File No. 333-17391
811-07959
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 23 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
Amendment No. 25 [X]
ADVISORS SERIES TRUST
(Exact name of registrant as specified in charter)
4455 E. Camelback Road, Suite 261E
Phoenix, AZ 85018
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (including area code): (602) 952-1100
ROBERT H. WADSWORTH
Advisors Series Trust
4455 E. Camelback Road, Suite 261E
Phoenix, AZ 85018
(Name and address of agent for service of process)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
It is proposed that this filing will become effective (check appropriate box)
[X] immediatexy upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
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<PAGE>
The Rockhaven Fund and The Rockhaven Premier Dividend Fund
Supplement dated April 30, 1998 to Prospectus dated October 14, 1997
FINANCIAL HIGHLIGHTS (Unaudited)
The table that follows is included in the Fund's Semi-annual Report to
shareholders. The financial statements and financial highlights are incorporated
by reference into (are legally a part of) the Fund's Statement of Additional
Information. The reporting period of the financial statements is from November
3, 1997 (commencement of operations of the Funds) through March 31, 1998.
<TABLE>
<CAPTION>
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The The Rockhaven
Rockhaven Premier Dividend
Fund Fund
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<S> <C> <C>
Net asset value, beginning of period ................. $ 10.00 $ 10.00
Income from investment operations:
Net investment income ........................... 0.08 0.11
Net realized and unrealized gain on investments . 1.36 0.99
---------- ----------
Total from investment operations ..................... 1.44 1.10
Less distributions:
Dividends from net investment income ............ (0.03) (0.04)
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Net asset value, end of period ....................... $ 11.41 $ 11.06
========== ==========
Total return ......................................... 14.66%++ 11.58%++
Ratios / supplemental data:
Net assets, end of period (thousands) ................ $ 1,864 $ 963
Ratio of expenses to average net assets:
Before expense reimbursement .................... 16.03%+ 14.86%+
After expense reimbursement ..................... 1.47%+ 1.48%+
Ratio of net investment income to average net assets:
Before expense reimbursement .................... (12.73%)+ (10.90%)+
After expense reimbursement ..................... 1.83%+ 2.49%+
Portfolio turnover rate .............................. 26.17%++ 54.26%++
Average commission rate paid per share ............... $ 0.0600 $ 0.0600
</TABLE>
+ Annualized.
++ Not annualized.
<PAGE>
The General Information section, The Trust subsection is supplemented by the
following:
The fiscal year of each Fund ends on September 30, 1998.
The prospectus is additionally supplemented with the following disclosure:
Shareholder Rights.
As of April 9, 1998, The Funds were controlled by AMSOUTH BANCORPORATION
RETIREMENT TRUST, U/A: 12-13-1973 AmSouth Bank, TTEE.
Year 2000 Risk.
Like other business organizations around the world, the Fund could be adversely
affected if the computer systems used by its investment advisor, Rockhaven Asset
Management, LLC and other service providers do not properly process and
calculate information related to dates beginning January 1, 2000. This is
commonly known as the "Year 2000 Issue." The Fund's advisor, is taking steps
that it believes are reasonably designed to address the Year 2000 Issue with
respect to its own computer systems, and assurances are being obtained from the
Fund's other service providers that they are taking comparable steps. However,
there can be no assurance that these actions will be sufficient to avoid any
adverse impact on the Funds.
The Trust.
The Agreement and Declaration of Trust permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, par value
$.01 per share.
<PAGE>
THE ROCKHAVEN FUND
THE ROCKHAVEN PREMIER DIVIDEND FUND
Statement of Additional Information
Dated October 14, 1997, as amended April 30, 1998
This Statement of Additional Information is not a prospectus, and it should be
read in conjunction with the prospectus dated October 14, 1997 as supplemented
April 30, 1997 of The Rockhaven Fund and The Rockhaven Premier Dividend Fund
(the "Premier Dividend Fund"), each a series of Advisors Series Trust (the
"Trust"). (Collectively, both The Rockhaven Fund and The Rockhaven Premier
Dividend Fund may be referred to as the "Funds." ) Rockhaven Asset Management,
LLC (the "Advisor") is the Advisor to each of the Funds. A copy of the
prospectus may be obtained from the Fund at 100 First Avenue, Suite 1050,
Pittsburgh, PA 15222, telephone (800) 522-3508.
TABLE OF CONTENTS
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<CAPTION>
Cross-reference to sections
Page in the prospectus
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Investment Objective and Policies.................... B-2 Investment Objective and Policies
Management........................................... B-10 Management of the Fund; General
Information
Distribution Arrangements............................ B-13 Expense Table
Portfolio Transactions and Brokerage................. B-13 Management of the Funds
Net Asset Value...................................... B-13 Investor Guide
Taxation ........................................... B-14 Distributions and Taxes
Dividends and Distributions.......................... B-15 Distributions and Taxes
Performance Information.............................. B-16 General Information
General Information.................................. B-17 General Information
Appendix............................................. B-17 Not applicable
</TABLE>
B-1
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of The Rockhaven Fund is to obtain above
average current income together with capital appreciation. The primary
investment objective of The Premier Dividend Fund is to obtain high current
income, and the Fund has a secondary objective of seeking capital appreciation.
There is no assurance that either Fund will achieve its objective. The
discussion below supplements information contained in the prospectus as to
investment policies of the Funds.
Convertible Securities and Warrants
The Funds may invest in convertible securities and warrants. A
convertible security is a fixed income security (a debt instrument or a
preferred stock) which may be converted at a stated price within a specified
period of time into a certain quantity of the common stock of the same or a
different issuer. Convertible securities are senior to common stocks in an
issuer's capital structure, but are usually subordinated to similar
non-convertible securities. While providing a fixed income stream (generally
higher in yield than the income derivable from common stock but lower than that
afforded by a similar nonconvertible security), a convertible security also
affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation attendant upon a market price advance in
the convertible security's underlying common stock.
A warrant gives the holder a right to purchase at any time during a
specified period a predetermined number of shares of common stock at a fixed
price. Unlike convertible debt securities or preferred stock, warrants do not
pay a dividend. Investments in warrants involve certain risks, including the
possible lack of a liquid market for resale of the warrants, potential price
fluctuations as a result of speculation or other factors, and failure of the
price of the underlying security to reach or have reasonable prospects of
reaching a level at which the warrant can be prudently exercised (in which event
the warrant may expire without being exercised, resulting in a loss of the
Fund's entire investment therein).
Risks of Investing in Debt Securities
There are a number of risks generally associated with an investment in
debt securities (including convertible securities). Yields on short,
intermediate, and long-term securities depend on a variety of factors, including
the general condition of the money and bond markets, the size of a particular
offering, the maturity of the obligation, and the rating of the issue.
Debt securities with longer maturities tend to produce higher yields
and are generally subject to potentially greater capital appreciation and
depreciation than obligations with short maturities and lower yields. The market
prices of debt securities usually vary, depending upon available yields. An
increase in interest rates will generally reduce the value of such portfolio
investments, and a decline in interest rates will generally increase the value
of such portfolio investments. The ability of the Funds to achieve its
investment objective also depends on the continuing ability of the issuers of
the debt securities in which a Fund invests to meet their obligations for the
payment of interest and principal when due.
Risks of Investing in Lower-Rated Debt Securities
As set forth in the prospectus, each Fund may invest a portion of its
net assets in debt securities, which may be rated below "Baa" by Moody's or
"BBB" by S&P or below investment grade by other recognized rating agencies, or
in unrated securities of comparable quality under certain circumstances.
Securities with ratings below "Baa" and/or "BBB" are commonly referred to as
"junk bonds." Such bonds are subject to greater market fluctuations and risk of
loss of income and principal than higher rated bonds for a variety of reasons,
including the following:
Sensitivity to Interest Rate and Economic Changes. The economy and
interest rates affect high yield securities differently from other securities.
For example, the prices of high yield bonds have been found to be less sensitive
to interest rate changes than higher-rated investments, but more sensitive to
adverse economic changes or individual corporate developments. Also, during an
economic downturn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress which would adversely affect
their ability to service their principal and interest obligations, to meet
projected business goals, and to obtain additional financing. If the issuer of a
bond defaults, a Fund may incur additional expenses to seek recovery. In
addition, periods of economic
B-2
<PAGE>
uncertainty and changes can be expected to result in increased volatility of
market prices of high yield bonds and the Fund's asset values.
Payment Expectations. High yield bonds present certain risks based on
payment expectations. For example, high yield bonds may contain redemption and
call provisions. If an issuer exercises these provisions in a declining interest
rate market, a Fund would have to replace the security with a lower yielding
security, resulting in a decreased return for investors. Conversely, a high
yield bond's value will decrease in a rising interest rate market, as will the
value of the Fund's assets. If a Fund experiences unexpected net redemptions, it
may be forced to sell its high yield bonds without regard to their investment
merits, thereby decreasing the asset base upon which the Fund's expenses can be
spread and possibly reducing that Fund's rate of return.
Liquidity and Valuation. To the extent that there is no established
retail secondary market, there may be thin trading of high yield bonds, and this
may impact the Advisor's ability to accurately value high yield bonds and a
Fund's assets and hinder a Fund's ability to dispose of the bonds. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of high yield bonds, especially
in a thinly traded market.
Credit Ratings. Credit ratings evaluate the safety of principal and
interest payments, not the market value risk of high yield bonds. Also, since
credit rating agencies may fail to timely change the credit ratings to reflect
subsequent events, the Advisor must monitor the issuers of high yield bonds in a
Fund's portfolio to determine if the issuers will have sufficient cash flow and
profits to meet required principal and interest payments, and to assure the
bonds' liquidity so that Fund can meet redemption requests. A Fund will dispose
of a portfolio security in an orderly manner when its rating has been downgraded
below C.
Short-Term Investments
Each Fund may invest in any of the following securities and
instruments:
Bank Certificates of Deposit, Bankers' Acceptances and Time Deposits. A
Fund may acquire certificates of deposit, bankers' acceptances and time
deposits. Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by a Fund will be
dollar-denominated obligations of domestic or foreign banks or financial
institutions which at the time of purchase have capital, surplus and undivided
profits in excess of $100 million (including assets of both domestic and foreign
branches), based on latest published reports, or less than $100 million if the
principal amount of such bank obligations are fully insured by the U.S.
Government. If a Fund holds instruments of foreign banks or financial
institutions, it may be subject to additional investment risks that are
different in some respects from those incurred by a fund which invests only in
debt obligations of U.S. domestic issuers. See "Foreign Investments" below. Such
risks include future political and economic developments, the possible
imposition of withholding taxes by the particular country in which the issuer is
located on interest income payable on the securities, the possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities.
Domestic banks and foreign banks are subject to different governmental
regulations with respect to the amount and types of loans which may be made and
interest rates which may be charged. In addition, the profitability of the
banking industry depends largely upon the availability and cost of funds for the
purpose of financing lending operations under prevailing money market
conditions. General economic conditions as well as exposure to credit losses
arising from possible financial difficulties of borrowers play an important part
in the operations of the banking industry.
As a result of federal and state laws and regulations, domestic banks
are, among other things, required to maintain specified levels of reserves,
limited in the amount which they can loan to a single borrower, and subject to
other regulations designed to promote financial soundness. However, such laws
and regulations do not necessarily apply to foreign bank obligations that a Fund
may acquire.
B-3
<PAGE>
In addition to purchasing certificates of deposit and bankers'
acceptances, to the extent permitted under its investment objectives and
policies stated above and in its prospectus, a Fund may make interest-bearing
time or other interest-bearing deposits in commercial or savings banks. Time
deposits are non-negotiable deposits maintained at a banking institution for a
specified period of time at a specified interest rate.
Savings Association Obligations. Each Fund may invest in certificates
of deposit (interest-bearing time deposits) issued by savings banks or savings
and loan associations that have capital, surplus and undivided profits in excess
of $100 million, based on latest published reports, or less than $100 million if
the principal amount of such obligations is fully insured by the U.S.
Government.
Commercial Paper, Short-Term Notes and Other Corporate Obligations.
Each Fund may invest a portion of its assets in commercial paper and short-term
notes. Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper and short-term notes will normally have
maturities of less than nine months and fixed rates of return, although such
instruments may have maturities of up to one year.
