-----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, E6LXR43CR5y8kL4qlyMFTVY35LPtcdBqdKYiJvgj+ZW4eEB7ROokYc1m+5CJx5YD iA00upIwOpRU/loqwuvSCQ== 0000950147-99-000924.txt : 19990825 0000950147-99-000924.hdr.sgml : 19990825 ACCESSION NUMBER: 0000950147-99-000924 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990824 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVISORS SERIES TRUST CENTRAL INDEX KEY: 0001027596 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07959 FILM NUMBER: 99698626 BUSINESS ADDRESS: STREET 1: 2020 E FINANCIAL WAY SUITE 100 CITY: GLENDORA STATE: CA ZIP: 91741 BUSINESS PHONE: 8188521033 MAIL ADDRESS: STREET 1: 2020 E FINANCIAL WAY STREET 2: SUITE 100 CITY: GLENDORA STATE: CA ZIP: 91741 N-30D 1 SEMI-ANNUAL REPORT FOR PERIOD ENDING 6-30-99 THE AVATAR ADVANTAGE INTERNATIONAL EQUITY ALLOCATION FUND Semi-Annual Report June 30, 1999 August 1999 Dear Shareholder, We are pleased to report on the progress of The Avatar Advantage International Equity Allocation Fund for the six months ended June 30, 1999. Avatar's asset allocation philosophy of participating in rising markets worldwide while attempting to limit losses during such market downturns, helped the Fund realize a return of 3.42% for the period. We expect the Fund to benefit from being in existence for the full 1999 calendar year, contrary to 1998 when the Fund commenced operations in February. The Morgan Stanley Capital International (MSCI) EAFE + Canada Index was up 4.40% for the same period. 1999-THE SECOND SIX MONTHS IN REVIEW World financial markets began this period reeling from Brazil's financial turmoil and its decision to devalue its currency. President's Clinton's impeachment trial followed but quickly ended without the constitutional crisis that could roil the world's markets. Then NATO closed ranks to begin a 3 month military campaign in Kosovo resulting in a victory for the Allies. Economic forecasts for Europe were revised to reflect slower growth in the region, led by Germany and Italy. While these actions were ongoing, the Pacific Rim quietly worked its way out of its own financial crisis which last year seemed so bleak, led by resurgent economies in Thailand, Indonesia and Japan. The Euro, introduced in January, has fallen as the dollar gains strength against it and all other world currencies. Our models, which have helped us to anticipate and weather these storms, were responsible for our gradual increased presence in Japan and Hong Kong, while reducing our exposure in Europe, particularly in England, Germany and Italy. 1999 MARKET OUTLOOK The likelihood of worldwide recession or deflation has abated. Falling currencies abroad should help U.S. companies regain a toehold, particularly in those Asian markets that evaporated over the past 2 years. The U.S. economy remains strong led by the American consumer's insatiable appetite for goods and services backed by the financial wherewithall to purchase them. The falling Euro has the Continent wary but no currency appears to have the strength to take on the dollar. Europe continues to stagnate somewhat as evidenced by declining growth rates throughout those countries in the EMU. We are encouraged by the adoption by European companies of the U.S. industry model of consolidation and cost cutting, which may help pull it out of its stagnation. Our models currently have turned positive on Japan and somewhat less so on Europe. On the negative side, unease and uncertainty for the time being remain throughout Asia, with all sides hoping the recovery will not only continue but strengthen the underlying fundamentals in the affected countries. Latin America, with Brazil in particular, continues to remain an area of concern for the long term. Other concerns center on the Y2K problem in those foreign countries that appear to be lagging in preparation and continuing ethnic conflicts around the world, which appear to be increasing and which can explode at any time as witnessed in Kosovo. In short, the world and its markets still face major challenges to stability. Our goal at Avatar is to evaluate current investment risk and alter the portfolio mix to reflect the current environment. We believe we have done this. Our plan for the remainder of the year is to continue this strategy and to hopefully produce results that meet with your approval. Sincerely, /s/ Theodore M. Theodore Theodore M. Theodore Portfolio Manager Past performance is not predictive of future performance. The Morgan Stanley Capital International (MSCI) EAFE plus Canada Index is a capitalization-weighted index comprised of stocks representing a sampling of companies in a manner that replicates the industry composition of certain foreign markets. Countries included in the Index are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and the United Kingdom. Indexes do not incur expenses and are not available for direct investment. The Fund's average annual total return for the period from inception on February 2, 1998 through June 30, 1999 was 6.40%. The Fund's total return for the one-year ended June 30, 1999 was 0.93%. THE AVATAR ADVANTAGE INTERNATIONAL EQUITY ALLOCATION FUND SCHEDULE OF INVESTMENTS AT JUNE 30, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- Shares OPEN-END FUNDS: 99.93% Market Value - -------------------------------------------------------------------------------- 1,400 WEBS - Australia Index Series................. $ 15,663 1,100 WEBS - Canada Index Series.................... 15,468 2,500 WEBS - France Index Series.................... 56,250 2,600 WEBS - Germany Index Series................... 56,713 700 WEBS - Hong Kong Index Series................. 9,013 4,600 WEBS - United Kingdom Index Series............ 99,187 600 WEBS - Italy Index Series..................... 14,738 1,100 WEBS - Switzerland Index Series............... 