N-30D 1 0001.txt SEMI-ANNUAL REPORT DATED 08/31/2000 THE AMERICAN TRUST ALLEGIANCE FUND ONE COURT STREET LEBANON, NEW HAMPSHIRE 03766 SEMI-ANNUAL REPORT FOR THE PERIOD ENDED AUGUST 31, 2000 THE AMERICAN TRUST ALLEGIANCE FUND October, 2000 Dear Fellow Shareholder, We are pleased to send you the American Trust Allegiance Fund's semi-annual report for the six months ending August 31, 2000. Asset growth of the Fund has been encouraging with total assets reaching $47.4 million as of August 31, 2000. The Fund's investment performance continues to be quite competitive, as it ranked in the top 10% of growth mutual funds over the past twelve months and three year periods, according to Lipper, Inc. Based on total return, Lipper ranked the Fund 132nd out of 1304 growth funds and 75th out of 825 growth funds for the one and three year periods ending August 31, 2000, respectively. The Fund was recently highlighted in the November 2000 issue of MUTUAL FUND MAGAZINE (pg.52). The Fund also received a five star rating from Morningstar for the three year period ending August 31, 2000 in the domestic equity category consisting of 3,839 funds. The year of 2000 has been a challenging one for most investors as the financial markets have been whipsawed over concerns of rising interest rates, decelerating earnings growth, higher energy prices, and fairly high valuations. Technology, in particular, has been vulnerable to some impressive price swings with the NASDAQ composite index experiencing three different periods of declines greater than 10%. Our focus continues to be on any changes in the competitive position or the underlying fundamentals of the companies we own, rather than the market gyrations. Seeking long term growth potential, our quantitative screening yields a preponderance of technology companies upon which we next apply more qualitative analysis. Optical networking and semiconductors are two technology sectors that we believe offer attractive long term growth. We are also finding attractive opportunities in the energy and financial sectors of the U.S. economy. We thank you for your support and look forward to helping you achieve your financial goals. /s/ Jeffrey M. Harris Jeffrey M. Harris, CFA /s/ Paul H. Collins Paul H. Collins Remember past performance is not a guarantee of future results. Fund share values and returns fluctuate and investors may have a gain or a loss when shares are redeemed. During the ranking period advisory fees have been waived. Morningstar proprietary ratings on US-domiciled funds reflect historical risk-adjusted performance as of 8-31-00. The ratings are subject to change every month. Morningstar ratings on US-domiciled funds are calculated from the fund's 3-year average annual returns in excess of 90-day Treasury bill returns with appropriate fee adjustments, and a risk factor that reflects fund performance below 90-day US T-bill returns. Allegiance Fund received 5 stars for the 3-year period. The top 10% of the funds in a broad asset class receive 5 stars. The Fund was rated exclusively against US-domiciled funds. Lipper rankings are based on total return; this calculation does not include sales charges. Please note this fund does not charge sales loads. THE AMERICAN TRUST ALLEGIANCE FUND American Trust Allegiance Fund Comparison of the change in value of a $10,000 investment in the American Trust Allegiance Fund versus the S&P 500 Composite Stock Price Index Average Annual Total Return(1) 1 Year............................ 58.37% Since Inception (3/11/97)......... 34.93% American Trust S&P 500 Composite Allegiance Fund Stock Price Index --------------- ----------------- 11-Mar-97 $10,000 $10,000 31-Mar-97 $ 9,210 $ 9,342 31-May-97 $10,630 $10,497 31-Aug-97 $11,450 $11,175 30-Nov-97 $12,200 $11,927 28-Feb-98 $13,480 $13,149 29-May-98 $13,620 $13,718 31-Aug-98 $12,110 $12,086 30-Nov-98 $15,130 $14,750 28-Feb-99 $17,183 $15,742 31-May-99 $17,842 $16,600 31-Aug-99 $17,893 $16,892 30-Nov-99 $20,765 $17,829 29-Feb-00 $25,942 $17,585 31-May-00 $23,536 $18,340 31-Aug-00 $28,337 $19,648 (1) Average Annual Total Return represents the average change in account value over the periods indicated. Past performance is not predictive of future performance. * The S&P 500 Composite Stock Price Index is an unmanaged capitalization-weighted index of 500 stocks designed to represent the broad domestic economy. 