THE CRUELTY FREE VALUE FUND
SEMI-ANNUAL REPORT
MAY 31, 1997
BEACON GLOBAL ADVISORS, INC.
8260 GREENSBORO DRIVE, SUITE 250
MCLEAN, VIRGINIA
22102-3801
FOR ADDITIONAL INFORMATION ABOUT THE CRUELTY FREE VALUE FUND CALL:
(800) 892-9626
@HTTP://WWW.CRUELTYFREE.COM
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July 18, 1997
Dear Shareholder,
It is my pleasure to provide you with the first report on the progress of
The Cruelty Free Value Fund. As required by the Securities and Exchange
Commission, the enclosed Semi-Annual Report is dated May 31, 1997 and therefore,
reflects only the first few weeks of operation by the Fund.
Since the Funds release by the SEC on April 8, 1997, its net asset value
has increased from $25.00 per share to $26.52 at the close of business on July
17, 1997. Currently, there are 33 common stocks in its portfolio with sixteen
and one half percent of its value in cash or related short-term investments.
The initial portfolio is concentrated in the financial services, leisure,
and technological industries and consists of the following positions:
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Airborne Freight Corp. AMCOL Int'l Corp. Compass Bancshares, Inc.
Diamond Multimedia Systems Electroglas, Inc. Exar Corp.
Fedders Corp. First Financial Corp. Fleetwood Enterprises
Global Industrial Tech. Haggar Corp. Heilig-Meyers Co.
Imperial Credit Industries Insurance Auto Auctions Integon Corp.
Intermet Corp. Jones Intercable, Inc. Komag, Inc.
Lawyers Title Corp. Long Island Bancorp. Mercantile Bancorp.
Myers Industries, Inc. Pacific Scientific Co. Quanex Corp.
Read-Rite Corp. Scientific-Atlanta, Inc. Simpson Industries, Inc.
Southern Pacific Funding Stewart & Stevenson Tech-Sym Corp.
TR Financial Corp. Walbro Corp. Watts Industries, Inc.
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The Cruelty Free Value Fund does NOT invest in companies that (I) employ
animal testing in their product development; (II) sponsor inappropriate use of
animals as entertainment; (III) slaughter animals by any method; (IV) have been
found to have violated either a state cruelty law or the Federal Animal Welfare
Act; or, (V) have a corporate policy which results in the unnecessary pain and
suffering of animals.
The investment objective of the Fund is capital appreciation. The Fund's
assets are invested in value-oriented common and/or preferred stocks of small
capitalization companies with market capitalizations ranging from $100 million
to $1 billion.
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A foundation dedicated to helping end the suffering of animals and raising
public awareness of animal related issues will be established by Beacon Global
Advisors, Inc. Furthermore, Beacon Global Advisors, Inc. has made a commitment
to donate a percentage of their management fees to help fund this worthwhile
philanthropic project.
Zurich Investment Management, Inc. and Dreman Value Advisors, Inc. are the
Subadvisors of the Fund's assets and are both wholly owned subsidiaries of
Zurich Kemper Investments, Inc. Zurich Kemper Investments, Inc. and its
affiliates have been in the management of investment funds for more than
forty-eight years and are currently responsible for $80 billion under
management.
I am looking forward to my future letters to you. If you have any comments
or questions, please drop me a line.
Sincerely,
[/S/ Richard A. Ollen]
Richard A. Ollen
President & Chairman of the Board
THE CRUELTY FREE VALUE FUND
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The Cruelty Free Value Fund
Statement of Assets and Liabilities (unaudited) May 31, 1997
================================================================================
ASSETS:
Cash ............................................................. $ 90,917
Receivables:
Capital stock sold ........................................... 1,000
Due from Advisor ............................................. 7,000
Interest receivable .......................................... 331
Deferred unamortized organization costs (Note 1) ................. 83,502
Other assets ..................................................... 9,055
--------
TOTAL ASSETS ........................................... 191,805
--------
LIABILITIES:
Payables:
Accrued expenses ............................................. 43,974
Distribution fee (Note 2) .................................... 28
Investment advisory fees (Note 2) ............................ 141
--------
TOTAL LIABILITIES ...................................... 44,143
--------
NET ASSETS:
Applicable to 5,901 shares; unlimited number of shares
of beneficial interest authorized with no par value ........... $147,662
========
Net asset value, offering and redemption price
($147,662 (DIVIDE) 5,901 shares) ............................... $ 25.02
========
NET ASSETS CONSIST OF:
Paid-in capital .................................................. $147,536
Accumulated undistributed net investment income .................. 126
--------
NET ASSETS ............................................. $147,662
========
See accompanying notes to financial statements.
