The American Trust
Allegiance Fund
One Court Sreet
Lebanon, New Hampshire 03766
ANNUAL REPORT
FOR THE YEAR ENDED
FEBRUARY 28, 1999
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
March 30, 1999
Dear Fellow Shareholder,
We are pleased to send you the American Trust Allegiance Fund's annual
report for the twelve months ending February 28, 1999. Asset growth of the Fund
has been encouraging with total assets reaching $13.3 million as of February 28,
1999. The Fund's investment performance continues to be quite competitive, as it
ranked in the top 15% of growth mutual funds over the past twelve months
according to Lipper Analytic Services, Inc. Based on total return, Lipper ranked
the Fund 145 out of 1011 growth funds for the year ending February 28, 1999.
In an effort to provide shareholders with more information on the Fund, we
established our own website on the Internet, located at www.AllegianceFund.com.
Our website is updated each evening with the closing net asset value and on a
quarterly basis, investment performance is updated. We also received our
"ticker" symbol of "ATAFX" for the Fund from the NASDAQ, which can also be used
to obtain current net asset values.
The significant correction in the U.S. stock market last summer presented
challenges to all investors, as macroeconomic events from Asia and Europe
stressed global financial markets. Being long term, "bottom up" investors, our
focus continues to be on any changes in the competitive position or the
underlying fundamentals of the companies we own, rather than timing the stock
market or reacting to perceived valuation levels. Our job is to look through the
day to day volatility of the U.S. stock market and track the operating
performance of companies in our portfolio.
Our research continues to favor predominantly large capitalization,
domestic, high quality companies which possess, on average, growth in earnings
per share faster than that of the general stock market. In the current market
environment, we feel companies that have demonstrated a more predictable,
consistent record of growth in earnings per share are the most attractive.
Despite inherent shorter term volatility, our research continues to favor
companies in the technology sector and consequently, the Fund's portfolio is
overweighted, relative to the S&P 500 Index, in this area.
We thank you for your support and look forward to helping you achieve your
financial goals.
/s/ Jeffrey M. Harris
Jeffrey M. Harris, CFA
/s/ Paul H. Collins
Paul H. Collins
The Fund's average annual total return for the year ended March 31, 1999 was
30.35% and since inception (March 11, 1997) to March 31, 1999 was 34.01%.
Remember past performance is not a guarantee of future results. Fund share
values and returns fluctuate and investors may have a gain or a loss when shares
are redeemed. Based on total return, Lipper ranked the Fund in the top 11% of
growth funds (109th out of 1022 growth funds) for the year ending March 31,
1999. Total return identifies the return of the Fund taking into consideration
changes in the NAV price, accumulation and reinvestment of dividends and the
compounding factor over time. During the year ended February 28, 1999, fees were
waived and expenses advanced to the Fund.
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
Comparison of the change in value of a $10,000 investment in the American Trust
Allegiance Fund versus the S & P 500 Composite Stock Price Index.
Average Annual Total Return
Period Ended February 28, 1999
1 Year..............................27.47%
Since Inception (3/11/97)...........31.63%
[PERFORMANCE CHART]
American Trust S & P 500 Composite
Allegiance Fund Stock Price Index
--------------- -----------------
11-Mar-97 $10,000 $10,000
31-Mar-97 $ 9,210 $ 9,342
30-Apr-97 $ 9,950 $ 9,902
31-May-97 $10,630 $10,497
30-Jun-97 $11,110 $10,968
31-Jul-97 $12,100 $11,841
31-Aug-97 $11,450 $11,175
30-Sep-97 $12,240 $11,791
31-Oct-97 $11,820 $11,404
30-Nov-97 $12,200 $11,927
31-Dec-97 $12,480 $12,132
31-Jan-98 $12,460 $12,271
28-Feb-98 $13,480 $13,149
31-Mar-98 $14,000 $13,822
30-Apr-98 $14,140 $13,963
31-May-98 $13,620 $13,718
30-Jun-98 $14,670 $14,278
31-Jul-98 $14,330 $14,130
31-Aug-98 $12,110 $12,086
30-Sep-98 $13,378 $12,858
10/31/98 $14,244 $13,910
11/30/98 $15,130 $14,750
12/31/98 $17,081 $15,600
1/31/99 $17,914 $16,256
2/28/99 $17,183 $15,742
Past performance is not predictive of future performance.
* The S&P 500 Composite Stock Price Index is an unmanaged
capitalization-weighted index of 500 stocks designed to represent the broad
domestic economy.
2
<PAGE>
TOP 10 HOLDINGS AT FEBRUARY 28, 1999
America Online, Inc.
American International Group, Inc.
Cintas Corporation
Cisco Systems, Inc.
EMC Corporation
Fifth Third Bancorp
The Gap, Inc.
The Gillette Company
The Home Depot, Inc.
Qwest Communications International Inc.
