-----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, L3N0PZDqr7KR0+tlaQwm64UuU2E3RrtaT8d1jkVYwCNIgZcNFA1rp899uJ6M6075 fy05prEPBA/Z/MAfYEQ7cQ== 0000898531-04-000288.txt : 20040909 0000898531-04-000288.hdr.sgml : 20040909 20040909125253 ACCESSION NUMBER: 0000898531-04-000288 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040909 DATE AS OF CHANGE: 20040909 EFFECTIVENESS DATE: 20040909 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-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07959 FILM NUMBER: 041022236 BUSINESS ADDRESS: STREET 1: U.S BANCORP FUND SERVICES, LLC STREET 2: 615 E MICHIGAN STREET CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 414-765-5344 MAIL ADDRESS: STREET 1: 615 E MICHIGAN STREET STREET 2: MK-WI-LC2 CITY: MILWAUKEE STATE: WI ZIP: 53202 N-CSR 1 taaeaf-ncsrse.txt 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 811-07959 --------- ADVISORS SERIES TRUST --------------------- (Exact name of registrant as specified in charter) 615 EAST MICHIGAN ST. MILWAUKEE, WI 53202 ------------------- (Address of principal executive offices) (Zip code) ERIC M. BANHAZL ADVISORS SERIES TRUST 2020 EAST FINANCIAL WAY, SUITE 100 GLENDORA, CA 91741 ------------------ (Name and address of agent for service) (414) 765-5340 -------------- Registrant's telephone number, including area code Date of fiscal year end: DECEMBER 31, 2004 ------------------ Date of reporting period: JUNE 30, 2004 ------------- ITEM 1. REPORT TO STOCKHOLDERS. - ------------------------------ THE AVATAR ADVANTAGE EQUITY ALLOCATION FUND Semi-Annual Report For the Six Months Ended June 30, 2004 TABLE OF CONTENTS THE AVATAR ADVANTAGE EQUITY ALLOCATION FUND Management's Discussion and Analysis Letter 3 Schedule of Investments 6 Statement of Assets and Liabilities 9 Statement of Operations 10 Statements of Changes in Net Assets 11 Financial Highlights 12 Notes to Financial Statements 13 August 9, 2004 Dear Shareholder, I would like to take this opportunity to report on the progress of the Avatar Advantage Equity Allocation Fund for the period for the second quarter of 2004. PERFORMANCE: 3 MONTHS ENDED 6 MONTHS ENDED 1 MONTH ENDED 6/30/04 6/30/04 7/31/04 -------------- -------------- ------------- FUNDS: 0.73% 1.59% (2.65%) Equity Fund (at POP) INDEXES: S&P 500 1.72% 3.44% (3.31%) NASDAQ 2.69% 2.22% (7.83%) Average annual total return at public offering price ("POP") calculations reflect average performance over the time period indicated including the fund's maximum sales charge of 4.50% and assume reinvestment of all dividends and capital gains at net asset value. 2004 - SECOND QUARTER IN REVIEW: - -------------------------------- The second quarter showed modest gains for the equity market. Better economic data drove earnings for stocks at a good year-over-year basis; however, this may prove to be the best percentage gain we will see for this cycle. While this is not necessarily bad news for stocks, the best news could be behind us for a while. With P/E's near a 25-year average for stocks, we will need good reasons to move much higher. If there have been doubts about how seriously to take the Federal Reserve's comments about interest rate tightening, Fed Chairman Greenspan has cleared up a lot of ambiguity by suggesting that bond traders are likely to be on the defensive in this process. The remaining questions surrounding a tighter monetary policy revolve largely around the speed with which interest rates will rise. With the economy showing signs of slowing down (but not going down), the outlook for rates is, as we have said, now totally dependent on actual inflation data. We have known very few economists who do well predicting inflation at turning points. Mostly, they just extrapolate the past. This lack of visibility is the source of risk for both stocks and bonds. Our Economic Liquidity model, after a brief respite, is on the downside once more. With actual rates rising and some renewed weakness in the dollar, a slowing economy has not helped much. In fact, monetary liquidity has slowed down even more than the economy and