CHASE
GROWTH
FUND
Semi - Annual
Report
dated March 31, 1999
----------
Chase Investment Counsel Corp.
300 Preston Avenue
Suite 403
Charlottesville, Virginia 22902-5091
Advisor: 804-293-9104
Shareholder Servicing: 888-861-7556
<PAGE>
CHASE GROWTH FUND
May 5, 1999
Dear Fellow Shareholders:
[PHOTO OF DERWOOD S. CHASE, JR.]
Let me start our Semi-Annual review for the period ended March 31, 1999 by
welcoming our new shareholders. As I write, 150 shareholders have $6.7 million
invested in our new Chase Growth Fund (inCGFld). We appreciate the trust each of
you has placed in our management and we are working very hard to earn your
continued confidence.
For the period ended March 31, 1999 our Fund enjoyed a (before and after
tax) total return of 21.45% compared with 18.44% for the Standard & Poor(TM)s
i.500lP Composite Stock Price Index (the itS&P 500lP) and 17.52% for the Lipper
30 Growth Fund Index. On March 31, 92% of our Fund was invested in 32 stocks.
Our heaviest industry concentrations were in Computer Hardware, Software and
Services, Retail, Financial Services (including Insurance), Drugs and Leisure
Time. During the last six months our best performing stocks were EMC Corp.
+122.7%, TJX Companies +90.9%, Cisco Systems +77.3%, Wal-Mart Stores +68.8%,
Microsoft +62.9%, Lexmark International +61.4%, Home Depot +57.6%, American
International Group +53.9%, Ross Stores +53.1% and Carnival Corp. +52.7%.
Several new purchases during the period also helped performance with MCI
Worldcom +117.8%, Harley Davidson +46.4% and Biogen +44%.
We are a bottom-up stock picking firm. Our investment process combines
fundamental, quantitative, and technical research. We seek good quality
companies that are leaders in their industries and enjoy above average,
sustainable earnings growth, strong balance sheets, and reasonable prices. We
believe that the CGF companies represent relatively outstanding investment
opportunities. In the table below, we compare the characteristics of our
Fund(TM)s stocks to the S&P 500. On average the CGF stocks have enjoyed more
consistent and substantially higher five year earnings growth rates of 24% vs.
15% for the S&P 500. They are significantly more profitable with a Return on
Equity of 32% vs. 20%, and have stronger balance sheets with Debt to Total
Capital of 13% vs. 33%, yet they sell at only a moderate 23% premium to the S&P
500(TM)s price/earnings multiple based on 1999 estimated earnings. Though
pricey, our stocks are selling at only 1.58x their five year historical growth
rates compared to 2.05x for the S&P 500.
CHASE GROWTH FUND STOCKS VS. S&P 500
March 31, 1999 Chase Growth Fund Stocks S&P 500
- -------------- ------------------------ -------
Last 5 Year Earnings Growth 24% 15%
Return on Equity 32% 20%
Debt/Total Capital 13% 33%
Reinvestment Rate 27% 12%
Weighted Avg. Capitalization (Billions) 94.4 101.3
Price/Earnings Estimated '99 37.8 30.8
Weighted Avg. Beta (Volatility) 1.02 1.00
Source: Chase Investment Counsel. This information is based on certain
assumptions and historical data and is not a prediction of future results for
the Fund or companies held in the Fund(TM)s portfolio. S&P 500 earnings are
based on reported figures after write-offs.
<PAGE>
The stock market continues to be a Supply/Demand driven market with
liquidity being much more important than fundamentals. Mutual fund cash reserves
are low, but money flows (buying) continue to be fairly strong. Though off 33%
from'98, year-to-date equity fund net inflows were $46 billion. As long as
overall equity purchases (including corporate purchases of their own shares)
exceed selling and new stock offerings, supply/demand dynamics remain bullish.
It usually does not pay to fight the Federal Reserve when they are expanding the
money supply. At these levels we expect the market to be more volatile and
sometime this year or next we should certainly expect a full fledged
intermediate term correction (15-20%). However, we are mindful of studies that
point out that completely withdrawing from stocks is very hazardous too. For
instance, in one forty year period if you had missed only 6% of the months (the
best ones) you would have missed 100% of the return in excess of T-bills. We
assume most of our shareholders have some reserves. Since the CGF is an equity
fund we are reluctant to stay below 90% invested, even when we are cautious.