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 96.17% Market Value
- --------------------------------------------------------------------------------
AIRLINES: 0.41%
1,800 Southwest Airlines Co. $ 54,225
---------
BANKS - MAJOR REGIONAL: 8.75%
6,050 Fifth Third Bancorp 400,056
3,650 Mellon Bank Corporation 246,831
2,500 Northern Trust Corporation 223,594
3,850 State Street Corporation 295,247
---------
1,165,728
---------
COMMUNICATION EQUIPMENT: 2.82%
3,700 Lucent Technologies 375,781
---------
COMPUTER HARDWARE: 7.12%
6,650 Compaq Computer Corporation 234,413
4,250 Dell Computer Corporation* 340,398
2,200 International Business
Machines Corporation 374,000
---------
948,811
---------
COMPUTER SOFTWARE AND SERVICES: 11.00%
7,000 America Online, Inc. 622,562
4,450 BMC Software, Inc.* 182,033
4,300 Computer Sciences Corporation 286,487
2,500 Microsoft Corporation* 375,234
---------
1,466,316
---------
COMPUTERS - NETWORKING: 2.90%
3,955 Cisco Systems, Inc.* 386,972
---------
COMPUTERS - PERIPHERAL: 3.00%
3,900 EMC Corporation* 399,263
---------
DISTRIBUTOR - FOOD AND HEALTH: 1.74%
8,200 Sysco Corporation 231,650
---------
ELECTRICAL EQUIPMENT: 4.54%
7,250 Solectron Corporation* 323,984
5,300 Symbol Technologies, Inc. 280,900
---------
604,884
---------
See accompanying Notes to Financial Statements.
4
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 28, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
ELECTRONICS - SEMICONDUCTOR: 2.57%
2,850 Intel Corporation $ 341,911
------------
ENTERTAINMENT: 1.3%
5,100 The Walt Disney Company 179,456
------------
FINANCIAL - DIVERSIFIED: 2.26%
4,300 Federal National Mortgage Association 301,000
------------
HOUSEHOLD PRODUCTS: 4.67%
2,875 Colgate-Palmolive Company 244,016
3,200 The Clorox Company 378,600
------------
622,616
------------
INSURANCE - BROKERS: 1.48%
2,775 Marsh & McLennan Companies, Inc. 196,505
------------
INSURANCE - MULTILINE: 3.40%
3,983 American International Group, Inc. 453,813
------------
MANUFACTURER - DIVERSE: 1.42%
2,750 Illinois Tool Works 189,062
------------
OIL AND GAS - DRILL AND EQUIPMENT: 1.87%
5,000 Schlumberger Ltd. 242,812
------------
OIL - INTERNATIONAL: 2.91%
3,000 Exxon Corporation 199,688
4,300 Royal Dutch Petroleum
Company ADR 188,663
------------
388,351
------------
PERSONAL CARE: 2.04%
7,600 The Gillette Company 407,550
------------
RETAIL - APPAREL: 2.98%
6,150 The Gap, Inc. 397,828
------------
RETAIL - BUILDING SUPPLY: 3.04%
6,800 The Home Depot, Inc. 405,875
------------
See accompanying Notes to Financial Statements.
5
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 28, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
RETAIL - SPECIALTY: 2.18%
9,900 Bed Bath & Beyond Inc.* $ 291,122
------------
SERVICES - COMMERCIAL AND CONSTRUCTION: 3.02%
5,700 Cintas Corporation 402,919
------------
SERVICES - COMPUTER SYSTEMS: 1.69%
5,700 Sungard Data Systems Inc.* 225,862
------------
SERVICES - DATA PROCESSING: 4.30%
7,750 Automatic Data Processing, Inc. 308,063
6,250 Paychex, Inc. 265,039
------------
573,102
------------
TELECOMMUNICATIONS - LOND DISTANCE: 7.31%
2,300 AT&T Corp. 188,888
4,600 MCI WORLDCOM, Inc.* 379,644
6,600 Qwest Communications International Inc.* 405,694
------------
974,226
------------
TELEPHONE: 4.43%
6,600 BellSouth Corporation 305,250
5,400 SBC Communications Inc. 285,525
------------
590,775
------------
Total Common Stocks
(cost $9,146,278) 12,818,415
------------
See accompanying Notes to Financial Statements.
6
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 28, 1999, CONTINUED
Principal
Amount SHORT-TERM INVESTMENTS: 2.38%
- --------------------------------------------------------------------------------
$316,695 Star Treasury Fund, 4.62% (cost $316,695) $ 316,695
------------
Total Investments in Securities
(cost $9,462,973+): 98.55% 13,135,110
Other Assets less Liabilities: 1.45% 194,300
------------
TOTAL NET ASSETS: 100.0% $ 13,329,410
============
* Non-income producing security.
+ At February 28, 1999, the cost of securities for Federal tax purposes was
$9,468,591. Gross unrealized appreciation and depreciation of securities were as
follows:
Gross unrealized appreciation $ 3,810,399
Gross unrealized depreciation (143,880)
-----------
Net unrealized appreciation $ 3,666,519
===========
See accompanying Notes to Financial Statements.
7
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
STATEMENT OF ASSETS AND LIABILITIES AT FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(identified cost $9,462,973) $13,135,110
Receivables:
Securities sold 417,853
Fund shares sold 75,413
Dividends and interest 6,532
Deferred Organization Costs 11,209
Prepaid expenses 21,702
-----------
Total assets 13,667,819
-----------
LIABILITIES
Payables
Due to Advisor 4,733
Administration fees 2,301
Fund shares repurchased 500
Securities purchased 321,996
Accrued expenses 8,879
-----------
Total liabilities 338,409
-----------
NET ASSETS $13,329,410
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($13,329,410/787,167 shares outstanding; unlimited number
of shares authorized, par value $.01) $ 16.93
===========
COMPONENTS OF NET ASSETS
Paid-in capital $ 9,833,539
Accumulated net realized loss on investments (176,266)
Net unrealized appreciation on investments 3,672,137
-----------
Net assets $13,329,410
===========
See accompanying Notes to Financial Statements.