Commercial paper and short-term notes will consist of issues rated at
the time of purchase "A-2" or higher by S&P, "Prime-1" or "Prime-2" by Moody's,
or similarly rated by another nationally recognized statistical rating
organization or, if unrated, will be determined by the Advisor to be of
comparable quality. These rating symbols are described in Appendix A.
Corporate obligations include bonds and notes issued by corporations to
finance longer-term credit needs than supported by commercial paper. While such
obligations generally have maturities of ten years or more, the Fund may
purchase corporate obligations which have remaining maturities of one year or
less from the date of purchase and which are rated "AA" or higher by S&P or "Aa"
or higher by Moody's.
Money Market Funds
Each Fund may under certain circumstances invest a portion of its
assets in money market funds. The Investment Company Act of 1940 (the "1940
Act") prohibits a Fund from investing more than 5% of the value of its total
assets in any one investment company. or more than 10% of the value of its total
assets in investment companies as a group, and also restricts its investment in
any investment company to 3% of the voting securities of such investment
company.
Government Obligations
Each Fund may make short-term investments in U.S. Government
obligations. Such obligations include Treasury bills, certificates of
indebtedness, notes and bonds, and issues of such entities as the Government
National Mortgage Association ("GNMA"), Export-Import Bank of the United States,
Tennessee Valley Authority, Resolution Funding Corporation, Farmers Home
Administration, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Farm Credit Banks, Federal Land Banks, Federal Housing Administration,
Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation, and the Student Loan Marketing Association.
Some of these obligations, such as those of the GNMA, are supported by
the full faith and credit of the U.S. Treasury; others, such as those of the
Export-Import Bank of United States, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the FNMA, are supported by
the discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law.
Zero Coupon Securities
Each Fund may invest up to 35% of its net assets in zero coupon
securities. Zero coupon securities are debt securities which have been stripped
of their unmatured interest coupons and receipts, or certificates representing
interests in such stripped debt obligations or coupons. Because a zero coupon
security pays no interest to its holder during its life or for a substantial
period of time, it usually trades at a deep discount from its face or par value
and will be subject to greater fluctuations of market value in response to
changing interest rates than debt obligations of comparable maturities which
make current distributions of interest.
B-4
<PAGE>
Variable and Floating Rate Instruments
Each Fund may acquire variable and floating rate instruments. Such
instruments are frequently not rated by credit rating agencies; however, unrated
variable and floating rate instruments purchased by a Fund will be determined by
the Advisor under guidelines established by the Trust's Board of Trustees to be
of comparable quality at the time of the purchase to rated instruments eligible
for purchase by a Fund. In making such determinations, the Advisor will consider
the earning power, cash flow and other liquidity ratios of the issuers of such
instruments (such issuers include financial, merchandising, bank holding and
other companies) and will monitor their financial condition. An active secondary
market may not exist with respect to particular variable or floating rate
instruments purchased by a Fund. The absence of such an active secondary market
could make it difficult for the Funds to dispose of the variable or floating
rate instrument involved in the event of the issuer of the instrument defaulting
on its payment obligation or during periods in which a Fund is not entitled to
exercise its demand rights, and a Fund could, for these or other reasons, suffer
a loss to the extent of the default. Variable and floating rate instruments may
be secured by bank letters of credit.
Options on Securities and Securities Indices
Writing Call Options. Each Fund may write covered call options. A call
option is "covered" if a Fund owns the security underlying the call or has an
absolute right to acquire the security without additional cash consideration
(or, if additional cash consideration is required, cash or cash equivalents in
such amount as are held in a segregated account by the Custodian). The writer of
a call option receives a premium and gives the purchaser the right to buy the
security underlying the option at the exercise price. The writer has the
obligation upon exercise of the option to deliver the underlying security
against payment of the exercise price during the option period. If the writer of
an exchange-traded option wishes to terminate his obligation, he may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. A writer may not effect a closing
purchase transaction after it has been notified of the exercise of an option.
Effecting a closing transaction in the case of a written call option
will permit a Fund to write another call option on the underlying security with
either a different exercise price, expiration date or both. Also, effecting a
closing transaction will permit the cash or proceeds from the concurrent sale of
any securities subject to the option to be used for other investments of a Fund.
If a Fund desires to sell a particular security from its portfolio on which it
has written a call option, it will effect a closing transaction prior to or
concurrent with the sale of the security.
A Fund will realize a gain from a closing transaction if the cost of
the closing transaction is less than the premium received from writing the
option or if the proceeds from the closing transaction are more than the premium
paid to purchase the option. A Fund will realize a loss from a closing
transaction if the cost of the closing transaction is more than the premium
received from writing the option or if the proceeds from the closing transaction
are less than the premium paid to purchase the option. However, because
increases in the market price of a call option will generally reflect increases
in the market price of the underlying security, any loss to a Fund resulting
from the repurchase of a call option is likely to be offset in whole or in part
by appreciation of the underlying security owned by that Fund.
Stock Index Options. Each Fund may also purchase put and call options
with respect to the S&P 500 and other stock indices. Such options may be
purchased as a hedge against changes resulting from market conditions in the
values of securities which are held in a Fund's portfolio or which it intends to
purchase or sell, or when they are economically appropriate for the reduction of
risks inherent in the ongoing management of a Fund.
The distinctive characteristics of options on stock indices create
certain risks that are not present with stock options generally. Because the
value of an index option depends upon movements in the level of the index rather
than the price of a particular stock, whether a Fund will realize a gain or loss
on the purchase or sale of an option on an index depends upon movements in the
level of stock prices in the stock market generally rather than movements in the
price of a particular stock. Accordingly, successful use by a Fund of options on
a stock index would be subject to the Advisor's ability to predict correctly
movements in the direction of the stock market generally. This requires
different skills and techniques than predicting changes in the price of
individual stocks.
B-5
<PAGE>
Index prices may be distorted if trading of certain stocks included in
the index is interrupted. Trading of index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
stocks included in the index. If this were to occur, a Fund would not be able to
close out options which it had purchased, and if restrictions on exercise were
imposed, that Fund might be unable to exercise an option it holds, which could
result in substantial losses to that Fund. It is the policy of the Funds to
purchase put or call options only with respect to an index which the Advisor
believes includes a sufficient number of stocks to minimize the likelihood of a
trading halt in the index.
Risks of Investing in Options. There are several risks associated with
transactions in options on securities and indices. Options may be more volatile
than the underlying instruments and, therefore, on a percentage basis, an
investment in options may be subject to greater fluctuation than an investment
in the underlying instruments themselves. There are also significant differences
between the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objective. In addition, a liquid secondary market for particular options may
be absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of option of underlying securities; unusual or unforeseen
circumstances may interrupt normal operations on an exchange; the facilities of
an exchange or clearing corporation may not at all times be adequate to handle
current trading volume; or one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in that class or series of options) would
cease to exist, although outstanding options that had been issued by a clearing
corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.
A decision as to whether, when and how to use options involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected events. The
extent to which a Fund may enter into options transactions may be limited by the
Internal Revenue Code requirements for qualification as a regulated investment
company. See "Dividends, Distributions and Taxes."
Dealer Options. Each Fund may engage in transactions involving dealer
options as well as exchange-traded options. Certain risks are specific to dealer
options. While the Funds might look to a clearing corporation to exercise
exchange-traded options, if a Fund were to purchase a dealer option it would
need to rely on the dealer from which it purchased the option to perform if the
option were exercised. Failure by the dealer to do so would result in the loss
of the premium paid by a Fund as well as loss of the expected benefit of the
transaction.
Exchange-traded options generally have a continuous liquid market while
dealer options may not. Consequently, a Fund may generally be able to realize
the value of a dealer option it has purchased only by exercising or reselling
the option to the dealer who issued it. Similarly, when a Fund writes a dealer
option, that Fund may generally be able to close out the option prior to its
expiration only by entering into a closing purchase transaction with the dealer
to whom that Fund originally wrote the option. While a Fund will seek to enter
into dealer options only with dealers who will agree to and which are expected
to be capable of entering into closing transactions with that Fund, there can be
no assurance that a Fund will at any time be able to liquidate a dealer option
at a favorable price at any time prior to expiration. Unless a Fund, as a
covered dealer call option writer, is able to effect a closing purchase
transaction, it will not be able to liquidate securities (or other assets) used
as cover until the option expires or is exercised. In the event of insolvency of
the other party, a Fund may be unable to liquidate a dealer option. With respect
to options written by a Fund, the inability to enter into a closing transaction
may result in material losses to that Fund. For example, because a Fund must
maintain a secured position with respect to any call option on a security it
writes, that Fund may not sell the assets which it has segregated to secure the
position while it is obligated under the option. This requirement may impair
that Fund's ability to sell portfolio securities at a time when such sale might
be advantageous.
The Staff of the Securities and Exchange Commission (the "Commission")
has taken the position that purchased dealer options are illiquid securities. A
Fund may treat the cover used for written dealer options as liquid if the dealer
agrees that the Fund may repurchase the dealer option it has written for a
maximum price to be calculated
B-6
<PAGE>
by a predetermined formula. In such cases, the dealer option would be considered
illiquid only to the extent the maximum purchase price under the formula exceeds
the intrinsic value of the option. With that exception, however, a Fund will
treat dealer options as subject to that Fund's limitation on unmarketable
securities. If the Commission changes its position on the liquidity of dealer
options, each Fund will change its treatment of such instruments accordingly.
Foreign Investments and Currencies
Each Fund may invest in securities of foreign issuers that are publicly
traded in the United States. Each Fund may also invest in depositary receipts.
Depositary Receipts. Depositary Receipts ("DRs") include American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") or other forms of depositary receipts. DRs are
receipts typically issued in connection with a U.S. or foreign bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation.
Risks of Investing in Foreign Securities. Investments in foreign
securities involve certain inherent risks, including the following:
Political and Economic Factors. Individual foreign economies of certain
countries may differ favorably or unfavorably from the United States' economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, diversification and balance of payments
position. The internal politics of certain foreign countries may not be as
stable as those of the United States. Governments in certain foreign countries
also continue to participate to a significant degree, through ownership interest
or regulation, in their respective economies. Action by these governments could
include restrictions on foreign investment, nationalization, expropriation of
goods or imposition of taxes, and could have a significant effect on market
prices of securities and payment of interest. The economies of many foreign
countries are heavily dependent upon international trade and are accordingly
affected by the trade policies and economic conditions of their trading
partners. Enactment by these trading partners of protectionist trade legislation
could have a significant adverse effect upon the securities markets of such
countries.
Legal and Regulatory Matters. Certain foreign countries may have less
supervision of securities markets, brokers and issuers of securities, and less
financial information available to issuers, than is available in the United
States.
Taxes. The interest payable on certain of a Fund's foreign portfolio
securities may be subject to foreign withholding taxes, thus reducing the net
amount of income available for distribution to the Fund's shareholders.
Risk Factors Regarding Emerging Markets Investments. Investments in
securities issued by the governments of emerging or developing countries, and of
companies within those countries, involves greater risks than other foreign
investments. Investments in emerging or developing markets involve exposure to
economic and legal structures that are generally less diverse and mature (and in
some cases the absence of developed legal structures governing private and
foreign investments and private property), and to political systems which can be
expected to have less stability, than those of more developed countries. The
risks of investment in such countries may include matters such as relatively
unstable governments, higher degrees of government involvement in the economy,
the absence until recently of capital market structures or market-oriented
economies, economies based on only a few industries, securities markets which
trade only a small number of securities, restrictions on foreign investment in
stocks, and significant foreign currency devaluations and fluctuations. Emerging
markets can be substantially more volatile than both U.S. and more developed
foreign markets. Such volatility may be exacerbated by illiquidity. The average
daily trading volume in all of the emerging markets combined is a small fraction
of the average daily volume of the U.S. market. Small trading volumes may result
in a Fund being forced to purchase securities at substantially higher prices
than the current market, or to sell securities at much lower prices than the
current market.
