CHASE GROWTH FUND
November 17, 1999
Dear Fellow Shareholders:
Let me start our annual review for the period ended September 30, 1999 by
welcoming our new shareholders. As I write, 203 shareholders have $10.7 million
invested in our Chase Growth Fund (NASDAQ: CHASX). 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 year ended September 30, 1999 our fund enjoyed a (before and after
tax) total return of 27.9% compared with 27.8% for the fully invested Standard &
Poor's "500" Composite Stock Price Index (the "S&P 500") and 30.2% for the
Lipper 30 Growth Fund Index. Our returns were muted by the fact that on average
we were only 89% invested during the year due to our concerns over the short
term market outlook. By September 30, 19% was in cash equivalent reserves and
81% of our fund was invested in 35 stocks. Our heaviest industry concentrations
were in Computer Hardware, Computer Software and Services, Telecommunications,
Biotechnology, and Drugs. During the last twelve months our ten best performing
stocks were EMC Corp. +148.8%, Lexmark International + 132.3%, Cisco Systems +
121.8%, Wal-Mart Stores +74.1%, Home Depot + 73.7%, Microsoft +64.6%, TJX
Companies +57.5%, MCI Worldcom +47.1%, Ross Stores +40.6% and American
International Group +38.7%. A couple of new purchases made during the year also
helped performance with Biogen +64.4% and Sun Microsystems +51.2%.
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's
stocks to the Standard & Poor's "500" Stock Composite Index. On average the CGF
stocks have enjoyed more consistent and substantially higher five year annual
earnings growth rates of 27% vs. 15% for the S&P. They are significantly more
profitable with a Return on Equity of 33% vs. 22%, and have stronger balance
sheets with Debt to Total Capital of 18% vs. 33%, yet they sell at only a
moderate 22% premium to the S&P "500"'s price/earnings multiple based on year
2000 estimated reported earnings. Though pricey, our stocks are selling at only
1.20x their five year historical growth rates compared to 1.81x for the S&P
"500", and even less than the 1.72x for the Russell "1000" Value Index. As shown
on the attached table, our stocks are even more attractive when their multiples
are compared to projected reinvestment rates.
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CHASE GROWTH FUND
CHASE GROWTH FUND STOCKS VS. S&P 500
SEPTEMBER 30, 1999
Chase Growth
Fund Stocks S&P 500
----------- -------
Last 5 Year Earnings Growth 27% 15%
Return on Equity 33% 22%
Debt/Total Capital 18% 33%
Reinvestment Rate 29% 14%
Weighted Average Capitalization (Billions) 90.1 106.2
Price/Earnings Estimated '00 31.8 26.1
Weighted Average Beta (Volatility) 1.09 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's portfolio. S&P 500 earnings are based
on reported figures after write-offs.
Most investors really believe in this market, but our long term optimism is
tempered by the recognition that prices are high and it continues to be a
Supply/Demand driven affair with liquidity often being more important than
valuation fundamentals. As of November 10th, year-to-date U.S. equity mutual
fund net inflows were $145 billion, about the same as 1998. Moreover, retired
stock through corporate repurchases and acquisitions ($192 billion YTD 11/10/99)
exceeds the supply of new equity offerings ($132 billion YTD 11/10/99) and is
reducing the net supply of equities ($60 billion YTD 11/10/99) compared with a
small increase last year. In summary, the net YTD Supply/Demand Dynamics
(Source: Leuthold/Weeden Research) is a positive $205 billion versus $140 and
$145 billion, respectively, in 1998 and 1997. Most of these net cash flows are
going into domestic equity funds that stay quite fully invested.
Valuation measurements continue to suggest caution, but at last month's low
the median stock of over 6,200 (followed by Ned Davis Research) had declined by
28% from their April 1998 highs. We are watching our technical indicators
closely for evidence of a change in leadership toward depressed mid-cap growth
stocks which have mostly underperformed since 1983. Considerable publicity has
been given to the Federal Reserve's interest rate increases and it usually does
not pay to fight the Fed for long. However, it should be noted that the Fed
continues rapid expansion of monetary reserves. The Money Supply (MZM) has been
growing at a 6 1/2% annualized rate since August, much faster in the last two
months. Presumably, much of that increase is the response to Y2K fears, but some
of it will find its way into the stock market. We expect the market to be
volatile and it would be normal for a full fledged decline to depress prices by
10% to 20%. Long term investors should realize that timing the market is very
difficult. One 35 year study showed that if you were out of the market just 5%
of the time and missed the best 22 months, your 35 year gain would have been
only about 14% as much as the S&P "500" on a buy and hold basis or less than
just holding T-Bills.
