<PAGE>
THE CRUELTY FREE VALUE FUND
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102
July 22, 1998
Dear Shareholder,
I am pleased to provide you with the Semi-Annual report of the Cruelty Free
Value Fund for the six months from November 30, 1997 through May 31, 1998.
During the period, the Fund increased in assets from $1.2 million to $1.7
million. While the net asset value per share (NAV) increased from $27.96 to
$30.10 or 10.45%, comparing very favorably with the Russell 2000 Index* of small
capitalization stocks which rose 6.21% based on a monthly compounded return. The
one year return for the Cruelty Free Value Fund as of 6/30/98 was 16.89% and the
since inception return was 17.78%. Even though small capitalization issues were
out of favor for the period, when compared to large capitalization stocks, small
capitalization valuations look cheap, consequently growth prospects appear
higher. The Fund's portfolio continues to favor the financial, basic industry,
energy and consumer sectors.
The Cruelty Free Value Fund continues its dedication to providing an investment
program to help end the suffering, abuse and extinction of animals and at the
same time provide an outstanding investment opportunity.
Your Fund's management thanks you for your support of the Cruelty Free Value
Fund. Please direct inquiries or questions to Beacon Global Advisors, Inc. at
1-800-662-9992.
Sincerely,
/s/ Richard A. Ollen
Richard A. Ollen
President & Chairman of the Board
The Cruelty Free Value Fund
* The Russell 2000 is an unmanaged index that is unavailable for investment.
Past performance is not indicative of future results. Share price and returns
will fluctuate and when redeemed, shares may be worth more or less than their
original investment. There are special risks associated with investing in
smaller capitalization stocks, which may be subject to a higher degree of market
risk due to liquidity concerns.
THE CRUELTY FREE VALUE FUND IS DISTRIBUTED BY FPS BROKER SERVICES, INC.-DFU07/98
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<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Schedule of Investments (unaudited) 31-May-98
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<S> <C> <C>
Market
Shares Value
COMMON STOCKS - 74.50%
BASIC MATERIALS & PROCESSING - 9.54%
1,200 AK Steel Holding Corp. ........................... $22,350
1,050 AMCOL International Corp. ........................ 14,438
800 Ball Corp. ....................................... 31,550
700 Intermet Corp. ................................... 13,650
600 Quanex Corp. ..................................... 18,638
2,000 RMI Titanium Co.* ................................ 42,875
800 Webb (Del E.) Corp. .............................. 19,400
------------
162,901
------------
CONSUMER DISCRETIONARY - 10.51%
1,500 Finish Line, Inc. (The), Class A* ................ 35,625
700 Haggar Corp. ..................................... 9,800
300 Harman International Industries, Inc. ............ 12,769
1,500 Heilig-Meyers Co. ................................ 18,000
1,200 Insurance Auto Auctions, Inc.* ................... 15,900
700 Reynolds & Reynolds Co., Class A ................. 14,656
300 Springs Industries, Inc., Class A ................ 16,838
600 Tommy Hilfiger Corp.* ............................ 40,350
300 Young Broadcasting, Inc.* ........................ 15,563
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179,501
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CONSUMER STAPLES - 1.16%
500 BJ's Wholesale Club, Inc.* ....................... 19,750
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FINANCIAL SERVICES - 24.48%
900 Acceptance Insurance Cos., Inc.* ................. 20,700
535 Associated Banc-Corp. ............................ 26,482
400 Astoria Financial Corp. .......................... 22,012
700 Compass Bancshares, Inc. ......................... 33,228
2,800 Doral Financial Corp. ............................ 46,725
1,000 FBL Financial Group, Inc., Class A ............... 28,062
1,200 Imperial Credit Industries, Inc.* ................ 25,350
700 LandAmerica Financial Group, Inc. ................ 33,425
600 Long Island Bancorp, Inc. ........................ 37,069
1,050 North Fork Bancorporation, Inc. .................. 25,266
300 Penncorp Financial Group, Inc. ................... 6,637
1,000 Peoples Heritage Financial Group, Inc. ........... 22,500
700 Southern Pacific Funding Corp.* .................. 10,763
1,320 Sovereign Bancorp, Inc. .......................... 23,348
700 TR Financial Corp. ............................... 31,325
1,000 United Bankshares, Inc. .......................... 25,125
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418,017
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HEALTH CARE - 1.88%
800 Apria Healthcare Group, Inc.* .................... 6,100
700 Integrated Health Services, Inc. ................. 26,031
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32,131
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</TABLE>
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Schedule of Investments (unaudited) - continued 31-May-98
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<S> <C> <C>
Market
Shares Value
COMMON STOCKS - continued
OTHER - 0.70%
700 Global Industrial Technologies, Inc.* ............ $11,856
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PRODUCER DURABLES - 3.55%
700 Electroglas, Inc.* ............................... 9,537
700 Flowserve Corp. .................................. 20,300
700 Stewart & Stevenson Services, Inc. ............... 14,525
700 Watts Industries, Inc., Class A .................. 16,319
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60,681
------------
