LIBERTY FREEDOM
FUND
ANNUAL REPORT
FOR THE YEAR ENDED
MAY 31, 1999
<PAGE>
LIBERTY FREEDOM FUND
Dear Shareholder:
We are pleased to provide you with our first full year's results as of June 30,
1999. From our inception on June 29, 1998 through June 30, 1999, the Fund
returned 14.55% (10.57% when including the effect of the sales charge), while
assets grew to $4.1 million.
This has been an eventful year. Shortly after opening the Fund, the stock market
- - as represented by the S&P 500 Index - experienced one of its worst periods of
performance, losing 15.35% in July and August of 1998. By year-end, however,
these losses were recouped. During the first quarter of 1999, we witnessed a
flat period for value stocks. The second quarter was the charm. Investors found
favor with the large, stable corporations that comprise the S&P 100 Index. As a
result, our Fund ended its inaugural year on a positive note and outperformed
its benchmark - the S&P 500 Barra Value index which returned 12.23%.
As we move forward, we will continue to adhere to our investment philosophy
which seeks to maximize value while minimizing risk.
Cordially,
/s/ Greg St. Etienne
Greg St. Etienne
Advisor
<PAGE>
LIBERTY FREEDOM FUND
LIBERTY FREEDOM FUND, CLASS A SHARES
Comparison of the change in value of a $10,000 investment in the Liberty Freedom
Fund, Class A Shares versus the S&P 500 Composite Stock Price, the S&P 500 Barra
Value and the Lipper Growth & Income Fund Indexes.
Liberty Freedom Fund, S&P 500 Composite
Class A Shares Stock Price Index
--------------------- -----------------
29-Jun-98 $10,000 $10,000
31-Jul-98 $9,295 $9,896
31-Aug-98 $8,234 $8,465
30-Sep-98 $8,851 $9,005
31-Oct-98 $9,421 $9,742
30-Nov-98 $9,904 $10,330
31-Dec-98 $9,915 $10,926
31-Jan-99 $9,683 $11,386
28-Feb-99 $9,538 $11,026
31-Mar-99 $9,741 $11,466
30-Apr-99 $11,153 $11,913
31-May-99 $11,057 $11,626
S&P 500 Lipper Growth &
Barra Value Index Income Fund Index
--------------------- -----------------
29-Jun-98 $10,000 $10,000
31-Jul-98 $9,783 $9,755
31-Aug-98 $8,210 $8,377
30-Sep-98 $8,709 $8,753
31-Oct-98 $9,391 $9,389
30-Nov-98 $9,880 $9,841
31-Dec-98 $10,227 $10,176
31-Jan-99 $10,434 $10,272
28-Feb-99 $10,209 $10,045
31-Mar-99 $10,519 $10,392
30-Apr-99 $11,425 $11,070
31-May-99 $11,223 $10,905
Average Annual Total Return
Period ended May 31, 1999
Since inception (6/29/98) 10.57%
Returns shown reflect the effect of the maximum sales load of 3.50%.
Past performance is not predictive of future performance.
The S&P 500 Stock Index is a broad market capitalization-weighted index of 500
stocks designed to represent the broad domestic economy.
The S&P 500/Barra Value Index is an unmanaged capitalization-weighted index that
contains approximately 50% of the stocks in the S&P 500 with lower price-to-book
ratios.
The Lipper Growth & Income Fund Index is comprised of the 30 largest growth and
income funds. Growth and Income funds combine the growth-of-earnings orientation
and an income requirement for level and/or rising dividends.
Indexes do not incur expenses and are not available for direct investment.