Many quality growth stocks have experienced sizeable corrections. We
believe taking advantage of weakness in good growth stocks is a sounder
investment strategy than buying cyclical, commodity oriented and lower quality
stocks (value Stocks) which are more business cycle sensitive and face rough
competition from world wide excess capacity. We continue to seek growth at a
(relatively) reasonable price. As depicted in the chart below, our mostly large
capitalization growth stocks sell at significantly lower P/E multiples compared
with their 5-year historical earnings growth rates and their 2000 estimated
reinvestment rates than the S&P "500" or even some value indexes. While the CGF
is an equity fund, we are holding 19% in cash equivalent reserves and continuing
2
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CHASE GROWTH FUND
to emphasize "A" rated stocks with relatively low volatility (the average beta
is now 1.09) that should provide some defensive qualities. We are generally
invested in companies that enjoy above average earnings growth rates without
paying a big premium for them.
FUNDAMENTALS AND RATIOS
P/E to Five-Year P/E to Projected
Historical Growth Reinvestment Rate
----------------- -----------------
Chase Growth Fund 1.20 1.10
Russell 1000 Growth 1.59 1.57
Russell 1000 Value 1.72 1.44
S&P 500 1.81 2.01
In our 42nd year, we are the oldest independent investment counsel firm
domiciled in Virginia. For our customized separate accounts, we manage over $800
million for 77 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 large and mid-cap stocks without a significant market impact.
New shareholders are not buying into a portfolio which already has substantial
imbedded capital gain tax liabilities on gains they did not even enjoy. We are
tax sensitive and plan to manage our fund to reduce taxes and we expect most
future capital gains will be net long term. There were no taxable capital gains
or taxable income distributions for 1999.
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. Biogen
2. Lexmark International 7. Home Depot
3. Bristol Myers Squibb 8. Sun Microsystems
4. Nokia, ADR 9. Wal-Mart Stores, Inc.
5. Microsoft 10. Cisco Systems
/s/ Derwood S. Chase Jr.
Derwood S. Chase, Jr., President
Chase Investment Counsel Corporation
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.
3
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CHASE GROWTH FUND
CHASE GROWTH FUND
Comparison of the change in value of a $10,000 investment in the
Chase Growth Fund versus the S&P 500 Composite Stock
Price Index and the Lipper Growth Fund Index.
Average Annual Total Return(1)
One Year ........................ 27.90
Since Inception (12/2/97 ........ 18.68
Lipper Growth
Chase Growth S&P 500 Fund Index
------------ ------- ----------
2-Dec-97 $10,000 $10,000 $10,000
31-Dec-97 $10,201 $10,000 $10,009
31-Jan-98 $10,251 $10,115 $10,076
28-Feb-98 $10,911 $10,838 $10,786
31-Mar-98 $11,432 $11,393 $11,248
30-Apr-98 $11,272 $11,509 $11,368
29-May-98 $11,032 $11,308 $11,089
30-Jun-98 $11,602 $11,769 $11,569
31-Jul-98 $11,492 $11,647 $11,446
31-Aug-98 $10,070 $9,962 $9,608
30-Sep-98 $10,691 $10,598 $10,249
31-Oct-98 $11,202 $11,465 $10,958
30-Nov-98 $11,922 $12,158 $11,611
31-Dec-98 $13,224 $12,859 $12,581
31-Jan-99 $13,704 $13,400 $13,118
28-Feb-99 $13,284 $12,976 $12,670
31-Mar-99 $13,884 $13,495 $13,220
30-Apr-99 $13,554 $14,020 $13,556
31-May-99 $13,184 $13,683 $13,292
30-Jun-99 $14,155 $14,443 $14,078
31-Jul-99 $13,925 $13,993 $13,729
31-Aug-99 $13,634 $13,923 $13,575
30-Sep-99 $13,674 $13,540 $13,349
Past performance is not predictive of future performance.
* The S&P 500 Index is an unmanaged capitalization-weighted index of 500
stocks designed to represent the broad domestic economy.
* The Lipper Growth Fund Index comprises of the 30 largest growth funds.