this has created a drag on the financial system. Our experience has been that when liquidity is under pressure, random negative shocks create an exaggerated impact. Our Investor Liquidity model is in the middle of its range and, as such, may not have decisive predictive value. However, given the model has showed extreme optimism (which, from our contrary point of view, is negative) early in the year, and there has not yet been extreme pessimism (which likewise would signal better returns), the chances are somewhat tilted toward eventually getting that pessimism. That normally happens by having stock prices fall. Our Momentum model also has backed off from good readings earlier in the year. The market continues to wrestle with important, basic questions, such as, "should it be growth or value, big cap or small cap, and high quality or low qualityo" This tug of war leaves the market rotating considerably at times. Our Bond model has shown a little improvement as it reflects the modest economic slowing. As mentioned earlier, negative inflation surprises have not been discounted. The major equity indices turned in a disappointing month, heading down in the first few days and never looking back. Good earnings reports only fueled the theory that the best market momentum is now behind us. Economic news has started to come in on the mixed side, with inflation fears creeping into the picture once again, even while growth seems to be tapering off. Worst hit in the quarter, as is not uncommon in a sell off, were the technology stocks. Intel's less-than-stellar outlook during their quarterly conference call, despite actual earnings that demonstrated a 77% growth in earnings per share, kicked off another downward move for the group. We trimmed our holdings in this group during the quarter. Almost as bad was the healthcare group, particularly the service providers and device manufacturers. Biotechnology turned in a flat quarter, with some strength in the latter portion of the month. The best performing sectors were telecom services and energy. We continue to be over- weight energy, as supply uncertainties in Russia and the Middle East continue to make headlines, driving oil prices to new highs. The financial sector performed relatively well in comparison, as investors factored in a bit of an economic slowdown in their rate forecasts. Some of the best performance in this group came from the regional banks. All in all, it was a tough month for equities as uncertainty in many forms took hold. As usual, portfolios remain well diversified and continue to have a high quality orientation. 2004 - OUTLOOK: - --------------- Now that the Federal Reserve Board has started a new round of tightening with regard to monetary policy, both stock and bond markets are trying to gauge the impact of higher interest rates. The Fed is promising to be "measured" as they raise rates, and if this actually happens, markets will have enough time to adjust. However, most tightening episodes have carried frequent negative surprises. Negative surprises can come from any number of places. Clearly, the presidential election has market consequences, as would a terrorist attack on home soil. Although the rate of profit growth has probably peaked for this cycle, the absolute level of growth is still high, and as such, is comforting to most investors. Again, if the rise in rates is orderly, then equity investors generally expect that valuations will hold up and permit decent gains for stock prices; we do not take too much of an issue with this point of view. Perhaps the probable course of events for the remainder of the year will be modest gains. Sincerely, /s/Larry Seibert Larry Seibert, CFA Vice Chairman OAM AVATAR, LLC An affiliate of Overture Asset Managers, LLC PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. The NASDAQ Composite Index is a market capitalization-weighted index that is designed to represent the performance of the National Market System which includes over 5,000 stocks traded only over-the-counter and not on an exchange. You cannot invest directly in an index. Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any securities. Please see the Schedule of Investments within this report for complete holdings information. The Price to Earnings (P/E) Ratio reflects the multiple of earnings at which a stock sells. Must be preceded or accompanied by a current prospectus. Quasar Distributors, LLC, distributor. SCHEDULE OF INVESTMENTS at June 30, 2004 (Unaudited) SHARES MARKET VALUE - ------ ------------ COMMON STOCKS: 89.39% AEROSPACE/DEFENSE: 1.05% 400 United Technologies Corp. $ 36,592 ---------- BANKS: 6.49% 900 Bank of America Corp. 76,159 185 Commerce Bancorp Inc. NJ 10,177 400 Countrywide Financial Corp. 28,100 1,010 Wachovia Corp 44,945 1,185 Wells Fargo & Co. 67,818 ---------- 227,199 ---------- CHEMICALS: 0.67% 530 Du Pont De Nemours & Co. 23,543 ---------- CHEMICALS - SPECIALTY: 0.71% 400 PPG Industries, Inc. 24,996 ---------- COMPUTER SOFTWARE: 4.73% 700 Adobe Systems Inc 32,550 4,030 Microsoft Corp. 115,097 1,500 Oracle Corp.* 17,895 ---------- 165,542 ---------- CONSUMER CYCLICAL: 3.00% 530 Best Buy Co. Inc. 26,892 765 Lowe's Companies, Inc. 40,201 500 Nike Class B 37,875 ---------- 104,968 ---------- CONSUMER STAPLES: 7.29% 1,430 Coca-Cola Co. 72,186 960 Kellogg Co. 40,176 1,010 Pepsico Inc. 54,419 1,620 The Procter & Gamble Co. 88,193 ---------- 254,974 ---------- DIVERSIFIED FINANCIAL SERVICES: 2.37% 1,785 Citigroup, Inc. 83,002 ---------- DIVERSIFIED MANUFACTURING: 6.61% 410 Eaton Corp. 26,543 3,590 General Electric Co. 116,316 255 Illinois Tool Works Inc. 24,452 490 Ingersoll-Rand Co. - Class A # 33,472 340 3M Co. 30,603 ---------- 231,386 ---------- DRUGS & PHARMACEUTICALS: 7.67% 1,060 Abbott Labs 43,206 126 Hospira Inc.* 3,478 1,095 Johnson & Johnson 60,991 665 Merck & Co. Inc. 31,587 2,485 Pfizer, Inc. 85,186 1,215 Wyeth 43,934 ---------- 268,382 ---------- DRUGS STORE: 1.44% 1,195 CVS Corporation 50,214 ---------- ELECTRIC - INTEGRATED: 0.50% 275 Dominion Resources, Inc. 17,347 ---------- ELECTRIC POWER: 0.53% 490 Cinergy Corp. 18,620 ---------- ELECTRONIC COMPONENTS - SEMICONDUCTORS: 3.69% 2,670 Intel Corp. 73,692 550 KLA - Tencor Corporation* 27,159 1,290 National Semiconductor Corp.* 28,367 ---------- 129,218 ---------- ELECTRONIC COMPONENTS - MILITARY: 0.72% 375 L-3 Communications Holdings 25,050 ---------- FINANCE - CREDIT CARD: 1.40% 340 Capital One Financial Corp 23,249 995 MBNA Corp. 25,661 ---------- 48,910 ---------- FINANCE - INVESTMENTS BANKERS/BROKERS: 3.65% 1,100 E*Trade Financial Corporation* 12,265 340 Federated Investors Inc. 10,316 300 Franklin Resources Inc. 15,024 290 Goldman Sachs Group, Inc. 27,306 495 Merrill Lynch & Co. Inc. 26,720 700 National City Corporation 24,507 300 North Fork Bancorp 11,415 ---------- 127,553 ---------- FOOD - RETAIL: 1.14% 1,535 McDonald's Corp. 39,910 ---------- HEALTHCARE: 1.10% 430 Anthem, Inc.* 38,511 ---------- INDUSTRIAL GAS: 0.57% 500 Praxair Inc. 19,955 ---------- INSURANCE - BROKERS: 0.65% 330 Hartford Financial Services 22,684 ---------- INSURANCE - MULTILINE: 4.46% 655 Ace Ltd. # 27,693 1,290 American International Group, Inc. 91,951 500 Metlife Inc. 17,925 400 Prudential Financial Inc. 18,588 ---------- 156,157 ---------- MACHINERY FARMING: 0.38% 190 Deere & Co. 13,327 ---------- MEDIA: 1.16% 628 Comcast Corp - Class A* 17,603 505 Tribune Co. 22,998 ---------- 40,601 ---------- MEDICAL - HMO: 0.61% 340 UnitedHealth Group, Inc. 21,165 ---------- MEDICAL INSTRUMENTS: 3.00% 400 Boston Scientific Corp.* 17,120 900 Medtronic Inc 43,848 900 Perkinelmer Inc. 18,036 470 Stryker Corp. 25,850 ---------- 104,854 ---------- MOVIES & ENTERTAINMENT: 2.09% 1,595 The Walt Disney Co. 40,656 910 Viacom, Inc. - Class B 32,505 ---------- 73,161 ---------- OIL & GAS - MACHINERY & EQUIPMENT: 0.57% 525 Baker Hughes Inc. 19,766 ---------- PETROLEUM PRODUCTS: 5.57% 660 Apache Corporation 28,743 510 ChevronTexaco Corp. 47,996 2,660 Exxon Mobil Corp. 118,131 ---------- 194,870 ---------- RETAIL: 3.27% 800 Gap 19,400 755 Target Corp. 32,065 1,195 Wal-Mart Stores, Inc. 63,048 ---------- 114,513 ---------- RETAIL - OFFICE SUPPLIES: 1.13% 1,345 Staples, Inc. 39,422 ---------- WIRELESS COMMUNICATIONS: 0.94% 450 QUALCOMM, Inc. 32,841 ---------- TECHNOLOGY: 5.17% 2,335 Cisco Systems, Inc.