1838 INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
May 7, 1997
TO THE SHAREHOLDER:
The net asset value of your Fund as of April 30, 1997 was $11.29 per share. This
represents an increase of 8.14% over the net asset value per share for the
six-month period ending April 30, 1997. Including the dividend of $0.036 cents
per share paid out in December, the Fund's total return for the period was 8.5%.
This compares favorably with the total return of the benchmark for the Fund, the
EAFE index, of 1.6%. The number of shares outstanding rose by 8.1% to 4,266,438.
Looking back, we did well to have under-representation in the Japanese market.
In dollar terms, this market dropped 13.3% during the half year. We did
emphasize Japan's multinationals like Toyota, TDK and Takeda, which rose in
value as they benefited from the strength of the dollar. The major European
markets again showed considerable strength, particularly the UK, Germany, the
Netherlands, Switzerland and Spain, whose market indices all rose more than 10%
expressed in dollars. We were well represented in Europe, albeit at a slightly
lower level than the benchmark. This is a consequence of our strategic choice to
have high weightings in areas of structurally or potentially high growth, such
as South East Asia and other emerging markets. However, during this period, the
markets of South East Asia have generally been disappointing. Of the developed
markets, Hong Kong ended unchanged while Malaysia was down 6%; Asia's emerging
markets were up only 0.7%, mainly on the strength of Taiwan.
Why hasn't Asia's economic miracle been translated into strong stock market
performance? These economies are still suffering from various factors including
the sharp decline in export growth that started last year, the property glut in
many markets after years of overbuilding, the strength of the dollar to which
many local currencies are linked, and the restrictive policies designed to
reduce trade deficits. While we are currently cautious about the prospects for
the equity markets of the region, we do anticipate investments in Hong Kong to
benefit from relatively low valuations and additional business opportunities in
China after the hand-over on July 1, 1997.
Of the emerging markets, the Latin American region performed best. We held 5% to
8% of the assets of the Fund in this area with positive impact on performance.
We continue to be optimistic on the region's investment potential.
In various degrees and at different speeds, we see governments around the world
taking steps to deregulate their capital, labor and product markets in order to
compete in what are fast becoming integrated global markets. Selecting companies
that have the capabilities to succeed in this new environment offers the Fund
tremendous investment opportunities.
Sincerely,
/s/Hans van den Berg
---------------------------------
Hans van den Berg
Vice President & Portfolio Manager
- ----------
6/97. Shares of the 1838 International Equity Fund are distributed by
Rodney Square Distributors, Inc.
Past performance is not predictive of future results. Investment returns and
principal values will fluctuate, so that, when redeemed, shares may be worth
less than their original cost.
1
<PAGE>
1838 INTERNATIONAL EQUITY FUND
SCHEDULE OF NET ASSETS (UNAUDITED) APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
COMMON STOCK -- 98.8%
ARGENTINA -- 1.0%
Yacimientos Petroliferos Fiscades S.A. Oil & Gas Exploration............. 18,000 $ 497,250
--------------
AUSTRALIA -- 2.2%
Broken Hill Propriety Co. Metals - Diversified.............. 35,963 508,414
National Australia Bank, Ltd. Banking........................... 38,000 521,464
--------------
1,029,878
--------------
BRAZIL -- 1.4%
Telecomunicacoes Brasileiras S.A. ADR Telecommunications................ 6,000 688,500
--------------
CHILE -- 1.4%
Cia DE Telecommunicaciones
DE Chile S.A. Telecommunications................ 20,000 647,500
--------------
CHINA -- 1.1%
Huaneng Power Intl., Inc. ADR* Electric Utility.................. 22,000 533,500
--------------
FRANCE -- 8.7%
Compagnie Gen Des Eaux Service Company................... 6,000 837,468
Promodes Retail - Grocery.................. 2,200 743,695
Rhone Poulenc Chemicals ........................ 21,318 718,444
SGS-Thomson Microelectronics N.V.* Electronics....................... 8,500 666,188
Societe Generale Banking & Financial Services...... 5,000 561,402
Total S.A. (B Shares) Oil & Gas Exploration............. 8,000 664,756
--------------
4,191,953
--------------
GERMANY -- 7.4%
Adidas AG Sportswear........................ 7,000 727,562
Daimler-Benz AG Automobiles....................... 10,000 741,170
Daimler-Benz AG Rights Automobiles....................... 147 13
Hoechst AG Chemicals......................... 17,000 668,877
SAP ADR Computers, Software............... 11,000 674,571
Veba AG Electric Utility.................. 14,000 728,372
--------------
3,540,565
--------------
HONG KONG -- 6.9%
Cheung Kong Holdings, Ltd. Real Estate....................... 52,000 456,500
China Resources Enterprise, Ltd. Real Estate....................... 200,000 552,550
Citic Pacific, Ltd. Holding Company................... 90,000 486,838
HSBC Holdings Financial Services................ 41,009 1,037,680
</TABLE>
See notes to financial statements.
2
<PAGE>
1838 INTERNATIONAL EQUITY FUND
SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
HONG KONG - CONTINUED
Hutchinson Whampoa, Ltd. Real Estate, Transportation &
Telecommunications.............. 56,000 $ 415,704
Sun Hung Kai Properties Real Estate....................... 35,000 379,555
--------------
3,328,827
--------------
INDONESIA -- 0.9%
PT Bank Intl. Indonesia Banking........................... 300,000 215,739
PT Bank Intl. Indonesia Warrants Banking........................... 63,420 20,197
Telekomunik Indonesia ADR Telecommunications................ 7,500 213,750
--------------
449,686
--------------
ITALY -- 3.6%
Assicurazioni Generali Spa Insurance......................... 30,000 501,524
Telecom Italia Mobile Spa Telecommunications................ 390,000 1,225,450
--------------
1,726,974
--------------
JAPAN -- 24.2%
Autobacs Seven Co., Ltd. Auto Parts Manufacturer........... 8,000 533,015
Canon Inc. ADR Manufacturing - Electronics....... 8,100 961,875
Credit Saison Co., Ltd. Consumer Finance.................. 32,200 619,496
Fuji Bank, Ltd. Banking........................... 50,000 563,766
Ibiden Co., Ltd. Electronics....................... 56,000 737,391
Industrial Bank of Japan Banking........................... 19,000 202,246
Konica Corp. Photography Equipment............. 81,000 469,424
Mitsubishi Estate Co., Ltd. Real Estate....................... 35,000 441,551
Mitsubishi Heavy Industries, Ltd. Heavy Machinery................... 60,000 396,450
Mitsui & Co., Ltd. Diversified - Wholesale........... 50,000 382,021
Nippon Steel Corp. Steel Manufacturer................ 140,000 399,604
Nippon Telephone and Telegraph Corp. Telephone Utility................. 75 529,270
Nippondenso Co., Ltd. Electronics....................... 31,000 706,403
Obayashi Corp. Construction...................... 60,000 304,670
Seven-Eleven Retail - Grocery.................. 6,000 380,838
Sony Corp. Electronics....................... 9,000 655,704
Takeda Chemicals Industries Pharmaceuticals................... 45,000 1,039,617
TDK Corp. Magnetic Tapes, Floppy &
Optical Discs................... 14,000 1,010,048
Toyota Motor Corp. Automobile Manufacturer........... 31,000 899,503
Tsubakimoto Chain Machinery......................... 80,000 421,998
--------------
11,654,890
--------------
KOREA -- 0.9%
Korea Mobile Telecom ADR Communications.................... 18,540 176,130
Samsung Electronics GDR* Electronics....................... 10,000 235,000
--------------
411,130
--------------
</TABLE>
See notes to financial statements.
