KAMINSKI POLAND FUND
ANNUAL REPORT
June 30, 1998
MANAGED BY
KAMINSKI ASSET MANAGEMENT, INC.
319 1st Avenue, Suite 400
Minneapolis, MN 55401
KAMINSKI POLAND FUND
August 14, 1998
Dear Shareholders,
We are pleased to bring you this annual report for the Kaminski Poland Fund
covering the period ended June 30, 1998. During this period, your Fund posted an
annual return of - 17.6% in comparison to the WIG Index producing a total return
of -.68%.
The Asian economic crisis and the currency turmoil of the Russian Ruble
continues to cause commotion on the stock exchanges of world markets.
Unfortunately this economic crisis is perceived to have an effect on all
emerging markets, with Poland being no exception. This in turn explains the
lower returns of the Fund's performance.
In the wake of this economic turmoil, I find it important to point out several
factors to reinforce the soundness of Poland's economy.
The Polish zloty is one of the world's few emerging market currencies to
increase in value this year. Unlike Asia and Russia, which are suffering from
structural economic problems, Poland has not experienced the same shock to its
currency. The Polish zloty has strengthened this year to the dollar as most
Asian and Russian currencies have weakened. I believe this is due to Poland's
stable political and economic climate.
The sell off in Asian markets has created tremendous opportunity in the buying
of Polish equities. The Fund's philosophy of long-term value investing can take
advantage of buying Polish securities at lower costs in an economy producing
strong GDP growth, increasing foreign direct investment and declining interest
rates and inflation.
Poland & Russia - Russia's current economic crisis has basically had a spill
over effect on the Polish market. It is important to keep in mind that Poland's
economic fundamentals are positive and its trade exposure to the Russian market
accounts for only 8% of Polish GDP growth.
The Polish market will experience renewed strength next year when Poland's newly
created Pension Reform Act goes into effect at the beginning of 1999. This
potentially could add approximately 2 billion dollars of market capitalization
to Poland's equity markets in 1999 alone and roughly $30 billion over the next 8
- -10 years. When demand exceeds supply in stocks, it generally makes equities
rise in value.
The Fund continues to purchase solid companies demonstrating stable management
and earnings growth in excess of 10% per year. Looking forward, the Fund should
continue to benefit from Poland's strong economic fundamentals, the fast pace of
structural reforms and the positive evolution of the political system. In
emerging markets such as Poland, those with foresight and patience should be
expected to achieve superior results over time.
Cordially,
/s/
M.G. Kaminski
President
<PAGE>
KAMINSKI POLAND FUND
Comparison of the change in value of a $10,000 investment in the Kaminski Poland
Fund versus the WIG Index of the Warsaw Stock Exchange.
Kaminski Poland Fund WIG Index
9-Jul-97 10,000 10,000
30-Sep-97 9,720 11,007
31-Dec-97 9,060 9,235
31-Mar-98 9,870 10,618
30-Jun-98 8,240 9,903
(Somewhere in graph)
* Fund total return from commencement of operations on July 9, 1997 to June 30,
1998: (17.6%)
(On bottom of graph)
Past performance is not predictive of future performance.