* 55,339 1,130 Dell Computer Corp.* 40,477 1,600 EMC Corp / Massachusetts* 18,240 410 International Business Machines Corp. 36,141 1,270 Texas Instruments, Inc. 30,709 ---------- 180,906 ---------- TECHNOLOGY - COMMERCIAL SERVICES: 0.93% 715 Choice Point, Inc.* 32,647 ---------- TECHNOLOGY - DATA PROCESSING: 0.72% 565 First Data 25,154 ---------- TELEPHONE: 1.98% 990 SBC Communications, Inc. 24,008 1,225 Verizon Communications 45,418 ---------- 69,426 ---------- TRUCKING: 0.45% 210 United Parcel Service - Cl B 15,786 ---------- UTILITIES: 0.98% 1,030 Exelon Corporation 34,289 ---------- TOTAL COMMON STOCKS (Cost $3,093,054) 3,127,441 ---------- PRINCIPAL AMOUNT - --------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS: 5.71% $200,000 U.S. Treasury Bill, 0.96%, 07/22/04 199,892 ---------- TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $ 199,892) 199,892 ---------- PRINCIPAL AMOUNT/SHARES - ------------- SHORT-TERM INVESTMENTS: 15.42% 539,361 Federated Cash Trust Treasury Money Market Fund 539,361 ---------- TOTAL SHORT-TERM INVESTMENTS (Cost $539,361) 539,361 ---------- Total Investments in Securities (Cost $3,832,307): 110.52% 3,866,694 Liabilities in Excess of Other Assets: (10.52%) (368,196) ---------- Net Assets: 100.00% $3,498,498 ---------- ---------- * Non-income producing security. # U.S. security of foreign issuer. See Accompanying Notes to Financial Statements. STATEMENT OF ASSETS AND LIABILITIES at June 30, 2004 (Unaudited) ASSETS Investments in securities, at value (cost $3,832,307) $3,866,694 Cash 7,048,898 Receivables: Dividends and interest receivable 6,179 Prepaid expenses 3,505 Due from Advisor 263 ---------- Total assets 10,925,539 ---------- LIABILITIES Payables: Due to Transfer Agent 4,820 Due to Custody 3,313 Due to Fund Accounting 3,110 Due to Administrator 2,466 Distribution fees 2,241 Securities Purchased 7,396,922 Accrued expenses 14,169 ---------- Total liabilities 7,427,041 ---------- NET ASSETS $3,498,498 ---------- ---------- NET ASSET VALUE AND REDEMPTION PRICE PER SHARE [$3,498,498 / 421,145 shares outstanding; unlimited number of shares (par value $.01) authorized] $8.31 ----- ----- OFFERING PRICE PER SHARE ($8.31 /.9550) $8.70 ----- ----- COMPONENTS OF NET ASSETS Paid-in capital $4,536,477 Undistributed net investment loss (1,859) Accumulated net realized loss on investments (1,070,507) Net unrealized appreciation on investments 34,387 ---------- Net assets $3,498,498 ---------- ---------- See Accompanying Notes to Financial Statements. STATEMENT OF OPERATIONS For the Six Months Ended June 30, 2004 (Unaudited) INVESTMENT INCOME Income Dividends $ 64,734 Interest 7,910 -------- Total income 72,644 -------- Expenses Advisory fees (Note 3) 44,706 Administration fees (Note 3) 14,959 Professional fees 12,418 Fund accounting fees 10,357 Distribution fees (Note 4) 13,149 Transfer agent fees 9,505 Custody fees 8,485 Reports to shareholders 2,585 Trustee fees 4,085 Registration expense 965 Miscellaneous 1,757 Insurance expense 709 -------- Total expenses 123,680 Less: advisory fee waiver (Note 3) (44,786) -------- Net expenses 78,894 -------- NET INVESTMENT INCOME (6,250) -------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain on investments 830,018 Net change in unrealized depreciation on investments (695,609) -------- Net realized and unrealized gain on investments 134,409 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $128,159 -------- -------- See Accompanying Notes to Financial Statements. STATEMENTS OF CHANGES IN NET ASSETS Six Months Ended June 30, 2004 Year Ended (Unaudited) December 31, 2003 ---------------- ----------------- NET INCREASE / (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment (loss) / gain $ (6,250) $ 4,391 Net realized gain on investments 830,018 80,504 Net realized (loss) on financial futures -- (17,944) Net change in unrealized depreciation / appreciation on investments and