Helped by the wealth effect of a strong stock market, retail sales and
the economy in general have been stronger than expected. Inflation and interest
rates remain low and corporate earnings growth is resuming. Worldwide excess
capacity, global deflation and substantial expenditures to solve Year 2000
problems are expected to continue placing pressure on profit margins. Fourth
quarter profits were only up a little over 2%, despite a 6% rise in GDP. With
GDP unexpectedly strong during the first quarter (up about 4%), earnings growth
seems to be accelerating. Some of the most outstanding long term growth stocks
are priced ahead of their corporate progress and are vulnerable to significant
short term corrections. We continue to emphasize "A" rated stocks with
volatility (beta) close to 1.02 in this period of unprecedentedly narrow
leadership.
In our 41st year, we are the oldest independent investment counsel firm
domiciled in Virginia. For our customized separate accounts, we manage $800
million for 70 clients in twenty states. We intend to continue serving a
relatively small number of separate accounts. The Chase Growth Fund is managed
by the same senior portfolio managers, David Scott and myself, that manage our
large separate accounts. As a smaller Fund, we have much more flexibility in
buying and selling a broad array of large and mid-cap stocks without a
significant market impact. As part of a new fund, shareholders are not buying
into a portfolio which already has substantial imbedded capital gain tax
liabilities on gains new shareholders did not even enjoy. There were no 1998
capital gains taxes for the CGF. We plan to manage it so as to reduce capital
gains taxes and we expect most future net capital gains will be long term.
As the largest CGF shareholder I can assure you that we will be working
very hard to find, analyze and invest in relatively attractive stocks. The
officers and employees of Chase Investment Counsel Corp., most of whom are
fellow shareholders, appreciate your confidence and we look forward to a long
investment relationship together.
TOP 10 HOLDINGS
1. EMC Corp. 6. Home Depot
2. Microsoft 7. Carnival Corp.
3. TJX Companies 8. Intel
4. American International Group 9. Wal-Mart Stores, Inc.
5. Schering-Plough Corp. 10. Lexmark International
/s/ Derwood S. Chase, Jr.
Derwood S. Chase, Jr., President
Chase Investment Counsel Corporation
<PAGE>
The S&P 500 Composite Stock Price Index is an unmanaged capitalization-weighted
index of 500 stocks designed to represent the broad domestic economy.
The Lipper 30 Growth Fund Index is comprised of the 30 largest growth funds
tracked by Lipper, Inc. Lipper, Inc. defines a growth fund as a fund that
normally invests in companies with long-term earnings expected to grow
significantly faster than earnings of the stocks represented in the major
unmanaged stock indices.
The Chase Growth Fund's annual average total return from inception on December
2, 1997 through March 31, 1999 was 28.08% (after capping expenses at 1.48% of
average net assets annually) compared to the S&P 500 and Lipper 30 Index average
annual total returns of 25.36% and 23.43%, respectively for the same period.
Performance Figures of the fund and indexes referenced represent past
performance and are not indicative of future performance of the fund or the
indexes. Share value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than the original investment. Indexes do no incur
expenses and are not available for investment.
The Fund is distributed by First Fund Distributors, Inc., Phoenix, AZ. Member
NASD.
