InformationTech 100(R) Fund
160 Sansome Street
San Francisco, CA 94104
(415) 705-7777
Dear Fellow Shareholder,
The past year was definitely the year of the bull in information technology
(IT). After a major downturn in October 1997, technology rebounded strongly
through the first quarter of 1998. Our shareholders have been well rewarded for
staying the course.
IT companies continue to enjoy record sales and profits despite the downturn in
Asia and the slowing domestic economy. Year 2000 conversions, Euro currency
consolidation, corporate intranets, and e-commerce are just some of the major
issues driving the industry forward. The positive trend in IT spending is
unlikely to slow given the strong economic benefits resulting from employee
productivity gains, expense reduction and sales enhancement.
The Portfolio:
We ended the fund's fiscal year on February 28, 1998, up 50.75%. The Fund's
total return inception through March 31, 1998 was 60.30%. The fund celebrated
its one year anniversary with a 12 month return of 56.3% (inception on April 8,
1997 through April 7, 1998). The average total return for the Science &
Technology Funds Group was 40.37%, according to Lipper Analytical Services, Inc.
Among our best performers since inception through March 31, 1998 were: (1)
Compuware, up 171%, (2) America Online, up 175%, (3) Dell, up 202%, (4) Lucent,
up 125%, (5) CBT Group, up 115%, (6) PeopleSoft, up 169% and (7) SAP ADRs, up
157%. The networking stocks, excluding Cisco, continue to be laggards in the
performance race along with specific software and hardware companies that
disappoint Wall Street (ex: Sybase and Seagate).
Outlook:
Nothing goes up in a straight line. Technology, known to be volatile, will
undoubtedly have some setbacks on the way up. We believe that IT companies are
likely to be less volatile than other technology companies given their strong
ties to the corporate markets...but they will not be immune. Short-term, share
prices have gotten ahead of the fundamental values, especially in the
Internet-related companies. However, we are still bullish in our long-term
outlook as IT remains the fastest growing sector in the North American economy.
/s/ William F.K. Schaff
William F.K. Schaff
Portfolio Manager
<PAGE>
InformationTech 100(R) Fund
Comparison of the change in value of a $10,000 investment in the information
Tech 100(R) Fund versus the Wilshire 5000 Equity Index
Fund Wilshire 5000 Wilshire Raw Wilshire Change
---- ------------- ------------ ---------------
04/08/97 10,000 10,000 7305.75 1
05/31/97 11,740 10,292 7519.29 1.02922903192691
08/31/97 13,095 11,881 8679.98 1.18810252198611
11/28/97 13,080 12,514 9142.43 1.25140197789412
02/27/98 15,075 13,697 10006.4 1.36966088355063
(Somewhere in graph)
* Fund total return from commencement of operations on April 6, 1997 to February
27, 1998: 50.75%
(On bottom of graph)
Past performance is not predictive of future performance.
2
<PAGE>
InformationTech 100(R) Fund
SCHEDULE OF INVESTMENTS at February 28, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 80.17% Market Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Audio and Video Equipment: 0.41%
145 Hitachi Ltd............................................................. $ 10,984
--------
Communications Equipment: 6.72%
1,800 ADC Telecommunications, Inc.*........................................... 46,519
500 Advanced Fibre Communications*.......................................... 14,984
230 Ericsson (L.M.) Telephone Co............................................ 10,422
500 Lucent Technologies..................................................... 54,187
120 Motorola, Inc........................................................... 6,690
220 Northern Telecom Ltd.................................................... 11,729
1,000 Pairgain Technology*.................................................... 20,156
250 Tellabs, Inc.*.......................................................... 15,102
--------
179,789
--------
Communications Services: 12.31%
400 Airtouch Communications*................................................ 17,975
1,000 At-Home Corp., Series A*................................................ 34,187
150 AT&T Corp............................................................... 9,131
750 Cox Communications, Inc.*............................................... 28,922
900 First Data Corp......................................................... 30,600
100 MCI Communications...................................................... 4,784
1,600 Nextel Communications, Inc., Class A*................................... 47,250
2,100 Tele-Communications, Inc.*.............................................. 61,097
640 Viacom Inc., Class A*................................................... 30,240
1,700 Worldcom, Inc.*......................................................... 64,972
--------
329,158
--------
Computer Hardware: 5.32%
1,470 Compaq Computer Corp.................................................... 47,132
250 Dell Computer Corp.*.................................................... 34,961
175 Digital Equipment*...................................................... 9,964
205 Hewlett-Packard Co...................................................... 13,735
200 IBM..................................................................... 20,887
325 Sun Microsystems*....................................................... 15,488
--------
142,167
--------
</TABLE>
See accompanying Notes to Financial Statements.