financial futures (695,609) 1,125,297 ----------- ---------- NET DECREASE/INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 128,159 1,192,248 ----------- ---------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income -- -- ----------- ---------- TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- -- ----------- ---------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Net decrease in net assets derived from net change in outstanding shares (a) (4,375,897) (668,206) ----------- ---------- TOTAL INCREASE IN NET ASSETS (4,247,738) 524,042 ----------- ---------- NET ASSETS Beginning of period 7,746,236 7,222,194 ----------- ---------- END OF PERIOD $ 3,498,498 $7,746,236 ----------- ---------- ----------- ----------
(a) A summary of share transactions is as follows: Six Months Ended June 30, 2004 Year Ended (Unaudited) December 31, 2003 --------------------- --------------------- Shares Value Shares Value ------ ----- ------ ----- Shares sold 442,963 $ 3,664,782 118,861 $ 879,458 Shares issued in reinvestment of distributions -- -- -- -- Shares redeemed (969,415) (8,040,679) (209,511) (1,547,664) -------- ----------- -------- ----------- Net decrease (526,452) $(4,375,897) (90,650) $ (668,206) -------- ----------- -------- ----------- -------- ----------- -------- ----------- See Accompanying Notes to Financial Statements. FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD Six Months Ended Year Ended December 31, June 30, 2004 ---------------------------------------------------------------- (Unaudited) 2003 2002 2001 2000 1999 ---------------- ---- ---- ---- ---- ---- Net asset value, beginning of period $8.17 $6.96 $8.53 $10.90 $12.31 $11.84 ----- ----- ----- ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income / (loss) (0.01) -- (0.01) 0.01 0.01 0.01 Net realized and unrealized gain / (loss) on investments 0.15 1.21 (1.55) (2.29) (0.74) 1.98 ----- ----- ----- ------ ------ ------ Total from investment operations 0.14 1.21 (1.56) (2.28) (0.73) 1.99 ----- ----- ----- ------ ------ ------ LESS DISTRIBUTIONS: From net investment income -- -- (0.01) (0.01) -- -- From net capital gains -- -- -- (0.08) (0.68) (1.52) ----- ----- ----- ------ ------ ------ Total distributions -- -- (0.01) (0.09) (0.68) (1.52) ----- ----- ----- ------ ------ ------ Net asset value, end of period $8.31 $8.17 $6.96 $ 8.53 $10.90 $12.31 ----- ----- ----- ------ ------ ------ ----- ----- ----- ------ ------ ------ Total return 1.71% 17.38% (18.29%) (20.95%) (5.99%) 17.11% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (millions) $3.5 $7.7 $7.2 $9.0 $12.5 $14.1 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before expense reimbursement 2.35% 2.77% 2.49% 2.31% 2.02% 1.99% After expense reimbursement 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% RATIO OF NET INVESTMENT (LOSS) / INCOME TO AVERAGE NET ASSETS: After expense reimbursement (12.00%) 0.04% (0.12%) 0.10% 0.05% 0.08% Portfolio turnover rate 77.90% 78.21% 78.91% 79.48% 67.97% 101.86%
See Accompanying Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS at June 30, 2004 (Unaudited) NOTE 1 - ORGANIZATION The Avatar Advantage Equity Allocation Fund (the "Fund") is a series of shares of beneficial interest of Advisors Series Trust (the "Trust"), which is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund's primary investment objective is to seek long-term capital appreciation by investing in equity stocks. The Fund began operations on December 3, 1997. 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. Security Valuation: The Fund's investments are carried at fair value. Securities that are primarily traded on a national securities exchange shall be valued at the last sale price on the exchange on which they are primarily traded on the day of valuation or, if there has been no sale on such day, at the mean between the bid and asked prices. Securities primarily traded in the NASDAQ National Market System for which market quotations are readily available shall be valued using the NASDAQ Official Closing Price ("NOCP"). If the NOCP is not available, such securities shall be valued at the last sale price on the day of valuation, or if there has been no sale on such day, at the mean between the bid and asked prices. Over-the-counter ("OTC") securities which are not traded in the NASDAQ National Market System shall be valued at the most recent trade price. Securities for which market quotations are not readily available, if any, are valued following procedures approved by the Board of Trustees. Short-term investments are valued at amortized cost, which approximates market value. B. Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, a Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the "initial margin." Subsequent payments, known as "variation margin, "are made or received by a Fund each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss. When the contract expires or is closed the gain or loss is realized and is presented in the statement of operations as net realized gain (loss) on the financial futures contracts. The portfolio invests in financial futures contracts in order to hedge existing portfolio securities, or securities the portfolio intends to purchase against fluctuations in value. Under a variety of circumstances, the portfolio may not achieve the anticipated benefits of the financials futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts and the underlying assets. C. 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. D. Security Transactions, Dividends and Distributions: Security 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 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. E. 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 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES For the six months ended June 30, 2004, OAM Avatar LLC (the "Advisor") provided the Fund with investment management services under an Investment Advisory Agreement. The Advisor furnished all investment advice, office space, facilities, and provides most of the personnel needed by the Fund. As compensation for its services, the Advisor is entitled to a monthly fee at the annual rate of 0.85% based upon the average daily net assets of the Fund. For the six months ended June 30, 2004, the Fund incurred $44,706 in Advisory Fees. The Fund is responsible for its own operating expenses. The Advisor has agreed to reduce fees payable to it by the Fund and to pay Fund operating expenses to the extent necessary to limit the Fund's aggregate annual operating expenses to 1.50% of average net assets (the "expense cap"). Any such reduction made by the Advisor in its fees or payment of expenses which are the Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so requested by the Advisor, in subsequent fiscal years if the aggregate amount actually paid by the Fund toward the operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the applicable limitation on Fund expenses. The Advisor is permitted to be reimbursed only for fee reductions and expense payments made in the previous three fiscal years, but is permitted to look back five years and four years, respectively, during the initial six years and seventh year of the Fund's operations. Any such reimbursement is also contingent upon Board of Trustees review and approval at the time the reimbursement is made. Such reimbursement may not be paid prior to the Fund's payment of current ordinary operating expenses. For the six months ended June 30, 2004, the Advisor reduced its fees and absorbed Fund expenses in the amount of $44,786; no amounts were reimbursed to the Advisor. Cumulative expenses subject to recapture pursuant to the aforementioned conditions amounted to $300,017 at June 30, 2004. Cumulative expenses subject to recapture expire as follows: Year Amount ---- ------ 2004 $ 70,174 2005 81,041 2006 80,897 2007 93,293 2008 44,786 -------- $370,191 -------- -------- 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 for the Fund; prepares reports and materials to be supplied to the Trustees; monitors the activities of the Fund's custodian, transfer agent and accountants; coordinates the preparation and