17,393 400 WEBS - Spain Index Series..................... 11,125 1,200 WEBS - Netherlands Index Series............... 29,775 8,700 WEBS - Japan Index Series..................... 108,750 -------- 434,075 -------- Total Open-End Funds (cost $408,959)............................. 434,075 -------- Principal Amount SHORT-TERM INVESTMENTS: 5.14% - -------------------------------------------------------------------------------- 22,326 Firstar Stellar Treasury Fund................. 22,326 -------- Total Investments in Securities (cost $431,285+): 105.07% ................. 456,401 Liabilities in excess of other assets: (5.07%) (22,028) -------- TOTAL NET ASSETS: 100.0% ..................... $434,373 ======== +Gross unrealized appreciation and depreciation of securities is as follows: Gross unrealized appreciation................. $ 26,960 Gross unrealized depreciation................. (1,844) -------- Net unrealized depreciation............... $ 25,116 ======== WEBS (World Equity Benchmark Shares) are each a series of WEBS INDEX FUND, INC., an open-end management investment company. Each Index Series represents a portfolio of ordinary foreign shares and seeks to provide investment results that track the performance of that country's publicly traded equity securities in the aggregate. See Notes to Financial Statements. 4 THE AVATAR ADVANTAGE INTERNATIONAL EQUITY ALLOCATION FUND STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS Investments in securities, at value (identified cost $431,285) ................................ $ 456,401 Receivables: Due from Advisor .......................................... 9,152 Dividends and interest .................................... 164 Deferred Organization Cost ................................... 9,034 Prepaid expenses ............................................. 3,348 --------- Total assets ........................................... 478,099 --------- LIABILITIES Payables: Administration fee ........................................ 2,311 Distribution fee .......................................... 88 Portfolio securities purchased ............................ 17,584 Fund shares repurchased ................................... 50 Accrued expenses ............................................. 23,693 --------- Total liabilities ...................................... 43,726 --------- NET ASSETS ..................................................... $ 434,373 ========= Net asset value, offering and redemption price per share ($434,373 / 42,270 shares outstanding; unlimited number of shares (par value $0.01) authorized) ............... $ 10.28 ========= COMPONENTS OF NET ASSETS Paid-in capital .............................................. $ 420,880 Accumulated net investment loss .............................. (4,218) Accumulated net realized loss on investments ................. (7,405) Net unrealized appreciation on investments ................... 25,116 --------- Net assets ................................................ $ 434,373 ========= See Notes to Financial Statements. 5 THE AVATAR ADVANTAGE INTERNATIONAL EQUITY ALLOCATION FUND STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME Income Dividends ................................................... $ (1,203) Interest .................................................... 412 -------- Total income .......................................... (791) -------- Expenses Fund Accounting fees ........................................ 15,868 Administration fees (Note 3) ................................ 14,876 Professional fees ........................................... 8,927 Transfer agent fees ......................................... 8,431 Reports to shareholders ..................................... 3,472 Custody fees ................................................ 3,203 Advisory fees ............................................... 2,077 Trustees' fees .............................................. 1,676 Other ....................................................... 1,554 Amortization of deferred organization costs ................. 1,240 Distribution fees (Note 4) .................................. 519 Insurance expense ........................................... 414 Registration fees ........................................... 363 -------- Total expenses ........................................... 62,620 Less: advisory fee waiver and absorption (Note 3) ................................... (59,193) -------- Net expenses ............................................. 3,427 -------- Net investment loss ................................... (4,218) -------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss from security transactions ................... (4,235) Net change in unrealized appreciation on investments ............................................... 22,285 -------- Net realized and unrealized gain on investments ............. 18,050 -------- Net Increase in net assets resulting from operations ........................................ $ 13,832 ======== See Notes to Financial Statements. 6 THE AVATAR ADVANTAGE INTERNATIONAL EQUITY ALLOCATION FUND STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) - -------------------------------------------------------------------------------- Six Months February 2, 1998* Ended through June 30, 1999# December 31, 1998 -------------- ----------------- NET INCREASE IN ASSETS FROM OPERATIONS Net investment (loss) income ............ $ (4,218) $ 8,940 Net realized (loss) gain from security transactions ........................... (4,235) 8,724 Net change in unrealized appreciation on investments ......................... 22,285 2,831 --------- --------- Net increase in net assets resulting from operations ..................... 