In considering whether to invest in the securities of a foreign
company, the Advisor considers such factors as the characteristics of the
particular company, differences between economic trends and the performance of
securities markets within the U.S. and those within other countries, and also
factors relating to the general economic,
B-7
<PAGE>
governmental and social conditions of the country or countries where the company
is located. The extent to which a Fund will be invested in foreign companies and
countries and depository receipts will fluctuate from time to time within the
limitations described in the prospectus, depending on the Advisor's assessment
of prevailing market, economic and other conditions.
Repurchase Agreements
Each Fund may enter into repurchase agreements with respect to its
portfolio securities. Pursuant to such agreements, a Fund acquires securities
from financial institutions such as banks and broker-dealers as are deemed to be
creditworthy by the Advisor, subject to the seller's agreement to repurchase and
the Fund's agreement to resell such securities at a mutually agreed upon date
and price. The repurchase price generally equals the price paid by the Fund plus
interest negotiated on the basis of current short-term rates (which may be more
or less than the rate on the underlying portfolio security). Securities subject
to repurchase agreements will be held by the Custodian or in the Federal
Reserve/Treasury Book-Entry System or an equivalent foreign system. The seller
under a repurchase agreement will be required to maintain the value of the
underlying securities at not less than 102% of the repurchase price under the
agreement. If the seller defaults on its repurchase obligation, the Fund holding
the repurchase agreement will suffer a loss to the extent that the proceeds from
a sale of the underlying securities are less than the repurchase price under the
agreement. Bankruptcy or insolvency of such a defaulting seller may cause the
Fund's rights with respect to such securities to be delayed or limited.
Repurchase agreements are considered to be loans under the 1940 Act.
When-Issued Securities, Forward Commitments and Delayed Settlements
Each Fund may purchase securities on a "when-issued," forward
commitment or delayed settlement basis. In this event, the Custodian will set
aside liquid assets equal to the amount of the commitment in a separate account.
Normally, the Custodian will set aside portfolio securities to satisfy a
purchase commitment. In such a case, a Fund may be required subsequently to set
aside additional assets in order to assure that the value of the account remains
equal to the amount of that Fund's commitment. It may be expected that a Fund's
net assets will fluctuate to a greater degree when it sets aside portfolio
securities to cover such purchase commitments than when it sets aside cash.
The Funds do not intend to engage in these transactions for speculative
purposes but only in furtherance of their investment objectives. Because a Fund
will set aside liquid assets to satisfy its purchase commitments in the manner
described, that Fund's liquidity and the ability of the Advisor to manage it may
be affected in the event that Fund's forward commitments, commitments to
purchase when-issued securities and delayed settlements ever exceeded 15% of the
value of its net assets.
A Fund will purchase securities on a when-issued, forward commitment or
delayed settlement basis only with the intention of completing the transaction.
If deemed advisable as a matter of investment strategy, however, a Fund may
dispose of or renegotiate a commitment after it is entered into, and may sell
securities it has committed to purchase before those securities are delivered to
that Fund on the settlement date. In these cases a Fund may realize a taxable
capital gain or loss. When a Fund engages in when-issued, forward commitment and
delayed settlement transactions, it relies on the other party to consummate the
trade. Failure of such party to do so may result in a Fund's incurring a loss or
missing an opportunity to obtain a price credited to be advantageous.
The market value of the securities underlying a when-issued purchase,
forward commitment to purchase securities, or a delayed settlement and any
subsequent fluctuations in their market value is taken into account when
determining the market value of a Fund starting on the day that Fund agrees to
purchase the securities. A Fund does not earn interest on the securities it has
committed to purchase until they are paid for and delivered on the settlement
date.
Borrowing
Each Fund is authorized to borrow money from time to time for
temporary, extraordinary or emergency purposes or for clearance of transactions
in amounts up to 5% of the value of its total assets at the time of such
borrowings.
Illiquid Securities
B-8
<PAGE>
Each Fund may not invest more than 15% of the value of its net assets
in securities that at the time of purchase have legal or contractual
restrictions on resale or are otherwise illiquid. The Advisor will monitor the
amount of illiquid securities in each Fund's portfolio, under the supervision of
the Trust's Board of Trustees, to ensure compliance with the Fund's investment
restrictions.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 (the "Securities Act"), securities
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities, and a Fund might be unable
to dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemption within
seven days. A Fund might also have to register such restricted securities in
order to dispose of them, resulting in additional expense and delay. Adverse
market conditions could impede such a public offering of securities.
In recent years, however, a large institutional market has developed
for certain securities that are not registered under the Securities Act,
including repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments. If such securities are subject to purchase by institutional buyers
in accordance with Rule 144A promulgated by the Commission under the Securities
Act, the Trust's Board of Trustees may determine that such securities are not
illiquid securities notwithstanding their legal or contractual restrictions on
resale. In all other cases, however, securities subject to restrictions on
resale will be deemed illiquid.
Investment Restrictions
The Trust (on behalf of each Fund) has adopted the following
restrictions as fundamental policies, which may not be changed without the
favorable vote of the holders of a "majority," as defined in the 1940 Act, of
the outstanding voting securities of a Fund. Under the 1940 Act, the "vote of
the holders of a majority of the outstanding voting securities" means the vote
of the holders of the lesser of (i) 67% of the shares of a Fund represented at a
meeting at which the holders of more than 50% of its outstanding shares are
represented or (ii) more than 50% of the outstanding shares of that Fund.
As a matter of fundamental policy, each Fund is diversified; i.e., as
to 75% of the value of a its total assets: (i) no more than 5% of the value of
its total assets may be invested in the securities of any one issuer (other than
U.S. Government securities); and (ii) the Fund may not purchase more than 10% of
the outstanding voting securities of an issuer. Each Fund's investment objective
is also fundamental.
In addition, each Fund may not:
1. Issue senior securities, borrow money or pledge its assets, except
that (i) the Fund may borrow from banks in amounts not exceeding one-third of
its total assets (not including the amount borrowed); and (ii) this restriction
shall not prohibit the Fund from engaging in options transactions or short
sales;
2. Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of transactions and except that the Fund may
borrow money from banks to purchase securities;
3. Act as underwriter (except to the extent the Fund may be deemed to
be an underwriter in connection with the sale of securities in its investment
portfolio);
4. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
Government securities);
B-9
<PAGE>
5. Purchase or sell real estate or interests in real estate or real
estate limited partnerships (although the Fund may purchase and sell securities
which are secured by real estate and securities of companies which invest or
deal in real estate);
6. Purchase or sell commodities or commodity futures contracts, except
that a Fund may invest in stock index, currency and financial futures contracts
and related options in accordance with any rules of the Commodity Futures
Trading Commission; or
7. Make loans of money (except for purchases of debt securities
consistent with the investment policies of the Fund and except for repurchase
agreements).
Each Fund observes the following restrictions as a matter of operating
but not fundamental policy, pursuant to positions taken by federal regulatory
authorities:
Each Fund may not:
1. Borrow money or pledge its assets, except that the Fund may borrow
on an unsecured basis from banks for temporary or emergency purposes or for the
clearance of transactions in amounts not exceeding 5% of its total assets (not
including the amount borrowed);
2. Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of transactions;
3. Invest in the securities of other investment companies or purchase
any other investment company's voting securities or make any other investment in
other investment companies except to the extent permitted by federal law;
4. Invest more than 15% of its assets in securities which are
restricted as to disposition or otherwise are illiquid or have no readily
available market (except for securities which are determined by the Board of
Trustees to be liquid);
5. Sell securities short;
6. Invest in stock index futures, currency or financial futures or
related options; or
7. Make investments for the purpose of exercising control or
management.
MANAGEMENT
The overall management of the business and affairs of the Trust is
vested with its Board of Trustees. The Board approves all significant agreements
between the Trust and persons or companies furnishing services to it, including
the agreements with the Advisor, Administrator, Custodian and Transfer Agent.
The day to day operations of the Trust are delegated to its officers, subject to
the Fund's investment objectives and policies and to general supervision by the
Board of Trustees.
The Trustees and officers of the Trust, their ages and positions with
the Trust, their business addresses and principal occupations during the past
five years are:
<TABLE>
<CAPTION>
Name, address and age Position Principal Occupation During Past Five Years
<S> <C> <C>
Walter E. Auch, Sr. (75) Trustee Director, Geotech Communications, Inc., Nicholas-Applegate
6001 N. 62d Place Investment Trust, Brinson Funds (since 1994), Smith Barney Trak
Paradise Valley, AZ 85253 Fund, Pimco Advisors L.P., Banyan Realty Trust, Banyan Land
Fund II and Legend Properties.
Eric M. Banhazl (39)* Trustee, Senior Vice President, Investment Company Administration
2025 E. Financial Way President and Corporation; Vice President, First Fund Distributors; President,
Glendora, CA 91740 Treasurer RNC Mutual Fund Group; Treasurer, Guiness Flight Investment
Funds, Inc. and Professionally Managed Portfolios.
</TABLE>
B-10
<PAGE>
<TABLE>
<S> <C> <C>
Donald E. O'Connor (60) Trustee Retired; formerly Executive Vice President and Chief Operating 1700
Taylor Avenue Officer of ICI Mutual Insurance Company (until January, 1997),
Fort Washington MD, 20744 Vice President Operations, Investment Company Institute (until
June, 1993).
George T. Wofford III (57) Trustee Vice President, Information Services, Federal Home Loan Bank of
305 Glendora Circle San Francisco (since March, 1993); formerly Director of
Danville, CA 94526 Management Information Services, Morrison & Foerster (law firm).
Steven J. Paggioli (47) Vice Executive Vice President, Robert H. Wadsworth & Associates, Inc.
479 W. 22d Street President and Investment Company Administration Corporation; Vice
New York, NY 10011 President First Fund Distributors, Inc.; President and Trustee,
Professionally Managed Portfolios; Trustee, Managers Funds.
Robert H. Wadsworth (57) Vice President, Robert H. Wadsworth & Associates, Inc., Investment
4455 E. Camelback Road President Company Administration Corporation and First Fund Distributors,
Suite 261E Inc.; Vice President, Professionally Managed Portfolios;
Phoenix, AZ 85018 President, Guinness Flight Investment Funds, Inc.; Director,
Germany Fund, Inc., New Germany Fund, Inc. and Central
European Equity Fund, Inc.
Chris O. Kissack (48) Secretary Employed by Investment Company Administration Corporation
4455 E. Camelback Road (since July, 1996); formerly employed by Bank One, N.A. (from
Suite 261E August, 1995 until July, 1996); O'Connor, Cavanagh, Anderson,
Phoenix, AZ 85018 Killingsworth and Beshears (law firm) (until August, 1995).
</TABLE>
* denotes Trustee who is an "interested person" of the Trust under the 1940 Act.
<TABLE>
<CAPTION>
Name and Position Aggregate Compensation from The Trust*
- ----------------- --------------------------------------
<S> <C>
Walter E. Auch, Sr., Trustee $12,000
Donald E. O'Connor, Trustee $12,000
George T. Wofford III, Trustee $12,000
</TABLE>
*Estimated for the current fiscal year. The Trust has no pension or retirement
plan. No other entity affiliated with the Trust pays any compensation to the
Trustees.
The Advisor
Subject to the supervision of the Board of Trustees, investment
management and related services are provided by the Advisor, pursuant to an
Investment Advisory Agreement (the "Advisory Agreement").
Under the Advisory Agreement, the Advisor agrees to invest the assets
of the Funds in accordance with the investment objectives, policies and
restrictions of each Fund as set forth in each Fund's and the Trust's governing
documents, including, without limitation, the Trust's Agreement and Declaration
of Trust and By-Laws; the Funds' prospectus, Statement of Additional
Information, and undertakings; and such other limitations, policies and
procedures as the Trustees of the Trust may impose from time to time in writing
to Advisor. In providing such services, Advisor shall at all times adhere to the
provisions and restrictions contained in the federal securities laws, applicable
state securities laws, the Internal Revenue Code, and other applicable law.