8
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends $ 63,783
Interest 18,521
Total income 82,304
Expenses
Advisory fees (Note 3) 88,383
Administration fees (Note 3) 30,000
Custodian and accounting fees 23,613
Transfer agent fees 21,657
Audit fees 12,670
Registration fees 12,490
Miscellaneous 7,985
Trustees' fees 5,077
Reports to shareholders 4,877
Legal fees 4,000
Amortization of deferred organization costs 3,701
-----------
Total expenses 214,453
Less: advisory fee waiver and absorption (79,291)
-----------
Net expenses 135,162
-----------
NET INVESTMENT LOSS (52,858)
-----------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS
Net realized loss from security transactions (94,763)
Net change in unrealized appreciation on investments 2,552,998
-----------
Net realized and unrealized gain on investments 2,458,235
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,405,377
===========
See accompanying Notes to Financial Statements.
9
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Year March 11, 1997*
Ended through
February 28, 1999 February 28, 1998
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM: OPERATIONS
Net investment loss $ (52,858) $ (15,458)
Net realized gain (loss) from security transactions (94,763) 81,313
Net change in unrealized appreciation on investments 2,552,998 1,119,139
------------ -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,405,377 1,184,994
------------ -----------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net realized gain on security tranactions(a) (147,358) --
Total dividends and distributions to shareholders (147,358) --
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in
outstanding shares (a) 4,711,269 5,175,128
------------ -----------
TOTAL INCREASE IN NET ASSETS 6,969,288 6,360,122
NET ASSETS
Beginning of period 6,360,122 0
------------ -----------
END OF PERIOD $ 13,329,410 $ 6,360,122
============ ===========
</TABLE>
(a) A summary of capital shares transactions is as follows:
<TABLE>
<CAPTION>
Year March 11, 1997*
Ended through
February 28, 1999 February 28, 1998
----------------------- -----------------------
Shares Value Shares Value
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold 384,345 $ 5,725,856 480,212 $ 5,272,001
Shares issued in reinvestment
of distributions 9,895 144,009 -- --
Shares redeemed (79,048) (1,158,596) (8,237) (96,873)
------- ----------- ------- -----------
Net increase 315,192 $ 4,711,269 471,975 $ 5,175,128
======= =========== ======= ===========
</TABLE>
* Commencement of operations.
See accompanying Notes to Financial Statements.
10
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
FINANCIAL HIGHLIGHTS - FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
Year March 11, 1997*
Ended through
February 28, 1999 February 28, 1998
----------------- -----------------
Net asset value, beginning of period $ 13.48 $ 10.00
-------- -------
Income from investment operations:
Net investment loss (0.07) (0.03)
Net realized and unrealized gain
on investments 3.74 3.51
-------- -------
Total from investment operations 3.67 3.48
-------- -------
Less distributions:
From net realized gain (0.22) --
Net asset value, end of period $ 16.93 $ 13.48
======== =========
Total return 27.47% 34.80%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 13,329 $ 6,360
Ratio of expenses to average net assets:
Before expense reimbursement 2.30% 4.04%++
After expense reimbursement 1.45% 1.45%++
Ratio of net investment loss to
average net assets: (0.57%) (0.42%)++
Portfolio turnover rate 40.99% 27.65%
* Commencement of operations.
** Not Annualized.
++ Annualized.
See accompanying Notes to Financial Statements.
11
<PAGE>
AMERICAN TRUST ALLEGIANCE FUND
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The American Trust Allegiance Fund (the "Fund") is a series of shares
of Advisors Series Trust (the "Trust"), which is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Fund began operations on March 11, 1997.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund:
A. SECURITY VALUATION: The Fund's investments are carried at fair
value. Securities listed on an exchange or quoted on a National
Market System are valued at the last sale price. Other securities
are valued at the mean between the last bid and asked prices.
Securities for which market quotations are not readily available, if
any, are valued following procedures approved by the Board of
Trustees. Short-term investments are valued at amortized cost, which
approximates market value.
B. FEDERAL INCOME TAXES: It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no federal income tax
provision is required.
C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security
transactions are accounted for on the trade date. Dividend income
and distributions to shareholders are recorded on the ex-dividend
date. Realized gains and losses on securities sold are determined on
the basis of identified cost. Discounts and premiums on securities
purchased are amortized over the life of the respective securities.
D. DEFERRED ORGANIZATION COSTS: The Fund has incurred expenses of
$18,500 in connection with its organization. These costs have been
deferred and are being amortized on a straight-line basis over a
period of sixty months from the date the Fund commenced investment
operations.
E. USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and
decreases in net assets during the reporting period. Actual results
could differ from those estimates.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
For the year ended February 28, 1999, American Trust Company (the "Advisor")
provided the Fund with investment management services under an Investment
Advisory Agreement. The Advisor furnished all investment advice, office space,
facilities, and provides most of the personnel needed by the Fund. As
compensation for its services, the Advisor is entitled to a monthly fee at the
annual rate of 0.95% based upon the average daily net assets of the Fund. For
the year ended February 28, 1999, the Fund incurred $88,383 in Advisory Fees.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
- --------------------------------------------------------------------------------
The Fund is responsible for its own operating expenses. The Advisor has agreed
to reduce fees payable to it by the Fund and to pay Fund operating expenses to
the extent necessary to limit the Fund's aggregate annual operating expenses to
1.45% of average net assets (the "expense cap"). Any such reductions made by the
Advisor in its fees or payment of expenses which are the Fund's obligation are
subject to reimbursement by the Fund to the Advisor, if so requested by the
Advisor, in subsequent fiscal years if the aggregate amount actually paid by the
Fund toward the operating expenses for such fiscal year (taking into account the
reimbursement) does not exceed the applicable limitation on Fund expenses. The
Advisor is permitted to be reimbursed only for fee reductions and expense
payments made in the previous three fiscal years, but is permitted to look back
five years and four years, respectively, during the initial six years and
seventh year of the Fund's operations. Any such reimbursement is also contingent
upon Board of Trustees' subsequent review and ratification of the reimbursed
amounts. Such reimbursement may not be paid prior to the Fund's payment of
current ordinary operating expenses. For the year ended February 28, 1999, the
Advisor reduced its fees and absorbed Fund expenses in the amount of $79,291; no
amounts were reimbursed to the Advisor. Fees waived and expenses absorbed by the
Advisor which may be subject to recapture in the future pursuant to the
aforementioned conditions totalled $174,965 as of February 28, 1999.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of the Fund's expenses and reviews the
Fund's expense accruals. For its services, the Administrator receives a monthly
fee at the annual rate of 0.20% of average daily net assets, subject to a
minimum fee of $30,000 annually.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's principal
underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
Certain officers of the Fund are also officers and/or directors of the
Administrator and the Distributor.
NOTE 4 - SECURITIES TRANSACTIONS
For the year ended February 28, 1999, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $8,050,361and
$3,679,562, respectively.
13
<PAGE>
INDEPENDENT AUDITOR'S REPORT
THE BOARD OF TRUSTEES AND SHAREHOLDERS
THE AMERICAN TRUST ALLEGIANCE FUND
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The American Trust Allegiance Fund as of
February 28, 1999, and the related statement of operations for the year then
ended, changes in net assets and the financial highlights for the periods
indicated in the accompanying financial statements. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
American Trust Allegiance Fund as of February 28, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
McGLADREY & PULLEN, LLP
New York, New York
March 26, 1999
<PAGE>
ADVISOR
American Trust Company
One Court Street
Lebanon, NH 03766
1-800-788-8806
AUDITOR
McGladrey & Pullen, LLP
555 Fifth Avenue, 8th Floor
New York, NY 10017
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
1-800-385-7003
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
This report is intended for shareholders of the
Fund and may not be used as sales literature
unless preceded or accompanied by a current
prospectus.
Past performance results shown in this report
should not be considered a representation of
future performance. Share price and returns will
fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
Statements and other information herein are dated
and are subject to change.
<PAGE>
INFORMATIONTECH 100(R) FUND
160 SANSOME STREET
SAN FRANCISCO, CA 94104
(415) 705-7777
February 28, 1999
Dear Shareholder,
The InformationTech 100(R) Fund gained 22.3% during the fiscal fourth quarter
(ending February 28, 1999) and completed the fiscal year with a gain of 47.1%.
This compares favorably with a comparable index, the PSE Technology Index, which
had fiscal fourth quarter, 1999 and fiscal 1999 total returns of 16.9% and
36.2%, respectively. The Russell 2000 Index total returns were -1.4% and -15.0%
for the comparable time periods. The Fund ended the fiscal year with a net asset
value of $44.36 and, once again, had no year-end income or capital gain
distributions.
The stock market, as represented by the S&P 500, continues to be led by its
largest 50 companies. The only other areas of strength have been in
Internet-related and communications stocks. Though the rise has not been
broad-based, our Fund continues to benefit from the strength in technology.
The Portfolio:
The InformationTech 100(R) Fund's top performers during the fiscal year were
Internet, communications, enterprise storage and the mega-cap technology
companies. Names like America Online, At Home and Yahoo!, have done extremely
well for everyone as the mania for Internet-related stocks has been nothing less
than spectacular. The question of sustainability is always present as the
current environment reminds us of the biotech frenzy of earlier years - only a
few of those companies survive today. We continue to hold solid enterprise and
IT-related companies with strong fundamentals. Storage and hardware companies
have continued to thrive. These include EMC, Legato, and Network Appliance.
Communications and networking companies are starting to crossover. Companies
such as Cisco and Lucent are likely to be competitors in the future as much as
they are partners today. We still favor the large telecom companies such as
MCI-WorldCom and AT&T/TCI as they push the frontiers for additional bandwidth.
The convergence of telephony and cable will eventually lead to other
opportunities.
The laggards within the Fund tended to be company specific. The consulting and
IT service companies keep battling for IT budgets but are losing out to Y2K and
hardware upgrade expenses in the latter part of 1998 and 1999. Solid companies
such as JD Edwards, Cambridge Technology Partners and Gartner Group were not
immune. However, we expect most of them to recover by mid-2000 as Y2K expenses
decline and alternative projects are initiated.