<PAGE>
<TABLE>
KAMINSKI POLAND FUND
<CAPTION>
SCHEDULE OF INVESTMENTS at June 30, 1998
- -------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 96.45% Market Value
- -------------------------------------------------------------------------------------------------------------------
Brewery: 5.18%
<S> <C> <C>
585 Zaklady Piwowarskie W Zywcu S.A. (Zywiec)............................... $ 70,461
---------
Building & Construction: 15.94%
11,900 Budimex S.A.*........................................................... 54,602
4,300 Exbud S.A.*............................................................. 51,792
13,750 Mostostal Krakow S.A.*.................................................. 30,363
9,500 Mostostal Zabrze S.A.................................................... 53,670
17,200 Mostostal-Export S.A.................................................... 26,636
---------
217,063
---------
Chemical - Diversified: 6.17%
1,850 Gorazdze S.A............................................................ 33,689
19,500 Polifarb-Cieszyn Wroclaw S.A............................................ 50,329
---------
84,018
---------
Commercial Banks: 14.24%
3,100 Bank Handlowy W Warszawie............................................... 59,119
425 Bank Przemyslowo Handlowy S.A.*......................................... 30,470
700 Bank Slaski S.A......................................................... 46,974
15,500 Kredyt Bank PBI S.A.*................................................... 57,341
---------
193,904
---------
Computers - Micro: 5.00%
3,390 Optimus S.A............................................................. 68,052
---------
Conglomerates: 4.39%
4,900 Elektrim Spolka Akcyjna S.A............................................. 59,721
---------
Engineering - Design: 0.95%
7,700 Prochem S.A............................................................. 12,918
---------
Food - Misc/Diversified: 4.19%
3,900 Agros Holding S.A.*..................................................... 57,040
---------
Home Furnishings: 4.40%
43,500 Fabryki Mebli Forte S.A.*............................................... $ 59,879
---------
Machinery - General Industrial: 1.58%
4,000 Hutmen S.A.*............................................................ 21,566
---------
Medical Drugs: 8.10%
4,550 Medicines S.A.*......................................................... 47,888
3,600 Polfa Kutno*............................................................ 62,460
---------
110,348
---------
Metal - Diversified: 7.84%
19,500 Huta Olawa S.A.......................................................... 49,770
14,200 KGHM Polska Miedz S.A.*................................................. 57,011
---------
106,781
---------
Multi-Line Insurance: 10.79%
47,000 Polisa S.A.*............................................................ 68,741
4,400 Tuir Warta S.A.......................................................... 78,233
---------
146,974
---------
Rubber - Tires: 3.24%
2,200 Debica S.A.............................................................. 44,164
---------
Television: 4.44%
5,500 @Entertainment, Inc.*................................................... 60,500
---------
Total Investments in Securities (cost $1,564,908)**: 96.45% ............. $1,313,389
Cash and Other Assets less Liabilities: 3.55%........................... 48,384
---------
Total Net Assets: 100.0% ............................................... $1,361,773
===========
*Denotes a non-income producing security.
**At June 30, 1998, the cost of securities for Federal tax purposes was the same
as the basis for financial reporting. Unrealized appreciation and depreciation
of securities and foreign currency were as follows:
Gross unrealized appreciation........................................... $ 84,024
Gross unrealized depreciation........................................... (335,560)
---------
Net unrealized depreciation....................................... $ (251,536)
===========
</TABLE>
<PAGE>
KAMINSKI POLAND FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at June 30, 1998
- -------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (cost $1,564,908).................................. $1,313,389
Cash................................................................................... 19,669
Receivables:
Due from Advisor................................................................. 22,889
Securities sold ................................................................. 1,400
Dividends........................................................................ 4,589
Deferred organization costs............................................................ 28,518
Prepaid expenses....................................................................... 14,436
---------
Total assets .............................................................. 1,404,890
---------
LIABILITIES
Payables for securities purchased...................................................... 11,100
Accrued expenses....................................................................... 32,017
---------
Total liabilities.......................................................... 43,117
---------
NET ASSETS $1,361,773
===========
Net asset value, offering and redemption price per share
($1,361,773/164,970 shares outstanding;
unlimited number of shares authorized, par value $0.01) ......................... $ 8.25
===========
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $1,616,723
Current period realized loss on investments............................................ (3,414)
Net unrealized depreciation on investments and foreign currency........................ (251,536)
---------
Net assets ...................................................................... $1,361,773
===========
</TABLE>
<PAGE>
KAMINSKI POLAND FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the period July 9, 1997* to June 30, 1998
- -------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Dividends (net of withholding tax of $1,152)..................................... $ 4,607
Interest......................................................................... 6,919
---------
Total income............................................................... 11,526
---------
Expenses
Advisory fees (Note 3)........................................................... 13,159
Administration fees (Note 3)..................................................... 29,260
Custodian and accounting fees.................................................... 35,262
Transfer agent fees.............................................................. 19,116
Professional fees................................................................ 22,460
Insurance expense................................................................ 1,457
Trustees' fees................................................................... 4,419
Registration fees................................................................ 11,640
Organization expense............................................................. 6,910
Other ........................................................................... 4,414
Distribution fees (Note 4)....................................................... 2,269
Reports to shareholders.......................................................... 9,064
---------
Total expenses............................................................. 159,430
Less advisory fee waiver and absorption (Note 3)........................... (134,372)
---------
Net expenses............................................................... 25,058
---------
Net investment loss.................................................. (13,532)
---------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss from security transactions..................................... (3,414)
Net change in unrealized depreciation on investments and foreign currency........ (251,536)
---------
Net realized and unrealized loss on investments and foreign currency....... (254,950)
---------
Net Decrease in Net Assets Resulting from Operations ................ $ (268,482)
===========
*Commencement of operations.
