis. U.S. Government securities with more than 60 days remaining to maturity are valued at their current market value (using the mean between the bid and asked price) until the 60th day prior to maturity, and are then valued at amortized cost based upon the value on such date unless the Board of Trustees determines during such 60 day period that amortized cost does not represent fair value. 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. 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 differ 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. NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS McCarthy Group Asset Management, Inc. (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 0.95% of the Fund's average daily net assets. For the six months ended December 31, 2002, the Fund incurred $117,854 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 a one year period, so that its ratio of expenses to average net assets will not exceed 1.25%. 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 in subsequent fiscal years. Under the expense limitation agreement, the Advisor may recoup reimbursements made in the Fund's first fiscal year in any of the five succeeding fiscal years, reimbursements made in the Fund's second fiscal year in any of the four succeeding fiscal years, and reimbursements in any subsequent fiscal year over the following three fiscal years. For the six months ended December 31, 2002, the Advisor absorbed expenses of $35,343. 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 as follows: YEAR AMOUNT ---- ------ 2007 $147,392 U.S. Bancorp Fund Services, LLC. (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: Under $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 Over $150 million 0.05% of average daily net assets For the six months ended December 31, 2002, the Fund incurred $18,832 in administration fees. U.S. Bancorp Fund Services, LLC. also provides fund accounting services for the Fund. Quasar Distributors, LLC. (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 also officers of the Administrator. NOTE 4 - PURCHASES AND SALES OF SECURITIES The cost of purchases and proceeds from sales of securities, excluding short- term investments, for the six months ended December 31, 2002, were $7,482,890 and $6,904,477 respectively. ADVISOR McCarthy Group Asset Management, Inc. 1125 South 103rd Street, Suite 450 Omaha, Nebraska 68124-6019 DISTRIBUTOR Quasar Distributors, LLC 615 East Michigan Street Milwaukee, Wisconsin 53202 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street M/L 6118 Cincinnati, Ohio 45202 TRANSFER AGENT Orbitex Data Services, Inc. 14707 California Street, Suite 5 Omaha, Nebraska 68154 1-866-811-0228 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker 55 Second Street, 24th Floor San Francisco, California, 94105 This report is intended for 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. -----END PRIVACY-ENHANCED MESSAGE-----