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The Cruelty Free Value Fund
Statement of Operations
================================================================================
For the Period
April 29, 1997*
through
May 31, 1997
(unaudited)
INVESTMENT INCOME ---------------
Interest ................................................... $ 346
--------------
EXPENSES:
Investment advisory fees (Note 2) .......................... 141
Administration fees ........................................ 4,822
Miscellaneous fees ......................................... 2,696
Accounting fees ............................................ 2,104
Transfer agent fees ........................................ 2,104
Legal fees ................................................. 1,578
Amortization of organization costs (Note 1) ................ 1,490
Audit fees ................................................. 1,315
Registration fees .......................................... 877
Distribution expense (Note 2) .............................. 28
--------------
TOTAL EXPENSES ................................... 17,155
Expenses waived and reimbursed by Advisor
(Note 2) ..................................... (16,935)
--------------
NET EXPENSES ..................................... 220
--------------
NET INVESTMENT INCOME ......................................... 126
--------------
Net increase in net assets resulting from operations .......... $ 126
==============
*Commencement of investment operations.
See accompanying notes to financial statements.
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The Cruelty Free Value Fund
Statement of Changes in Net Assets
================================================================================
For the Period
April 29, 1997*
through
May 31, 1997
(unaudited)
OPERATIONS: ---------------
Net investment income ...................................... $ 126
---------------
Net increase in net assets resulting from operations ....... 126
---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .................................. 47,536
Cost of shares redeemed .................................... 0
---------------
Increase in net assets derived from capital
share transactions (a) .................................. 47,536
---------------
TOTAL INCREASE IN NET ASSETS ....................... 47,662
---------------
NET ASSETS:
Beginning of period ........................................ 100,000
---------------
End of period .............................................. $ 147,662
===============
(a) Transactions in capital stock were:
Shares sold ........................................... 1,901
Shares redeemed ....................................... 0
---------------
Increase in shares outstanding ............................ 1,901
===============
*Commencement of investment operations.
See accompanying notes to financial statements.
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The Cruelty Free Value Fund
Financial Highlights
================================================================================
The table below sets forth financial data for one share of capital stock
outstanding throughout the period presented.
For the Period
April 29, 1997*
through
May 31, 1997
(unaudited)
---------------
Net asset value, beginning of period .......................... $ 25.00
---------------
Income from investment operations:
Net investment income ................................... 0.02
Net realized and unrealized gain on investments ......... 0.00
---------------
Total from investment operations ...................... 0.02
---------------
Net asset value, end of period ................................ $ 25.02
===============
Total return .................................................. 0.08%1
Ratios/Supplemental Data
Net assets, end of period (in 000s) ...................... $ 148
Ratio of expenses to average net assets:
Before expense reimbursement ........................ 152.05%2
After expense reimbursement ......................... 1.95%2
Ratio of net investment income to average net assets:
Before expense reimbursement ........................ (148.99%)2
After expense reimbursement ......................... 1.11%2
Portfolio turnover rate .................................. 0.00%
Average commission rate paid ............................. $ 0.0000
* Commencement of investment operations.
1 Not Annualized.
2 Annualized.
See accompanying notes to financial statements.