</TABLE>
<PAGE>
KAMINSKI POLAND FUND
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
July 9, 1997*
through
June 30, 1998
- -------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
OPERATIONS
<S> <C>
Net investment loss........................................................................ $ (13,532)
Net realized loss from security transactions............................................... (3,414)
Net change in unrealized depreciation on investments and foreign currency.................. (251,536)
---------
Net decrease in net assets resulting from operations ................................ (268,482)
---------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding shares (a)............... 1,630,255
---------
Total increase in net assets ........................................................ 1,361,773
NET ASSETS
Beginning of period........................................................................ -0-
---------
End of period ............................................................................. $1,361,773
==========
(a) A summary of capital share transactions is as follows:
July 9,1997*
through
June 30, 1998
-----------------------------
Shares Value
-------------- --------------
Shares sold................................................................. 195,353 $1,927,665
Shares redeemed............................................................. (30,383) (297,410)
-------------- --------------
Net increase................................................................ 164,970 $1,630,255
============== ==============
*Commencement of operations.
</TABLE>
<PAGE>
KAMINSKI POLAND FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
- -------------------------------------------------------------------------------------------------------------------
July 9, 1997*
through
June 30, 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period....................................................... $10.00
------------------
Loss from investment operations:
Net investment loss+................................................................ (0.08)
Net realized and unrealized loss on investments...................................... (1.67)
------------------
Total from investment operations........................................................... (1.75)
------------------
Net asset value, end of period............................................................. $ 8.25
==================
Total return............................................................................... (17.6%)***
Ratios/supplemental data:
Net assets, end of period (thousands)...................................................... $ 1,362
Ratio of expenses to average net assets:
Before expense reimbursement......................................................... 17.5%**
After expense reimbursement.......................................................... 2.75%**
Ratio of net investment loss to average net assets:
Before expense reimbursement......................................................... (16.23%)**
After expense reimbursement.......................................................... (1.48%)**
Portfolio turnover rate.................................................................... 25.74%
*Commencement of operations.
**Annualized.
+Net investment loss per share is calculated using the ending balance prior to
consideration of adjustments for permanent book and tax differences.
***Not annualized.
</TABLE>
<PAGE>
KAMINSKI POLAND FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Kaminski Poland 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 July 9, 1997. The Fund's primary investment objective is to seek
long term growth of capital by investing in publicly traded securities of
companies based in the Republic of Poland.
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: Investments in securities traded on the Warsaw
Stock Exchange, Poland's primary exchange, are valued at the last
reported sale price at the close of regular trading on the last
business day of the period; securities traded on the exchange for
which there have been no sale are valued at the last reported bid
price. Securities for which market quotations are not readily
available are valued following procedures approved by the Board of
Trustees. Short-term investments are valued at amortized cost, which
approximates market value.
U.S. Government securities with less than 60 days remaining to
maturity when acquired by the Fund are valued on an amortized cost
basis. U.S. Government securities with more than 60 days remaining to
maturity are valued at the current market value (using the mean
between the bid and the asked price) until the 60th day prior to
maturity, and are then valued at amortized cost based upon the value
on such date unless the Board determines during such 60-day period
that this amortized cost basis does not represent fair value.
Foreign securities are recorded in the financial statements after
translation to U.S. dollars, based on the applicable exchange rate at
the end of the period. The Fund does not isolate that portion of the
results of operations arising as a result of changes in the currency
exchange rate from the fluctuations arising as a result of changes in
the market prices of investments during the period.