<PAGE>
LIBERTY FREEDOM FUND
SCHEDULE OF INVESTMENTS AT MAY 31, 1999
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 96.80% Market Value
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE: 3.08%
1,900 General Dynamics Corporation........................... $ 124,925
-----------
AUTO PARTS & EQUIPMENT: 5.39%
1,398 Delphi Automotive Systems Corporation.................. 27,433
3,200 The Goodyear Tire & Rubber Company..................... 191,000
-----------
218,433
-----------
AUTOMOBILES: 3.40%
2,000 General Motors Corporation............................. 138,000
-----------
BANKS - MAJOR REGIONAL: 2.66%
2,700 Wells Fargo & Company.................................. 108,000
-----------
BANKS - MONEY CENTER: 4.47%
1,300 J.P. Morgan & Co., Incorporated........................ 181,106
-----------
CHEMICALS: 8.83%
2,500 E. I. du Pont de Nemours and Company................... 163,594
1,200 The Dow Chemical Company............................... 145,800
950 Union Carbide Corporation.............................. 48,747
-----------
358,141
-----------
CHEMICALS - SPECIALTY: 2.53%
2,500 International Flavors & Fragrances, Inc................ 102,812
-----------
COMMUNICATIONS EQUIPMENT: 2.75%
2,950 Harris Corporation..................................... 111,547
-----------
ELECTRIC COMPANIES: 5.08%
2,300 American Electric Power Company, Inc................... 99,763
3,750 The Southern Company................................... 106,406
-----------
206,169
-----------
ELECTRICAL EQUIPMENT: 3.50%
1,500 Honeywell, Inc......................................... 141,937
-----------
3
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LIBERTY FREEDOM FUND
SCHEDULE OF INVESTMENTS AT MAY 31, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
ENGINEERING AND CONSTRUCTION: 2.34%
2,550 Fluor Corporation...................................... $ 94,987
-----------
FINANCIAL - DIVERSIFIED: 6.88%
1,100 American Express Company............................... 133,306
2,200 Citigroup Inc.......................................... 145,750
-----------
279,056
-----------
INSURANCE - MULTI-LINE: 6.26%
1,400 CIGNA Corporation...................................... 130,550
1,950 The Hartford Financial Services Group, Inc............. 123,338
-----------
253,888
-----------
LEISURE TIME - PRODUCTS: 2.60%
4,400 Brunswick Corporation.................................. 105,600
-----------
MACHINERY - DIVERSIFIED: 3.79%
2,800 Caterpillar Inc........................................ 153,650
-----------
MANUFACTURING - DIVERSIFIED: 4.76%
2,250 Minnesota Mining and Manufacturing Company............. 192,938
-----------
OIL - DOMESTIC INTEGRATED: 3.40%
1,650 Atlantic Richfield Company............................. 138,084
-----------
OIL - INTERNATIONAL INTEGRATED: 5.70%
1,200 Chevron Corporation.................................... 111,225
1,500 Exxon Corporation...................................... 119,813
-----------
231,038
-----------
PHOTOGRAPHY/IMAGING: 2.33%
1,400 Eastman Kodak Company.................................. 94,675
-----------
RAILROADS: 2.79%
3,450 Norfolk Southern Corporation........................... 112,988
-----------
4
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LIBERTY FREEDOM FUND
SCHEDULE OF INVESTMENTS AT MAY 31, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE: 3.89%
3,300 Sears, Roebuck and Co.................................. $ 157,781
-----------
RETAIL - SPECIALTY/APPAREL: 4.52%
3,750 The Limited, Inc....................................... 183,281
-----------
TELEPHONE: 2.70%
2,000 Bell Atlantic Corporation.............................. 109,500
-----------
TOBACCO: 3.15%
3,300 Philip Morris Companies Inc............................ 127,256
-----------
Total common stocks (cost $3,551,013).................. 3,925,792
-----------
Principal
Amount Short-term Investments: 2.65%
- -------------------------------------------------------------------------------
$107,616 Firstar Stellar Treasury Fund, 5.00%................... 107,616
-----------
Total Investments in Securities
(cost $3,658,628): 99.45%.............................. 4,033,408
Other Assets less Liabilities: 0.55%................... 22,458
-----------
TOTAL NET ASSETS: 100.00% ............................. $ 4,055,866
===========
+ At May 31, 1999, the cost of securities for Federal tax purposes was
$3,670,311. Gross unrealized appreciation and depreciation of securities were as
follows:
Gross unrealized appreciation ......................... $ 419,384
Gross unrealized depreciation ......................... (56,287)
-----------
Net unrealized appreciation ........................ $ 363,097
===========
5
<PAGE>
LIBERTY FREEDOM FUND
STATEMENT OF ASSETS AND LIABILITIES AT MAY 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (identified cost $3,658,628) $ 4,033,408
Receivables
Due from Advisor............................................ 6,310
Dividends and interest...................................... 14,516
Deferred Organization Cost..................................... 32,657
Prepaid expenses .............................................. 6,424
-----------
Total assets............................................. 4,093,315
-----------
LIABILITIES
Payables
Administration fees......................................... 2,549
Accrued expenses............................................... 34,900
-----------
Total liabilities........................................ 37,449
-----------
NET ASSETS........................................................ $ 4,055,866
===========
CLASS A - NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
$4,055,866/354,913 shares outstanding;
unlimited number of shares (par value $0.01) authorized........ $ 11.43
===========
CLASS A - OFFERING PRICE PER SHARE ($11.43 / 0.965)............... $ 11.84
===========
COMPONENTS OF NET ASSETS
Paid-in capital................................................ $ 3,569,855
Accumulated net investment income.............................. 13,267
Accumulated net realized gain on investments................... 97,964
Net unrealized appreciation on investments..................... 374,780
-----------
Net assets.................................................. $ 4,055,866
===========
See accompanying Notes to Financial Statements.