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THE CRUELTY FREE VALUE FUND
NOTES TO FINANCIAL STATEMENTS MAY 31, 1997 (UNAUDITED)
================================================================================
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Beacon Global Advisors Trust (the "Trust") is organized as a Delaware business
trust pursuant to a Trust Agreement dated August 29, 1996. The Trust is
registered under the Investment Company Act of 1940, as amended, as an open-end,
diversified management investment company. The Trust is organized to offer
separate series of shares and is currently offering a single series of shares
called The Cruelty Free Value Fund (the "Fund"). The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles for investment companies.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last reported sales price. Unlisted
securities, or listed securities in which there were no sales, are valued
at the mean of the closing bid and ask prices. When market quotations are
not readily available, securities and other assets are valued at fair value
as determined in good faith by the Board of Trustees. Short-term
obligations having a maturity of 60 days or less are valued at amortized
cost, which the Board of Trustees believes represents fair value.
B. INVESTMENT INCOME AND SECURITIES TRANSACTIONS. Security transactions are
accounted for on the date the securities are purchased or sold (trade
date). Cost is determined and gains and losses are based on the identified
cost basis for both financial statement and federal income tax purposes.
Dividend income is reported on the ex-dividend date. Interest income and
expenses are accrued daily.
C. ORGANIZATION COSTS. Organization costs are being amortized on a straight
line basis over five years from commencement of operations.
D. FEDERAL INCOME TAXES. It is the policy of the Fund to comply with all
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.
E. DISTRIBUTIONS TO SHAREHOLDERS: The Fund intends to distribute substantially
all of its net investment income and capital gains, if any, annually.
Distributions to shareholders are recorded on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
F. USE OF ESTIMATES. In preparing financial statements in conformity with
generally accepted accounting principles, management makes 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 reporting period. Actual results could
differ from those estimates.
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THE CRUELTY FREE VALUE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED MAY 31, 1997 (UNAUDITED)
================================================================================
NOTE 2 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Beacon Global Advisors, Inc. (the "Advisor"), a registered investment advisor,
provides the Fund with investment management services. For providing investment
advisory services, the Fund pays the Advisor a monthly fee which is calculated
by applying the following annual rates: 1.25% of the average daily net assets of
the first $100 million, 1.00% of the average daily net assets from $100 million
to $500 million, and 0.75% of average daily net assets over $500 million. The
Advisor has voluntarily agreed to waive its fees for the first year of
operations to the extent total annualized expenses exceed 1.95% of the Fund's
average daily net assets. For the period ended May 31, 1997, advisory fees of
$141 were paid to the Advisor and the Advisor reimbursed the Fund $16,935.
The Advisor has entered into a Subadvisory Agreement with Zurich Investment
Management, Inc. ("ZIM") and ZIM has entered into a Subadvisory Agreement with
Dreman Value Advisors, Inc. ("Dreman" or the "Subadvisor") to assist in the
selection and management of the Fund's investment securities. For its services,
ZIM receives from the Advisor and pays to Dreman, an annual fee equal to 0.50%
of the first $50 million of the Fund's average daily net assets, 0.35% of the
Fund's average daily net assets from $50 million to $100 million, and 0.25% of
the Fund's average daily net assets in excess of $100 million.
The Fund has adopted a Distribution Plan (the "Plan"), pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, which permits the Fund to
pay certain expenses associated with the distribution of its shares. The Plan
provides that the Fund will reimburse Beacon Global Advisors, Inc. (the
"Distributor"), the Fund's sole underwriter and distributor, for actual
distribution and shareholder servicing expenses incurred by the Distributor not
exceeding, on an annual basis, 0.25% of the Fund's average daily net assets. For
the period ended May 31, 1997, the Fund reimbursed the Distributor $28 for
distribution costs incurred. Certain Officers and Trustees of the Fund are
affiliated persons of the Advisor. All Officers serve without direct
compensation from the Fund.
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INVESTMENT ADVISER
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(800) 662-9992
(703) 883-0865
DISTRIBUTOR
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(800) 662-9992
(703) 883-0865
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, Pennsylvania 19406-0903
(800) 892-9626
(610) 239-4600
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, District of Columbia
20036-1800
AUDITORS
Ernst & Young LLP
1225 Connecticut Avenue N.W.
Washington, District of Columbia
20036-1800
THIS REPORT IS SUBMITTED FOR GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUND. IT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND
UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS WHICH INCLUDES DETAILS
REGARDING THE FUND'S OBJECTIVES, POLICIES, EXPENSES AND OTHER INFORMATION.