3
<PAGE>
InformationTech 100(R) Fund
SCHEDULE OF INVESTMENTS at February 28, 1998, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computer Networks: 4.61%
280 Arbor Software*......................................................... $ 12,583
700 Bay Networks, Inc.*..................................................... 23,713
650 Cambridge Technology Partners*.......................................... 29,656
587 Cisco Systems*.......................................................... 38,687
165 Sapient Corp.*.......................................................... 13,050
400 Vanstar Corp.*.......................................................... 5,525
--------
123,214
--------
Computer Peripherals: 1.24%
1,000 American Power Conversion Co.*.......................................... 29,031
116 3 Com Corp.*............................................................ 4,151
--------
33,182
--------
Computer Services: 5.18%
250 Affiliated Computer Services, Inc.*..................................... 8,047
500 America Online*......................................................... 60,563
280 American Management Systems, Inc.*...................................... 7,332
240 Automatic Data Processing............................................... 14,655
400 Ceridian Corp.*......................................................... 18,625
85 Computer Sciences*...................................................... 8,898
155 EDS Corporation......................................................... 6,791
185 Gartner Group*.......................................................... 7,388
195 NCR Corp.*.............................................................. 6,118
--------
138,417
--------
Computer Software: 2.06%
400 SAP (Sponsored) ADR..................................................... 55,000
--------
Computer Storage Devices: 0.94%
400 EMC Corp.*.............................................................. 15,300
145 Storage Technology*..................................................... 9,896
--------
25,196
--------
Computer Systems - Desktop and Application: 0.60%
900 Unisys Corp.*........................................................... 16,088
--------
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
InformationTech 100(R) Fund
SCHEDULE OF INVESTMENTS at February 28, 1998, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consulting and Integration Services: 4.42%
500 Computer Horizons Corp.*................................................ $ 26,062
500 Dataworks Corp.*........................................................ 12,656
700 HBO & Co................................................................ 37,909
200 Mastech Corp.*.......................................................... 10,563
150 Renaissance Worldwide, Inc.*............................................ 8,944
250 Systems & Computer Technology Corp.*.................................... 10,906
400 Wang Laboratories, Inc.*................................................ 11,175
--------
118,215
--------
Database and Tools Software: 0.28%
200 Mercury Interactive Corp.*.............................................. 7,500
--------
Enterprise Application Software: 2.65%
150 Citrix Systems, Inc.*................................................... 6,323
200 HNC Software*........................................................... 7,150
100 I2 Technologies, Inc.*.................................................. 5,644
500 Siebel Systems, Inc.*................................................... 30,781
200 Veritas Software Corp.*................................................. 11,388
350 Viasoft Inc.*........................................................... 9,472
--------
70,758
--------
Enterprise Software: 5.48%
3,000 Brooktrout Technology, Inc.*............................................ 47,625
1,600 Cendant Corp.*.......................................................... 60,000
600 Networks Associates, Inc.*.............................................. 38,813
--------
146,438
--------
Insurance (Miscellaneous): 0.81%
300 Policy Management Systems*.............................................. 21,713
--------
Internet Services: 1.45%
500 Mindspring Enterprises, Inc.*........................................... 24,219
200 Yahoo! Inc.*............................................................ 14,637
--------
38,856
--------
Office Equipment: 0.45%
135 Xerox Corp.............................................................. 11,973
--------
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
InformationTech 100(R) Fund
SCHEDULE OF INVESTMENTS at February 28, 1998, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Personal Productivity Software: 0.52%
300 Intuit Inc.*............................................................ $ 13,988
--------
Rental and Leasing: 0.33%
210 Comdisco, Inc........................................................... 8,754
--------
Semiconductors: 2.17%
375 Intel Corp.............................................................. 33,621
420 Texas Instruments....................................................... 24,308
--------
57,929
--------
Software and Programming: 21.66%
170 Adobe Systems, Inc...................................................... 7,517
300 Aspen Technology, Inc.*................................................. 11,963
410 Baan Co.*............................................................... 18,437
450 BMC Software*........................................................... 34,439
500 CBT Group*.............................................................. 45,969
515 Check Point Software*................................................... 19,844
650 Computer Associates..................................................... 30,631
1,300 Compuware Corp.*........................................................ 54,803
500 Documentum, Inc.*....................................................... 23,281
240 Hummingbird Communications*............................................. 8,145
330 Hyperion Software*...................................................... 13,592
470 Keane, Inc.*............................................................ 21,855
700 Legato Systems, Inc.*................................................... 34,388
350 Manugistics Group*...................................................... 13,945
170 Microsoft Corp.*........................................................ 14,413
540 Oracle Corp.*........................................................... 13,314