2 THE AMERICAN TRUST ALLEGIANCE FUND TOP 10 HOLDINGS AT AUGUST 31, 2000 -------------------------------------------------------------------------------- American International Group, Inc. Broadcom Corp. - Class A EMC Corp. Flextronics International Ltd. Intel Corp. Juniper Networks, Inc. Network Appliance, Inc. Nortel Networks Corp. SDL, Inc. Sun Microsystems, Inc. 3 THE AMERICAN TRUST ALLEGIANCE FUND SCHEDULE OF INVESTMENTS AT AUGUST 31, 2000 (UNAUDITED) -------------------------------------------------------------------------------- Shares COMMON STOCKS: 92.9% Market Value -------------------------------------------------------------------------------- AIR FREIGHT - SERVICES: 1.0% 9,900 Expeditors International of Washington, Inc......... $ 485,100 ----------- ALUMINUM: 1.3% 19,200 Alcoa, Inc.......................................... 638,400 ----------- BANKS - MAJOR REGIONAL: 1.6% 9,100 Northern Trust Corp................................. 767,244 ----------- BROADCAST MEDIA: 1.1% 13,500 Comcast Corp. - Special Class A*.................... 502,875 ----------- COMMUNICATIONS - EQUIPMENT: 9.1% 15,200 ADC Telecommunications, Inc.*....................... 622,250 8,500 Alcatel SA.......................................... 704,437 2,200 Corning, Inc........................................ 721,462 3,800 Lucent Technologies, Inc............................ 158,888 17,600 Nokia Corp.-SPON ADR................................ 790,900 16,200 Nortel Networks Corp................................ 1,321,313 ----------- 4,319,250 ----------- COMPUTER SOFTWARE AND SERVICES: 7.9% 9,700 America Online, Inc.*............................... 568,663 9,000 Convergys Corp.*.................................... 352,125 7,450 Microsoft Corp.*.................................... 520,103 10,400 Oracle Corp.*....................................... 945,750 5,400 Siebel Systems, Inc.*............................... 1,063,800 2,450 VERITAS Software Corp.*............................. 295,378 ----------- 3,745,819 ----------- COMPUTERS - HARDWARE: 3.7% 2,500 International Business Machines Corp................ 330,000 11,100 Sun Microsystems, Inc.*............................. 1,409,006 ----------- 1,739,006 ----------- See accompanying Notes to Financial Statements. 4 THE AMERICAN TRUST ALLEGIANCE FUND SCHEDULE OF INVESTMENTS AT AUGUST 31, 2000 (UNAUDITED), CONTINUED -------------------------------------------------------------------------------- Shares Market Value -------------------------------------------------------------------------------- COMPUTERS - NETWORKING: 9.4% 15,320 Cisco Systems, Inc.*................................ $ 1,049,420 7,100 Juniper Networks, Inc.*............................. 1,517,625 11,200 Network Appliance, Inc.*............................ 1,310,400 4,100 Sycamore Networks................................... 561,700 ----------- 4,439,145 ----------- COMPUTERS - PERIPHERALS: 3.3% 15,800 EMC Corp.*.......................................... 1,548,400 ----------- ELECTRICAL EQUIPMENT: 1.0% 11,550 Symbol Technologies, Inc............................ 477,881 ----------- ELECTRONIC COMPONENTS: 4.5% 14,000 Flextronics International Ltd....................... 1,166,375 21,300 Solectron Corp.*.................................... 965,156 ----------- 2,131,531 ----------- ELECTRONICS - SEMICONDUCTOR: 17.2% 10,300 Analog Devices, Inc.*............................... 1,035,150 20,000 Atmel Corp.......................................... 400,000 4,850 Broadcom Corp. - Class A*........................... 1,212,500 15,800 Intel Corp.......................................... 1,183,025 7,700 JDS Uniphase Corp.*................................. 959,613 3,600 SDL, Inc.*.......................................... 1,430,325 10,624 Taiwan Semiconductor Manufacturing Co. Ltd., ADR.... 371,840 12,400 Texas Instruments, Inc.............................. 830,025 8,500 Vitesse Semiconductor Corp.*........................ 754,906 ----------- 8,177,384 ----------- ELECTRONICS - SEMICONDUCTOR EQUIPMENT: 2.4% 8,700 Applied Materials, Inc.*............................ 750,919 5,700 Teradyne, Inc.*..................................... 369,431 ----------- 1,120,350 ----------- FINANCIAL - DIVERSIFIED: 0.8% 7,300 Fannie Mae.......................................... 392,375 ----------- See accompanying Notes to Financial Statements. 5 THE AMERICAN TRUST ALLEGIANCE FUND SCHEDULE OF INVESTMENTS AT AUGUST 31, 2000 (UNAUDITED), CONTINUED -------------------------------------------------------------------------------- Shares Market Value -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS: 1.4% 13,250 Colgate-Palmolive Co................................ $ 674,922 ----------- INSURANCE - BROKERS: 2.2% 8,775 Marsh & McLennan Companies, Inc..................... 1,042,031 ----------- INSURANCE - MULTILINE: 2.8% 14,967 American International Group, Inc................... 1,333,934 ----------- INVESTMENT BANKING: 1.5% 5,600 The Goldman Sachs Group, Inc........................ 717,150 ----------- LEISURE: 1.8% 16,800 Harley-Davidson, Inc................................ 836,850 ----------- OIL & GAS - DRILL AND EQUIPMENT: 2.3% 12,900 Schlumberger Ltd.................................... 1,100,531 ----------- OIL - INTERNATIONAL: 2.3% 13,400 Exxon Mobil Corp.................................... 1,093,775 ----------- RETAIL - BUILDING SUPPLY: 1.3% 13,350 The Home Depot, Inc................................. 641,634 ----------- RETAIL - COMPUTER AND ELECTRONICS: 1.1% 8,700 Best Buy Co, Inc.*.................................. 537,225 ----------- RETAIL - DEPARTMENT STORES: 1.0% 8,600 Kohl's Corp......................................... 481,600 ----------- RETAIL - DISCOUNT: 0.9% 19,875 Dollar General Corp................................. 408,680 ----------- RETAIL - SPECIALTY: 1.3% 34,200 Bed Bath & Beyond, Inc.*............................ 600,638 ----------- See accompanying Notes to Financial Statements. 6 THE AMERICAN TRUST ALLEGIANCE FUND SCHEDULE OF INVESTMENTS AT AUGUST 31, 2000 (UNAUDITED), CONTINUED -------------------------------------------------------------------------------- Shares Market Value -------------------------------------------------------------------------------- SERVICES - DATA PROCESSING: 3.1% 9,400 Automatic Data Processing, Inc...................... $ 560,475 20,025 Paychex, Inc........................................ 893,616 ----------- 1,454,091 ----------- TELECOMMUNICATIONS - CELLULAR: 1.9% 16,400 Nextel Communications, Inc.......................... 909,175 ----------- TELEPHONE: 1.5% 8,700 BellSouth Corp...................................... 324,619 9,500 SBC Communications, Inc............................. 396,625 ----------- 721,244 ----------- UTILITIES - NATURAL GAS: 2.2% 12,200 Enron Corp.......................................... 1,035,475 ----------- TOTAL COMMON STOCKS (cost $27,715,552).............. 44,073,715 ----------- Principal Amount SHORT-TERM INVESTMENT: 3.5% -------------------------------------------------------------------------------- $1,649,932 Firstar Stellar Treasury Fund (cost $1,649,932)..... 1,649,932 ----------- TOTAL INVESTMENTS IN SECURITIES (cost $29,365,484): 96.4%........................... 45,723,647 Other Assets less Liabilities: 3.6%................. 1,727,436 ----------- NET ASSETS: 100.0%.................................. $47,451,083 =========== * Non-income producing security. At August 31, 2000, gross unrealized appreciation and depreciation were as follows: Gross unrealized appreciation....................... $16,912,964 Gross unrealized depreciation....................... (554,801) ----------- Net unrealized appreciation........................ $16,358,163 =========== See accompanying Notes to Financial Statements. 7 THE AMERICAN TRUST ALLEGIANCE FUND STATEMENT OF ASSETS AND LIABILITIES AT AUGUST 31, 2000 (UNAUDITED) -------------------------------------------------------------------------------- ASSETS Investments in securities, at value (cost $29,365,484)......... $45,723,647 ----------- Receivables: Securities sold.............................................. 2,282,413 Fund shares sold............................................. 120,369 Dividends and interest....................................... 19,865 Prepaid expenses............................................... 18,857 Deferred organization costs.................................... 5,632 ----------- Total assets............................................... 48,170,783 ----------- LIABILITIES Payables: Securities purchased......................................... 641,412 Fund shares redeemed......................................... 49,823 Due to advisor............................................... 25,314 Accrued expenses............................................... 3,151 ----------- Total liabilities.......................................... 719,700 ----------- NET ASSETS....................................................... $47,451,083 =========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE [$47,451,083/1,699,662 shares outstanding; unlimited number of shares (par value $0.01) authorized]............... $ 27.92 =========== COMPONENTS OF NET ASSETS Paid-in capital................................................ $29,298,766 Accumulated net investment loss................................ (164,479) Accumulated net realized gain on investments................... 1,958,633 Net unrealized appreciation on investments..................... 