Without limiting the generality of the foregoing, the Advisor has
agreed to (i) furnish each Fund with advice and recommendations with respect to
the investment of each Fund's assets, (ii) effect the purchase and sale of
portfolio securities; (iii) manage and oversee the investments of each Fund,
subject to the ultimate supervision and direction of the Trust's Board of
Trustees; (iv) vote proxies and take other actions with respect to the
securities; (v)
B-11
<PAGE>
maintain the books and records required to be maintained with respect to the
securities in each Fund's portfolio; (vi) furnish reports, statements and other
data on securities, economic conditions and other matters related to the
investment of each Fund's assets which the Trustees or the officers of the Trust
may reasonably request; and (vi) render to the Trust's Board of Trustees such
periodic and special reports as the Board may reasonably request. The Advisor
has also agreed, at its own expense, to maintain such staff and employ or retain
such personnel and consult with such other persons as it shall from time to time
determine to be necessary to the performance of its obligations under this
Agreement. Personnel of the Advisor may serve as officers of the Trust provided
they do so without compensation from the Trust. Without limiting the generality
of the foregoing, the staff and personnel of the Advisor shall be deemed to
include persons employed or retained by the Advisor to furnish statistical
information, research, and other factual information, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice and assistance as the Advisor
or the Trust's Board of Trustees may desire and reasonably request. With respect
to the operation of each Fund, the Advisor has agreed to be responsible for the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders); and the costs of any special Board
of Trustees meetings or shareholder meetings convened for the primary benefit of
the Advisor.
As compensation for the Advisor's services, each Fund pays it an
advisory fee at the rate specified in the prospectus. In addition to the fees
payable to the Advisor and the Administrator, the Trust is responsible for its
operating expenses, including: fees and expenses incurred in connection with the
issuance, registration and transfer of its shares; brokerage and commission
expenses; all expenses of transfer, receipt, safekeeping, servicing and
accounting for the cash, securities and other property of the Trust for the
benefit of each Fund including all fees and expenses of its custodian,
recordkeeping agent, shareholder services agent and accounting services agent;
interest charges on any borrowings; costs and expenses of pricing and
calculating its daily net asset value and of maintaining its books of account
required under the Investment Company Act; taxes, if any; a pro rata portion of
expenditures in connection with meetings of the Fund's shareholders and the
Trust's Board of Trustees that are properly payable by each Fund; salaries and
expenses of officers and fees and expenses of members of the Trust's Board of
Trustees or members of any advisory board or committee who are not members of,
affiliated with or interested persons of the Advisor or Administrator; insurance
premiums on property or personnel of each Fund which inure to its benefit,
including liability and fidelity bond insurance; the cost of preparing and
printing reports, proxy statements, prospectuses and Statements of Additional
Information of each Fund or other communications for distribution to existing
shareholders; legal, auditing and accounting fees; trade association dues; fees
and expenses (including legal fees) of registering and maintaining registration
of its shares for sale under federal and applicable state and foreign securities
laws; all expenses of maintaining and servicing shareholder accounts, including
all charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of its operation plus any extraordinary and non-recurring
expenses, except as otherwise prescribed in the Advisory Agreement.
The Advisor may agree to waive certain of its fees or reimburse a Fund
for certain expenses, in order to limit the expense ratio of that Fund. In that
event, subject to approval by the Trust's Board of Trustees, a Fund may
reimburse the Advisor in subsequent years for fees waived and expenses
reimbursed, provided (i) the reimbursement is specifically requested; (ii) the
expenses or waivers for which reimbursement is sought relate to fiscal periods
not more than three years past; and (iii) the reimbursement will not cause that
Fund to exceed the expense ratio then in effect. Provided these conditions are
met, the Advisor may reek reimbursement before payment of current fees and
expenses.
The Advisor is controlled by Christopher H. Wiles and AmSouth
Bancorporation.
Under the Advisory Agreement, the Advisor will not be liable to the
Trust for any error of judgment by the Advisor for any loss sustained by the
Trust except in the case of a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages will be
limited as provided in the 1940 Act) or of willful misfeasance, bad faith or
gross negligence by reason of reckless disregard of its obligations and duties
under the applicable agreement.
B-12
<PAGE>
The Advisory Agreement will remain in effect for a period not to exceed
two years from the date each Fund commenced operations. Thereafter, if not
terminated, the Advisory Agreement will continue automatically for successive
annual periods, provided that such continuance is specifically approved at least
annually (i) by a majority vote of the Independent Trustees cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the Board
of Trustees or by vote of a majority of the outstanding voting securities of
that Fund.
The Advisory Agreement is terminable by vote of the Board of Trustees
or by the holders of a majority of the outstanding voting securities of the
Trust at any time without penalty, on 60 days written notice to the Advisor. The
Advisory Agreement also may be terminated by the Advisor on 60 days written
notice to the Trust. The Advisory Agreement terminates automatically upon its
assignment (as defined in the 1940 Act).
Distribution Plan. The Trust has adopted a Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act. The Advisor acts as Distribution Coordinator
under the Plan, and may make payments on behalf of a Fund for distribution and
related expenses of that Fund, including preparation, printing and mailing of
prospectuses, shareholder reports, performance reports and newsletters and sales
literature and other promotion material to prospective investors; direct mail
solicitation; advertising and public relations; compensation of sales personnel,
advisors or other third parties for their assistance with respect to the
distribution of the Funds' shares payments to financial intermediaries for
shareholder support; administrative and accounting services with respect to the
shareholders of the Funds; and such other expenses as may be approved from time
to time by the Board of Trustees. The Distribution Plan allows excess
distribution expenses to be carried forward by the Advisor and resubmitted in a
subsequent fiscal year, provided that (i) distribution expenses cannot be
carried forward for more that three years following initial submission; (ii) the
Board of Trustees has made a determination at the time of initial submission
that the distribution expenses are appropriate to be carried forward; and (iii)
the Board of Trustees makes a further determination, at the time any such
expenses which have been carried forward are resubmitted for payment, to the
effect that payment at the time is appropriate, consistent with the objectives
of the Plan and in the current best interests of shareholders.
The Administrator. The Administrator has agreed to be responsible for
providing such services as the Trustees may reasonably request, including but
not limited to (i) maintaining the Trust's books and records (other than
financial or accounting books and records maintained by any custodian, transfer
agent or accounting services agent); (ii) overseeing the Trust's insurance
relationships; (iii) preparing for the Trust (or assisting counsel and/or
auditors in the preparation of) all required tax returns, proxy statements and
reports to the Trust's shareholders and Trustees and reports to and other
filings with the Commission and any other governmental agency (the Trust
agreeing to supply or cause to be supplied to the Administrator all necessary
financial and other information in connection with the foregoing); (iv)
preparing such applications and reports as may be necessary to register or
maintain the Trust's registration and/or the registration of the shares of the
Trust under the securities or "blue sky" laws of the various states selected by
the Trust (the Trust agreeing to pay all filing fees or other similar fees in
connection therewith); (v) responding to all inquiries or other communications
of shareholders, if any, which are directed to the Administrator, or if any such
inquiry or communication is more properly to be responded to by the Trust's
custodian, transfer agent or accounting services agent, overseeing their
response thereto; (vi) overseeing all relationships between the Trust and any
custodian(s), transfer agent(s) and accounting services agent(s), including the
negotiation of agreements and the supervision of the performance of such
agreements; and (vii) authorizing and directing any of the Administrator's
directors, officers and employees who may be elected as Trustees or officers of
the Trust to serve in the capacities in which they are elected. All services to
be furnished by the Administrator under this Agreement may be furnished through
the medium of any such directors, officers or employees of the Administrator.
The Administrator is an affiliate of the Distributor.
DISTRIBUTION ARRANGEMENTS
Pursuant to the Distribution Plan ("Plan") adopted by the Trustees, each Fund
pays the Advisor, as distribution coordinator, an annual fee for the Advisor's
services in such capacity including its expenses in connection with the
promotion and distribution of the Fund's shares and related shareholder
servicing (collectively, "Distribution Expenses"). The Plan provides that the
Advisor shall furnish to the Board of Trustees of the Trust, for its review, on
a quarterly basis, a written report of the monies paid to it under the Plan with
respect to the Fund, and shall
B-13
<PAGE>
furnish the Board of Trustees of the Trust with such other information as the
Board of Trustees may reasonably request in connection with the payments made
under the Plan in order to enable the Board of Trustees to make an informed
determination of whether the Plan should be continued as to each Fund.
The Plan may not be amended to increase materially the amount to be spent for
distribution and servicing of shares of a Fund without approval by a majority of
the outstanding voting securities of that Fund. The Plan may be terminated at
any time, without penalty, by vote of a majority of the outstanding voting
securities of a Fund, and any Distribution Agreement under the Plan may be
likewise terminated on not more than sixty (60) days' written notice. Once
terminated, no further payments shall be made under the Plan notwithstanding the
existence of any unreimbursed current or carried forward Distribution Expenses.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Advisory Agreement states that the Advisor shall be responsible for
broker-dealer selection and for negotiation of brokerage commission rates,
provided that the Advisor shall not direct orders to an affiliated person of the
Advisor without general prior authorization to use such affiliated broker or
dealer by the Trust's Board of Trustees. The Advisor's primary consideration in
effecting a securities transaction will be execution at the most favorable
price. In selecting a broker-dealer to execute each particular transaction, the
Advisor may take the following into consideration: the best net price available;
the reliability, integrity and financial condition of the broker-dealer; the
size of and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of each Fund on
a continuing basis. The price to a Fund in any transaction may be less favorable
than that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Advisor and the Board of Trustees of
the Trust may determine, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused a Fund to pay a broker or dealer that
provides (directly or indirectly) brokerage or research services to the Advisor
an amount of commission for effecting a portfolio transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities with respect to
that Fund. The Advisor is further authorized to allocate the orders placed by it
on behalf of a Fund to such brokers or dealers who also provide research or
statistical material, or other services, to the Trust, the Advisor, or any
affiliate of either. Such allocation shall be in such amounts and proportions as
the Advisor shall determine, and the Advisor shall report on such allocations
regularly to the Trust, indicating the broker-dealers to whom such allocations
have been made and the basis therefor. The Advisor is also authorized to
consider sales of shares of a Fund as a factor in the selection of brokers or
dealers to execute portfolio transactions, subject to the requirements of best
execution, i.e., that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.
On occasions when the Advisor deems the purchase or sale of a security
to be in the best interest of a Fund as well as other clients of the Advisor (or
proprietary accounts of the Advisor), the Advisor, to the extent permitted by
applicable laws and regulations, may aggregate the securities to be so purchased
or sold in order to obtain the most favorable price or lower brokerage
commissions and the most efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Advisor in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Fund and to
such other clients.
NET ASSET VALUE
The net asset value of each Fund's shares will fluctuate and is
determined as of the close of trading on the New York Stock Exchange (currently
4:00 p.m. Eastern time) each business day. The Exchange annually announces the
days on which it will not be open for trading. The most recent announcement
indicates that it will not be open on the following days: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. However, the Exchange may
close on days not included in that announcement.
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<PAGE>
The net asset value per share is computed by dividing the value of the
securities held by a Fund plus any cash or other assets (including interest and
dividends accrued but not yet received) minus all liabilities (including accrued
expenses) by the total number of shares in that Fund outstanding at such time.
Generally, trading in and valuation of foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. In addition, trading in and valuation of foreign securities may not take
place on every day in which the NYSE is open for trading. In that case, the
price used to determine a Fund's net asset value on the last day on which such
exchange was open will be used, unless the Trust's Board of Trustees determines
that a different price should be used. Furthermore, trading takes place in
various foreign markets on days in which the NYSE is not open for trading and on
which a Fund's net asset value is not calculated. Occasionally, events affecting
the values of such securities in U.S. dollars on a day on which the Fund
calculates its net asset value may occur between the times when such securities
are valued and the close of the NYSE that will not be reflected in the
computation of a Fund's net asset value unless the Board or its delegates deem
that such events would materially affect the net asset value, in which case an
adjustment would be made.
Generally, the Fund's investments are valued at market value or, in the
absence of a market value, at fair value as determined in good faith by the
Advisor and the Trust's Pricing Committee pursuant to procedures approved by or
under the direction of the Board.
The Funds' securities, including ADRs, EDRs and GDRs, which are traded
on securities exchanges are valued at the last sale price on the exchange on
which such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any reported sales, at the mean between
the last available bid and asked price. Securities that are traded on more than
one exchange are valued on the exchange determined by the Advisor to be the
primary market. Securities traded in the over-the-counter market are valued at
the mean between the last available bid and asked price prior to the time of
valuation. Securities and assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Board.