1,200 Peoplesoft, Inc.*....................................................... 53,588
890 Platinum Technology*.................................................... 22,639
600 Saville Systems Ireland ADR*............................................ 27,975
200 Security Dynamics*...................................................... 7,113
800 Sterling Commerce, Inc.*................................................ 36,500
410 Sterling Software*...................................................... 21,602
475 Symantec Corp.*......................................................... 11,949
205 Transaction Systems Architects, Inc.*................................... 8,866
500 Vantive Corp.*.......................................................... 13,703
220 Wind River Systems*..................................................... 8,649
--------
579,120
--------
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
InformationTech 100(R) Fund
SCHEDULE OF INVESTMENTS at February 28, 1998, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Telecommunications Infrastructure: 0.56%
150 Nokia Corp., ADR ...................................................... $ 15,113
----------
Total Common Stocks (cost $1,718,980)................................... 2,143,552
----------
Principal Amount SHORT-TERM INVESTMENTS: 6.83%
- --------------------------------------------------------------------------------------------------------------
$182,532 Star Treasury Fund, 4.73% (cost $182,532)............................... 182,532
----------
Total Investments in Securities (cost $1,901,512+): 87.00% ............. 2,326,084
Other Assets less Liabilities: 13.00%................................... 347,659
----------
Total Net Assets: 100.0% ............................................... $2,673,743
==========
*Non-income producing security.
+ At February 28, 1998, the cost of securities for Federal tax purposes was the same as the basis for financial
reporting. Unrealized appreciation and depreciation of securities were as follows:
Gross unrealized appreciation........................................... $ 440,886
Gross unrealized depreciation........................................... (16,314)
----------
Net unrealized appreciation....................................... $ 424,572
=========
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
InformationTech 100(R) Fund
STATEMENT OF ASSETS AND LIABILITIES at February 28, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (identified cost $1,901,512) (Note 2) ............. $2,326,084
Receivables:
Due from Advisor (Note 3)........................................................ 6,499
Dividends and interest .......................................................... 538
Fund shares sold................................................................. 323,557
Deferred organization costs (Note 2)................................................... 15,194
Prepaid expenses....................................................................... 18,464
----------
Total assets .............................................................. 2,690,336
----------
LIABILITIES
Administration fee payable............................................................. 2,301
Accrued Expenses....................................................................... 14,292
----------
Total liabilities.......................................................... 16,593
----------
NET ASSETS .................................................................................. $2,673,743
==========
Net asset value, offering and redemption price per share
($2,673,743/88,685 shares outstanding;
unlimited number of shares (par value $.01) authorized) ......................... $30.15
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $2,274,035
Net realized loss on investments....................................................... (24,864)
Net unrealized appreciation on investments............................................. 424,572
----------
Net assets ...................................................................... $2,673,743
==========
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
InformationTech 100(R) Fund
STATEMENT OF OPERATIONS - For the Period from April 8, 1997*
through February 28, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Income
Dividends........................................................................ $ 1,446
Interest......................................................................... 2,917
---------
Total income............................................................... 4,363
---------
Expenses
Administration fee (Note 3)...................................................... 26,794
Transfer agent fees.............................................................. 11,012
Fund accounting.................................................................. 10,856
Audit fees....................................................................... 9,826
Registration..................................................................... 9,214
Advisory fee (Note 3)............................................................ 8,353
Custody fees..................................................................... 6,073
Miscellaneous.................................................................... 6,026
Directors' fees.................................................................. 5,761
Legal fees....................................................................... 4,573
Reports to shareholders.......................................................... 4,466
Amortization of deferred organization costs (Note 2)............................. 3,306
Insurance........................................................................ 1,418
---------
Total expenses............................................................. 107,678
Less: expenses reimbursed/waived (Note 3).................................. (94,417)
---------
Net expenses............................................................... 13,261
---------
Net investment loss ................................................. (8,898)
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss from security transactions..................................... (23,156)
Net change in unrealized appreciation on investments............................. 424,572
---------
Net realized and unrealized gain on investments............................ 401,416
---------
Net Increase in Net Assets Resulting from Operations ................ $ 392,518
=========
*Commencement of operations.