payment of the Fund's expenses and reviews the Fund's expense accruals. For its services, the Administrator receives a monthly fee at the following annual rate: Fund asset level Fee rate ---------------- -------- Less than $15 million $30,000 $15 million to less than $50 million 0.20% of average daily net assets $50 million to less than $100 million 0.15% of average daily net assets $100 million to less than $150 million 0.10% of average daily net assets More than $150 million 0.05% of average daily net assets U.S. Bancorp Fund Services, LLC ("USBFS") also serves as the Fund Accountant and Transfer Agent to the Fund. U.S. Bank, N.A., an affiliate of USBFS, serves as the Fund's custodian. 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. For the six months ended June 30, 2004, the Distributor did not receive any sales commission from the Funds. Certain officers of the Fund are also officers and/or directors of the Administrator. NOTE 4 - DISTRIBUTION The Avatar Advantage Equity Allocation 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 involved in selling shares of the Fund. Payments made pursuant 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 June 30, 2004, The Avatar Advantage Equity Allocation Fund paid the Distribution Coordinator in the amount of $13,149. NOTE 5 - PURCHASES AND SALES OF SECURITIES For the six months ended June 30, 2004, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were $5,879,819 and $9,100,883 respectively. NOTE 6 - INCOME TAXES Net investment income/(loss) and net realized gains/(losses) differ for financial statement and tax purposes due to differing treatments of wash sale losses deferred and losses realized subsequent to October 31 on the sale of securities. The tax character of distributions paid during years ended December 31, 2003 and 2002 were as follows: 2003 2002 ---- ---- Ordinary income -- $10,041 As of December 31, 2003, the components of accumulated earnings/(losses) on a tax basis were as follows: Cost of investments $ 7,019,989 ----------- Gross tax unrealized appreciation 807,464 Gross tax unrealized depreciation (78,151) ----------- Net tax unrealized appreciation$ $ 729,313 ----------- Undistributed ordinary income $ 3,206 Undistributed long-term capital gain -- ----------- Total distributable earnings $ 3,206 ----------- Other accumulated gains/losses $(1,895,335) ----------- Total accumulated earnings/(losses) $(1,162,816) ----------- ----------- The Fund had a capital loss carryforward of ($1,895,335) which expires as follows: Year Amount ---- ------ 2011 $ (128,035) 2010 (611,184) 2009 (1,156,116) ----------- $(1,895,335) ----------- ----------- NOTICE TO SHAREHOLDERS JUNE 30, 2004 HOW TO OBTAIN A COPY OF THE FUNDS' PROXY VOTING POLICIES A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (1) without charge upon request by calling 866-205-0294; (2) at avatar- associates.com; and (3) on the U.S. Securities and Exchange Commission's website at sec.gov. ADVISOR OAM Avatar LLC 350 Madison Avenue, 11th Floor New York, New York 10017 www.avatar-associates.com DISTRIBUTOR Quasar Distributors, LLC 615 E. Michigan Street Milwaukee, Wisconsin 53202 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street Cincinnati, Ohio 45202 TRANSFER AGENT U.S. Bancorp Fund Services, LLC 615 E. Michigan Street Milwaukee, Wisconsin 53202 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker, LLP 55 Second Street, 24th Floor San Francisco, California 94105 INDEPENDENT PUBLIC ACCOUNTANTS Tait, Weller & Baker 1818 Market Street, Suite 2400 Philadelphia, PA 19103 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. ITEM 2. CODE OF ETHICS. - ----------------------- Not applicable for semi-annual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. - ---------------------------------------- Not applicable for semi-annual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. - ----------------------------------------------- Not applicable for semi-annual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. - ---------------------------------------------- Not applicable to open-end investment companies. ITEM 6. SCHEDULE OF INVESTMENTS. - -------------------------------- Not applicable for periods ending before July 9, 2004. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END - ------------------------------------------------------------------------- MANAGEMENT INVESTMENT COMPANIES. - -------------------------------- Not applicable to open-end investment companies. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT - --------------------------------------------------------------------------- COMPANY AND AFFILIATED PURCHASES. - --------------------------------- Not applicable to open-end investment companies. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. - ------------------------------------------------------------ The registrant's independent directors/trustees serve as its nominating committee, however they do not make use of a nominating committee charter. THERE HAVE BEEN NO MATERIAL CHANGES TO THE PROCEDURES BY WHICH SHAREHOLDERS MAY RECOMMEND NOMINEES TO THE REGISTRANT'S BOARD OF DIRECTORS. ITEM 10. CONTROLS AND PROCEDURES. - --------------------------------- (a) The Registrant's President/Chief Executive Officer and Treasurer/Chief Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "1940 Act")) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 15d-15(b) under the Securities Exchange Act of 1934, as amended. (b) There were no significant changes in the Registrant's internal controls or in other factors that occurred during the Registrant's last fiscal half- year that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 11. EXHIBITS. - ----------------- (a) (1) Any code of ethics or amendment thereto, that is subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not applicable. (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. (3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies. (b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. 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. (Registrant) Advisors Series Trust --------------------- By (Signature and Title) /s/ Eric M. Banhazl -------------------------- Eric M. Banhazl, President Date 8/30/04 ----------- 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/ Eric M. Banhazl -------------------------- Eric M. Banhazl, President Date 8/30/04 ----------- By (Signature and Title)* /s/ Douglas G. Hess -------------------------- Douglas G. Hess, Treasurer Date 8/31/04 ----------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 taaeaf-ex99cert302.txt CERTIFICATIONS -------------- I, Eric M. Banhazl, certify that: 1. I have reviewed this report on Form N-CSR of Advisors Series Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Omitted; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Omitted; 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 8/30/04 /s/ Eric M. Banhazl ----------- ------------------- Eric M. Banhazl President CERTIFICATIONS -------------- I, Douglas G. Hess, certify that: 1. I have reviewed this report on Form N-CSR of Advisors Series Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Omitted; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 9/1/04 /s/ Douglas G. Hess ---------- ------------------- Douglas G. Hess Treasurer EX-99.906 CERT 3 taaeaf-ex99cert906.txt CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT --------------------------------------------------------------- Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of the Advisors Series Trust, does hereby certify, to such officer's knowledge, that the report on Form N-CSR of the Advisors Series Trust for the six months ended June 30, 2004, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Advisors Series Trust for the stated period. /s/ Eric M. Banhazl /s/ Douglas G. Hess - ------------------- ------------------- Eric M. Banhazl Douglas G. Hess President, Advisors Series Trust Treasurer, Advisors Series Trust Dated: 8/30/04 ----------- This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by Advisors Series Trust for purposes of the Securities Exchange Act of 1934. -----END PRIVACY-ENHANCED MESSAGE-----