Short-term debt obligations with remaining maturities in excess of 60
days are valued at current market prices, as discussed above. Short-term
securities with 60 days or less remaining to maturity are, unless conditions
indicate otherwise, amortized to maturity based on their cost to the Fund if
acquired within 60 days of maturity or, if already held by the Fund on the 60th
day, based on the value determined on the 61st day.
All other assets of the Funds are valued in such manner as the Board in
good faith deems appropriate to reflect their fair value.
TAXATION
The Funds will be taxed, under the Internal Revenue Code (the "Code"),
as separate entities from any other series of the Trust and each intends to
elect to qualify for treatment as a regulated investment company ("RIC") under
Subchapter M of the Code. In each taxable year that a Fund qualifies, that Fund
(but not its shareholders) will be relieved of federal income tax on that part
of its investment company taxable income (consisting generally of interest and
dividend income and net short term capital gains) and net capital gain that is
distributed to shareholders.
In order to qualify for treatment as a RIC, a Fund must distribute
annually to shareholders at least 90% of its investment company taxable income
and must meet several additional requirements. Among these requirements are the
following: (1) at least 90% of a Fund's gross income each taxable year must be
derived from dividends, interest, payments with respect to securities loans and
gains from the sale or other disposition of securities or foreign currencies, or
other income derived with respect to its business of investing in securities or
currencies; (2) at the close of each quarter of a Fund's taxable year, at least
50% of the value of its total assets must be represented by cash and cash items,
U.S. Government securities, securities of other RICs and other securities,
limited in respect of any one issuer, to an amount that does not exceed 5% of
the value of that Fund and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (3) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its assets
may be invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer.
B-15
<PAGE>
Distributions of net investment income and net realized capital gains
by a Fund will be taxable to shareholders whether made in cash or reinvested in
shares. In determining amounts of net realized capital gains to be distributed,
any capital loss carryovers from prior years will be applied against capital
gains. Shareholders receiving distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received
equal to the net asset value of a share of a Fund on the reinvestment date. Fund
distributions also will be included in individual and corporate shareholders'
income on which the alternative minimum tax may be imposed.
A Fund or any securities dealer effecting a redemption of a Fund's
shares by a shareholder will be required to file information reports with the
IRS with respect to distributions and payments made to the shareholder. In
addition, a Fund will be required to withhold federal income tax at the rate of
31% on taxable dividends, redemptions and other payments made to accounts of
individual or other non-exempt shareholders who have not furnished their correct
taxpayer identification numbers and made certain required certifications on the
Account Application Form or with respect to which that Fund or the securities
dealer has been notified by the IRS that the number furnished is incorrect or
that the account is otherwise subject to withholding.
Each Fund intends to declare and pay dividends and other distributions
annually, as stated in the Prospectus. In order to avoid the payment of any
federal excise tax based on net income, the Fund must declare on or before
December 31 of each year, and pay on or before January 31 of the following year,
distributions at least equal to 98% of its ordinary income for that calendar
year and at least 98% of the excess of any capital gains over any capital losses
realized in the one-year period ending October 31 of that year, together with
any undistributed amounts of ordinary income and capital gains (in excess of
capital losses) from the previous calendar year.
Each Fund may receive dividend distributions from U.S. corporations. To
the extent that a Fund receives such dividends and distributes them to its
shareholders, and meets certain other requirements of the Code, corporate
shareholders of the Fund may be entitled to the "dividends received" deduction.
Availability of the deduction is subject to certain holding period and
debt-financing limitations.
Redemptions and exchanges of shares of a Fund will result in gains or
losses for tax purposes to the extent of the difference between the proceeds and
the shareholder's adjusted tax basis for the shares. Any loss realized upon the
redemption or exchange of shares within six months from their date of purchase
will be treated as a long-term capital loss to the extent of distributions of
long-term capital gain dividends with respect to such shares during such
six-month period. All or a portion of a loss realized upon the redemption of
shares of a Fund may be disallowed to the extent shares of the same Fund are
purchased (including shares acquired by means of reinvested dividends) within 30
days before or after such redemption.
Distributions and redemptions may be subject to state and local income
taxes, and the treatment thereof may differ from the federal income tax
treatment. Foreign taxes may apply to non-U.S. investors.
The above discussion and the related discussion in the Prospectus are
not intended to be complete discussions of all applicable federal tax
consequences of an investment in the Funds. The law firm of Paul, Hastings,
Janofsky & Walker,LLP has expressed no opinion in respect thereof. Nonresident
aliens and foreign persons are subject to different tax rules, and may be
subject to withholding of up to 30% on certain payments received from the Funds.
Shareholders are advised to consult with their own tax advisers concerning the
application of foreign, federal, state and local taxes to an investment in the
Funds.
DIVIDENDS AND DISTRIBUTIONS
Dividends from a Funds' investment company taxable income (whether paid
in cash or invested in additional shares) will be taxable to shareholders as
ordinary income to the extent of that Fund's earnings and profits. Distributions
of a Funds' net capital gain (whether paid in cash or invested in additional
shares) will be taxable to shareholders as short-, mid- or long-term capital
gain based upon the characterization of those gains, regardless of how long they
have held that Funds shares.
Dividends declared by a Fund in October, November or December of any
year and payable to shareholders of record on a date in one of such months will
be deemed to have been paid by the Fund and received by the
B-16
<PAGE>
shareholders on the record date if the dividends are paid by the Fund during the
following January. Accordingly, such dividends will be taxed to shareholders for
the year in which the record date falls.
Each Fund is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to any individuals and certain
other noncorporate shareholders who do not provide the Fund with a correct
taxpayer identification number. Each Fund also is required to withhold 31% of
all dividends and capital gain distributions paid to such shareholders who
otherwise are subject to backup withholding.
PERFORMANCE INFORMATION
Total Return
Average annual total return quotations used in the Funds' advertising
and promotional materials are calculated according to the following formula:
P(1 + T)n = ERV
where "P" equals a hypothetical initial payment of $1000; "T" equals average
annual total return; "n" equals the number of years; and "ERV" equals the ending
redeemable value at the end of the period of a hypothetical $1000 payment made
at the beginning of the period.
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication. Average
annual total return, or "T" in the above formula, is computed by finding the
average annual compounded rates of return over the period that would equate the
initial amount invested to the ending redeemable value. Average annual total
return assumes the reinvestment of all dividends and distributions.
For the period from November 3, 1997 (commencement of operations)
through March 31, 1998, The Rockhaven Fund and the Premier Dividend Fund had
Total Returns of 14.66% and 11.58%, respectively.
Yield
Annualized yield quotations used in the Funds' advertising and
promotional materials are calculated by dividing a Fund's investment income for
a specified thirty-day period, net of expenses, by the average number of shares
outstanding during the period, and expressing the result as an annualized
percentage (assuming semi-annual compounding) of the net asset value per share
at the end of the period. Yield quotations are calculated according to the
following formula:
6
YIELD = 2 [(a-b + 1) - 1]
---
cd
where "a" equals dividends and interest earned during the period; "b" equals
expenses accrued for the period, net of reimbursements; "c" equals the average
daily number of shares outstanding during the period that are entitled to
receive dividends and "d" equals the maximum offering price per share on the
last day of the period.
Except as noted below, in determining net investment income earned
during the period ("a-b" in the above formula), each Fund calculates interest
earned on each debt obligation held by it during the period by (1) computing the
obligation's yield to maturity, based on the market value of the obligation
(including actual accrued interest) on the last business day of the period or,
if the obligation was purchased during the period, the purchase price plus
accrued interest; (2) dividing the yield to maturity by 360 and multiplying the
resulting quotient by the market value of the obligation (including actual
accrued interest). Once interest earned is calculated in this fashion for each
debt obligation held by the Fund, net investment income is then determined by
totaling all such interest earned.
For purposes of these calculations, the maturity of an obligation with
one or more call provisions is assumed to be the next date on which the
obligation reasonably can be expected to be called or, if none, the maturity
date.
For the period from November 3, 1997 (commencement of operations)
through March 31, 1998, The Rockhaven Fund and the Premier Dividend Fund had
Yields of 1.90% and 2.06%, respectively.
Other information
B-17
<PAGE>
Performance data of the Funds quoted in advertising and other
promotional materials represents past performance and is not intended to predict
or indicate future results. The return and principal value of an investment in a
Fund will fluctuate, and an investor's redemption proceeds may be more or less
than the original investment amount. In advertising and promotional materials a
Fund may compare its performance with data published by Lipper Analytical
Services, Inc. ("Lipper") or CDA Investment Technologies, Inc. ("CDA"). A Fund
also may refer in such materials to mutual fund performance rankings and other
data, such as comparative asset, expense and fee levels, published by Lipper or
CDA. Advertising and promotional materials also may refer to discussions of a
Fund and comparative mutual fund data and ratings reported in independent
periodicals including, but not limited to, The Wall Street Journal, Money
Magazine, Forbes, Business Week, Financial World and Barron's.
GENERAL INFORMATION
The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest and to divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interest in the Funds. Each share
represents an interest in a Fund proportionately equal to the interest of each
other share. Upon a Fund's liquidation, all shareholders of that Fund would
share pro rata in the net assets of that Fund available for distribution to
shareholders. If they deem it advisable and in the best interest of
shareholders, the Board of Trustees may create thirteen series of shares which
differ from each other only as to dividends. The Board of Trustees has created
six series of shares, and may create additional series in the future, which have
separate assets and liabilities. Income and operating expenses not specifically
attributable to a particular Fund will be allocated fairly among the Funds by
the Trustees, generally on the basis of the relative net assets of each Fund.
Rule 18f-2 under the 1940 Act provides that as to any investment
company which has two or more series outstanding and as to any matter required
to be submitted to shareholder vote, such matter is not deemed to have been
effectively acted upon unless approved by the holders of a "majority" (as
defined in the Rule) of the voting securities of each series affected by the
matter. Such separate voting requirements do not apply to the election of
Trustees or the ratification of the selection of accountants. The Rule contains
special provisions for cases in which an advisory contract is approved by one or
more, but not all, series. A change in investment policy may go into effect as
to one or more series whose holders so approve the change even though the
required vote is not obtained as to the holders of other affected series.
The Funds' custodian, Star Bank, 425 Walnut Street, Cincinnati, Ohio
45202 is responsible for holding the Funds' assets. American Data Services, P.O.
Box 5536, Hauppauge, NY 11788 acts as the Fund's accounting services agent. The
Fund's independent accountants, McGladrey & Pullen, LLP, 555 Fifth Avenue, New
York, NY 10017, assist in the preparation of certain reports to the Securities
and Exchange Commission and the Funds' tax returns.
Shares of the Funds owned by the Trustees and officers as a group were
less than 1% at April 8, 1998.
As of April 9, 1998, the Funds were controlled by AmSouth
Bancorporation Retirement Trust, U/A: 12-13- 1973, AmSouth Bank, TTEE, P.O. Box
11426, Birmingham, AL 35202 which owned 33.00% of the Rockhaven Fund and 56.93%
of The Rockhaven Premier Dividend Fund. The controlling shareholder would be
able to control decisions made by the shareholders with respect to matters
affecting only the Funds, such as the Investment Advisor Agreement.
On April 9, 1998, the following additional persons owned of record
and/or beneficially more than 5% of The Rockhaven Fund's outstanding voting
securities:
Stephen John Getway IRA, Star Bank N.A. Custodian, 411 Gaywood Circle,
Upper St. Clair, PA 15241; 6.04% record.
Saxon & Co., FBO: Katherine E. Snee, P.O. Box 7780-1888, Philadelphia,
PA 19182; 14.42% record.
Saxon & Co., FBO: Snee-Reinhardt Charitable Fund, P.O. Box 7780-1888,
Philadelphia, PA 19182; 14.42% record.
Timothy F. Currie Charitable Remainder Unittrust D/T/D 9/23/97, First
National Bank of Atmore, P.O. Box 27, Atmore, AL 36504; 5.78% record.
B-18
<PAGE>
On April 9, 1998, the following additional persons owned of record
and/or beneficially more than 5% of The Rockhaven Premier Dividend Fund's
outstanding voting securities:
Frederick R. Weiss IRA, Star Bank N.A. Custodian, 326 Dehaney Drive,
Pittsburgh, PA 15235; 5.78% record.