Growth funds invest in companies with long-term earnings expected to grow
significantly faster than the earnings of the stocks represented in the
major unmanaged stock indices.
(1) Average Annual Total Return represents the average change in account value
over the periods indicated.
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CHASE GROWTH FUND
SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 80.63% Market Value
- --------------------------------------------------------------------------------
Advertising: 1.39%
3,100 The Interpublic Group of Companies, Inc. .............. $ 127,487
-----------
Airlines: 1.74%
10,500 Southwest Airlines Co. ................................ 159,469
-----------
Apparel: 1.85%
6,000 Tommy Hilfiger Corporation* ........................... 169,125
-----------
Appliances: 1.64%
4,500 Maytag Corporation .................................... 149,906
-----------
Auto / Auto Parts: 2.26%
10,000 Gentex Corporation* ................................... 206,563
-----------
Biotechnology: 5.41%
2,100 Amgen Inc.* ........................................... 171,150
4,100 Biogen Inc.* .......................................... 323,131
-----------
494,281
-----------
Building: 3.23%
4,304 The Home Depot, Inc. .................................. 295,362
-----------
Chemicals - Specialty: 2.08%
3,600 Avery Dennison Corporation ............................ 189,900
-----------
Computer - Semiconductors: 1.95%
2,400 Intel Corporation ..................................... 178,350
-----------
Computer Hardware: 5.63%
7,200 EMC Corporation* ...................................... 514,350
-----------
Computer Networking: 2.78%
3,700 Cisco Systems, Inc.* .................................. 253,681
-----------
Computer Peripheral: 5.46%
6,200 Lexmark International Group, Inc.* .................... 499,100
-----------
5
<PAGE>
SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Computer Software and Services: 9.21%
3,850 Microsoft Corporation* ................................ $ 348,666
4,500 Oracle Corporation* ................................... 204,750
3,100 Sun Microsystems, Inc.* ............................... 288,300
-----------
841,716
-----------
Conglomerates: 2.60%
2,300 Tyco International Ltd. ............................... 237,475
-----------
Drugs: 4.58%
6,200 Bristol-Myers Squibb Company .......................... 418,500
-----------
Financial Services: 1.77%
1,200 American Express Company............................... 161,550
-----------
Insurance - Life / Health: 0.87%
2,730 Protective Life Corporation............................ 79,170
-----------
Insurance - Property /Casualty: 2.47%
2,600 American International Group, Inc. .................... 226,038
-----------
Leisure Time: 3.82%
5,500 Carnival Corporation Class A........................... 239,250
2,200 Harley-Davidson, Inc................................... 110,137
-----------
349,387
-----------
Medical Supplies: 0.20%
1,300 STERIS Corporation*.................................... 17,875
-----------
Retail: 2.81%
5,400 Wal-Mart Stores, Inc................................... 256,837
-----------
Retail - Apparel: 3.15%
4,000 Ross Stores, Inc....................................... 80,500
7,400 The TJX Companies, Inc................................. 207,663
-----------
288,163
-----------
Retail - Grocers: 0.87%
3,600 The Kroger Co.*........................................ 79,425
-----------
Retail Drug Stores: 1.06%
3,800 Walgreen Co............................................ 96,425
-----------
6
<PAGE>
SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Service Companies: 1.11%
2,400 Dycom Industries, Inc.*................................ $ 101,250
-----------
Telecom Equipment: 3.83%
3,900 Nokia Corporation ADR Class A.......................... 350,269
-----------
Telecom Services: 6.86%
2,600 Ameritech Corporation.................................. 174,688
2,900 Bell Atlantic Corporation.............................. 195,206
3,800 BellSouth Corporation................................ 171,000
1,200 MCI WorldCom Incorporated*............................. 86,250
-----------
627,144
Total Equity Securities (Cost $5,839,338): 80.63%...... 7,368,798
Principal
Amount SHORT-TERM INVESTMENTS: 19.44%
- --------------------------------------------------------------------------------
$1,777,533 Firstar Stellar Treasury Fund
(Cost $1,777,533): 19.44% .......................... 1,777,533
-----------
Total Investments in Securities
(Cost $7,616,871): 100.07%.......................... 9,146,331
Liabilities in excess of Other Assets: (0.07%)........ (6,737)
-----------
TOTAL NET ASSETS: 100.0% ........................... $ 9,139,594
===========
* Non-income producing security.