Outlook:
We expect the strength in technology to continue favoring the mega-market cap
stocks such as Cisco, Lucent, Intel, Dell, and Microsoft. We also see short-term
sentiment driving the Internet stocks as there remains too much money chasing
<PAGE>
too few stocks. This supply/demand equation could change quickly if sentiment
changes and investors start focusing on profitability rather than sales growth
alone. We expect communications will remain an area of opportunity in 1999 and
the IT services and software sector will start recovering by year-end. Despite
some short-term price weakness in 1999, our positive long-term outlook for the
leading information processing technology companies has not changed; information
technology remains the fastest growing sector of the American economy.
/s/ William Schaff
William F.K. Schaff, CFA
Portfolio Manager
The PSE Technology Index is a price-weighted, broad-based index of 100 listed
and over-the-counter stocks that cover 15 different industry subsectors.
The Russell 2000 Index is a widely regarded small cap index of the 2,000
smallest securities of the Russell 3000 Index which is comprised of the 3,000
largest U.S. Securities as determined by total market capitalization.
The S&P 500 Composite Stock Price Index is an unmanaged capitalization-weighted
index of 500 stocks designed to represent the broad domestic economy.
<PAGE>
INFORMATIONTECH 100(R) FUND
INFORMATIONTECH 100(R) FUND
Comparison of the change in value of a $10,000 investment in the
InformationTech 100(R) Fund versus the Wilshire 5000 Equity Index.
Average Annual Total Return
Period ended February 28, 1999.....47.13%
Since inception (April 8, 1997)....52.32%
[PERFORMANCE CHART]
Information Tech 100(R)Fund Wilshire 5000 Equity Index
--------------------------- --------------------------
8-Apr-97 10,000 10,000
31-May-97 11,740 10,292
31-Aug-97 13,095 11,881
28-Nov-97 13,080 12,514
28-Feb-98 15,075 13,697
29-May-98 15,215 14,118
31-Aug-98 13,475 12,891
30-Nov-98 18,130 14,578
28-Feb-99 22,180 15,448
Past performance is not predictive of future performance.
*The Wilshire 5000 Equity Index tracks the performance of all equity securities
issued by U.S. head-quartered companies regardless of exchange.
3
<PAGE>
INFORMATIONTECH 100(R) FUND
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 85.9% Market Value
- --------------------------------------------------------------------------------
CABLE TV: 4.9%
2,050 Cox Communications, Inc. - Class A*.............. $ 145,038
5,700 Tele-Communications, Inc. - TCI Group A*......... 358,209
1,240 Viacom Inc. - Class A*........................... 108,267
-----------
611,514
-----------
COMMUNICATIONS BROADCASTING EQUIPMENT: 1.0%
1,720 Motorola, Inc.................................... 120,830
-----------
COMPUTER INTERNET SERVICES: 10.4%
5,200 America Online, Inc.............................. 462,475
2,100 At Home Corporation - Series A*.................. 223,781
3,600 MindSpring Enterprises, Inc.*.................... 307,575
2,000 Yahoo! Inc.*..................................... 307,063
-----------
1,300,894
-----------
COMPUTER MISCELLANEOUS: 0.1%
500 Lernout & Hauspie Speech Products NV*............ 14,203
-----------
COMPUTER PERIPHERAL EQUIPMENT: 14.6%
4,516 3Com Corporation*................................ 142,113
3,000 Ascend Communications, Inc.*..................... 231,000
3,900 Cisco Systems, Inc.*............................. 381,591
1,500 Hewlett-Packard Company.......................... 99,656
1,200 International Business Machines Corporation...... 204,000
2,795 NCR Corporation*................................. 114,420
4,325 Sun Microsystems, Inc.*.......................... 421,012
7,400 Unisys Corporation*.............................. 220,612
-----------
1,814,404
-----------
COMPUTER PROCESSING SERVICES: 6.0%
2,000 Affiliated Computer Services, Inc.*.............. 92,500
2,480 Automatic Data Processing, Inc................... 98,580
900 Ceridian Corporation*............................ 64,462
6,050 First Data Corporation........................... 231,412
593 Hyperion Solutions Corporation*.................. 8,432
200 i2 Technologies, Inc.*........................... 5,000
See accompanying Notes to Financial Statements.
4
<PAGE>
INFORMATIONTECH 100(R) FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 28, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
COMPUTER PROCESSING SERVICES, CONTINUED
4,800 Legato Systems Inc.*............................. $ 236,550
205 Transaction Systems Architects, Inc.*............ 8,040
-----------
744,976
-----------
COMPUTER PROGRAMMING SERVICES: 6.9%
170 Adobe Systems Incorporated....................... 6,853
280 American Management Systems, Incorporated*....... 9,301
100 Baan Company*.................................... 941
450 Cambridge Technology Partners (Massachusetts),
Inc.*.......................................... 11,391
200 Computer Horizons Corp.*......................... 2,981
1,570 Computer Sciences Corporation*................... 104,601
1,955 Electronic Data Systems Corporation.............. 90,907
400 J.D. Edwards & Company*.......................... 6,362
870 Keane, Inc.*..................................... 26,916
10 Momentum Business Applications, Inc.*............ 87
5,000 Oracle Corporation*.............................. 279,219
6,800 PeopleSoft, Inc.*................................ 128,562
1,400 SAP AG - ADR..................................... 44,800
3,200 Siebel Systems, Inc.*............................ 140,600
330 Wind River Systems, Inc.*........................ 7,518
-----------
861,039
-----------
COMPUTER SOFTWARE: 1.6%
1,300 Advent Software, Inc.*........................... 60,450
1,200 BEA Systems, Inc.*............................... 20,625
1,800 Mercury Interactive Corporation*................. 116,663
-----------
197,738
-----------
COMPUTER STORAGE DEVICES: 4.9%
4,500 EMC Corporation*................................. 460,687
1,700 Seagate Technology, Inc.*........................ 49,194
290 Storage Technology Corporation*.................. 10,096
1,300 VERITAS Software Corporation*.................... 92,381
-----------
612,358
-----------
COMPUTER SYSTEMS & SERVICES: 0.7%
4,800 Novell, Inc.*.................................... 93,150
-----------
See accompanying Notes to Financial Statements.