<PAGE>
CHASE GROWTH FUND
PORTFOLIO OF INVESTMENTS AT MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 92.86% Market Value
- --------------------------------------------------------------------------------
ADVERTISING: 1.26%
1,000 The Interpublic Group of Companies, Inc................... $ 77,875
--------
AIRLINES: 1.91%
5,000 Comair Holdings, Inc...................................... 118,281
--------
AUTO/AUTO PARTS: 1.05%
3,000 Gentex Corp.*............................................. 64,688
--------
BIOTECHNOLOGY: 4.19%
950 Biogen Inc................................................ 108,567
1,700 Genentech, Inc.*.......................................... 150,663
--------
259,230
--------
BUILDING: 4.34%
4,304 The Home Depot, Inc....................................... 267,924
--------
COMPUTER - SEMICONDUCTORS: 4.04%
1,100 Intel Corporation......................................... 249,638
--------
COMPUTER HARDWARE: 5.79%
2,800 EMC Corporation*.......................................... 357,700
--------
COMPUTER NETWORKING: 3.28%
1,850 Cisco Systems, Inc........................................ 202,748
--------
COMPUTER SOFTWARE AND SERVICES: 11.15%
3,100 BMC Software, Inc.*....................................... 114,991
2,050 Lexmark International Group, Inc.*........................ 229,088
3,850 Microsoft Corporation*.................................... 344,936
--------
689,015
--------
DRUGS: 10.79%
2,600 Bristol-Myers Squibb Company.............................. 167,213
1,450 Pfizer, Inc............................................... 201,188
5,400 Schering-Plough Corporation............................... 298,688
--------
667,089
--------
ELECTRICAL EQUIPMENT: 1.64%
650 Nokia Corporation - ADR................................... 101,237
--------
4
<PAGE>
CHASE GROWTH FUND
PORTFOLIO OF INVESTMENTS AT MARCH 31, 1999 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
FINANCE/BANKS: 2.30%
1,600 Northern Trust Corporation.................................. $142,150
--------
FINANCIAL SERVICES: 3.91%
2,500 Federal National Mortgage Association*...................... 173,125
1,200 Federal Home Loan Mortgage Corporation*..................... 68,550
--------
241,675
--------
INSURANCE - LIFE/HEALTH: 1.31%
2,130 Protective Life Corporation................................. 80,674
--------
INSURANCE - PROPERTY/CASUALTY: 5.04%
2,580 American International Group, Inc........................... 311,213
--------
LEISURE TIME: 7.02%
5,500 Carnival Corporation........................................ 267,094
2,900 Harley-Davidson, Inc........................................ 166,750
--------
433,844
--------
MEDICAL SUPPLIES: 0.56%
1,300 STERIS Corporation.......................................... 34,613
--------
RETAIL: 5.93%
1,750 The Gap, Inc................................................ 117,797
2,700 Wal-Mart Stores, Inc........................................ 248,905
--------
366,702
--------
RETAIL - SPECIALTY: 6.66%
1,800 Ross Stores, Inc............................................ 78,694
9,800 The TJX Companies, Inc...................................... 333,199
--------
411,893
--------
RETAIL DRUG STORES: 3.57%
7,800 Walgreen Co................................................. 220,349
--------
RETAIL - GROCERS: 5.84%
2,900 Albertson's, Inc............................................ 157,506
3,400 The Kroger Co.*............................................. 203,575
--------
361,081
--------
TELECOMMUNICATIONS: 1.29%
900 MCI WORLDCOM, Inc.*......................................... $ 79,677
--------
5
<PAGE>
CHASE GROWTH FUND
PORTFOLIO OF INVESTMENTS AT MARCH 31, 1999 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Total Common Stocks (cost $3,976,051)............ $5,739,296
----------
Principal Amount SHORT-TERM INVESTMENTS: 9.90%
- --------------------------------------------------------------------------------
$611,667 Star Treasury Fund, 4.95%, (cost $611,667)....... 611,667
----------
Total Investments in Securities (cost
$4,587,718+): 102.76% ......................... 6,350,963
Liabilities in excess of Other Assets: (2.76)%... (170,610)
----------
TOTAL NET ASSETS: 100.0% ........................ $6,180,353
==========
+At March 31, 1999, the cost of securities for Federal tax purposes was the same
as the basis for financial reporting. Unrealized appreciation and depreciation
of securities were as follows:
Gross unrealized appreciation.................. $1,781,353
Gross unrealized depreciation.................. (18,109)
----------
Net unrealized appreciation.............. $1,763,244
==========
See Notes to Financial Statements.
6
<PAGE>
CHASE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (identified cost $4,587,718) $6,350,963
Receivables
Due from Advisor ............................................... 5,618
Dividends and interest ......................................... 2,778
Prepaid expenses ............................................... 6,967
----------
Total assets .............................................. 6,366,325
----------
LIABILITIES
Payables
Administration fees ............................................ 2,598
Investment securities purchased ................................ 173,999
Accrued expenses ............................................... 9,376
----------
Total liabilities ......................................... 185,972
----------
NET ASSETS ....................................................... $6,180,353
==========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
($6,180,353/445,505 shares outstanding;
unlimited number of shares authorized, par value $0.01) ...... $ 13.87
==========
SOURCE OF NET ASSETS
Paid-in capital ................................................ $4,822,989
Dividends in excess of net investment loss ..................... (5,569)
Net investment loss ............................................ (15,198)
Accumulated net realized loss on investments ................... (364,373)
Net unrealized appreciation on investments ..................... 1,742,504
----------
Net assets ................................................ $6,180,353
==========
See Notes to Financial Statements.