3
<PAGE>
1838 INTERNATIONAL EQUITY FUND
SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
MALAYSIA -- 1.1%
Malayan Banking Berhad Banking........................... 33,000 $ 328,685
United Engineers, Ltd. Engineering & Construction........ 30,000 212,749
--------------
541,434
--------------
MEXICO -- 2.7%
Grupo Casa Autrey ADR Pharmaceuticals................... 21,000 364,875
Grupo Financiero Inbursa, S.A. de C.V. Financial Services................ 100,000 344,546
Panamerican Beverages, Inc. (A Shares) Beverages......................... 20,000 580,000
--------------
1,289,421
--------------
NETHERLANDS -- 6.4%
Aegon N.V. Insurance......................... 10,109 717,836
Akzo N.V. Chemicals......................... 4,000 516,620
ING Groep, N.V. Financial Services................ 17,240 678,635
Koninklijke Ahold N.V. Retail Food Distributor........... 8,060 551,600
Stork N.V. Miscellaneous Manufacturing....... 14,837 640,540
Stork N.V. Rights Miscellaneous Manufacturing....... 17 19
--------------
3,105,250
--------------
PANAMA -- 0.8%
Banco Latinoamericano de
Exportaciones, S.A. (E Shares) Banking........................... 8,000 367,000
--------------
PHILIPPINES -- 0.2%
Pilipino Telephone Corp. Telecommunications................ 250,000 118,511
--------------
SINGAPORE -- 1.5%
Singapore Press Holdings Publishing........................ 16,000 296,932
United O/S Bank Banking........................... 43,000 404,958
--------------
701,890
--------------
SPAIN -- 4.0%
Banco Santander S.A. Banking........................... 10,000 755,746
Empresa Nacional de Electricidad S.A. Utility........................... 8,000 561,726
Telefonica de Espana ADR Telecommunications................ 8,000 616,000
--------------
1,933,472
--------------
SWEDEN -- 1.5%
Atlas Copco AB (A Shares) Machinery Manufacturer............ 30,000 744,436
--------------
SWITZERLAND -- 5.9%
ABB AG Electrical Machinery.............. 670 816,627
Nestle S.A. ADR Food Processing................... 9,000 546,680
</TABLE>
See notes to financial statements.
4
<PAGE>
1838 INTERNATIONAL EQUITY FUND
SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
SWITZERLAND - CONTINUED
Novartis AG (Bearer Shares) Pharmaceuticals................... 426 $ 564,897
Novartis AG (Reg. Shares) Pharmaceuticals................... 300 397,815
Zurich Versicherungsgesellschaft ADR * Insurance......................... 8,000 525,574
--------------
2,851,593
--------------
THAILAND -- 0.7%
PTT Exploration and Production
Public Co. (Foreign Shares) Oil & Gas Exploration............. 10,000 127,872
PTT Exploration and Production
Public Co. Oil & Gas Exploration............. 5,000 60,107
Thai Farmers Bank Co. Banking........................... 21,000 127,030
Thai Farmers Bank Co. Warrants Banking........................... 1,375 1,000
--------------
316,009
--------------
UNITED KINGDOM -- 14.3%
British Aerospace plc Aerospace......................... 43,000 919,475
British Airways plc ADR Airlines.......................... 5,000 573,125
Carlton Communications plc ADR Broadcasting...................... 15,000 628,125
Kingfisher plc Retail Department Stores.......... 55,000 599,250
Lloyds TSB Group plc Banking........................... 90,796 833,765
Prudential Corp. plc Insurance......................... 85,000 830,452
Reed Intl. plc Publishing........................ 33,000 611,988
Reuters Holding plc ADR Publishing........................ 8,000 493,000
Shell Transport and Trading Co. plc Oil & Gas Exploration & Distribution 28,000 498,255
Smithkline Beecham plc Pharmaceuticals................... 55,159 892,026
--------------
6,879,461
--------------
TOTAL COMMON STOCK (COST $42,660,363)......................................... 47,549,130
--------------
COMMERCIAL PAPER -- 0.7%
Par
-------
American Express Credit Corp., 5.60%,
05/01/97 (COST $348,773)............................................... 348,773 348,773
--------------
TOTAL INVESTMENTS (COST $43,009,136)+-- 99.5%........................................... $ 47,897,903
OTHER ASSETS AND LIABILITIES, NET-- 0.5%................................................ 251,028
--------------
NET ASSETS-- 100.0%..................................................................... $ 48,148,931
==============
</TABLE>
- ----------
* Non-income producing security.
+ Also the cost for Federal income tax purposes. At April 30, 1997, net
unrealized appreciation was $4,888,767. This consisted of aggregate gross
unrealized appreciation in which there was an excess of market value over tax
cost of $6,998,090, and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$2,109,323.
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
See notes to financial statements.