Christopher H. Wiles IRA, Star Bank N.A. Custodian, 132 Rockhaven Ln.,
Pittsburgh, PA 15228; 13.97% record.
APPENDIX
Description of Ratings
Moody's Investors Service, Inc.: Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa---Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great period of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA -- Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any long period of time may be small.
CAA -- Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA -- Bonds rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
short-comings.
C -- Bonds rated C are the lowest-rated class of bonds, and such issues
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modified 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Standard & Poor's Corporation: Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
B-19
<PAGE>
AA--Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB -- Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B -- Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB- rating.
CCC -- Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest and repay principal. The CCC rating
category is also used for debt subordinated to senior debt that is assigned an
actual or implied B or B- Rating.
CC -- Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C -- The Rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
The ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative
standing within the major rating categories.
Commercial Paper Ratings
Moody's commercial paper ratings are assessments of the issuer's
ability to repay punctually promissory obligations. Moody's employs the
following three designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers: Prime 1--highest quality; Prime
2--higher quality; Prime 3--high quality.
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment. Ratings are graded into four categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Issues assigned the highest rating, A, are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers "1", "2" and "3" to indicate the relative degree of safety. The
designation A-1 indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. A "+" designation is applied to those issues
rated "A-1" which possess extremely strong safety characteristics. Capacity for
timely payment on issues with the designation "A-2" is strong. However, the
relative degree of safety is not as high as for issues designated A-1. Issues
carrying the designation "A-3" have a satisfactory capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effect of changes in
circumstances than obligations carrying the higher designations.
B-20
<PAGE>
The Rockhaven Fund
Rockhaven Premier
Dividend Fund
Semi-Annual Report
For the period ended
March 31, 1998
<PAGE>
The Rockhaven Fund
SCHEDULE OF INVESTMENTS at March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 92.64% Market Value
- --------------------------------------------------------------------------------
Aerospace: 1.06%
350 B.F. Goodrich Co.............................. $ 17,872
--------
Basic Materials: 4.03%
800 Allegheny Teledyne Inc........................ 22,250
550 IWC Global, CONV PRD 6.25%.................... 20,900
800 Royal Group Technologies,
CONV PRD 6.875%............................... 24,800
--------
67,950
--------
Classified Goods/Diversified: 7.55%
500 Emerson Electric Co........................... 32,594
700 Fluor Corp.................................... 34,825
300 General Electric Co........................... 25,856
500 PPG Industries, Inc........................... 33,969
--------
127,244
--------
Consumer Cyclical: 4.09%
550 Ford Motor Co................................. 35,647
1,250 Tupperware Corp............................... 33,281
--------
68,928
--------
Energy: 7.56%
250 British Petroleum Co. plc, ADR................ 21,515
20,000 Diamond Offshore Drilling Inc.,
CONV BOND 3.75%, due 2/15/2007................ 25,350
350 Exxon Corp.................................... 23,669
700 Shell Transport & Trading, ADR................ 30,975
425 Tosco Corp., CONV PRD 5.75%................... 25,925
--------
127,434
--------
Finance: 15.32%
730 Banc One Corp................................. 46,173
300 Bankers Trust NY Corp......................... 36,094
250 J.P. Morgan & Co., Inc........................ 33,578
900 National Australia Bank Ltd.,
CONV PRD 7.875%............................... 26,100
300 NationsBank (JP) Aces,
CONV PRD 7.25%................................ 37,688
2
<PAGE>
The Rockhaven Fund
SCHEDULE OF INVESTMENTS at March 31, 1998 (Unaudited), Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Finance, continued
1,900 Pacific Century Financial Corp................ $ 45,243
500 Wilmington Trust Corp......................... 33,281
--------
258,157
--------
Health Care: 10.69%
400 American Home Products........................ 38,150
700 Baxter International Inc...................... 38,588
375 Johnson & Johnson............................. 27,491
250 Merck & Co., Inc.............................. 32,094
1,000 Pharmacia & Upjohn, Inc....................... 43,750
--------
180,073
--------
Retailing: 5.09%
450 J.C. Penney Company, Inc...................... 34,059
900 Sears, Roebuck & Co........................... 51,694
--------
85,753
--------
Services: 5.77%
550 McDonald's Corporation........................ 33,000
1,550 Readers Digest Trace,
CONV PRD 8.25%................................ 41,172
900 Sysco Corporation............................. 23,063
--------
97,234
--------
Staples: 8.23%
900 Dimon Inc., CONV PRD 8.50%.................... 15,750
900 DIMON Inc..................................... 15,019
700 Dole Food Co., Inc. CONV PRD 7.00%............ 31,675
300 General Mills, Inc............................ 22,800
450 H.J. Heinz Company............................ 26,269
650 Philip Morris Companies....................... 27,097
--------
138,610
--------
Technology: 15.76%
23,000 Adaptec Inc., CONV PRD 4.75%,
due 2/1/2004.................................. 19,148
700 Adaptec, Inc.................................. 13,759
650 AMP Incorporated.............................. 28,478
350 Hewlett-Packard Company....................... 22,181
3
<PAGE>
The Rockhaven Fund
SCHEDULE OF INVESTMENTS at March 31, 1998 (Unaudited), Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Technology, continued
30,000 Kent Electronics Corp.,
CONV PRD 4.50%, due 9/1/2004.................. $ 25,087
600 Kent Electronics Corp......................... 12,638
650 Microsoft Corporation,
CONV PRD $2.196............................... 60,166
600 Motorola, Inc................................. 36,375
450 Pitney Bowes, Inc............................. 22,584
25,000 Xilinx Inc., CONV PRD 5.25%,
due 11/1/2202................................. 25,063
--------
265,479
--------
Transportation: 1.00%
300 Union Pacific Corp............................ 16,856
--------
Utility: 6.48%
650 MCN Energy Group, Inc.,
CONV PRD 8.75%................................ 21,206
750 Pacific Enterprises........................... 30,609
450 Salomon Smith Barney Holdings, Inc.,
CONV PRD 6.25%................................ 30,038
500 U.S. West Communications...................... 27,375
--------
109,228
--------
Total Common Stocks and Convertible
Securities (cost $1,465,833).................. 1,560,818
----------
Principal Amount SHORT-TERM INVESTMENTS: 9.84%
- --------------------------------------------------------------------------------
$165,709 Star Treasury Fund, 4.99%..................... 165,709
----------
Total Investments in Securities
(cost $1,631,542+):102.48% ................ 1,726,527
Liabilities less Other Assets: (2.48%)........ (41,746)
----------
Total Net Assets: 100.0% ..................... $1,684,781
==========
4
<PAGE>
The Rockhaven Fund
SCHEDULE OF INVESTMENTS at March 31, 1998 (Unaudited), Continued
- --------------------------------------------------------------------------------
Market Value
- --------------------------------------------------------------------------------
+At March 31, 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................. $ 103,881
Gross unrealized depreciation................. 8,896
---------
Net unrealized appreciation............... $ 94,985
=========
See Notes to Financial Statements.
5
<PAGE>
The Rockhaven Fund
STATEMENT OF ASSETS AND LIABILITIES at March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(identified cost $1,631,542) ........................... $1,726,527
Receivables:
Fund shares sold........................................ 11,363
Dividends and interest.................................. 3,199
Due from Advisor........................................ 8,704
Subscriptions........................................... 100,000
Prepaid expenses........................................... 13,946
----------
Total assets ........................................ 1,863,739
----------
LIABILITIES
Payables:
Advisory fee............................................ 643
Administration fee...................................... 2,548
Dividends............................................... 1,032
Securities purchased.................................... 162,445
Accrued expenses........................................... 12,290
----------
Total liabilities.................................... 178,958
----------
NET ASSETS ................................................... $1,684,781
==========
Netasset value, offering and redemption
price per share ($1,684,781/147,693 shares
outstanding; unlimited number of shares
(par value $.01) authorized)............................ $11.41
==========
COMPONENTS OF NET ASSETS
Paid-in capital ........................................... $1,590,365
Accumulated net investment loss............................ (38)
Accumulated net realized loss on investments............... (531)
Net unrealized appreciation on investments................. 94,985
----------
Net assets ............................................. $1,684,781
==========
See Notes to Financial Statements.
6
<PAGE>
The Rockhaven Fund
STATEMENT OF OPERATIONS
For the Period from November 3, 1997* through March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends............................................... $ 7,660
Interest................................................ 1,983
Amortization of Premium................................. (421)
--------
Total income......................................... 9,222
--------
Expenses
Advisory fees (Note 3).................................. 2,048
Administration fee (Note 3)............................. 12,082
12b-1 expense........................................... 683
Custodian and accounting fees........................... 8,539
Transfer agent fees..................................... 5,236
Professionals' fees..................................... 6,042
Trustees' fees.......................................... 2,396
Registration fees....................................... 2,865
Reports to shareholders................................. 2,820
Other expenses.......................................... 2,115
--------
Total expenses....................................... 44,826
Less, expenses reimbursed/waived..................... (40,730)
--------
Net expenses......................................... 4,096
--------
Net investment income ............................ 5,126
--------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized loss from security transactions............ (531)
Net change in unrealized appreciation
on investments........................................ 94,985
--------
Net realized and unrealized gain
on investments..................................... 94,454
--------
Net Increase in Net Assets Resulting
from Operations ................................ $ 99,580
========
*Commencement of operations.
See Notes to Financial Statements.
7
<PAGE>
The Rockhaven Fund
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
November 3, 1997*
through
March 31, 1998
- --------------------------------------------------------------------------------
NET INCREASE IN ASSETS FROM
OPERATIONS
Net investment income......................................... $ 5,126
Net realized loss from security transactions.................. (531)
Net change in unrealized appreciation of securities........... 94,985
----------
Net increase in net assets resulting
from operations ......................................... 99,580
----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income......................................... (5,163)
----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a)................................... 1,590,365
----------
Total increase in net assets .............................. 1,684,782
NET ASSETS
Beginning of period........................................... -0-
----------
End of period (including undistributed net
investment income of $3,528)................................ $1,684,782
==========
(a) A summary of capital share transactions is as follows:
November 3, 1997*
through
March 31, 1998
----------------------
Shares Value
------- ----------
Shares sold................................ 147,296 $1,586,033
Shares issued in reinvestment
of distributions......................... 397 4,332
Shares redeemed............................ (0) (0)
------- ----------
Net increase............................... 147,693 $1,590,365
======= ==========
*Commencement of operations.
See Notes to Financial Statements.
8
<PAGE>
The Rockhaven Fund
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
- --------------------------------------------------------------------------------
November 3, 1997*
through
March 31, 1998
- --------------------------------------------------------------------------------
Net asset value, beginning of period........................ $ 10.00
Income from investment operations:
Net investment income.................................... 0.08
Net realized and unrealized gain on investments.......... 1.38
-------
Total from investment operations............................ 1.46
-------
Less distributions:
Dividends from net investment income..................... (0.05)
-------
Net asset value, end of period.............................. $ 11.41
=======
Total return ............................................... 14.66%#
Ratios/supplemental data:
Net assets, end of period (thousands)....................... $ 1,864
Ratio of expenses to average net assets:
Before expense reimbursement............................. 16.03%+
After expense reimbursement.............................. 1.47%+
Ratio of net investment loss to average net assets:
Before expense reimbursement............................. (12.73%)+
After expense reimbursement.............................. 1.83%+
Portfolio turnover rate..................................... 26.17%
Average commission rate paid per share...................... $0.0600
*Commencement of operations.
#Not annualized.
+Annualized.
See Notes to Financial Statements.