7
<PAGE>
CHASE GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends ................................................... $ 11,802
Interest .................................................... 11,613
-----------
Total income ............................................ 23,415
-----------
Expenses
Advisory fees (Note 3) ...................................... 26,089
Administration fees (Note 3) ................................ 14,959
Professional fees ........................................... 12,865
Fund accounting fees ........................................ 3,982
Other ....................................................... 3,948
Transfer agent fees ......................................... 3,740
Custody fees ................................................ 2,043
Reports to shareholders ..................................... 1,496
Trustee fees ................................................ 1,228
Registration fees ........................................... 783
Total expenses ............................................ 71,133
Less, advisory fee waiver and absorption (Note 3) ......... (32,521)
-----------
Net expenses .............................................. 38,612
-----------
NET INVESTMENT LOSS ..................................... (15,198)
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from security transactions ................ (163,371)
Net change in unrealized appreciation on investments ........ 1,480,486
-----------
Net realized and unrealized gain on investments ........... 1,317,115
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $ 1,301,917
===========
See Notes to Financial Statements.
8
<PAGE>
CHASE GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Six Months December 2, 1997*
Ended through
March 31, 1999# September 30, 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment loss ....................................... $ (15,198) $ (4,214)
Net realized loss on security transactions ................ (163,371) (191,647)
Net change in unrealized appreciation on investments ...... 1,480,486 222,098
---------- ----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,301,917 26,237
---------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................................ -- (1,355)
From net realized gains ................................... -- --
---------- ----------
Total dividends and distribution to shareholders ....... -- (1,355)
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in
outstanding shares(a) .................................... 837,889 3,954,535
Cost basis adjustment ..................................... 30,565 --
---------- ----------
TOTAL INCREASE IN NET ASSETS ........................... 2,170,371 3,979,417
NET ASSETS
Beginning of period ......................................... 4,009,982 30,565(b)
---------- ----------
END OF PERIOD ............................................... $6,180,353 $4,009,982
========== ==========
(a) A summary of capital shares transactions is as follows:
Six Months December 2, 1997*
Ended through
March 31, 1999# September 30, 1998
---------------------- -----------------------
Shares Value Shares Value
------ ----- ------ -----
Shares sold ...................................... 92,223 $1,121,067 378,450 $3,987,216(b)
Shares issued on reinvestments of
distributions.................................. -- -- 134 1,355
Shares redeemed................................... (22,061) (283,178) (3,241) (34,036)
------- ---------- ------- ----------
Net increase...................................... 70,162 $ 837,889 375,343 $3,954,535
======= ========== ======= ==========
</TABLE>
* Commencement of operations.
# Unaudited.
(b) Excludes the unrealized gain on the tax-free issuance of Fund shares for
portfolio securities. The unrealized gain of $30,565 transferred into the Fund
was credited to unrealized gain.
See Notes to Financial Statements.
9
<PAGE>
CHASE GROWTH FUND
FINANCIAL HIGHLIGHTS
PER SHARE OPERATING PERFORMANCE
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Six Months December 2, 1997*
Ended through
March 31, 1999# September 30, 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period ......................... $10.68 $10.00
------ ------
Income from investment operations:
Net investment loss ....................................... -- (0.01)
Net realized and unrealized (loss) gain on investments..... 3.19 0.70
------ ------
Total from investment operations ............................. 3.19 0.69
------ ------
Less distributions:
From net investment income ................................ -- (0.01)
------ ------
Total from distributions ..................................... -- (0.01)
------ ------
Net asset value, end of period ............................... $13.87 $10.68
TOTAL RETURN ................................................. 29.87% 6.91%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) ........................ $6,180 $4,010
Ratio of expenses to average net assets
Before expense reimbursement .............................. 2.72%+ 3.98%+
After expense reimbursement ............................... 1.48%+ 1.47%+
Ratio of net investment loss to average net assets
After expense reimbursement ............................... (0.58%)+ (0.17%)+
Portfolio turnover rate ...................................... 18.91% 54.49%
</TABLE>
* Commencement of operations.