5
<PAGE>
1838 INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 1997
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Investments, at market (identified cost $43,009,136) (Note 2) ............ $ 47,897,903
Receivables:
Dividends and interest ................................................ 192,625
Foreign taxes recoverable ............................................. 34,361
Deferred organizational costs (Note 2).................................... 84,151
Other assets.............................................................. 246
-------------
Total assets ....................................................... 48,209,286
Liabilities:
Payables:
Due to Advisor......................................................... $ 21,587
Accrued expenses (Note 4) ............................................. 38,768
------------
Total liabilities .................................................. 60,355
-------------
Net Assets .............................................................. $ 48,148,931
=============
Net Assets consist of:
Common stock ............................................................. $ 4,266
Additional capital paid in ............................................... 43,484,906
Undistributed net investment income....................................... 64,600
Accumulated net realized loss on:
Investments ........................................................... (226,797)
Foreign currency transactions ......................................... (64,308)
Net unrealized appreciation (depreciation) on:
Investments ........................................................... 4,888,767
Translation of assets and liabilities in foreign currencies ........... (2,503)
-------------
Net Assets, for 4,266,438 shares outstanding ............................. $ 48,148,931
=============
Net Asset Value offering price and redemption price per share
($48,148,931/4,266,438 outstanding shares of common stock,
$0.001 par value) ...................................................... $11.29
======
</TABLE>
See notes to financial statements.
6
<PAGE>
1838 INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six-Month Period
Ended April 30, 1997
(Unaudited)
-------------------------
<S> <C> <C>
Investment Income:
Dividends .......................................................... $ 372,123
Interest ........................................................... 20,473
-------------
392,596
Less foreign taxes withheld ........................................ (38,859)
-------------
353,737
Expenses:
Investment advisory fee (Note 4) ................................... $ 168,222
Administration fee (Note 4) ........................................ 24,795
Accounting fee (Note 4) ............................................ 29,909
Custodian fees ..................................................... 17,852
Amortization of organizational expenses (Note 2) ................... 12,820
Legal .............................................................. 10,166
Audit .............................................................. 8,926
Registration fees .................................................. 6,283
Directors' fees and expenses (Note 4) .............................. 10,042
Transfer agency fees ............................................... 11,904
Reports to shareholders............................................. 6,972
Other .............................................................. 9,873
-----------
Total expenses before fee waivers ............................... 317,764
Advisory fee waived (Note 4) .................................... (37,397)
-----------
Total expenses, net .......................................... 280,367
-------------
Net investment income .............................................. 73,370
-------------
Realized and unrealized gain (loss) on investments and foreign currency:
Net realized gain (loss) on:
Investments ........................................................ 103,549
Foreign currency transactions ...................................... (64,308)
Net unrealized appreciation during the period on:
Investments ........................................................ 3,497,139
Translation of assets and liabilities in foreign currencies ........ 3,377
-------------
Net gain on investments
and foreign currency................................................ 3,539,757
-------------
Net increase in net assets resulting from operations ..................... $ 3,613,127
=============
</TABLE>
See notes to financial statements.
7
<PAGE>
1838 INTERNATIONAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six-Month
Period Ended For the Fiscal
April 30, 1997 Year Ended
(Unaudited) October 31, 1996
----------------- ----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income ................................................ $ 73,370 $ 204,643
Net realized gain (loss) on:
Investments ..................................................... 103,549 (306,807)
Foreign currency transactions ................................... (64,308) (63,127)
Net unrealized appreciation (depreciation) during the period on:
Investments ..................................................... 3,497,139 2,071,153
Translation of assets and liabilities in foreign currencies ..... 3,377 (5,836)
------------ -------------
Net increase in net assets resulting from operations .................. 3,613,127 1,900,026
------------ -------------
Distributions to shareholders from:
Net investment income ($0.036 and $0.043, per share, respectively)..... (148,857) (78,685)
------------ -------------
Increase in net assets from Fund share transactions (Note 5) ............. 3,475,731 22,623,847
------------ -------------
Increase in net assets ............................................... 6,940,001 24,445,188
Net Assets:
Beginning of period ................................................... 41,208,930 16,763,742
------------ -------------
End of period.......................................................... $ 48,148,931 $ 41,208,930
============ =============
</TABLE>
See notes to financial statements.
8
<PAGE>
1838 INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements. It should be read in conjunction with the financial statements and
notes thereto.
<TABLE>
<CAPTION>
For the Six-Month For the Period
Period Ended For the Fiscal August 3, 1995+
April 30, 1997 Year Ended through
(Unaudited) October 31, 1996 October 31, 1995
----------------- ---------------- -----------------
<S> <C> <C> <C>
Net Asset Value - Beginning of Period ............ $10.44 $9.61 $10.00
------ ----- ------
Investment Operations:
Net investment income....................... 0.02 0.07 0.02
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions ............................ 0.87 0.80 (0.41)
------ ----- ------
Total from investment operations .... 0.89 0.87 (0.39)
------ ----- ------
Distributions:
From net investment income ................. (0.04) (0.04) --
------ ----- ------
Net Asset Value - End of Period .................. $11.29 $10.44 $ 9.61
====== ====== ======
Total Return ..................................... 8.50% 9.11% (3.90)%
Ratios (to average net assets)/Supplemental Data:
Expenses1 .................................. 1.25%* 1.25% 1.25%*
Net investment income ...................... 0.33%* 0.70% 1.02%*
Portfolio turnover rate .......................... 86.64%* 59.11% 42.21%*
Average commission rate paid ..................... $0.0367 $0.0211 --
Net assets at end of period (000's omitted)....... $48,149 $41,209 $16,764
</TABLE>
+ Commencement of Operations.
1 Without waivers the annualized ratio of expenses to average daily net assets
would have been 1.42%, 1.80% and 2.60% for the six-month period ended April
30, 1997, and the fiscal years ended October 31, 1996 and 1995, respectively.
* Annualized.
See notes to financial statements.
9
<PAGE>
1838 SMALL CAP EQUITY FUND
- --------------------------------------------------------------------------------
May 15, 1997
TO THE SHAREHOLDER:
The Continuum
The North American equities markets, including small cap markets, were severely
tested during the first six months of the 1838 Small Cap Equity Fund's fiscal
year November 1, 1996 through April 30, 1997. The first quarter brought general
prosperity to most sectors, while the second quarter inflicted some pain on
investors as some excesses were worked off. From point-to-point, the Fund's
total return for the period was 9.22%, while the small cap Russell 2000 Index
was up less than 2%. That very strong relative return illustrates the general
characteristics of the value style which the 1838 Small Cap Equity Fund
utilizes. The Fund's aim is to capture the essence of a small cap appreciation
phase, and then hold on to those gains better than other small cap managers
during periods of corrections or consolidations by adherence to the disciplined
investment process as explained below.