</TABLE>
See accompanying Notes to Financial Statements.
9
<PAGE>
InformationTech 100(R) Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
April 8, 1997*
through
February 28, 1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
NET INCREASE IN ASSETS FROM
OPERATIONS
Net investment loss..................................................................... $ (8,898)
Net realized loss from security transactions............................................ (23,156)
Net change in unrealized appreciation on investments.................................... 424,572
----------
Net increase in net assets resulting from operations ............................. 392,518
----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding shares (a)............ 2,281,225
----------
Total increase in net assets ..................................................... 2,673,743
NET ASSETS
Beginning of period..................................................................... -0-
----------
End of period .......................................................................... $2,673,743
==========
(a) A summary of capital shares transactions is as follows:
April 8, 1997*
through
February 28, 1998
-----------------------
Shares Value
------- ----------
Shares sold.............................................................. 89,946 $2,313,271
Shares redeemed.......................................................... (1,261) (32,046)
------- ----------
Net increase............................................................. 88,685 $2,281,225
======= ==========
*Commencement of operations.
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE>
InformationTech 100(R) Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - For a capital share outstanding throughout the period
- -------------------------------------------------------------------------------------------------------------------
April 8, 1997*
through
February 28, 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period....................................................... $ 20.00
Income from investment operations:
Net investment income................................................................ (0.10)
Net realized and unrealized gain on investments...................................... 10.25
--------
Total from investment operations........................................................... 10.15
--------
Net asset value, end of period............................................................. $ 30.15
========
Total return............................................................................... 50.75%**
Ratios/supplemental data:
Net assets, end of period (thousands)...................................................... $ 2,674
Ratio of expenses to average net assets:
Before expense reimbursement......................................................... 12.17%***
After expense reimbursement.......................................................... 1.50%***
Ratio of net investment loss to average net assets......................................... (1.01%)***
Portfolio turnover rate.................................................................... 32.78%
Average commission rate paid per share..................................................... $ .1000
*Commencement of operations.
**Not annualized.
***Annualized.
</TABLE>
See accompanying Notes to Financial Statements.
11
<PAGE>
InformationTech 100(R) Fund
NOTES TO FINANCIAL STATEMENTS at February 28, 1998
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The InformationTech 100 Fund (the "Fund") is a diversified series of
shares of beneficial interest of Advisors Series Trust (the "Trust"), which is
registered under the Investment Company Act of 1940 (the "1940 Act") as a
diversified open-end management investment company. The Fund began operations on
April 8, 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 market
value. Securities listed on an exchange or quoted on a National
Market System are valued at the last sale price. Other securities
are valued at the last quoted bid price. Short-term investments are
stated at cost, which when combined with accrued interest,
approximates market value.
B. Federal Income Taxes. The Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute 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.
D. Deferred Organization Costs. The Fund has incurred expenses of
$18,500 in connection with the organization of the Fund. 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 amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the period ended February 28, 1998, Bay Isle Financial Corporation
(the "Advisor") provided the Fund with investment management services under an
Investment Advisory Agreement. The Advisor furnishes all investment advice,
office space, facilities, and most of the personnel needed by the Fund. As
compensation for its services, the Advisor is entitled to a monthly fee at the
annual rate of .95% based upon the average daily net assets of the Fund. For the
period ended February 28, 1998, the Fund incurred $8,353 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 1.5% 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
12
<PAGE>
InformationTech 100(R) Fund
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
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 Trustees 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 February 28,
1998, the Advisor reduced its fees and absorbed Fund expenses in the amount of
$94,417; 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 Fund 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 net assets, subject to a $30,000 annual
minimum.