++ Not Annualized.
+ Annualized.
# Unaudited.
See Notes to Financial Statements.
10
<PAGE>
CHASE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Chase Growth Fund (the "Fund") is a series of shares of Advisors
Series Trust (the "Trust"), which is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. The Fund began
operations on December 2, 1997. The Fund's objective is growth of capital.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION: The Fund's investments are carried at fair
value. Securities listed on an exchange or quoted on a National
Market System are valued at the last sale price. Other securities
are valued at the mean between the last bid and asked prices.
Securities for which market quotations are not readily available, if
any, are valued following procedures approved by the Board of
Trustees. Short-term investments are valued at amortized cost, which
approximates market value.
B. FEDERAL INCOME TAXES: It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no federal income tax
provision is required.
C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security
transactions are accounted for on the trade date. Dividend income
and distributions to shareholders are recorded on the ex-dividend
date. Realized gains and losses on securities sold are determined on
the basis of identified cost.
D. USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and
decreases in net assets during the reporting period. Actual results
could differ from those estimates.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
For the six months ended March 31, 1999, Chase Investment Counsel
Corporation (the "Advisor") provided the Fund with investment management
services under an Investment Advisory Agreement. The Advisor furnished all
investment advice, office space, facilities, and provides most of the personnel
needed by the Fund. As compensation for its services, the Advisor is entitled to
a monthly fee at the annual rate of 1.00% based upon the average daily net
assets of the Fund. For the six months ended March 31, 1999, the Fund incurred
$25,919 in Advisory Fees.
The Fund is responsible for its own operating expenses. The Advisor has
agreed to reduce fees payable to it by the Fund and to pay Fund operating
expenses to the extent necessary to limit the Fund's aggregate annual operating
expenses to 1.48% of average net assets (the "expense cap"). Any such reductions
made by the Advisor in its fees or payment of expenses which are the Fund's
obligation are subject to reimbursement by the Fund to the Advisor, if so
requested by the Advisor, in subsequent fiscal years if the aggregate amount
11
<PAGE>
CHASE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
actually paid by the Fund toward the operating expenses for such fiscal year
(taking into account the reimbursement) does not exceed 1.48% of average net
assets annually. The Advisor is permitted to be reimbursed only for fee
reductions and expense payments made in the previous three fiscal years, but is
permitted to look back five years and four years, respectively, during the
initial six years and seventh year of the Fund's operations. Any such
reimbursement is also contingent upon Board of Trustees review and approval at
the time the reimbursement is made. Such reimbursement may not be paid prior to
the Fund's payment of current ordinary operating expenses. For the six months
ended March 31, 1999, the Advisor reduced its fees and absorbed Fund expenses in
the amount of $32,521; no amounts were reimbursed to the Advisor.
Investment Company Administration, L.L.C. (the "Administrator") acts as
the Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of the Fund's expenses and reviews the
Fund's expense accruals. For its services, the Administrator receives a monthly
fee at the annual rate of 0.20% of average daily net assets, subject to a
minimum fee of $30,000 annually.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
Certain officers of the Fund are also officers and/or directors of the
Administrator and the Distributor.
NOTE 4 - SECURITIES TRANSACTIONS
For the six months ended March 31, 1999 the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, were
$2,072,670 and $894,661, respectively. For federal income tax purposes, the Fund
has a capital loss carryforward of $190,969 available to offset realized gains.
This carryforward expires in 2006.
12
<PAGE>
ADVISOR
Chase Investment Counsel Corp.
300 Preston Avenue, Suite 403
Charlottesville, Virginia 22902-5091
===========
DISTRIBUTOR
First Fund Distributors, Inc.
4455 E. Camelback Road, Suite 261-E
Phoenix, Arizona 85018
===========
CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street, M/L 6118
Cincinnati, Ohio 45202
===========
TRANSFER AGENT
American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
===========
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street
San Francisco, California 94104