The Investment Process
The 1838 Small Cap Equity Fund follows a very disciplined investment process
focused primarily upon a low price in relation to trailing 12 month's earnings
(low P/E) screen. Accordingly, all stocks purchased for the Fund's portfolio
will be small cap ($900 million of market float or less) and low P/E, defined as
the lowest 40% of all stocks contained in the Compustat North American Database.
This small cap, low P/E investment style has been adopted because numerous
studies have concluded that over the long term for North American stocks, the
smaller the company and the lower the P/E, the better the performance in
aggregate. A recently updated study by Prudential Securities confirms that over
the last 21 years ending in 1996, the return of the lowest P/E stocks in the
small cap universe exceeded that of the highest valued stocks by 2.7 times.
In reviewing stocks for inclusion in the Fund's portfolio, other fundamental and
quantitative measures are observed and judged important in aiding the decision
making process. The following analysis in early May 1997 of the holdings in the
Fund leads us to conclude that the fundamental characteristics of the small cap
portfolio holdings in aggregate are stronger than those for the comparable small
cap benchmark.
- ----------
Past performance is not predictive of future results. Investment returns and
principal values will fluctuate, so that, when redeemed, shares may be worth
less than their original cost.
10
<PAGE>
1838 SMALL CAP EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Summary Characteristics*
----------------------------------------------------------------------
Average Average Average
Market Average EPS Growth Return on Debt/Total
Cap** P/E Ratio 5 Year Equity Capitalization
-------- --------- ---------- --------- --------------
<C> <C> <C> <C> <C> <C>
1838 Small Cap Fund...................... $330.4MM 14.1x 18.9% 16.7% 31.1%
Russell 2000 Index....................... $420.0MM 17.8x 12.1% 14.4% 37.6%
</TABLE>
* This chart represents the characteristics of the Fund's portfolio at May 14,
1997.
** 1838 measures market float only (excluding closely held shares) in equity
capitalization.
A comparison with similar recent studies suggests that these premium valuation
characteristics tend to be maintained over time.
During the first six months of fiscal 1997, the three securities which
contributed the greatest returns to the Fund were in the medical services, life
insurance, and semiconductor industries. The three securities which provided the
most negative returns to the Fund were in the property/casualty insurance,
diaper, and industrial tube industries. The wide variety of businesses
represented by these six companies illustrates the substantial diversification
within your portfolio.
The Outlook
The North American equities markets have continued to experience positive
returns for the first have of the fiscal year. Investors do continue to
demonstrate a preference for larger companies. However, we would observe the
current fundamental premium valuations placed on large companies suggests that
the risk-reward equation substantially favors small cap companies. Over time
that should work to the advantage of small cap investors.
Sincerely,
/s/ Edwin B. Powell
--------------------------------
Edwin B. Powell
Vice President & Portfolio Manager
- ----------
6/97. Shares of the 1838 Small Cap Equity Fund are distributed by Rodney
Square Distributors, Inc.
Past performance is not predictive of future results. Investment returns and
principal values will fluctuate, so that, when redeemed, shares may be worth
less than their original cost.
11
<PAGE>
1838 SMALL CAP EQUITY FUND
SCHEDULE OF NET ASSETS (UNAUDITED) APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
COMMON STOCK -- 97.6%
AGRICULTURE, FORESTRY & FISHERIES -- 0.9%
Sylvan, Inc. *............................................................ 18,180 $ 170,438
--------------
FINANCE & INSURANCE -- 23.4%
INSURANCE CARRIERS -- 19.5%
Allmerica Financial Corp.................................................. 5,200 187,200
Amerus Life Holdings, Inc. (A Shares)..................................... 6,600 151,800
Capmac Holdings, Inc...................................................... 4,050 105,300
E.W. Blanch Holdings, Inc................................................. 12,970 288,583
Enhance Financial Services Group, Inc..................................... 5,890 226,765
Everest Re Holdings, Inc.................................................. 4,925 141,594
Executive Risk Inc........................................................ 6,390 289,147
FPIC Insurance Group, Inc. *.............................................. 14,100 253,800
Gryphon Holdings, Inc. *.................................................. 17,550 252,281
Harleysville Group, Inc................................................... 6,400 204,400
Home State Holdings, Inc. *............................................... 4,850 13,641
Penn Treaty American Corp.*............................................... 4,200 113,400
Penncorp Financial Group, Inc............................................. 5,400 185,625
Presidential Life Corp.................................................... 12,900 185,437
State Auto Financial Corp................................................. 15,050 263,375
Terra Nova (Bermuda) Holdings, Ltd........................................ 8,400 157,500
The PMI Group, Inc........................................................ 2,700 138,037
W.R. Berkley Corp......................................................... 4,700 231,475
Western National Corp..................................................... 13,750 354,063
--------------
3,743,423
--------------
SAVINGS, CREDIT & OTHER FINANCIAL INSTITUTIONS -- 0.7%
Long Island Bancorp, Inc.................................................. 3,815 129,710
--------------
STATE & NATIONAL BANKS -- 3.2%
Dime Community Banccorp, Inc. *........................................... 17,100 302,456
Riggs National Corp....................................................... 12,700 234,950
United Security Bancorporation *.......................................... 6,710 87,230
--------------
624,636
--------------
TOTAL FINANCE & INSURANCE ............................................................ 4,497,769
--------------
MANUFACTURING -- 47.3%
CHEMICALS & ALLIED PRODUCTS -- 2.6%
General Chemical Group, Inc............................................... 13,585 302,266
OM Group, Inc............................................................. 6,900 192,338
--------------
494,604
--------------
</TABLE>
See notes to financial statements.