TECHNOLOGY - 12.29%
1,050 Burr-Brown Corp.* ................................ 26,939
700 Diamond Multimedia Systems, Inc.* ................ 5,338
2,700 ESS Technology, Inc.* ............................ 12,234
700 Exar Corp.* ...................................... 16,100
600 Komag, Inc.* ..................................... 5,925
700 Read-Rite Corp.* ................................. 6,169
2,100 Scientific-Atlanta, Inc. ......................... 46,331
700 Tech-Sym Corp.* .................................. 20,256
1,400 The Learning Company, Inc.* ...................... 39,900
1,800 Western Digital Corp.* ........................... 30,600
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209,792
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TRANSPORTATION - 9.51%
1,200 Airborne Freight Corp. ........................... 44,700
700 Borg-Warner Automotive, Inc. ..................... 39,900
700 Fleetwood Enterprises, Inc. ...................... 28,000
1,000 Roadway Express, Inc. ............................ 18,812
1,700 Simpson Industries, Inc. ......................... 23,800
700 Walbro Corp. ..................................... 7,219
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162,431
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UTILITIES - 0.88%
700 Jones Intercable Inc., Class A*................... 15,050
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Total Common Stocks (Cost $1,101,639)............. 1,272,110
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Principal
Amount SHORT-TERM INVESTMENTS - 18.96%
$323,793 The Bank of New York Cash Reserve Fund, 4.60% .... 323,793
------------
Total Short Term Investments (Cost $323,793) ..... 323,793
------------
Total Investments (Cost $1,425,432) - 93.46% ..... 1,595,903
Other Assets, Less Other Liabilities - 6.54% .... 111,707
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NET ASSETS - 100.00% ............................. $1,707,610
============
* Non-income producing security
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Statement of Assets and Liabilities (unaudited) May 31, 1998
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<S> <C>
ASSETS:
Investment in securities at value (Cost $1,425,432) ............................ $ 1,595,903
Receivables:
Due from Advisor ........................................................... 64,956
Dividends and interest receivable .......................................... 2,086
Deferred unamortized organization costs (Note 1) ............................... 55,958
Other assets ................................................................... 996
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TOTAL ASSETS ......................................................... 1,719,899
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LIABILITIES:
Payables:
Accrued expenses ........................................................... 11,921
Distribution fee (Note 3) .................................................. 368
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TOTAL LIABILITIES .................................................... 12,289
----------------
NET ASSETS:
Applicable to 56,729 shares; unlimited number of shares
of beneficial interest authorized with no par value ......................... $ 1,707,610
================
Net asset value, offering and redemption price
($1,707,610 divided by 56,729 shares) ....................................... $ 30.10
================
NET ASSETS CONSIST OF:
Paid-in capital ................................................................ $ 1,520,173
Accumulated undistributed net investment loss .................................. (6,324)
Accumulated undistributed realized gains on investments ........................ 23,290
Net unrealized appreciation on investments ..................................... 170,471
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NET ASSETS ........................................................... $ 1,707,610
================
</TABLE>
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<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Statement of Operations (unaudited)
For the Six Months
Ended
INVESTMENT INCOME 31-May-98
<S> <C>
Dividend ...................................................................................... $ 5,509
Interest ...................................................................................... 4,261
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Total investment income ............................................................. 9,770
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EXPENSES:
Investment advisory fees (Note 3) ............................................................. 9,068
Distribution expense (Note 3) ................................................................. 1,814
Administration fees ........................................................................... 27,984
Registration fees ............................................................................. 16,356
Transfer agent fees ........................................................................... 14,372
Accounting fees ............................................................................... 11,966
Audit fees .................................................................................... 1,513
Amortization of organization costs (Note 1) ................................................... 7,125
Custody fees .................................................................................. 4,413
Trustees fees ................................................................................. 4,687
Printing fees ................................................................................. 986