5
<PAGE>
INFORMATIONTECH 100(R) FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 28, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
COMPUTER - INTEGRATED SYSTEMS: 0.1%
1,000 Sequent Computer Systems, Inc.*.................. $ 9,531
400 Wang Laboratories, Inc.*......................... 9,563
-----------
19,094
-----------
CONSULTANTS: 0.1%
1,220 Comdisco, Inc.................................... 14,640
-----------
ELECTRONIC COMPUTERS: 7.0%
7,835 Compaq Computer Corporation...................... 276,184
6,000 Data General*.................................... 82,875
3,400 Dell Computer Corporation*....................... 272,319
9,300 LSI Logic Corporation*........................... 241,219
-----------
872,597
-----------
FINANCE: 1.0%
4,500 Tele-Communications, Inc. - TCI Ventures Group A* 124,172
-----------
GENERAL INDUSTRIAL MACHINERY: 0.1%
145 Hitachi Ltd. - ADR............................... 9,017
-----------
INTERNET SOFTWARE: 0.6%
2,800 Sterling Commerce, Inc.*......................... 72,800
-----------
NETWORKING PRODUCTS: 3.0%
8,800 Network Appliance, Inc.*......................... 369,600
-----------
OFFICE MACHINES: 0.9%
2,070 Xerox Corporation................................ 114,238
-----------
POWER CONVERSION / SUPPLY EQUIPMENT: 0.9%
3,000 American Power Conversion Corporation*........... 107,438
-----------
PREPACKAGED SOFTWARE: 10.4%
3,300 AXENT Technologies, Inc.*........................ 113,231
250 BMC Software, Inc.*.............................. 10,227
700 CBT Group PLC - ADR*............................. 11,178
See accompanying Notes to Financial Statements.
6
<PAGE>
INFORMATIONTECH 100(R) FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 28, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
PREPACKAGED SOFTWARE, CONTINUED
200 Check Point Software Technologies Ltd.*.......... $ 7,637
150 Citrix Systems, Inc.*............................ 11,573
1,300 Computer Associates International, Inc........... 54,600
6,000 Compuware Corporation*........................... 335,813
2,000 Documentum, Inc.*................................ 43,000
200 HNC Software Inc.*............................... 5,381
1,500 Intuit Inc.*..................................... 148,313
1,350 Microsoft Corporation*........................... 202,627
100 Network Associates, Inc.*........................ 4,697
397 Platinum Software Corporation*................... 2,891
890 PLATINUM Technology, Inc.*....................... 11,793
600 Policy Management Systems Corporation*........... 21,937
7,300 Rational Software Corporation*................... 216,034
1,000 Sapient Corporation*............................. 66,687
200 Security Dynamics Technologies, Inc.*............ 3,694
420 Sterling Software, Inc.*......................... 10,710
475 Symantec Corporation*............................ 8,565
-----------
1,290,588
-----------
SEMICONDUCTORS AND DEVICES: 2.5%
875 Intel Corporation................................ 104,973
1,800 Micron Technology, Inc.*......................... 103,725
1,120 Texas Instruments Incorporated................... 99,890
-----------
308,588
-----------
TELEPHONE APPARATUS: 6.5%
2,800 ADC Telecommunications, Inc.*.................... 113,575
460 LM Ericsson Telephone Company - ADR.............. 11,974
2,400 Lucent Technologies Inc.......................... 243,750
2,000 Nokia Corporation - ADR.......................... 271,250
2,220 Northern Telecom Limited......................... 128,899
500 Tellabs, Inc.*................................... 40,000
-----------
809,448
-----------
TELEPHONE COMMUNICATIONS: 12.1%
1,600 AirTouch Communications, Inc.*................... 145,700
1,250 AT&T Corporation................................. 102,656
See accompanying Notes to Financial Statements.