12
<PAGE>
1838 SMALL CAP EQUITY FUND
SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
COMPUTER & OFFICE EQUIPMENT -- 0.3%
Lexmark Intl. Group, Inc. (A Shares) *.................................... 2,400 $ 55,800
--------------
FURNITURE & FIXTURES -- 1.4%
Culp, Inc................................................................. 6,400 113,600
Furniture Brands Intl., Inc. *............................................ 10,300 151,925
--------------
265,525
--------------
GLASS, CONCRETE & OTHER PRODUCTS -- 1.5%
Medusa Corp............................................................... 7,990 302,621
--------------
IRON & STEEL -- 0.5%
Schnitzer Steel Industries, Inc. (A Shares)............................... 4,625 102,906
--------------
MISC. ELECTRICAL MACHINERY, EQUIP. & SUPPLIES -- 9.0%
AVX Corp.................................................................. 13,300 297,588
Belden, Inc............................................................... 7,600 233,700
Burr-Brown Corp. *........................................................ 14,513 428,119
Holophane Corp. *......................................................... 10,100 204,525
Phototronics, Inc. *...................................................... 7,900 273,538
UCAR Intl., Inc. *........................................................ 7,035 295,470
--------------
1,732,940
--------------
MISC. FABRICATED METAL PRODUCTS -- 0.9%
Wolverine Tube, Inc. *.................................................... 7,075 183,950
--------------
MISC. INDUSTRIAL MACHINERY & EQUIP. -- 0.7%
Fedders Corp. (A Shares).................................................. 23,440 131,850
--------------
MISC. MANUFACTURING INDUSTRIES -- 9.2%
American Safety Razor Co. *............................................... 19,130 267,820
D.R. Horton, Inc.......................................................... 12,882 125,600
Dal-Tile Intl., Inc. *.................................................... 11,900 154,700
Doncasters plc ADR *...................................................... 7,300 164,250
Libbey, Inc............................................................... 7,315 226,765
Paragon Trade Brands, Inc. *.............................................. 6,900 110,400
Silgan Holdings, Inc...................................................... 10,100 267,650
US Can Corp. *............................................................ 17,765 270,916
Velcro Industries N.V..................................................... 2,580 175,440
--------------
1,763,541
--------------
NONFERROUS METALS -- 0.9%
Oregon Metallurgical Corp. *.............................................. 7,700 177,100
--------------
PAPER & PAPER PRODUCTS -- 5.0%
American Pad & Paper Co. *................................................ 12,825 190,772
Buckeye Cellulose Corp. *................................................. 10,790 325,049
</TABLE>
See notes to financial statements.
13
<PAGE>
1838 SMALL CAP EQUITY FUND
SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
PAPER & PAPER PRODUCTS - CONTINUED
Schweitzer-Mauduit International, Inc..................................... 6,610 $ 215,651
Shorewood Packaging Corp.................................................. 11,800 224,200
--------------
955,672
--------------
PRECISION INSTRUMENTS & MEDICAL SUPPLIES -- 5.6%
Fisher Scientific Intl.................................................... 7,650 324,169
Fluke Corp................................................................ 4,270 192,684
Haemonetics Corp. *....................................................... 11,800 196,175
Marquette Medical Systems (A Shares) *.................................... 9,900 199,237
OEC Medical Systems, Inc. *............................................... 11,030 168,207
--------------
1,080,472
--------------
RUBBER & PLASTICS -- 0.6%
Channell Commercial Corp. *............................................... 8,215 86,257
Greif Brothers Corp. (A Shares)........................................... 765 19,507
--------------
105,764
--------------
TELECOMMUNICATIONS EQUIPMENT -- 1.7%
Oak Industries, Inc.*..................................................... 11,190 209,813
Superior Telecom Inc. *................................................... 5,000 107,500
--------------
317,313
--------------
TEXTILES & APPAREL -- 3.6%
Guess?, Inc. *............................................................ 11,800 126,850
Hirsch Intl. Corp. (A Shares) *........................................... 8,662 158,082
Quaker Fabric Corp. *..................................................... 8,400 114,450
The First Years, Inc...................................................... 8,830 134,658
Worldtex, Inc. *.......................................................... 23,500 152,750
--------------
686,790
--------------
TRANSPORTATION -- 3.8%
Airnet Systems, Inc. *.................................................... 9,500 147,250
Alaska Air Group, Inc. *.................................................. 9,900 246,262
Canadian National Railway Co.............................................. 2,500 96,250
Midwest Express Holdings, Inc. *.......................................... 5,951 245,478
--------------
735,240
--------------
TOTAL MANUFACTURING................................................................... 9,092,088
--------------
MINING -- 3.9%
COAL -- 2.0%
Zeigler Coal Holding Co................................................... 15,700 394,463
--------------
CRUDE PETROLEUM & NATURAL GAS -- 1.9%
Belco Oil & Gas Corp.*.................................................... 7,100 143,775
Bellwether Exploration Co. *.............................................. 15,100 132,125
</TABLE>
See notes to financial statements.
14
<PAGE>
1838 SMALL CAP EQUITY FUND
SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
CRUDE PETROLEUM & NATURAL GAS - CONTINUED
Willbros Group, Inc. *.................................................... 7,900 $ 79,987
--------------
355,887
--------------
TOTAL MINING.......................................................................... 750,350
--------------
REAL ESTATE INVESTMENT TRUSTS -- 4.1%
EQUITY REIT -- 4.1%
Burnham Pacific Properties, Inc........................................... 14,900 186,250
Healthcare Realty Trust, Inc.............................................. 8,200 212,175
Pacific Gulf Properties, Inc.............................................. 8,300 175,337
Reckson Associates Realty Corp............................................ 8,800 203,500
--------------
TOTAL REAL ESTATE INVESTMENT TRUSTS................................................... 777,262
--------------
SERVICES -- 8.5%
AMUSEMENT & RECREATION SERVICES -- 2.1%
Harveys Casino Resorts.................................................... 13,335 201,692
Royal Caribbean Cruises Ltd............................................... 6,300 200,813
--------------
402,505
--------------
BUSINESS SERVICES -- 1.4%
New England Business Service, Inc......................................... 7,600 200,450
Obie Media Corp. *........................................................ 10,300 72,744
--------------
273,194
--------------
COMPUTER SERVICES -- 0.6%
CFI Proservices, Inc. *................................................... 7,500 112,500
Wall Data, Inc............................................................ 300 6,281
--------------
118,781
--------------
MEDICAL & HEALTH SERVICES -- 4.4%
Maxicare Health Plans, Inc. *............................................. 7,720 179,490
Medical Resources, Inc. *................................................. 10,500 133,875
Steiner Leisure Ltd....................................................... 4,800 116,400
Sun Healthcare Group, Inc. *.............................................. 15,800 223,175
Trigon Healthcare, Inc.................................................... 9,700 184,300
--------------
837,240
--------------
TOTAL SERVICES........................................................................ 1,631,720
--------------
WHOLESALE & RETAIL TRADE -- 9.5%
MISC. RETAIL STORES -- 2.2%
Duckwall-Alco Stores, Inc. *.............................................. 6,900 92,287
Finlay Enterprises, Inc. *................................................ 1,100 16,363
Ruddick Corp.............................................................. 21,635 324,525
--------------
433,175
--------------
</TABLE>
See notes to financial statements.