9
<PAGE>
Rockhaven Premier Dividend Fund
SCHEDULE OF INVESTMENTS at March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 98.35% Market Value
- --------------------------------------------------------------------------------
Aerospace: 1.63%
300 B.F. Goodrich Co.............................. $ 15,319
---------
Basic Materials: 4.55%
550 IWC Global, CONV PRD 6.25%.................... 20,900
700 Royal Group Technologies,
CONV PRD 6.875%............................... 21,700
---------
42,600
---------
Classified Goods/Diversified: 8.51%
550 Fluor Corp.................................... 27,362
1,000 Ingersoll-Rand Company,
CONV PRD 6.75%................................ 25,188
400 PPG Industries, Inc........................... 27,175
---------
79,725
---------
Consumer Cyclical: 4.41%
350 Ford Motor Co................................. 22,684
700 Tupperware Corp............................... 18,638
---------
41,322
---------
Energy: 8.28%
200 British Petroleum Co. plc, ADR................ 17,212
600 Shell Transport & Trading, ADR................ 26,550
250 Tosco Corp., CONV PRD 5.75%................... 15,250
350 Unocal Corporation, CONV PRD 6.25%............ 18,594
---------
77,606
---------
Finance: 16.01%
225 Bankers Trust NY Corp......................... 27,070
300 Frontier Insurance Group,
CONV PRD 6.25%................................ 19,313
900 National Australia Bank Ltd.,
CONV PRD 7.875%............................... 26,100
200 NationsBank (JP) Aces,
CONV PRD 7.25%................................ 25,125
1,200 Pacific Century Financial Corp................ 28,575
850 TrustCo Bank Corp. N.Y........................ 23,853
---------
150,036
---------
10
<PAGE>
Rockhaven Premier Dividend Fund
SCHEDULE OF INVESTMENTS at March 31, 1998 (Unaudited), Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Health Care: 12.10%
20,000 ALZA Corporation, CONV PRD 5.00%,
due 5/1/2006.................................. $ 26,225
300 American Home Products........................ 28,613
200 Merck & Co., Inc.............................. 25,675
750 Pharmacia & Upjohn, Inc....................... 32,812
---------
113,325
---------
Retailing: 5.18%
300 J.C. Penney Company, Inc...................... 22,706
450 Sears, Roebuck & Co........................... 25,847
---------
48,553
---------
Services: 5.92%
1,100 Readers Digest Trace,
CONV PRD 8.25%................................ 29,219
500 Wendy's International,
CONV PRD 5.00%................................ 26,281
---------
55,500
---------
Staples: 9.83%
1,650 Dimon Inc., CONV PRD (1.41)%.................. 28,875
550 Dole Food Co., Inc. CONV PRD 7.00%............ 24,887
300 H.J. Heinz Company............................ 17,513
500 Philip Morris Companies....................... 20,844
---------
92,119
---------
Technology: 14.33%
350 Adaptec, Inc., CONV PRD....................... 6,880
1,200 Adaptec Inc., CONV PRD 4.75%,
due 2/1/2004.................................. 9,990
20,000 Data General Corporation,
CONV PRD 6.00%, due 5/15/2004................. 19,550
30,000 Kent Electronics Corp.,
CONV PRD 4.50%, due 9/1/2004.................. 25,088
325 Microsoft Corporation, CONV PRD............... 30,083
450 Pitney Bowes, Inc............................. 22,584
20,000 Xilinx Inc., CONV PRD 5.25%,
due 11/1/2202................................. 20,050
---------
133,425
---------
11
<PAGE>
Rockhaven Premier Dividend Fund
SCHEDULE OF INVESTMENTS at March 31, 1998 (Unaudited), Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Transportation: 1.20%
200 Union Pacific Corp............................ $ 11,238
---------
Utility: 6.39%
550 MCN Energy Group, Inc.,
CONV PRD 8.75%................................ 17,943
300 Salomon Smith Barney Holdings, Inc.,
CONV PRD 6.25%................................ 20,025
400 U.S. West Communications...................... 21,900
---------
59,868
---------
Total Common Stocks and Convertible
Securities (cost $846,480+)................... 921,436
---------
Principal Amount SHORT-TERM INVESTMENTS: 0.41%
- --------------------------------------------------------------------------------
$3,842 Star Treasury Fund, 4.99%..................... 3,842
---------
Total Investments in Securities
(cost $850,323):98.76% .................... 925,278
Other Assets less Liabilities: 1.24%.......... 11,664
---------
Total Net Assets: 100.0% ..................... $ 936,942
=========
+At March 31, 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................. $ 89,469
Gross unrealized depreciation................. 14,514
--------
Net unrealized appreciation............... $ 74,955
========
See Notes to Financial Statements.
12
<PAGE>
Rockhaven Premier Dividend Fund
STATEMENT OF ASSETS AND LIABILITIES at March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(identified cost $850,323) ............................. $ 925,278
Receivables:
Fund shares sold........................................ 11,363
Dividends and interest.................................. 4,112
Due from Advisor........................................ 8,747
Suspense .................................................. (494)
Prepaid expenses........................................... 14,091
----------
Total assets ........................................ 963,097
----------
LIABILITIES
Payables:
Advisory fee............................................ 598
Administration fee...................................... 2,548
Securities purchased.................................... 10,887
Accrued expenses........................................... 12,122
----------
Total liabilities.................................... 25,155
----------
NET ASSETS ................................................... $ 936,942
==========
Net asset value, offering and redemption
price per share ($936,942/84,744 shares
outstanding; unlimited number of shares
(par value $.01) authorized)............................ $11.06
======
COMPONENTS OF NET ASSETS
Paid-in capital ........................................... $ 856,583
Accumulated net investment loss............................ (40)
Accumulated net realized gain on investments............... 5,444
Net unrealized appreciation on investments................. 74,955
---------
Net assets ............................................. $ 936,942
=========
See Notes to Financial Statements.
13
<PAGE>
Rockhaven Premier Dividend Fund
STATEMENT OF OPERATIONS
For the Period from November 3, 1997* through March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends............................................... $ 9,982
Interest................................................ 2,370
Amortization of Premium................................. (310)
--------
Total income......................................... 12,042
--------
Expenses
Advisory fees (Note 3).................................. 2,243
Administration fee (Note 3)............................. 12,082
12b-1 expense........................................... 748
Custodian and accounting fees........................... 8,539
Transfer agent fees..................................... 5,236
Professionals' fees..................................... 6,042
Trustees' fees.......................................... 2,396
Registration fees....................................... 2,865
Reports to shareholders................................. 2,819
Other expenses.......................................... 2,165
--------
Total expenses....................................... 45,135
Less, expenses reimbursed............................ (40,649)
--------
Net expenses......................................... 4,486
--------
Net investment income ............................ 7,556
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions............ 5,444
Net change in unrealized appreciation
on investments........................................ 74,955
--------
Net realized and unrealized gain
on investments..................................... 80,399
--------
Net Increase in Net Assets Resulting
from Operations ................................ $ 87,955
========
*Commencement of operations.
See Notes to Financial Statements.
14
<PAGE>
Rockhaven Premier Dividend Fund
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
November 3, 1997*
through
March 31, 1998
- --------------------------------------------------------------------------------
NET INCREASE IN ASSETS FROM
OPERATIONS
Net investment loss........................................... $ 7,556
Net realized gain from security transactions.................. 5,444
Net change in unrealized appreciation of securities........... 74,955
--------
Net increase in net assets resulting
from operations ......................................... 87,955
--------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income......................................... (7,596)
--------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a)................................... 856,583
--------
Total increase in net assets .............................. 936,942
NET ASSETS
Beginning of period........................................... -0-
--------
End of period ................................................ $936,942
========
(a) A summary of capital share transactions is as follows:
November 3, 1997*
through
March 31, 1998
---------------------
Shares Value
------ ---------
Shares sold................................ 84,038 $ 849,048
Shares issued in reinvestment
of distributions......................... 712 7,596
Shares redeemed............................ (6) (61)
------ ---------
Net increase............................... 84,744 $ 856,583
====== =========
*Commencement of operations.
See Notes to Financial Statements.
15
<PAGE>
Rockhaven Premier Dividend Fund
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
- --------------------------------------------------------------------------------
November 3, 1997*
through
March 31, 1998
- --------------------------------------------------------------------------------
Net asset value, beginning of period........................ $ 10.00
Income from investment operations:
Net investment income.................................... 0.11
Net realized and unrealized gain on investments.......... 1.04
-------
Total from investment operations............................ 1.15
-------
Less distributions:
Dividends from net investment income..................... (0.09)
-------
Net asset value, end of period.............................. $ 11.06
=======
Total return ............................................... 11.58%#
Ratios/supplemental data:
Net assets, end of period (thousands)....................... $ 963
Ratio of expenses to average net assets:
Before expense reimbursement............................. 14.86%+
After expense reimbursement.............................. 1.48%+
Ratio of net investment loss to average net assets:
Before expense reimbursement............................. (10.90%)+
After expense reimbursement.............................. 2.49%+
Portfolio turnover rate..................................... 54.26%
Average commission rate paid per share...................... $0.0600
*Commencement of operations.
#Not annualized.
+Annualized.
16
<PAGE>
The Rockhaven Fund
Rockhaven Premier Dividend Fund
NOTES TO FINANCIAL STATEMENTS at March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Rockhaven Fund and Rockhave Premier Dividend Fund (the "Funds") 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's primary
investment objective is seeking long-term capital appreciation. The Fund seeks
to achieve its objective by investing in equity securities during rising stock
markets and limiting losses during declining markets. The Fund began operations
on November 3, 1997.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities traded on a national
securities exchange or included in the NASDAQ National Market System
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
an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the last reported bid
price. Securities for which quotations are not readily available are
valued at their respective fair values as determined in good faith
by the Board of Trustees. Short-term investments are stated at cost,
which when combined with accrued interest, approximates market
value.
B. Federal Income Taxes. The Funds intend 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. Interest
17
<PAGE>
The Rockhaven Fund
Rockhaven Premier Dividend Fund
NOTES TO FINANCIAL STATEMENTS at March 31, 1998 (Unaudited), Continued
- --------------------------------------------------------------------------------
income is recognized on an accrual basis. Income and capital gains
distributions to shareholders are determined in accordance with
income tax regulations, which may differ from generally accepted
accounting principles. Those differences are primarily due to
differing treatments for net operating losses.
D. Deferred Organization Costs. The Funds have incurred expenses of
$35,000 in connection with the organization of the Funds. These
costs have been deferred and are being amortized on a straight-line
basis through the period ending December 2, 2002.
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, as well as the reported amounts of revenues
and expenses during the period. Actual results could differ from
those estimates.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY
TRANSACTIONS
For the period ended March 31, 1998, Rockhaven (the "Advisor") provided
the Funds with investment management services under an Investment Advisory
Agreement. The Advisor furnishes all investment advice, office space and certain
administrative services, and provides most of the personnel needed by the Funds.
As compensation for its services, the Advisor receives a monthly fee at the
annual rate of 0.85% based upon the average daily net assets of the Funds.
The Funds are responsible for their own operating expenses. The Advisor
has agreed to reduce fees payable to it by the Funds or reimburse the Funds to
the extent necessary to limit the Funds' aggregate annual operating expenses to
1.50% of average net assets, annually. Any such reductions made by the Advisor
in its fees or payments may be reimbursed by the Funds, subject to approval by
the Board of Trustees, if the Funds are able to effect such reimbursement and
remain in compliance with any expense limitations in effect. For the period
ended March 31, 1998, the Advisor has reimbursed the Funds
18
<PAGE>
The Rockhaven Fund
Rockhaven Premier Dividend Fund
NOTES TO FINANCIAL STATEMENTS at March 31, 1998 (Unaudited), Continued
- --------------------------------------------------------------------------------
in the amount of $2,080.
Investment Company Administration Corporation (the "Administrator") acts
as the Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Funds; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Funds' 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 net assets, subject to a $30,000 minimum.
First Fund Distributors, Inc. (the "Distributor") acts as the Funds'
principal underwriter in a continuous public offering of the Funds' 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 - DISTRIBUTION COSTS
The Funds have adopted a Distribution Plan (the "Plan") in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that the Funds may pay a fee to
the Distributor at an annual rate of up to 0.25% of the average daily net assets
of the Funds. The fee is paid to the Distributor as reimbursement for, or in
anticipation of, expenses incurred for distribution-related activity.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
For the period ended March 31, 1998, the cost of purchses and the
proceeds from sales of securities, excluding short-term securities, for the
Rockhaven Fund, were $1,640,055 and $173,374, respectively.
For the period ended March 31, 1998, the cost of purchses and the
proceeds from sales of securities, excluding short-term securities, for the
Rockhaven Premier Dividend Fund, were $1,178,574 and $337,377, respectively.