7
<PAGE>
INFORMATIONTECH 100(R) FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 28, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
TELEPHONE COMMUNICATIONS, CONTINUED
3,600 Level 3 Communications, Inc.*.................... $ 201,712
3,800 MCI WORLDCOM, Inc.*.............................. 313,619
3,600 NEXTEL Communications, Inc.*..................... 108,337
5,800 Qwest Communications International Inc.*......... 356,519
7,000 Teligent Inc. - Class A*......................... 273,219
-----------
1,501,762
-----------
Total Common Stocks (cost $8,659,075)............ 11,985,088
-----------
Principal Amount SHORT-TERM INVESTMENTS: 3.4%
- --------------------------------------------------------------------------------
$427,318 Star Treasury Fund, 4.73% (cost $427,318)........ 427,318
Total Investments in Securities
(cost $9,086,373+): 99.7%...................... 12,412,406
Other Assets less Liabilities: 0.3%.............. 33,596
-----------
TOTAL NET ASSETS: 100.0% ........................ $12,446,002
===========
* Non-income producing security.
+ At February 28, 1999, the cost of securities for Federal tax purposes was the
same as the basis for financial reporting. Gross unrealized appreciation and
depreciation of securities were as follows:
Gross unrealized appreciation.................... $3,693,003
Gross unrealized depreciation.................... (366,990)
----------
Net unrealized appreciation.................... $3,326,013
==========
8
<PAGE>
INFORMATIONTECH 100(R) FUND
STATEMENT OF ASSETS AND LIABILITIES AT FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (identified
cost $9,086,393) ........................................... $12,412,406
Receivables:
Fund shares sold ........................................... 19,429
Dividends and interest ..................................... 2,765
Deferred organization costs .................................. 11,493
Prepaid expenses ............................................. 20,514
-----------
Total assets ............................................ 12,466,607
-----------
LIABILITIES
Payables
Due to Advisor ............................................. 5,558
Administration fees ........................................ 2,301
Fund shares repurchased .................................... 9,657
Accrued expenses ............................................. 3,089
-----------
Total liabilities ....................................... 20,605
-----------
NET ASSETS ..................................................... $12,446,002
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($12,446,002/280,547 shares outstanding;
unlimited number of shares authorized, par value $.01) ..... $ 44.36
===========
COMPONENTS OF NET ASSETS
Paid-in capital .............................................. $ 9,021,762
Net realized gain on investments ............................. 98,227
Net unrealized appreciation on investments ................... 3,326,013
-----------
Net assets ................................................. $12,446,002
===========
See accompanying Notes to Financial Statements.
9
<PAGE>
INFORMATIONTECH 100(R) FUND
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends .................................................... $ 5,238
Interest ..................................................... 16,768
-----------
Total income ............................................... 22,006
-----------
Expenses
Advisory fees (Note 3) ....................................... 68,002
Administration fees (Note 3) ................................. 29,917
Custodian and accounting fees ................................ 25,530
Transfer agent fees .......................................... 19,823
Audit fees ................................................... 16,639
Registration fees ............................................ 12,239
Other ........................................................ 6,482
Trustees' fees ............................................... 5,061
Amortization of deferred organization costs .................. 3,691
Legal fees ................................................... 2,770
Reports to shareholders ...................................... 1,987
-----------
Total expenses ............................................. 192,141
Less: advisory fee waiver and absorption (Note 3) .......... (84,244)
-----------
Net expenses ............................................... 107,896
-----------
NET INVESTMENT LOSS ...................................... (85,891)
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized gain from security transactions ................... 123,091
Net change in unrealized appreciation on investments ........... 2,901,441
-----------
Net realized and unrealized gain on investments .............. 3,024,532
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....... $ 2,938,641
===========
See accompanying Notes to Financial Statements.
10
<PAGE>
INFORMATIONTECH 100(R) FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Year April 8, 1997*
Ended through
February 28, 1999 February 28, 1998
----------------- -----------------
<S> <C> <C>
NET INCREASE IN ASSETS FROM OPERATIONS
Net investment loss .................................. $ (85,891) $ (8,898)
Net realized gain (loss) from security transactions .. 123,091 (23,156)
Net change in unrealized appreciation on investments . 2,901,441 424,572
------------ -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,938,641 392,518
------------ -----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in
outstanding shares (a) ............................. 6,833,618 2,281,225
------------ -----------
TOTAL INCREASE IN NET ASSETS ....................... 9,772,259 2,673,743
NET ASSETS
Beginning of period .................................... 2,673,743 -0-
------------ -----------
END OF PERIOD .......................................... $ 12,446,002 $ 2,673,743
============ ===========
(a) A summary of capital shares transactions is as follows:
Year April 8,1997*
Ended through
February 28, 1999 February 28, 1998
-------------------------- -------------------------
Shares Paid In Capital Shares Paid In Capital
------- --------------- ------ ---------------
Shares sold.................................. 233,427 $8,406,475 89,946 $2,313,271
Shares redeemed.............................. (41,565) (1,572,857) (1,261) (32,046)
Net increase................................. 191,862 $6,833,618 88,685 $2,281,225
</TABLE>
* Commencement of operations.
See accompanying Notes to Financial Statements.
11
<PAGE>
INFORMATIONTECH 100(R) FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Year April 8, 1997*
Ended through
February 28, 1999 February 28, 1998
----------------- -----------------
<S> <C> <C>
Net asset value, beginning of period .............. $ 30.15 $ 20.00
Income from investment operations:
Net investment loss ............................. (0.31) (0.10)
Net realized and unrealized gain on investments . 14.52 10.25
Total from investment operations .................. 14.21 10.15
Net asset value, end of period .................... $ 44.36 $ 30.15
Total return ...................................... 47.13% 50.75%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) ............. $ 12,446 $ 2,674
Ratio of expenses to average net assets:
Before expense reimbursement .................... 2.67% 12.17%+
After expense reimbursement ..................... 1.50% 1.50%+
Ratio of net investment loss to average net assets:
After expense reimbursement ..................... (1.19%) (1.01%)+
Portfolio turnover rate ........................... 35.26% 32.78%
</TABLE>
* Commencement of operations.