15
<PAGE>
1838 SMALL CAP EQUITY FUND
SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
RETAIL APPAREL & ACCESSORY STORES -- 1.5%
Little Switzerland, Inc. *................................................ 19,595 $ 96,750
Zale Corp. *.............................................................. 10,575 195,638
--------------
292,388
--------------
WHOLESALE ELECTRONIC EQUIP. & COMPUTERS -- 1.8%
Marshall Industries *..................................................... 4,645 151,543
Pioneer-Standard Electronics, Inc......................................... 15,200 186,200
--------------
337,743
--------------
WHOLESALE MISCELLANEOUS -- 4.0%
BMC West Corp. *.......................................................... 20,315 218,386
Day Runner, Inc. *........................................................ 5,400 148,500
Dimon, Inc................................................................ 6,500 128,375
TBC Corp. *............................................................... 36,000 270,000
--------------
765,261
--------------
TOTAL WHOLESALE & RETAIL TRADE........................................................ 1,828,567
--------------
TOTAL COMMON STOCK (COST $18,226,863).................................................. 18,748,194
--------------
MISCELLANEOUS ASSETS -- 2.0%
Scudder Managed Cash Fund (COST $387,605)................................. 387,605 387,605
--------------
TOTAL INVESTMENTS (COST $18,614,468)+-- 99.6%................................................... $ 19,135,799
OTHER ASSETS AND LIABILITIES, NET-- 0.4%........................................................ 79,472
--------------
NET ASSETS-- 100.0%............................................................................. $ 19,215,271
==============
</TABLE>
* Non-income producing security.
+ The cost for Federal income tax purposes was $18,494,377. At April 30, 1997,
net unrealized appreciation was $641,423. This consisted of aggregate gross
unrealized appreciation in which there was an excess of market value over tax
cost of $1,554,113, and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$912,690.
See notes to financial statements.
16
<PAGE>
1838 SMALL CAP EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 1997
<TABLE>
Assets:
<S> <C> <C>
Investments, at market (identified cost $18,614,468) (Note 2) ............ $ 19,135,799
Cash ..................................................................... 25,575
Receivables:
Interest .............................................................. 1,587
Dividends ............................................................. 7,959
Investment securities sold ............................................ 249,815
Other assets ............................................................. 33
------------
Total assets ....................................................... 19,420,768
Liabilities:
Payables:
Investment securities purchased ....................................... $ 190,275
Accrued expenses (Note 4) ............................................. 15,222
------------
Total liablilities ................................................. 205,497
------------
Net Assets ......................................................... $ 19,215,271
============
Net Assets consist of:
Common stock ............................................................. $ 1,855
Additional capital paid in ............................................... 18,595,866
Accumulated net investment loss .......................................... (7,812)
Accumulated net realized gain on investments ............................. 104,031
Net unrealized appreciation on investments ............................... 521,331
------------
Net Assets, for 1,855,202 shares outstanding ............................. $ 19,215,271
============
NetAsset Value offering price and redemption price per share
$19,215,271/1,855,202 outstanding shares of common stock,
$0.001 par value) .................................................... $10.36
======
</TABLE>
See notes to financial statements.
17
<PAGE>
1838 SMALL CAP EQUITY FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six-Month Period
Ended April 30, 1997
(Unaudited)
------------------------
Investment Income:
<S> <C> <C>
Dividends .................................................. $ 46,223
Interest ................................................... 31,737
---------
Total investment income .............................. 77,960
---------
Expenses:
Investment advisory fee (Note 4) ........................... $ 51,463
Administration fee (Note 4) ................................ 24,795
Accounting fee (Note 4) .................................... 19,836
Custodian fees ............................................. 9,590
Legal ...................................................... 5,923
Audit ...................................................... 9,236
Registration fees .......................................... 5,903
Directors' fees and expenses (Note 4) ...................... 5,951
Transfer agency fees ....................................... 9,006
Reports to shareholders .................................... 8,834
Other ...................................................... 2,987
---------
Total expenses before fee waivers and reimbursement .. 153,524
Advisory fee waived (Note 4) ......................... (51,463)
Reimbursement from Investment Adviser (Note 4) ....... (16,289)
---------
Total expenses, net ............................. 85,772
---------
Net investment loss ........................................ (7,812)
---------
Realized and unrealized gain on investments:
Net realized gain on investments during the period ......... 218,375
Net unrealized appreciation on investments during the period 364,505
---------
Net gain on investments ................................. 582,880
---------
Net increase in net assets resulting from operations .......... $ 575,068
=========
</TABLE>
See notes to financial statements.
18
<PAGE>
1838 SMALL CAP EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six-Month For the Period
Period Ended June 17, 1996+
April 30, 1997 through
(Unaudited) October 31, 1996
----------------- ----------------
Increase (Decrease) in Net Assets:
Operations:
<S> <C> <C>
Net investment loss ........................................ $ (7,812) $ (8,741)
Net realized gain (loss) on investments during the period .. 218,375 (46,833)
Net unrealized appreciation on investments during the period 364,505 156,826
------------ ------------
Net increase in net assets resulting from operations ....... 575,068 101,252
------------ ------------
Distribution to shareholders from:
Net capital gain ($0.089 and $0 per share, respectively) (67,511) --
------------ ------------
Increase in net assets from Fund share transactions (Note 5) .. 13,280,063 5,326,399
------------ ------------
Increase in net assets .............................. 13,787,620 5,427,651
Net Assets:
Beginning of period ........................................ 5,427,651 0
------------ ------------
End of period .............................................. $ 19,215,271 $ 5,427,651
============ ============
</TABLE>
+ Commencement of Operations.
See notes to financial statements.
19
<PAGE>
1838 SMALL CAP EQUITY FUND
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements. It should be read in conjunction with the financial statements and
notes thereto.
<TABLE>
<CAPTION>
For the Six-Month For the Period
Period Ended June 17, 1996+
April 30, 1997 through
(Unaudited) October 31, 1996
----------------- ----------------
<S> <C> <C>
Net Asset Value - Beginning of Period ........... $9.57 $10.00
----- ------
Investment Operations:
Net investment income ..................... (0.01) (0.02)
Net realized and unrealized gain (loss)
on investment .......................... 0.89 (0.41)
----- ------
Total from investment operations ....... 0.88 (0.43)
----- ------
Distributions:
From net realized gains ................... (0.09) --
----- ------
Net Asset Value - End of Period ................. $10.36 $9.57
====== ======
Total Return .................................... 9.22% (4.30)%
Ratios (to average net assets)/Supplemental Data:
Expenses(1)................................ 1.25%* 1.25%*
Net investment income ..................... (0.11)%* (0.52)%*
Portfolio turnover rate ......................... 54.60%* 94.38%*
Average commission rate paid .................... $0.0590 $0.0512
Net assets at end of period (000's omitted) ..... $19,215 $5,428
</TABLE>
+ Commencement of Operations.