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 and trustees of the Trust are also officers and/or
directors of the Administrator and the Distributor.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, other
than short-term investments, for the period ended February 28, 1998, were
$2,018,465 and $276,329, respectively. The Fund incurred a net capital loss of
$24,864 for the period November 1, 1997 to February 28, 1998. In accordance with
Federal income tax regulations the Fund has deferred this loss into the fiscal
year commencing March 1, 1998 to offset future capital gains.
13
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Trustees and Shareholders
The InformationTech 100 Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The InformationTech 100 Fund as of February 28,
1998, and the related statements of operations, changes in net assets and the
financial highlights for the period from April 8, 1997 (commencement of
operations) to February 28, 1998. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of February 28, 1998, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
InformationTech 100 Fund as of February 28, 1998, the results of its operations,
the changes in its net assets, and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles.
McGLADREY & PULLEN, LLP
New York, New York
April 3, 1998
<PAGE>
This page intentionally left blank.
<PAGE>
Advisor
Bay Isle Financial Corporation
160 Sansome Street, 17th Floor
San Francisco, CA 94104
(415) 705-7777
Distributor
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E INFORMATIONTECH 100(R)
Phoenix, AZ 85018 MUTUAL FUND
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
Transfer Agent
American Data Services, Inc. Annual Report
150 Motor Parkway
Hauppauge, NY 11788
(800) 385-7003 For the period ended February 28, 1998
Legal Counsel
Paul, Hastings, Janofsky & Walker
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.
<PAGE>
The American Trust
Allegiance Fund
One Court Street
Lebanon, New Hampshire 03766
ANNUAL REPORT
FOR THE PERIOD ENDED
FEBRUARY 28, 1998
<PAGE>
American Trust Allegiance
One Court Street
Lebanon, New Hampshire 03766
March 30, 1998
Dear Fellow Shareholder,
We are pleased to send you the American Trust Allegiance Fund's first
annual report. Our first year of operation has been encouraging in terms of
growth of the Fund's assets, which totaled $6.9 million as of March 31, 1998.
The Fund's investment performance was quite competitive, as it ranked in the top
15% of growth mutual funds in its first full year of operation according to
Lipper Analytical Services, Inc. Based on total return, Lipper ranked the Fund
102 out of 858 growth funds for the year ending March 31, 1998.
The past year was not without challenges. Heightened volatility, rapid
rotation among industry sectors, international economic problems, and high
valuation levels in the financial markets presented difficulties for long term
investors. Our investment discipline is characterized by a "bottom up" focus,
identifying companies that meet our social and financial investment guidelines.
We do not attempt to forecast the stock market, interest rates, inflation, or
the U.S. economy. Our job is to look through the day to day volatility of the
U.S. stock market and track the operating performance of companies in our
portfolio. Shifts in the competitive position and changes in the fundamentals of
our companies will trigger a change in our portfolio holdings.
Our research efforts continue to search for predominantly large
capitalization, domestic, high quality companies which possess, on average,
growth in earnings per share faster than that of the general stock market. In
the current market environment, we feel companies that have demonstrated a more
predictable, consistent record of growth in earnings per share are the most
attractive. Our research continues to favor companies in the technology and
financial services sectors and consequently, the Fund's portfolio is
overweighted, relative to the S&P 500 Index, in these areas.
We thank you for your support and look forward to helping you achieve your
financial goals.
/s/ Jeffrey M. Harris, CFA /s/ Paul H. Collins
Jeffrey M. Harris, CFA Paul H. Collins
<PAGE>
American Trust Allegiance Fund
TOP 10 HOLDINGS at February 28, 1998
- ------------------------------------------
Lucent Technologies
Microsoft Corp.
Computer Sciences Corp.
Allied Signal, Inc.
Cintas Corp.
American International Group
Walt Disney Company
State Street Corp.
Tellabs, Inc.
Solectron Corp.
3
<PAGE>
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.
