-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LMES8zaLZU5XpiwOMLQn9fI040iMTUb9m+D2zcg9RFjCWrIwq0doTmLzTQH0GFig OZ0mtZs91Ry2l/3DpwmCmA== 0000950115-97-001027.txt : 19970703 0000950115-97-001027.hdr.sgml : 19970703 ACCESSION NUMBER: 0000950115-97-001027 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970702 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: 1838 INVESTMENT ADVISORS FUNDS CENTRAL INDEX KEY: 0000933996 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 232794406 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08902 FILM NUMBER: 97635575 BUSINESS ADDRESS: STREET 1: FIVE RADNOR CORPORATE CENTER SUITE 320 STREET 2: 100 MATSONFORD ROAD CITY: RADNOR STATE: PA ZIP: 19087 BUSINESS PHONE: 6102934300 MAIL ADDRESS: STREET 1: FIVE RADNOR CORPORATE CENTER SUITE 320 STREET 2: 100 MATSONFORD ROAD CITY: RADNOR STATE: PA ZIP: 19087 N-30D 1 SEMI-ANNUAL REPORT 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 1838 INTERNATIONAL EQUITY FUND SCHEDULE OF NET ASSETS (UNAUDITED) APRIL 30, 1997 - --------------------------------------------------------------------------------
Value Shares (Note 2) ------ -------- 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
See notes to financial statements. 2 1838 INTERNATIONAL EQUITY FUND SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997 - --------------------------------------------------------------------------------
Value Shares (Note 2) ------ -------- 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 --------------
See notes to financial statements. 3 1838 INTERNATIONAL EQUITY FUND SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997 - --------------------------------------------------------------------------------
Value Shares (Note 2) ------ -------- 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
See notes to financial statements. 4 1838 INTERNATIONAL EQUITY FUND SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997 - --------------------------------------------------------------------------------
Value Shares (Note 2) ------ -------- 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 ==============
- ---------- * 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 1838 INTERNATIONAL EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 1997
Assets: 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 ======
See notes to financial statements. 6 1838 INTERNATIONAL EQUITY FUND STATEMENT OF OPERATIONS
For the Six-Month Period Ended April 30, 1997 (Unaudited) ------------------------- 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 =============
See notes to financial statements. 7 1838 INTERNATIONAL EQUITY FUND STATEMENTS OF CHANGES IN NET ASSETS
For the Six-Month Period Ended For the Fiscal April 30, 1997 Year Ended (Unaudited) October 31, 1996 ----------------- ---------------- 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 ============ =============
See notes to financial statements. 8 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.
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 ----------------- ---------------- ----------------- 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
+ 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 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 1838 SMALL CAP EQUITY FUND - --------------------------------------------------------------------------------
Summary Characteristics* ---------------------------------------------------------------------- Average Average Average Market Average EPS Growth Return on Debt/Total Cap** P/E Ratio 5 Year Equity Capitalization -------- --------- ---------- --------- -------------- 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%
* 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 1838 SMALL CAP EQUITY FUND SCHEDULE OF NET ASSETS (UNAUDITED) APRIL 30, 1997 - --------------------------------------------------------------------------------
Value Shares (Note 2) ------ -------- 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 --------------
See notes to financial statements. 12 1838 SMALL CAP EQUITY FUND SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997 - --------------------------------------------------------------------------------
Value Shares (Note 2) ------ -------- 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
See notes to financial statements. 13 1838 SMALL CAP EQUITY FUND SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997 - --------------------------------------------------------------------------------
Value Shares (Note 2) ------ -------- 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
See notes to financial statements. 14 1838 SMALL CAP EQUITY FUND SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997 - --------------------------------------------------------------------------------
Value Shares (Note 2) ------ -------- 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 --------------
See notes to financial statements. 15 1838 SMALL CAP EQUITY FUND SCHEDULE OF NET ASSETS (UNAUDITED) -- CONTINUED APRIL 30, 1997 - --------------------------------------------------------------------------------
Value Shares (Note 2) ------ -------- 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 ==============
* 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 1838 SMALL CAP EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 1997 Assets: 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 ======
See notes to financial statements. 17 1838 SMALL CAP EQUITY FUND STATEMENT OF OPERATIONS
For the Six-Month Period Ended April 30, 1997 (Unaudited) ------------------------ Investment Income: 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 =========
See notes to financial statements. 18 1838 SMALL CAP EQUITY FUND STATEMENT OF CHANGES IN NET ASSETS
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: 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 ============ ============
+ Commencement of Operations. See notes to financial statements. 19 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.
For the Six-Month For the Period Period Ended June 17, 1996+ April 30, 1997 through (Unaudited) October 31, 1996 ----------------- ---------------- 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
+ 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 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 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 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:
Gross Advisory Fee Reimbursement Advisory Fee Waiver From Advisor ------------ ------------ ------------- International Equity Fund............ $168,222 $37,397 -- Small Cap Equity Fund................ 51,463 51,463 $16,289
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 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
For the Six-Month Period Ended April 30,1997 For the Fiscal Year (Unaudited) Ended October 31, 1996 ----------------------------- ------------------------------ Shares Amount Shares Amount ------ ------ ------ ------ 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 ========= =========
24 1838 INVESTMENT ADVISORS FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED APRIL 30, 1997 Note 5 -- Fund Share Transactions -- continued 1838 Small Cap Equity Fund
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 ------ ------ ------ ------ 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 ========= =======
Note 6 -- Commitments -- As of April 30, 1997, the International Equity Fund had no forward foreign currency exchange contracts. 25 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 1838 INVESTMENT ADVISORS FUNDS INTERNATIONAL EQUITY FUND SMALL CAP EQUITY FUND SEMI-ANNUAL REPORT APRIL 30, 1997 -----END PRIVACY-ENHANCED MESSAGE-----