16,358,163 ----------- Net assets................................................. $47,451,083 =========== See accompanying Notes to Financial Statements. 8 AMERICAN TRUST ALLEGIANCE FUND STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED AUGUST 31, 2000 (UNAUDITED) -------------------------------------------------------------------------------- INVESTMENT INCOME Income Dividends.................................................... $ 72,137 Interest .................................................... 58,098 ----------- Total income............................................. 130,235 Expenses Advisory fees (Note 3)....................................... 193,027 Administration fees (Note 3)................................. 40,637 Transfer agent fees.......................................... 23,937 Fund accounting fees......................................... 13,106 Registration fees............................................ 11,012 Audit fees................................................... 7,562 Custody fees................................................. 4,739 Reports to shareholders...................................... 2,974 Legal fees................................................... 2,773 Trustee fees................................................. 2,168 Deferred organization expense................................ 1,866 Insurance expense............................................ 1,595 Miscellaneous................................................ 1,405 ----------- Total expenses........................................... 306,801 Less: advisory fee waiver (Note 3)....................... (12,087) ----------- Net expenses............................................. 294,714 ----------- NET INVESTMENT LOSS .................................. (164,479) ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments............................... 1,123,524 Net change in unrealized appreciation on investments........... 3,031,583 ----------- Net realized and unrealized gain on investments.............. 4,155,107 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..... $ 3,990,628 =========== See accompanying Notes to Financial Statements. 9 AMERICAN TRUST ALLEGIANCE FUND STATEMENT OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- Six Months Year Ended Ended August 31, 2000# February 29, 2000 ---------------- ----------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss........................ $ (164,479) $ (157,537) Net realized gain on investments........... 1,123,524 1,178,889 Net unrealized appreciation on investments. 3,031,583 9,654,443 ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................... 3,990,628 10,675,795 ----------- ----------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares............. 6,528,434 12,926,816 ----------- ----------- TOTAL INCREASE IN NET ASSETS........... 10,519,062 23,602,611 ----------- ----------- NET ASSETS Beginning of period........................ 36,932,021 13,329,410 ----------- ----------- END OF PERIOD.............................. $47,451,083 $36,932,021 =========== =========== (a) A summary of capital share transactions is as follows: Six Months Year Ended Ended August 31, 2000* February 29, 2000 ------------------------ ------------------------ Shares Value Shares Value ---------- ----------- ---------- ----------- Shares sold............... 318,774 $ 8,161,288 743,011 $14,552,043 Shares redeemed........... (64,041) (1,632,854) (85,249) (1,625,227) ---------- ----------- ---------- ----------- Net increase.............. 254,733 $ 6,528,434 657,762 $12,926,816 ========== =========== ========== =========== # Unaudited. See accompanying Notes to Financial Statements. 10 AMERICAN TRUST ALLEGIANCE FUND FINANCIAL HIGHLIGHTS - FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD --------------------------------------------------------------------------------
Six Months Year Year March 11, 1997* Ended Ended Ended through Aug. 31, 2000# Feb. 29, 2000 Feb. 28, 1999 Feb. 28, 1998 ---------- ---------- ---------- ---------- Net asset value, beginning of period ............... $ 25.56 $ 16.93 $ 13.48 $ 10.00 -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss ................................ (0.10) (0.11) (0.07) (0.03) Net realized and unrealized gain on investments .................................. 2.46 8.74 3.74 3.51 -------- -------- -------- -------- Total from investment operations .............. 2.36 8.63 3.67 3.48 -------- -------- -------- -------- Less distributions: From net realized gain ............................. 