Interest income is translated at the exchange rates which existed at
the dates the income was accrued. Exchange gains and losses related to
interest income are included in interest income on the accompanying
Statement of Operations.
B. Repurchase Agreements: The Fund may enter into repurchase agreements
with government securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System or with such
other brokers or dealers that meet the credit guidelines established
by the Board of Trustees. The Fund will always receive and maintain,
as collateral, securities whose market value, including accrued
interest, will be at least equal to 102% of the dollar amount invested
by the Fund in each agreement, and the Fund will make payment for such
securities only upon physical delivery or upon evidence of book entry
transfer to the account of the custodian. To the extent that the term
of any repurchase transaction exceeds one business day, the value of
collateral is marked-to-market on a daily basis to ensure the adequacy
of the collateral. If the seller defaults and the value of the
collateral declines, or if bankruptcy proceedings are commenced with
respect to the seller of the security, realization of the collateral
by the Fund may be delayed or limited.
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.
Differences exist between net realized capital losses for financial
statement and tax purposes due to the deferral of capital losses for
tax purposes.
It is the Fund's policy to reclassify the net effect of permanent
differences between book and taxable income to trust capital accounts
on the statement of assets and liabilities. As a result of permanent
book-to-tax differences for the period ended June 30, 1998, the
accumulated net investment loss was reclassified into paid-in capital.
This reclassification has no effect on net assets, net asset value per
share, or the change in net assets resulting from operations.
D. Security Transactions, Dividends and Distributions: Security
transactions are accounted for on the trade date. The cost of
securities owned on realized transactions are relieved on the
first-in, first-out (FIFO) basis for book and tax purposes. Dividend
income and distributions to shareholders are recorded on the
ex-dividend date.
E. Deferred Organization Costs: The Fund has incurred expenses of $35,427
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.
F. Concentration of Risk: As of June 30, 1998 the Fund held a significant
portion of its assets in foreign securities. Certain price and foreign
exchange fluctuations as well as economic and political situations in
Poland could have an impact on the Fund's net assets. It is the
Trust's policy to continually monitor these off-balance sheet risks.
G. 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 period ended June 30, 1998, Kaminski Asset Management, Inc. (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 1.45% based upon the average daily net assets of the Fund.
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 2.75% 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 the first, second or third fiscal year next
succeeding the fiscal year of the reduction or absorption 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. With respect to the reimbursement of a particular
fee reduction or expense payment, a reimbursement to the Advisor is permitted
only within the three year period following the year in which the Advisor
reduced the subject fee or paid the subject expense. Any such reimbursement is
also contingent upon Board of Directors review and approval at the time the
reimbursement is made. Such reimbursement may be paid prior to the Fund's
payment of current expenses if so requested by the Advisor even if that practice
may require the Advisor to waive, reduce or absorb current Fund expenses. For
the period ended June 30, 1998, the Advisor reduced its fees and absorbed Fund
expenses in the amount of $134,372; no amounts were reimbursed.
Investment Company Administration Corporation (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 .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 - DISTRIBUTIONS
The Fund 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, acting 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
Distribution Coordinator as reimbursement for, or in anticipation of, expenses
incurred for distribution-related activity.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $1,752,182 and
$183,861, respectively.
<PAGE>
Report of Independent Accountants
August 21, 1998
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Kaminski Poland Fund (the
"Fund") at June 30, 1998, and the results of its operations, the changes in its
net assets and the financial highlights for the period July 9, 1997
(commencement of operations) through June 30, 1998, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at June 30, 1998 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
/s/
PricewaterhouseCoopers LLP
<PAGE>
ADVISOR
Kaminski Asset Management, Inc.
319 1st Avenue, Suite 400
Minneapolis, MN 55401
Web Page www.polfund.com
DISTRIBUTOR
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
TRANSFER AGENT
American Data Services, Inc.
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
(888) 229-2105
AUDITOR
PricewaterhouseCoopers LLP
33 South 6th Street, Suite 3100
Minneapolis, MN 55402
(612) 332-7000
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.