13,832 20,495 --------- --------- DISTRIBUTIONS TO SHAREHOLDERS Net investment income ................... -- (8,200) Realized capital gains .................. -- (14,799) --------- --------- Total distributions .................. -- (22,999) --------- --------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares (a) ... 7,950 415,095 --------- --------- Total increase in net assets ......... 21,782 412,591 --------- --------- NET ASSETS Beginning of period ........................ 412,591 -- End of period (including accumulated net investment loss of $4,218 and $0, respectively) ............................. $ 434,373 $ 412,591 ========= ========= (a) A summary of capital shares transactions is as follows: Six Months Ended February 2, 1998* through June 30, 1999# December 31, 1998 -------------------- ------------------------- Shares Value Shares Value ------ ----- ------ ----- Shares sold ........... 777 $8,000 39,104 $ 392,147 Shares issued in reinvestment of distributions ........ -- -- 2,398 22,998 Shares redeemed ....... 4 (50) (5) (50) --- ------ ------ --------- Net increase .......... 773 $7,950 41,497 $ 415,095 === ====== ====== ========= # Unaudited. * Commencement of operations. See Notes to Financial Statements. 7 THE AVATAR ADVANTAGE INTERNATIONAL EQUITY ALLOCATION FUND FINANCIAL HIGHLIGHTS FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD (UNAUDITED) - -------------------------------------------------------------------------------- Six Months February 2, 1998* Ended through June 30, 1999# December 31, 1998 -------------- ----------------- Net asset value, beginning of period.......... $ 9.94 $10.00 ------ ------ Income from investment operations: Net investment (loss) income............... (0.10) 0.23 Net realized and unrealized gain on investments.............................. 0.44 0.30 ------ ------ Total from investment operations.............. 0.34 0.53 ------ ------ Less distributions: From net investment income................. - (0.21) From realized capital gains................ - (0.38) ------ ------ Total distributions paid...................... - (0.59) ------ ------ Net asset value, end of period................ $10.28 $ 9.94 ====== ====== Total return.................................. 3.42%++ 5.50%++ Ratios/supplemental data: Net assets, end of period (thousands)......... $ 434 $ 413 Ratio of expenses to average net assets: Before expense reimbursement............... 30.14%+ 31.32%+ After expense reimbursement................ 1.65%+ 1.65%+ Ratio of net investment income (loss) to average net assets: Before expense reimbursement............... (30.52%)+ (27.25%)+ After expense reimbursement................ (2.03%)+ 2.45%+ Portfolio turnover rate....................... 61.36% 177.43% #Unaudited. *Commencement of operations. +Annualized. ++Not annualized. See Notes to Financial Statements. THE AVATAR ADVANTAGE INTERNATIONAL EQUITY ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS AT JUNE 30, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1 - ORGANIZATION The Avatar Advantage International Equity Allocation Fund (the "Fund") is a series of shares 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 February 2, 1998. 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 market 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 are recorded on the ex-dividend date. Realized gains and losses on securities sold are determined on the basis of identified cost. 9 THE AVATAR ADVANTAGE INTERNATIONAL EQUITY ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- D. DEFERRED ORGANIZATION COSTS: The Fund has incurred expenses of $12,500 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. NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES For the six months ended June 30, 1999, Avatar Investors Associates Corp. (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 1.00% based upon the average daily net assets of the Fund. For the six months ended June 30, 1999, the Fund incurred $2,077 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 1.65% 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 reimbursement is made. Such reimbursement may 10 THE AVATAR ADVANTAGE INTERNATIONAL EQUITY ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- not be paid prior to the Fund's payment of current ordinary operating expenses. For the six months ended June 30, 1999, the Advisor reduced its fees and absorbed Fund expenses in the amount of $59,193; no amounts were reimbursed to the Advisor. 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 annual rate of 0.20% of average daily net assets, subject to a minimum fee of $30,000 annually. 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. NOTE 4 - DISTRIBUTION COSTS The Trust has adopted a Distribution Plan (the "Plan") in accordance with Rule 12b-1 under the 1940 Act. The Plan provides that the Fund may pay a fee to the Advisor, as Distribution Coordinator, at an annual rate of up to 0.25% of the average daily net assets of the Fund. The fee is paid to the Advisor as reimbursement for, or in anticipation of, expenses incurred for distribution-related activity. For the six months ended June 30, 1999, the Fund paid the Advisor in the amount of $519. NOTE 5 - PURCHASES AND SALES OF SECURITIES For the six months ending June 30, 1999, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were $265,387 and $247,088, respectively. 11 ADVISOR Avatar Investors Associates Corp. 900 Third Avenue New York, New York 10022 DISTRIBUTOR First Fund Distributors, Inc. 4455 East Camelback Road, Suite 261-E Phoenix, Arizona 85018 CUSTODIAN Firstar Institutional Custody Services 425 Walnut Street M/L 6118 Cincinnati, Ohio 45202 TRANSFER AGENT Countrywide Fund Services, Inc. 312 Walnut Street, 21st Floor Cincinnati, Ohio 45202 (800)841-0924 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker LLP 345 California Street, 29th Floor San Francisco, California 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. -----END PRIVACY-ENHANCED MESSAGE-----