(1) Without waivers the annualized ratio of expenses to average daily net assets
would have been 2.24% and 4.63% for the periods ended April 30, 1997 and
October 31, 1996, respectively.
* Annualized.
See notes to financial statements.
20
<PAGE>
1838 INVESTMENT ADVISORS FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 1997
Note 1 -- Description of the Funds -- The 1838 Investment Advisors Funds (the
"Trust"), a diversified, open-end management investment company, was established
as a series Delaware business trust on December 9, 1994, and is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust's
Agreement and Declaration of Trust permits the Trustees to issue an unlimited
number of shares of beneficial interest. The Trust has established two series:
the 1838 International Equity Fund and the 1838 Small Cap Equity Fund (each a
"Fund" and collectively, the "Funds"). The Investment objectives of each Fund
are set forth below.
The 1838 International Equity Fund (the "International Equity Fund"), the first
of the two series currently offered by the Trust, commenced operations on August
3, 1995. The Fund's investment objective is capital appreciation, with a
secondary objective of income. The Fund seeks to achieve its objective by
investing in a diversified portfolio of equity securities of issuers located in
countries other than the United States.
The 1838 Small Cap Equity Fund (the "Small Cap Equity Fund") commenced
operations on June 17, 1996. The Fund's investment objective is long-term
growth. The Fund seeks to achieve its objective by investing primarily in the
common stock of domestic companies with relatively small market capitalization,
those with a market value of $1 billion or less (small cap), which are believed
to be undervalued and have good prospects for capital appreciation. The Fund
will invest in small capitalization companies using a value approach.
Note 2 -- Significant Accounting Policies.
Security Valuation. Each Fund's securities, except investments with remaining
maturities of 60 days or less, are valued at the last quoted sales price on the
security's principal exchange on that day. If there are no sales of the relevant
security on such day, the security will be valued at the mean between the
closing bid and asked price on that day, if any. Debt securities having a
maturity of 60 days or less are valued at amortized cost. Securities for which
market quotations are not readily available and all other assets will be valued
at their respective fair market value as determined in good faith by, or under
procedures established by, the Board of Trustees. At April 30, 1997 there were
no securities valued by the Board of Trustees.
Federal Income Taxes. Each Fund is treated as a separate entity and intends to
continue to qualify as a "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986 and to distribute all of its taxable income to
its shareholders. Therefore, no federal income or excise tax provision is
required. At October 31, 1996, the International Equity Fund had a net tax basis
capital loss carryforward available to offset future capital gains, if any, of
approximately $330,000, of which $24,000 will expire on October 31, 2003, and
$306,000 will expire on October 31, 2004.
Dividends and Capital Gain Distributions. Distributions of net investment income
and net realized gains are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments for foreign currency
transactions for the International Equity Fund and differing cost basis for
securities sold for the Small Cap Equity Fund. These distributions by each Fund
will be made annually in December. Additional distributions may be made by each
Fund to the extent necessary to avoid the payment of a 4% excise tax.
21
<PAGE>
1838 INVESTMENT ADVISORS FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED APRIL 30, 1997
Note 2 -- Significant Accounting Policies -- continued
Deferred Organizational Costs. Costs incurred by the International Equity Fund
in connection with the initial registration and public offering of shares have
been deferred and are being amortized on a straight-line basis over a five-year
period beginning on the date that the Fund commenced operations.
Foreign Currency Translations. The books and records of the International Equity
Fund are maintained in U.S. dollars. Foreign currency amounts are translated
into U.S. dollars on the following basis:
(i) market value of investment securities, assets and liabilities at the
daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on the
respective dates of such transactions.
The International Equity Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized between the trade and settlement dates on securities
transactions, the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at the end of the fiscal
period, resulting from changes in exchange rates.
Forward Foreign Currency Exchange Contracts. In connection with portfolio
purchases and sales of securities denominated in a foreign currency, the
International Equity Fund may enter into forward foreign currency exchange
contracts. Additionally, the International Equity Fund may enter into these
contracts to hedge certain foreign currency assets. Foreign currency exchange
contracts are recorded at market value. Certain risks may arise upon entering
into these contracts from the potential inability of counterparties to meet the
terms of their contracts. Realized gains or losses arising from such
transactions are included in net realized gain (loss) from foreign currency
transactions.
Use of Estimates in the Preparation of Financial Statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that may affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Other. Investment security transactions are accounted for on a trade date basis.
Each Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on an accrual basis.
22
<PAGE>
1838 INVESTMENT ADVISORS FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED APRIL 30, 1997
Note 3 -- Purchases and Sales of Investment Securities -- During the six-month
period ended April 30, 1997, purchases and sales of investment securities
(excluding short-term investments) aggregated as follows:
International Small Cap
Equity Fund Equity Fund
------------- -----------
Purchases................... $21,880,139 $16,275,338
Sales....................... 19,103,543 3,468,277
Note 4 -- Advisory Fee and Other Transactions with Affiliates -- The Trust, on
behalf of each Fund, employs 1838 Investment Advisors, L.P. (the "Investment
Adviser"), a Delaware limited partnership and registered investment adviser
under the 1940 Act, to furnish investment advisory services to the Funds
pursuant to an Investment Advisory Agreement with the Trust. The Investment
Adviser supervises the investments of the assets of each Fund in accordance with
each Fund's investment objective, policies and restrictions.
The Trust pays the Investment Adviser a monthly fee at the annual rate of 0.75%
of the average daily net assets of each Fund. The Investment Adviser has
voluntarily agreed to waive its advisory fee or reimburse each Fund monthly to
the extent that each Fund's total operating expenses will exceed 1.25% of the
average daily net assets of each Fund. This undertaking may be rescinded at any
time in the future.