Fund S&P 500 S&P Raw S&P Change
03/11/97 10,000 10,000 2452.78 1
05/31/97 10,630 10,497 2574.69 1.04970278622624
08/31/97 11,450 11,175 2740.92 1.11747486525494
01/28/97 12,200 11,927 2925.49 1.19272417420233
02/27/98 13,480 13,151 3225.57 1.31506698521677
(Somewhere in graph)
*Fund total return from commencement of operations on March 11, 1997 to February
28, 1997: 34.80%
(On bottom of Graph)
Past performances in not predictive of future performance.
<PAGE>
American Trust Allegiance Fund
SCHEDULE OF INVESTMENTS
at February 28, 1998
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 94.17% Market Value
- --------------------------------------------------------------------------------
Airlines: 0.54%
1,200 Southwest Airlines $ 34,425
----------
Banks -
Major Regional: 8.33%
1,550 Fifth Third Bancorp 122,450
2,150 Mellon Bank 133,972
1,650 Northern Trust Corp. 125,245
2,400 State Street Corp. 148,350
----------
530,017
----------
Communications
Equipment: 4.92%
1,550 Lucent Technologies 167,981
2,400 Tellabs, Inc.* 144,975
----------
312,956
----------
Computer Hardware: 2.14%
4,250 Compaq Computer Corp. 136,266
----------
Computers -
Networking: 1.96%
1,887 Cisco Systems, Inc.* 124,365
----------
Computer Software /
Services: 9.48%
2,125 Computer Associates
International, Inc. 100,141
1,550 Computer Sciences Corp.* 162,266
1,950 Microsoft Corp.* 165,323
2,750 Oracle Corp.* 67,805
2,400 Peoplesoft, Inc.* 107,175
----------
602,710
----------
Distributor -
Food and Health: 2.00%
2,700 Sysco Corp. 127,069
----------
Electrical Equipment: 6.58%
2,200 Emerson Electric Co. 140,387
4,500 Molex, Inc. 136,688
2,925 Solectron Corp.* 141,497
----------
418,572
----------
4
<PAGE>
American Trust Allegiance Fund
SCHEDULE OF INVESTMENTS
at February 28, 1998, Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Electonics -
Semiconductor: 4.13%
3,600 Applied Materials, Inc.* $ 132,637
1,450 Intel Corp. 130,002
------------
262,639
------------
Entertainment: 2.38%
1,350 Walt Disney Company 151,116
------------
Financial (Diverse): 3.67%
1,850 Federal National Mortgage
Association 118,053
2,550 Sunamerica, Inc. 115,547
------------
233,600
------------
Foods: 3.99%
2,350 Campbell Soup Co. 136,447
3,900 Conagra, Inc. 117,000
------------
253,447
------------
Household Products: 4.34%
1,550 Clorox Company 136,013
1,725 Colgate - Palmolive Co. 140,048
------------
276,061
------------
Insurance - Brokers: 1.91%
1,400 Marsh & McLennan, Inc. 121,362
------------
Insurance - Multiline: 2.46%
1,300 American International
Group 156,244
------------
Investment Bank /
Brokerage: 2.98%
1,900 Franklin Resources 96,900
1,400 T. Rowe Price Associates 92,925
------------
189,825
------------
Manufacturer - Diverse: 4.68%
3,750 Allied Signal, Inc. 159,609
2,300 Illinois Tool Works 137,856
------------
297,465
------------
5
<PAGE>
American Trust Allegiance Fund
SCHEDULE OF INVESTMENTS
at February 28, 1998, Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Manufacturer - Special 3.86%
2,550 Diebold $ 131,006
1,700 Sealed Air Corp.* 114,431
-----------
245,437
-----------
Oil and Gas - Drilling and
Equipment: 3.47%
1,650 Halliburton Co. 76,725
1,850 Nabors Industries, Inc.* 42,319
1,350 Schlumberger Ltd. 101,756
-----------
220,800
-----------
Oil - International: 1.45%
1,700 Royal Dutch Petroleum 92,331
-----------
Personal Care: 2.04%
1,200 Gillette Co. 129,450
-----------
Retail - Specialty: 6.10%
3,400 Barnes & Noble, Inc.* 119,425
3,050 Bed Bath & Beyond, Inc.* 132,008
4,100 Borders Group, Inc.* 136,581
-----------
388,014
-----------