0.00 0.00 (0.22) 0.00 -------- -------- -------- -------- Total distributions ........................... 0.00 0.00 (0.22) 0.00 -------- -------- -------- -------- Net asset value, end of period ..................... $ 27.92 $ 25.56 $ 16.93 $ 13.48 ======== ======== ======== ======== Total return ....................................... 9.23%++ 50.97% 27.47% 34.80%++ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) .............. $ 47,451 $ 36,932 $ 13,329 $ 6,360 Ratio of expenses to average net assets: Before expense reimbursement ....................... 1.51%+ 1.75% 2.30% 4.04%+ After expense reimbursement ........................ 1.45%+ 1.45% 1.45% 1.45%+ Ratio of net investment loss to average net assets: After expense reimbursement ........................ (0.81%)+ (0.73%) (0.57%) (0.42%)+ Portfolio turnover rate ............................ 24.14%++ 39.81% 40.99% 27.65%++
* Commencement of operations. # Unaudited. + Annualized. ++ Not Annualized. See accompanying Notes to Financial Statements. 11 AMERICAN TRUST ALLEGIANCE FUND NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000 (UNAUDITED) -------------------------------------------------------------------------------- NOTE 1 - ORGANIZATION The American Trust Allegiance 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 began operations on March 11, 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 generally accepted accounting principles. 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 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. 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. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security transactions are accounted for on the trade date. Dividend income and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Distributions which exceed net realized gains for financial reporting purposes but not for tax purposes are reported as distributions in excess of net realized gains and are primarily due to differing treatments for wash sales and realized losses subsequent to October 31 on sale of securities. 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 securities. D. DEFERRED ORGANIZATION COSTS: The Fund has incurred expenses of $18,500 in connection with its organization. These costs have been deferred and are being amortized on a straight-line basis over a period of sixty months from the date the Fund commenced investment operations. E. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles 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. 12 AMERICAN TRUST ALLEGIANCE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED -------------------------------------------------------------------------------- NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES For the six months ended August 31, 2000, American Trust Company (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 0.95% based upon the average daily net assets of the Fund. For the six months ended August 31, 2000, the Fund incurred $193,027 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 1.45% of average net assets (the "expense cap"). Any such reductions 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 reimbursed is made. Such reimbursement may not be paid prior to the Fund's payment of current ordinary operating expenses. For the six months ended August 31, 2000, the Advisor reduced its fees and absorbed Fund expenses in the amount of $12,087. Investment Company Administration, 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 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 First Fund Distributors, Inc. (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 Fund are also officers and/or directors of the Administrator and the Distributor. 13 AMERICAN TRUST ALLEGIANCE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED -------------------------------------------------------------------------------- NOTE 4 - PURCHASES AND SALES OF SECURITIES For the six months ended August 31, 2000, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were $12,844,654 and $9,333,654, respectively. 14 ADVISOR American Trust Company One Court Street Lebanon, NH 03766 1-800-788-8806 www.amertrust.com DISTRIBUTOR First Fund Distributors, Inc. 4455 East Camelback Road, Suite 261E Phoenix, AZ 85018 CUSTODIAN Firstar Bank, N.A. 425 Walnut Street Cincinnati, OH 45202 TRANSFER AGENT American Data Services, Inc. 150 Motor Parkway, Suite 109 Hauppauge, NY 11788 1-800-385-7003 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker, LLP 345 California Street, 29th Floor San Francisco, CA 94104 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.