The following table summarizes the advisory fees for the six-month period ended
April 30, 1997:
<TABLE>
<CAPTION>
Gross Advisory Fee Reimbursement
Advisory Fee Waiver From Advisor
------------ ------------ -------------
<S> <C> <C> <C>
International Equity Fund............ $168,222 $37,397 --
Small Cap Equity Fund................ 51,463 51,463 $16,289
</TABLE>
Rodney Square Management Corporation ("RSMC"), a wholly owned subsidiary of
Wilmington Trust Company ("WTC"), serves as Administrator to the Trust pursuant
to an Administration Agreement with the Trust on behalf of each Fund. As
Administrator, RSMC is responsible for services such as financial reporting,
compliance monitoring and corporate management. For the services provided, RSMC
receives a monthly administration fee from the Trust at the annual rate of 0.15%
of the average daily net assets of the Trust on the first $50 million; 0.10% of
such assets in excess of $50 million to $100 million; plus 0.07% of such assets
in excess of $100 million to $200 million; and 0.05% of such assets in excess of
$200 million. Each series pays its pro-rata portion based upon total Trust
assets. Such fees are subject to a minimum fee of $50,000 per year for one
series and $15,000 minimum per year for each additional portfolio added to a
series. For the six-month period ended April 30, 1997, RSMC's administration
fees amounted to $24,795 per Fund. At April 30, 1997, Administration fees
payable to RSMC amounted to $4,110 per Fund.
23
<PAGE>
1838 INVESTMENT ADVISORS FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED APRIL 30, 1997
Note 4 -- Advisory Fee and Other Transactions with Affiliates -- continued
Rodney Square Distributors, Inc. ("RSD"), a wholly owned subsidiary of WTC, has
been engaged pursuant to a Distribution Agreement with the Trust to assist in
securing purchasers for shares of each Fund. RSD also directly, or through its
affiliates, provides investor support services. RSD receives no compensation for
distribution of shares of the Funds, except for reimbursement of out-of-pocket
expenses. There are no expenses payable to RSD by the Funds for the six-month
period ended April 30, 1997.
RSMC serves as Accounting Agent to the Funds. As Accounting Agent, RSMC
determines each Fund's net asset value per share and provides accounting
services to the Funds pursuant to an Accounting Services Agreement with the
Trust. For the six-month period ended April 30, 1997, Accounting service fees
payable to RSMC amounted to $5,086 for the International Equity Fund and $3,288
for the Small Cap Equity Fund.
RSMC also serves as the Fund's transfer agent pursuant to a Transfer Agency
Agreement with the Trust. For these services, RSMC receives a monthly fee
computed on the basis of the number of shareholder accounts that the Transfer
Agent maintains for each Fund during the month, and is reimbursed for
out-of-pocket expenses. For the six-month period ended April 30, 1997, Transfer
Agent fees payable to RSMC amounted to $1,850 for the International Equity Fund
and $1,500 for the Small Cap Equity Fund.
The Trustees of the Trust who are "interested persons" of the Trust, the
Investment Adviser or its affiliates and all personnel of the Trust or the
Investment Adviser performing services related to research, statistical and
investment activities are paid by the Investment Adviser or its affiliates.
There are no fees or expenses payable to the "non-interested" Trustees.
Note 5 -- Fund Share Transactions -- At April 30, 1997, there were an unlimited
number of shares of beneficial interest with a $0.001 par value, authorized. The
following table summarizes the activity in shares of each Fund:
1838 International Equity Fund
<TABLE>
<CAPTION>
For the Six-Month Period
Ended April 30,1997 For the Fiscal Year
(Unaudited) Ended October 31, 1996
----------------------------- ------------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold......................... 347,444 $ 3,768,159 2,653,604 $ 27,246,882
Shares issued to shareholders in
reinvestment of distributions.... 12,343 133,064 7,882 78,427
Shares redeemed..................... (39,213) (425,492) (460,886) (4,701,462)
------- ----------- --------- ------------
Net increase ....................... 320,574 $ 3,475,731 2,200,600 $ 22,623,847
=========== ============
Shares outstanding:
Beginning of period.............. 3,945,864 1,745,264
--------- ---------
End of period.................... 4,266,438 3,945,864
========= =========
</TABLE>
24
<PAGE>
1838 INVESTMENT ADVISORS FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED APRIL 30, 1997
Note 5 -- Fund Share Transactions -- continued
1838 Small Cap Equity Fund
<TABLE>
<CAPTION>
For the Six-Month Period For the Period June 17,1996
Ended April 30, 1997 (Commencement of Operations)
(Unaudited) Through October 31, 1996
------------------------------ ----------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold......................... 1,342,037 $ 13,839,471 596,571 $ 5,598,237
Shares issued to shareholders in
reinvestment of distributions.... 6,772 67,511 0 0
Shares redeemed..................... (60,576) (626,919) (29,602) (271,838)
--------- ------------ ------- ------------
Net increase ....................... 1,288,233 $ 13,280,063 566,969 $ 5,326,399
============ ============
Shares outstanding:
Beginning of period.............. 566,969 0
--------- -------
End of period.................... 1,855,202 566,969
========= =======
</TABLE>
Note 6 -- Commitments -- As of April 30, 1997, the International Equity Fund had
no forward foreign currency exchange contracts.
25
<PAGE>
INVESTMENT ADVISER
------------------
1838 INVESTMENT ADVISORS, L.P.
FIVE RADNOR CORPORATE CENTER
SUITE 320
100 MATSONFORD ROAD
RADNOR, PA 19087
UNDERWRITER
-----------
RODNEY SQUARE DISTRIBUTORS, INC.
RODNEY SQUARE NORTH
1100 N. MARKET STREET
WILMINGTON, DE 19890
SHAREHOLDER SERVICES
--------------------
RODNEY SQUARE MANAGEMENT CORPORATION
RODNEY SQUARE NORTH
1100 N. MARKET STREET
WILMINGTON, DE 19890
CUSTODIANS
----------
BANKERS TRUST COMPANY
280 PARK AVENUE
NEW YORK, NY 10017
WILMINGTON TRUST COMPANY
RODNEY SQUARE NORTH
1100 N. MARKET STREET
WILMINGTON, DE 19890
LEGAL COUNSEL
-------------
STRADLEY, RONON, STEVENS & YOUNG L.L.P.
2600 ONE COMMERCE SQUARE
PHILADELPHIA, PA 19103
AUDITORS
--------
COOPERS & LYBRAND L.L.P.
2400 ELEVEN PENN CENTER
PHILADELPHIA, PA 19103
ET06
<PAGE>
1838
INVESTMENT ADVISORS FUNDS
INTERNATIONAL EQUITY FUND
SMALL CAP EQUITY FUND
SEMI-ANNUAL REPORT
APRIL 30, 1997
<PAGE>