Services - Commercial and
Consumer: 2.48%
3,700 Cintas Corp. 157,944
-----------
Services - Computer
Systems: 1.69%
3,150 Sungard Data Systems, Inc.* 107,691
-----------
Services -
Data Processing: 3.15%
1,550 Automatic Data Processing 94,647
2,050 Paychex, Inc. 105,959
-----------
200,606
-----------
Telephone: 1.84%
1,550 SBC Communications 117,219
-----------
6
<PAGE>
American Trust Allegiance Fund
SCHEDULE OF INVESTMENTS
at February 28, 1998, Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Textiles - Apparel: 1.60%
1,850 Jones Apparel Group, Inc.* $ 101,750
-----------
Total Common Stocks
(cost $4,870,242) 5,989,381
-----------
Principal
Amount SHORT-TERM INVESTMENTS: 5.50%
- --------------------------------------------------------------------------------
$349,662 Star Treasury Fund, 4.62%
(cost $349,662) 349,662
-----------
Total Investments in
Securities (cost
$5,219,904+): 99.67% 6,339,043
Other Assets less
Liabilities: 0.33% 21,079
-----------
Total Net Assets: 100.0% $ 6,360,122
============
*Non-income producing security.
+ At February 28, 1998, the cost of securities for Federal tax purposes was
$5,230,019. Unrealized appreciation and depreciation of securities were as
follows:
Gross unrealized
appreciation $ 1,170,045
Gross unrealized
depreciation (61,021)
-----------
Net unrealized appreciation $ 1,109,024
===========
See accompanying Notes to Financial Statements.
7
<PAGE>
American Trust Allegiance Fund
STATEMENT OF ASSETS AND LIABILITIES at
February 28, 1998
- --------------------------------------------------------------------------------
ASSETS
Investments in securities,
at value (identified cost
$5,219,904) (Note 2) $6,339,043
Receivables:
Due from Advisor 2,345
Dividends and interest 4,024
Subscriptions 2,335
Deferred organization costs (Note 2) 14,910
Prepaid expenses 17,957
----------
Total assets 6,380,614
----------
LIABILITIES
Due to Administrator 2,301
Accrued expenses 18,191
----------
Total liabilities 20,492
----------
NET ASSETS $6,360,122
==========
Net asset value, offering and
redemption price per share
($6,360,122/471,975 shares
outstanding; unlimited number
of shares (par value $.01)
authorized) $13.48
======
COMPONENTS OF NET ASSETS
Paid-in capital $5,175,128
Undistributed net realized gain
on investment transactions 65,855
Net unrealized appreciation on
investments 1,119,139
----------
Net assets $6,360,122
==========
See accompanying Notes to Financial Statements.
8
<PAGE>
American Trust Allegiance Fund
STATEMENT OF OPERATIONS - For the Period From
March 11, 1997* through February 28, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends $ 29,222
Interest 8,849
-----------
Total income 38,071
-----------
Expenses
Advisory fees (Note 3) 34,946
Administration fees (Note 3) 29,095
Registration fees 12,990
Transfer agent fees 12,609
Fund accounting 12,507
Audit fees 10,669
Miscellaneous 8,022
Custody fees 6,095
Legal fees 5,880
Directors' fees 5,675
Reports to shareholders 4,850
Amortization of deferred
organization costs 3,590
Insurance 2,275
-----------
Total expenses 149,203
-----------
Less: expenses reimbursed/
waived (95,674)
-----------
Net expenses 53,529
-----------
Net investment loss (15,458)
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain from security
transactions 81,313
Net change in unrealized
appreciation on investments 1,119,139
-----------
Net realized and unrealized gain
on investments 1,200,452
-----------
Net Increase in Net Assets
Resulting from Operations $ 1,184,994
===========
*Commencement of operations.
See accompanying Notes to Financial Statements.