19
<PAGE>
Advisor
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
888-263-6452
Auditor
McGladrey & Pullen LLP
555 Fifth Avenue, 8th Floor
New York, NY 10017-2416
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.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Contained in Part A, the Prospectus:
Financial Highlights
Contained in Part B, the Statement of Additional Information
Unaudited Financial Statements as of March 31, 1998
(b) Exhibits:
(1) Agreement and Declaration of Trust (1)
(2) By-Laws (1)
(3) Not applicable
(4) Specimen stock certificates (3)
(5) Form of Investment Advisory Agreement (2)
(6) Distribution Agreement (2)
(7) Not applicable
(8) Custodian Agreement (3)
(9) (1)Administration Agreement with Investment Company
Administration Corporation (2)
(2) Fund Accounting Service Agreement (2)
(3) Transfer Agency and Service Agreement (2)
(10) (i) Opinion and consent of counsel relating to
the Al Frank Fund, American Trust Allegiance
Fund, Avatar Advantage Balanced Fund, Avatar
Advantage Equity Allocation Fund, Avatar
Advantage International Equity Fund, Chase
Growth Fund, Edgar Lomax Fund,
InformationTech 100 Fund, Kaminski Poland
Fund, Ridgeway Helms Millenium Fund,
Rockhaven Fund (5)
(ii) Opinion and consent of counsel relating to
the Van Deventer & Hoch American Value Fund
(5)
(11) Not applicable
(12) Not applicable
(13) Investment letters (3)
(14) Individual Retirement Account forms (6)
C-1
<PAGE>
(15) (i) Form of Distribution Plan (4)
(16) Not applicable
(1) Previously filed with the Registration Statement on Form N-1A(File
No. 33-17391) on December 6, 1996 and incorporated herein by reference.
(2) Previously filed with Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A(File No. 33-17391) on January 29, 1997 and
incorporated herein by reference.
(3) Previously filed with Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A(File No. 33-17391) on February 28, 1997 and
incorporated herein by reference.
(4) Previously filed with Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A (File No. 33-17391) on February 19, 1998 and
incorporated herein by reference.
(5) Previously filed with Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A (File No. 33-17391) on March 19, 1998 and
incorporated herein by reference.
(6) To be filed by amendment.
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
Shares of Beneficial Interest
Number of record holders as of April 13, 1998
American Trust Allegiance Fund: 331
InformationTech 100 Fund: 34
Kaminski Poland Fund: 376
Ridgeway-Helms Millennium Fund: 115
Rockhaven Fund: 54
Rockhaven Premier Dividend Fund: 27
C-2
<PAGE>
Chase Growth Fund: 80
The Avatar Advantage Equity Allocation Fund: 3
Edgar Lomax Value Fund: 45
Al Frank Asset Management Fund: 272
The Avatar Advantage Balanced Fund: 1
Item 27. Indemnification.
Article VI of Registrant's By-Laws states as follows:
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this
Article, "agent" means any person who is or was a Trustee, officer, employee or
other agent of this Trust or is or was serving at the request of this Trust as a
Trustee, director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise or was a
Trustee, director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes without limitation attorney's fees and any expenses of
establishing a right to indemnification under this Article.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed:
(a) in the case of conduct in his official capacity as a Trustee
of the Trust, that his conduct was in the Trust's best
interests, and
(b) in all other cases, that his conduct was at least not opposed
to the Trust's best interests, and
(c) in the case of a criminal proceeding, that he had no
reasonable cause to believe the conduct of that person was
unlawful.
The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in the best interests of this
Trust or that the person had reasonable cause to believe that the person's
conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action by or in the right of this Trust to procure a
judgment in its favor by reason of the fact that that person is or was an agent
of this Trust, against expenses actually and reasonably incurred by that person
in connection with the defense or settlement of that action if that person acted
in good faith, in a manner that person believed to be in the best interests of
this Trust and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar
C-3
<PAGE>
circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision
to the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any claim, issue, or matter as to which that
person shall have been adjudged to be liable on the basis that
personal benefit was improperly received by him, whether or
not the benefit resulted from an action taken in the person's
official capacity; or
(b) In respect of any claim, issue or matter as to which that
person shall have been adjudged to be liable in the
performance of that person's duty to this Trust, unless and
only to the extent that the court in which that action was
brought shall determine upon application that in view of all
the circumstances of the case, that person was not liable by
reason of the disabling conduct set forth in the preceding
paragraph and is fairly and reasonably entitled to indemnity
for the expenses which the court shall determine; or
(c) of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval,
or of expenses incurred in defending a threatened or pending
action which is settled or otherwise disposed of without court
approval, unless the required approval set forth in Section 6
of this Article is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of
this Trust has been successful on the merits in defense of any proceeding
referred to in Sections 2 or 3 of this Article or in defense of any claim, issue
or matter therein, before the court or other body before whom the proceeding was
brought, the agent shall be indemnified against expenses actually and reasonably
incurred by the agent in connection therewith, provided that the Board of
Trustees, including a majority who are disinterested, non-party Trustees, also
determines that based upon a review of the facts, the agent was not liable by
reason of the disabling conduct referred to in Section 4 of this Article.
Section 6. REQUIRED APPROVAL. Except as provided in Section 5 of this
Article, any indemnification under this Article shall be made by this Trust only
if authorized in the specific case on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are not
parties to the proceeding and are not interested persons of
the Trust (as defined in the Investment Company Act of 1940);
or
(b) A written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding upon a written undertaking by or on behalf of the agent, to repay
C-4
<PAGE>
the amount of the advance if it is ultimately determined that he or she is not
entitled to indemnification, together with at least one of the following as a
condition to the advance: (i)security for the undertaking; or (ii) the existence
of insurance protecting the Trust against losses arising by reason of any lawful
advances; or (iii) a determination by a majority of a quorum of Trustees who are
not parties to the proceeding and are not interested persons of the Trust, or by
an independent legal counsel in a written opinion, based on a review of readily
available facts that there is reason to believe that the agent ultimately will
be found entitled to indemnification. Determinations and authorizations of
payments under this Section must be made in the manner specified in Section 6 of
this Article for determining that the indemnification is permissible.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article
shall affect any right to indemnification to which persons other than Trustees
and officers of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall be made
under this Article, except as provided in Sections 5 or 6 in any circumstances
where it appears:
(a) that it would be inconsistent with a provision of the
Agreement and Declaration of Trust of the Trust, a resolution
of the shareholders, or an agreement in effect at the time of
accrual of the alleged cause of action asserted in the
proceeding in which the expenses were incurred or other
amounts were paid which prohibits or otherwise limits
indemnification; or
(b) that it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 10. INSURANCE. Upon and in the event of a determination by the
Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent of this Trust against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such, but only to the extent that this Trust would
have the power to indemnify the agent against that liability under the
provisions of this Article and the Agreement and Declaration of Trust of the
Trust.
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does not
apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
Item 28. Business and Other Connections of Investment Adviser.
The information required by this item with respect to American Trust
Company is as follows:
American Trust Company is a trust company chartered under the
laws of the State of New Hampshire. Its President and Director, Paul H.
Collins, is a director of:
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MacKenzie-Childs, Ltd.
3260 State Road 90
Aurora, New York 13026
Great Northern Arts
Castle Music, Inc.
World Family Foundation
all with an address at
Gordon Road, Middletown, New York
Robert E. Moses, a Director of American Trust Company, is a director
of:
Mascoma Mutual Hold Corp.
On The Green
Lebanon, NH 03766
Information required by this item is contained in the Form ADV of the
following entities and is incorporated herein by reference:
Name of investment adviser File No.
-------------------------- --------
Bay Isle Financial Corporation 801-27563
Kaminski Asset Management, Inc. 801-53485
Ridgeway Helms Investment Management 801-49884
Rockhaven Asset Management, LLC 801-54084
Chase Investment Counsel Corp. 801-3396
Avatar Investors Associates Corp. 801-7061
The Edgar Lomax Company 801-19358
Van Deventer & Hoch 801-6118
Al Frank Asset Management, Inc. 801-30528
Heritage West Advisors, LLC 801-55233
Item 29. Principal Underwriters.
(a) The Registrant's principal underwriter also acts as principal
underwriter for the following investment companies:
Guinness Flight Investment Funds, Inc.
Fleming Capital Mutual Fund Group
Fremont Mutual Funds
Jurika & Voyles Mutual Funds
Kayne Anderson Mutual Funds
Masters' Select Investment Trust
O'Shaughnessy Funds, Inc.
PIC Investment Trust
Purisima Fund
Professionally Managed Portfolios
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group
(b) The following information is furnished with respect to the officers
and directors of First Fund Distributors, Inc.:
<TABLE>
<CAPTION>
Position and Offices Position and
Name and Principal with Principal Offices with
Business Address Underwriter Registrant
- ---------------- -------------------- ------------
<S> <C> <C>
Robert H. Wadsworth President Vice
4455 E. Camelback Road and Treasurer President
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Suite 261E
Phoenix, AZ 85018
Eric M. Banhazl Vice President President,
2025 E. Financial Way Treasurer
Glendora, CA 91741 and Trustee
Steven J. Paggioli Vice President & Vice
479 West 22nd Street Secretary President
New York, New York 10011
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession of the following persons:
(a) the documents required to be maintained by paragraph (4) of Rule
31a-1(b) will be maintained by the Registrant;
(b) the documents required to be maintained by paragraphs (5), (6),
(10) and (11) of Rule 31a-1(b) will be maintained by the respective investment
advisors:
American Trust Company, One Court Street, Lebanon, NH 03766
Bay Isle Financial Corporation, 160 Sansome Street, San Francisco, CA
94104
Kaminski Asset Management, Inc., 210 Second Street, North, #050,
Minneapolis, MN 55401
Ridgeway Helms Investment Management, 303 Twin Dolphin Drive, Redwood
Shores, CA 94065
Rockhaven Asset Management, 100 First Avenue, Suite 1050, Pittsburgh,
PA 15222
Chase Investment Counsel Corp., 300 Preston Avenue, Charlottesville, VA
22902
Avatar Associates Investment Corp., 900 Third Avenue, New York, NY
10022
The Edgar Lomax Company, 6564 Loisdale Court, Springfield, VA 22150
Van Deventer & Hoch, 800 North Bend Boulevard, Glendale, CA 91203
Al Frank Asset Management, Inc. 465 Forest Avenue, Laguna Beach, CA
92651
Heritage West Advisors, LLC, 1850 North Central Ave., Suite 610,
Phoenix, AZ 85004
(c) with respect to The Heritage West Dividend Capture Income Fund
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<PAGE>
series of the Registant, all other records will be maintained by the Registrant;
and
(d) all other documents will be maintained by Registrant's custodian,
Star Bank, 425 Walnut Street, Cincinnati, OH 45202.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Registrant hereby undertakes to:
(a) Furnish each person to whom a Prospectus is delivered a copy
of the applicable latest annual report to shareholders, upon
request and without charge.
(b) If requested to do so by the holders of at least 10% of the
Trust's outstanding shares, call a meeting of shareholders for
the purposes of voting upon the question of removal of a
director and assist in communications with other shareholders.
(c) On behalf of each of its series, to change any disclosure of
past performance of an Advisor to a series to conform to
changes in the position of the staff of the Commission with
respect to such presentation.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Amendment to
the Registration Statement on Form N-1A of Advisors Series Trust to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Phoenix
and State of Arizona on the 29th day of April, 1998.
ADVISORS SERIES TRUST
By /s/ Eric M. Banhazl*
--------------------------
Eric M. Banhazl
President
This Amendment to the Registration Statement on Form N-1A of Advisors
Series Trust has been signed below by the following persons in the capacities
indicated on April 29, 1998.
/s/ Eric M. Banhazl* President, Principal Financial
- --------------------------- and Accounting Officer, and Trustee
Eric M. Banhazl
/s/ Walter E. Auch Sr.* Trustee
- ---------------------------
Walter E. Auch, Sr.
/s/ Donald E. O'Connor* Trustee
- ---------------------------
Donald E. O'Connor
/s/ George T. Wofford III* Trustee
- ---------------------------
George T. Wofford III
* /s/ Robert H. Wadsworth
-------------------------
By: Robert H. Wadsworth
Attorney in Fact