+ Annualized.
See accompanying Notes to Financial Statements.
12
<PAGE>
INFORMATIONTECH 100(R) FUND
NOTES TO FINANCIAL STATEMENTS AT FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The InformationTech 100(R) Fund (the "Fund") is a series of shares of
Advisors Series Trust (the "Trust"), which is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Fund began operations on April 8, 1997. The investment objective of the Fund
is capital appreciation.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund:
A. SECURITY VALUATION: The Fund's investments are carried at fair
value. Securities listed on an exchange or quoted on a National
Market System are valued at the last sale price. Other securities
are valued at the mean between the last bid and asked prices.
Securities for which market quotations are not readily available, if
any, are valued following procedures approved by the Board of
Trustees. Short-term investments are valued at amortized cost, which
approximates market value.
B. FEDERAL INCOME TAXES: It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no federal income tax
provision is required.
C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security
transactions are accounted for on the trade date. Dividend income
and distributions to shareholders are recorded on the ex-dividend
date. Realized gains and losses on securities sold are determined on
the basis of identified cost.
D. DEFERRED ORGANIZATION COSTS. The Fund has incurred expenses of
$18,500 in connection with the organization of the Fund. These costs
have been deferred and are being amortized on a straight-line basis
over a period of sixty months from the date the Fund commenced
investment operations.
E. USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and
decreases in net assets during the reporting period. Actual results
could differ from those estimates.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
For the year ended February 28, 1999, Bay Isle Financial Corporation (the
"Advisor") provided the Fund with investment management services under an
Investment Advisory Agreement. The Advisor furnished all investment advice,
office space, facilities, and provides most of the personnel needed by the Fund.
As compensation for its services, the Advisor is entitled to a monthly fee at
the annual rate of 0.95% based upon the average daily net assets of the Fund.
For the year ended February 28, 1999, the Fund incurred $68,002 in Advisory
Fees.
The Fund is responsible for its own operating expenses. The Advisor has
agreed to reduce fees payable to it by the Fund and to pay Fund operating
expenses to the extent necessary to limit the Fund's aggregate annual operating
13
<PAGE>
INFORMATIONTECH 100(R) FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
- --------------------------------------------------------------------------------
reductions made by the Advisor in its fees or payment of expenses which are the
Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so
requested by the Advisor, in subsequent fiscal years if the aggregate amount
actually paid by the Fund toward the operating expenses for such fiscal year
(taking into account the reimbursement) does not exceed the applicable
limitation on Fund expenses. The Advisor is permitted to be reimbursed only for
fee reductions and expense payments made in the previous three fiscal years, but
is permitted to look back five years and four years, respectively, during the
initial six years and seventh year of the Fund's operations. Any such
reimbursement is also contingent upon Board of Trustees review and approval at
the time the reimbursement is made. Such reimbursement may not be paid prior to
the Fund's payment of current ordinary operating expenses. For the year ended
February 28, 1999, the Advisor reduced its fees and absorbed Fund expenses in
the amount of $84,244; no amounts were reimbursed to the Advisor. Fees waived
and expenses absorbed by the Advisor, which may be subject to recapture in the
future, pursuant to the aforementioned conditions totalled $178,661 as of
February 28, 1999.
Investment Company Administration, LLC (the "Administrator") acts as the
Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of the Fund's expenses and reviews the
Fund's expense accruals. For its services, the Administrator receives a monthly
fee at the annual rate of 0.20% of average daily net assets, subject to a
minimum fee of $30,000 annually.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
Certain officers of the Fund are also officers and/or directors of the
Administrator and the Distributor.
NOTE 4 - SECURITIES TRANSACTIONS
For the year ended February 28, 1999 the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, were
$9,151,789 and $2,378,077, respectively.
14
<PAGE>
INDEPENDENT AUDITOR'S REPORT
THE BOARD OF TRUSTEES AND SHAREHOLDERS
THE INFORMATIONTECH 100(R) FUND
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The InformationTech 100(R) Fund as of February
28, 1999, and the related statement of operations for the year then ended, the
statements of changes in net assets and the financial highlights for the periods
indicated in the accompanying financial statements. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
InformationTech 100(R) Fund as of February 28, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
McGLADREY & PULLEN, LLP
New York, New York
March 26, 1999
15
<PAGE>
INFORMATIONTECH 100(R) FUND
ADVISOR
Bay Isle Financial Corporation
160 Sansome Street, 17th Floor
San Francisco, CA 94104
(415) 705-7777
AUDITOR
McGladrey & Pullen LLP
555 Fifth Avenue, 8th Floor
New York, NY 10017-2416
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
(800) 385-7003
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker
345 California Street, 29th Floor
San Francisco, CA 94104
This report is intended for shareholders of the
Fund and may not be used as sales literature
unless preceded or accompanied by a current
prospectus.
Past performance results shown in this report
should not be considered a representation of
future performance. Share price and returns will
fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
Statements and other information herein are dated
and are subject to change.