Legal fees .................................................................................... 2,685
Insurance ..................................................................................... 568
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TOTAL EXPENSES ...................................................................... 103,537
Expenses waived and reimbursed by Advisor (Note 3) .................................. (89,391)
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NET EXPENSES ........................................................................ 14,146
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NET INVESTMENT LOSS .............................................................................. (4,376)
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REALIZED AND UNREALIZED GAINS ON INVESMENTS:
Net realized gains on investments ............................................................. 20,902
Net change in unrealized appreciation on investments .......................................... 100,671
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Net realized and unrealized gains on investments .............................................. 121,573
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Net increase in net assets resulting from operations ............................................. $ 117,197
=========
</TABLE>
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<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Statement of Changes in Net Assets
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For the Six For the Period
Months Ended April 29, 1997*
31-May-98 through
OPERATIONS: (unaudited) 30-Nov-97
------------ ------------
<S> <C> <C>
Net investment loss .................................................... $ (4,376) $ (1,948)
Net realized gains on investments ...................................... 20,902 15,171
Net change in unrealized appreciation on investments ................... 100,671 69,800
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Net increase in net assets resulting from operations ................... 117,197 83,023
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net capital gains ...................................................... (12,783) 0
------------ ------------
Total distributions .................................................... (12,783) 0
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .............................................. 505,498 992,665
Reinvestment of dividends .............................................. 11,990 0
Cost of shares redeemed ................................................ (82,693) (7,287)
------------ ------------
Increase in net assets derived from capital share transactions (a) ..... 434,795 985,378
------------ ------------
TOTAL INCREASE IN NET ASSETS ................................... 539,209 1,068,401
------------ ------------
NET ASSETS:
Beginning of period .................................................... 1,168,401 100,000
------------ ------------
End of period (including undistributed net
investment loss of $6,324 and $1,948)............................... $ 1,707,610 $ 1,168,401
=========== ===========
(a) Transactions in capital stock were:
Shares sold ...................................................... 17,239 38,051
Shares issued through reinvestment of dividends................... 449 0
Shares redeemed .................................................. (2,749) (261)
------------ ------------
Increase in shares outstanding ........................................ 14,939 37,790
============ ===========
*Commencement of investment operations.
</TABLE>
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<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Financial Highlights
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The table below sets forth financial data for one share of capital stock outstanding throughout each
period presented.
For the Six Months For the Period
Ended April 29, 1997*
May 31, 1998 through
(unaudited) November 30, 1997
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period ............................. $ 27.96 $ 25.00
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Income from investment operations:
Net investment loss ................................... (0.06) (0.05)
Net realized and unrealized gains on investments ...... 2.50 3.01
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Total from investment operations .................... 2.44 2.96
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Less distributions from:
Net capital gains ..................................... (0.30) 0.00
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Total distributions ................................. (0.30) 0.00
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Net asset value, end of period ................................... $ 30.10 $ 27.96
========== ==========
Total return ..................................................... 8.86%/1/ 11.84%/1/
Ratios/Supplemental Data
Net assets, end of period (in 000s) ...................... $ 1,708 $ 1,168
Ratio of expenses to average net assets:
Before expense reimbursement ........................ 14.27%/2/ 29.69%/2/
After expense reimbursement ......................... 1.95%/2/ 1.95%/2/
Ratio of net investment income to average net assets:
Before expense reimbursement ........................ (12.92%)/2/ (28.16%)/2/
After expense reimbursement ......................... (0.60%)/2/ (0.42%)/2/
Portfolio turnover rate .................................. 3.56%/1/ 15.06%/1/
Average commission rate paid ............................. $ 0.0700 $ 0.0698
* Commencement of investment operations.