6
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LIBERTY FREEDOM FUND
STATEMENT OF OPERATIONS - FOR THE PERIOD FROM JUNE 29, 1998* THROUGH
MAY 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends................................................... $ 65,122
Interest.................................................... 5,059
-----------
Total income............................................. 70,181
-----------
Expenses
Administration fees (Note 3)................................ 27,534
Advisory fees (Note 3)...................................... 21,729
Custodian and accounting fees............................... 21,266
Professional fees........................................... 18,491
Transfer agent fees......................................... 15,604
Distribution fees (Class A) (Note 4)........................ 12,782
Reports to shareholders..................................... 11,015
Registration fees........................................... 9,238
Amortization of deferred organization costs................. 7,343
Shareholder servicing fees (Class A) (Note 4)............... 6,390
Trustees' fees.............................................. 3,772
Other ...................................................... 3,213
Insurance expense........................................... 1,735
-----------
Total expenses........................................... 160,112
Less, advisory fee waiver and absorption (Note 3)........ (106,397)
-----------
Net expenses............................................. 53,715
-----------
Net investment income................................. 16,466
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from security transactions................... 100,667
Net change in unrealized appreciation on investments........... 374,780
-----------
Net realized and unrealized gain on investments............. 475,447
-----------
Net Increase in net assets resulting from operations.. $ 491,913
===========
* Commencement of operations.
See accompanying Notes to Financial Statements.
7
<PAGE>
LIBERTY FREEDOM FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
June 29, 1998*
through
May 31, 1999
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment income ........................................ $ 16,466
Net realized gain from security transactions.................. 100,667
Net change in unrealized appreciation on investments.......... 374,780
-----------
Net increase in net assets resulting from operations....... 491,913
-----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................................... (3,199)
From net realized gain from security transactions............. (2,703)
-----------
Total Distributions........................................ (5,902)
-----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in
outstanding shares (Class A) (a)............................ 3,569,855
-----------
Total increase in net assets.................................. $ 4,055,866
===========
NET ASSETS
Beginning of period.............................................. --
-----------
End of period.................................................... $ 4,055,866
===========
(a) A summary of capital shares transactions is as follows:
June 29, 1998*
through
May 31, 1999
-------------------------
CLASS A Shares Value
- ------- ----------- -----------
Shares sold ......................................... 410,458 $ 4,116,516
Shares issued in reinvestment of distributions....... 565 5,617
Shares redeemed...................................... (56,110) (552,278)
----------- -----------
Net increase......................................... 354,913 $ 3,569,855
=========== ===========
* Commencement of operations.
See accompanying Notes to Financial Statements.
8
<PAGE>
LIBERTY FREEDOM FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
June 29, 1998*
through
May 31, 1999
- --------------------------------------------------------------------------------
Net asset value, beginning of period............................ $ 10.00
-----------
Income from investment operations:
Net investment income..................................... 0.05
Net realized and unrealized gain on investments........... 1.40
-----------
Total from investment operations................................ 1.45
-----------
Less distributions:
From net investment income................................ (0.01)
From net realized gain from security transactions......... (0.01)
-----------
Total distributions............................................. (0.02)
-----------
Net asset value, end of period.................................. $ 11.43
===========
Total return.................................................... 14.55%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands)........................... $ 4,056
Ratio of expenses to average net assets:
Before advisory fee waiver and absorption................. 6.24%+
After advisory fee waiver and absorption.................. 2.10%+
Ratio of net investment income to average net assets:
After advisory fee waiver and absorption.................. 0.64%+
Portfolio turnover rate......................................... 54.69%
* Commencement of operations.
+ Annualized.
++ Does not include sales load and is not annualized.
See accompanying Notes to Financial Statements.
9
<PAGE>
LIBERTY FREEDOM FUND
NOTES TO FINANCIAL STATEMENTS AT MAY 31, 1999
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Liberty Freedom 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 June 29, 1998. The Fund's primary investment objective is the
growth of capital. Its secondary objective is to provide current income. The
Fund uses a disciplined approach to select securities it believes are
undervalued, reasonably priced and have prospects for continued consistent
growth.
Shares of beneficial interest of the Fund are currently divided into two
classes, designated Class A Shares and Class I Shares. Each Class represents an
interest in the same portfolio. During the period ended May 31, 1999, Class I
was inactive.
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 that are primarily traded on a national securities exchange
shall be valued at the last sale price on the exchange on which they
are primarily traded on the day of valuation or, if there has been no
sale on such day, at the mean between the bid and asked prices.