9
<PAGE>
American Trust Allegiance Fund
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
March 11, 1997*
through
February 28, 1998
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss $ (15,458)
Net realized gain from security
transactions 81,313
Net change in unrealized
appreciation on investments 1,119,139
-----------
Net increase in net assets
resulting from operations 1,184,994
-----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from
net change in outstanding shares (a) 5,175,128
-----------
Total increase in net assets 6,360,122
NET ASSETS
Beginning of period -0-
-----------
End of period $ 6,360,122
===========
(a) A summary of capital shares
transactions is as follows:
March 11, 1997*
through
February 28, 1998
-------------------------
Shares Value
--------- -----------
Shares sold 480,212 $ 5,272,001
Shares redeemed (8,237) (96,873)
------- -----------
Net increase 471,975 $ 5,175,128
======= ===========
*Commencement of operations.
See accompanying Notes to Financial Statements.
10
<PAGE>
American Trust Allegiance Fund
FINANCIAL HIGHLIGHTS - For a capital share
outstanding throughout the period
- --------------------------------------------------------------------------------
March 11, 1997*
through
February 28, 1998
- --------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
------
Income from investment operations:
Net investment loss (0.03)
Net realized and unrealized gain
on investments 3.51
------
Total from investment operations 3.48
------
Net asset value, end of period $13.48
======
Total return 34.80%**
Ratios/supplemental data:
Net assets, end of period (thousands) $6,360
Ratio of expenses to average net assets:
Before expense reimbursement 4.04%***
After expense reimbursement 1.45%***
Ratio of net investment loss
to average net assets (0.42%)***
Portfolio turnover rate 27.65%
Average commission rate
paid per share $.1204
*Commencement of operations.
**Not annualized.
***Annualized.
See accompanying Notes to Financial Statements.
11
<PAGE>
American Trust Allegiance Fund
NOTES TO FINANCIAL STATEMENTS at
February 28, 1998
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The American Trust Allegiance (the "Fund") is a diversified series of
shares of beneficial interest of Advisors Series Trust (the "Trust"), which is
registered under the Investment Company Act of 1940 (the "1940 Act") as an
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 market
value. Securities listed on an exchange or quoted on a National
Market System are valued at the last sale price. Other securities
are valued at the last quoted bid price. Short-term investments are
stated at cost, which when combined with accrued interest,
approximates market value.
B. Federal Income Taxes. The Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no federal income tax provision is
required.
C. Security Transactions, Dividends and Distributions. As is common in
the industry, security transactions are accounted for on the trade
date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
D. Deferred Organization Costs. The Fund has incurred expenses of
$18,500 in connection with the organization of the Fund. These costs
have been deferred and are being
12
<PAGE>
American Trust Allegiance Fund
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
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 amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the period ended February 28, 1998, American Trust Company (the
"Advisor") provides the Fund with investment management services under an
Investment Advisory Agreement. The Advisor furnishes all investment advice,
office space, facilities, and most of the personnel needed by the Fund. As
compensation for its services, the Advisor is entitled to a monthly fee at the
annual rate of .95% based upon the average daily net assets of the Fund. For the
period ended February 28, 1998, the Fund incurred $34,946 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 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
13
<PAGE>
American Trust Allegiance Fund
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
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
Trustees 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 February 28, 1998,
the Advisor reduced its fees and absorbed Fund expenses in the amount of
$95,674; 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 Fund 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 net assets, subject to a $30,000 annual
minimum.
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 and trustees of the Trust are also officers and/or
directors of the Administrator and the Distributor.
NOTE 4 - PURCHASES AND SALES OF SECURITES
The cost of purchases and the proceeds from sales of securities, other
than short-term investments, for the period ended February 28, 1998, were
$5,750,414 and $961,486, respectively.
14
<PAGE>
American Trust Allegiance Fund
INDEPENDENT AUDITOR'S REPORT
The Board of Trustees and Shareholders
The American Trust Allegiance Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The American Trust Allegiance Fund as of
February 28, 1998, and the related statements of operations, changes in net
assets and the financial highlights for the period from March 11, 1997
(commencement of operations) to February 28, 1998. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of February 28, 1998, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
American Trust Allegiance Fund as of February 28, 1998, the results of its
operations, the changes in its net assets, and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
McGLADREY & PULLEN, LLP
New York, New York
April 3, 1998
15
<PAGE>
Advisor
American Trust Company
One Court Street
Lebanon, NH 03766
1-800-788-8806
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 Service, 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.