/1/ Not Annualized.
/2/ Annualized.
</TABLE>
See accompanying notes to financial statements
<PAGE>
THE CRUELTY FREE VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) MAY 31, 1998
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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 (the "Act"), 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 initial
capitalization of the Fund, $100,000, was provided on March 26, 1997 by Beacon
Global Advisors, Ltd., parent company of the investment advisor. The Fund
commenced investment operations on April 29, 1997. 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.
SECURITY VALUATION. Investments in securities traded on a national securities
exchange are valued at the last reported sales price. Unlisted securities,
listed securities in which there were no sales, or securities traded over-the-
counter, 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.
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.
ORGANIZATION COSTS. Organization costs are being amortized on a straight line
basis over five years from commencement of operations.
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. Cost of
securities for tax purposes is substantially the same as for financial reporting
purposes.
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.
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.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short term investments, totaled
$247,305 and $42,350, respectively, for the six months ended May 31,1998. Net
unrealized appreciation of investments at May 31, 1998 includes aggregate
unrealized appreciation of $266,640 and unrealized depreciation of $96,169.
<PAGE>
THE CRUELTY FREE VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONTINUED MAY 31, 1998
- --------------------------------------------------------------------------------
NOTE 3 - 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 entered into a subadvisory agreement with Scudder Kemper
Investments, Inc. (formerly known as Zurich Kemper Value Advisors and Dreman
Value Advisors, Inc.) to assist in the selection and management of the Fund's
investment securities. For its services, the Subadvisor receives from the
Advisor 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 Advisor has voluntarily agreed to waive its fees and reimburse the Fund to
the extent total annualized expenses exceed 1.95% of the Fund's average daily
net assets. For the six months ended May 31, 1998, advisory fees of $9,068
were paid to the Advisor and the Advisor reimbursed the Fund $89,391. Certain
Officers and Trustees are affiliated persons of the Advisor. All Officers serve
without direct compensation from the Fund. Officers, Trustees and affiliated
persons of The Cruelty Free Value Fund directly control 25,561 shares, or 45.06%
of the Fund, including one shareholder who owns 35.62%.
Excluding the investment advisory fee, other expenses incurred for the six
months ended May 31, 1998 totaled $94,469, of which $54,322 represents fees
charged by First Data Investor Services Group, Inc., for administration,
transfer agent, accounting and shareholder services. The Bank of New York
serves as Custodian of the Fund.
The Fund has adopted a distribution plan (the "Plan"), pursuant to Rule 12b-1
under the Act 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 six months ended May 31, 1998, the
Fund reimbursed the Distributor $1,814 for distribution costs incurred.
NOTE 4 SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of Shareholders of the Fund was held on January 5, 1998, for
purposes of (i) approving a new sub-investment management agreement with
Scudder Kemper Investments, Inc., due to the acquisition of Scudder, Stevens &
Clark, Inc. by Zurich Insurance Company, and (ii) ratifying or rejecting the
selection of Johnson Lambert & Co. as the Fund's new independent public
accountants. A quorum was represented at the Meeting and the voting results are
set forth below:
For the approval of the new sub-investment management agreement:
FOR: 29,148
ABSTAIN: 1,398
For the selection of the new independent public accountants:
FOR: 29,541
ABSTAIN: 1,005
<PAGE>
THE CRUELTY FREE VALUE FUND
SEMI-ANNUAL REPORT
MAY 31, 1998
INVESTMENT ADVISOR
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102
DISTRIBUTOR
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102
SHAREHOLDER SERVICES
First Data Investor Services Group, Inc.
3200 Horizon Drive
King of Prussia, Pennsylvania 19406
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
AUDITORS
Johnson Lambert & Co.
7500 Old Georgetown Road #700
Bethesda, Maryland 20814
FOR ADDITIONAL INFORMATION ABOUT
THE CRUELTY FREE VALUE FUND CALL
(800) 892-9626
@HTTP://WWW.CRUELTYFREE.COM
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.
BEACON GLOBAL ADVISORS, INC.