Securities primarily traded in the NASDAQ National Market System for
which market quotations are readily available shall be valued at the
last sale price on the day of valuation, or if there has been no sale
on such day, at the mean between the bid and asked prices.
Over-the-counter ("OTC") securities which are not traded in the NASDAQ
National Market System shall be valued at the most recent trade price.
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. DEFERRED ORGANIZATION COSTS: The Fund has incurred expenses of $40,000
in connection with its organization. These costs have been deferred
and are being amortized on a straight-line basis over a period of
sixty months from the date the Fund commenced investment operations.
10
<PAGE>
LIBERTY FREEDOM FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
- --------------------------------------------------------------------------------
E. 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 period ended May 31, 1999, Liberty Bank and Trust Company (the
"Advisor") maintained overall responsibility for the Fund's assets and was
responsible for monitoring the day-to-day activities of the Sub-Advisor, The
Edgar Lomax Company. As compensation for its services, the Advisor is entitled
to a monthly fee at the annual rate of 0.25% based upon the average daily net
assets of the Fund. For the period ended May 31, 1999, The Edgar Lomax Company
(the "Sub-Advisor") provided the Fund with advice on buying and selling
securities and managing the investments of the Fund. As compensation for its
services, the Sub-Advisor is entitled to a monthly fee at the annual rate of
0.60% based upon the average daily net assets of the Fund.
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 Class A shares to an annual
operating expense of 2.10% 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
actually paid by the Fund toward the operating expenses for such fiscal year
(taking into account the reimbursement) does not exceed the applicable
limitation on Fund expenses. 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 period ended
May 31, 1999, the Advisor reduced its fees and absorbed Fund expenses in the
amount of $106,397; 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.
11
<PAGE>
LIBERTY FREEDOM FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
- --------------------------------------------------------------------------------
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 - DISTRIBUTION AND SHAREHOLDER SERVICING ARRANGEMENTS
The Trust has adopted a Distribution Plan (the "Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act. The Distribution Plan provides
that the Fund's Class A Shares pay a fee to the Advisor, acting as Distribution
Coordinator, at an annual rate of up to 0.50% of the average daily net assets of
the Fund. The expenses which the Fund may pay include the cost of preparing and
distributing prospectuses and other sales material, advertising and public
relations expenses, payments to financial intermediaries and compensation of
personnel involved in selling shares of the Fund. Payments made pursuant to the
Distribution Plan will represent compensation for distribution and service
activities, not reimbursement for specific expenses incurred. The Distribution
Plan allows excess distribution expenses to be carried forward for the following
three fiscal years.
The Trust has also adopted a Shareholder Servicing Plan (the "Servicing
Plan") which provides that the Fund's Class A Shares pay a fee to the Advisor at
an annual rate of up to 0.25% of the average daily net assets of the Fund, as
compensation for providing, or arranging for others to provide, certain
specified shareholders services to Class A shareholders. The Advisor will pay
certain banks, trust companies, broker-dealers and other financial
intermediaries (each a "Participating Organization") out of the fees the Advisor
receives from the Fund under the Servicing Plan to the extent that these
Participating Organizations perform shareholder servicing functions for Class A
shares owned from time to time by customers of the Participating Organization.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
For the period ended May 31, 1999, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $4,851,153 and
$1,400,807, respectively.
12
<PAGE>
LIBERTY FREEDOM FUND
INDEPENDENT AUDITOR'S REPORT
THE BOARD OF TRUSTEES AND SHAREHOLDERS
LIBERTY FREEDOM FUND
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments of the Liberty Freedom Fund, series of
Advisors Series Trust, as of May 31, 1999, and the related statement of
operations, changes in net assets and the financial highlights for the period
indicated in the accompanying financial statements. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with the generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1999, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Liberty Freedom Fund, series of Advisors Series Trust, as of May 31, 1999, the
results of its operations, the changes in its net assets and the financial
highlights for the period indicated, in conformity with generally accepted
accounting principles.
/s/ McGLADREY & PULLEN, LLP
McGLADREY & PULLEN, LLP
New York, New York
July 9, 1999
<PAGE>
ADVISOR
Liberty Bank and Trust Company
4101 Pauger Street, Suite 105
New Orleans, LA 70122
SUB-ADVISOR
The Edgar Lomax Company
6564 Loisdale Court, Suite 310
Springfield, VA 22150
DISTRIBUTOR
First Fund Distributors, Inc.
4455 E. Camelback Rd., Ste. 261E
Phoenix, AZ 85018
CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
TRANSFER AGENT
American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
(800) 385-7003
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