+ At September 30, 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................................ $ 1,890,362
Gross unrealized depreciation................................ ( 360,902)
-----------
Net unrealized appreciation................................ $ 1,529,460
===========
See Notes to Financial Statements.
7
<PAGE>
CHASE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES AT SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(identified cost $7,616,871) ............................ $ 9,146,331
Receivables:
Dividends and interest .............................. 8,966
Prepaid expenses .......................................... 3,949
-----------
Total assets .................................. 9,159,246
LIABILITIES
Payables:
Due to advisor ...................................... 3,128
Administration fees ................................. 2,516
Accrued expenses .......................................... 14,008
-----------
Total liabilities ............................. 19,652
-----------
NET ASSETS ...................................................... $ 9,139,594
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($ 9,139,594 / 669,002 shares outstanding;
unlimited number of shares authorized,
par value $0.01) .................................... $ 13.66
===========
COMPONENTS OF NET ASSETS
Paid-in capital ........................................... $ 7,894,931
Accumulated net realized loss on investments .............. (284,797)
Net unrealized appreciation on investments ................ 1,529,460
-----------
Net assets .......................................... $ 9,139,594
===========
See Notes to Financial Statements.
8
<PAGE>
CHASE GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends .................................................. $ 26,635
Interest ................................................... 32,377
-----------
Total income ............................................. 59,012
-----------
Expenses
Advisory fees (Note 3) ..................................... 66,558
Administration fees (Note 3) ............................... 29,999
Professional fees .......................................... 22,439
Fund accounting fees ....................................... 12,001
Transfer agent fees ........................................ 9,761
Other ...................................................... 5,084
Custody fees ............................................... 4,301
Reports to shareholders .................................... 3,001
Registration fees .......................................... 2,777
Trustee fees ............................................... 2,139
-----------
Total expenses ........................................... 158,060
Less: advisory fee waiver and absorption (Note 3) ........ (59,556)
-----------
Net expenses ............................................. 98,504
-----------
NET INVESTMENT LOSS .................................... (39,492)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss from security transactions ............... (93,150)
Net change in unrealized appreciation on investments ....... 1,276,797
-----------
Net realized and unrealized gain on investments .......... 1,183,647
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $ 1,144,155
===========
See Notes to Financial Statements.
9
<PAGE>
CHASE GROWTH FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------
Year December 2, 1997*
Ended through
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment loss .................................. $ (39,492) $ (4,214)
Net realized loss on security transactions ........... (93,150) (191,647)
Net change in unrealized appreciation on investments . 1,276,797 222,098
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,144,155 26,237
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ......................... -- (1,355)
----------- -----------
Total dividends and distribution to shareholders -- (1,355)
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in
outstanding shares(a) .............................. 3,985,457 3,954,535
----------- -----------
TOTAL INCREASE IN NET ASSETS .................... 5,129,612 3,979,417
NET ASSETS
Beginning of period .................................... 4,009,982 30,565(b)
----------- -----------
END OF PERIOD .......................................... $ 9,139,594 $ 4,009,982
=========== ===========
</TABLE>
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
December 2, 1997*
Year Ended through
September 30, 1999 September 30, 1998
----------------------- --------------------------
Shares Paid in Capital Shares Paid in Capital
------ --------------- ------ ---------------
<S> <C> <C> <C> <C>
Shares sold .................. 347,038 $ 4,725,105 378,450 $ 3,987,216 (b)
Shares issued on reinvestments
of distributions ........... -- -- 134 1,355
Shares redeemed .............. (53,379) (739,648) (3,241) (34,036)
------- ----------- ------- -----------
Net increase ................. 293,659 $ 3,985,457 375,343 $ 3,954,535
======= =========== ======= ===========
</TABLE>
*Commencement of operations.
(b) Shares sold in 1998 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.
10
<PAGE>
CHASE GROWTH FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout the Period
- -----------------------------------------------------------------------------------------------
Year December 2, 1997*
Ended through
September 30, 1999 September 30, 1998
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period.................... $10.68 $10.00
------ ------
Income from investment operations:
Net investment loss............................... (0.05) (0.01)
Net realized and unrealized gain on investments... 3.03 0.70
------ ------
Total from investment operations........................ 2.98 0.69
------ ------
Less distributions:
From net investment income........................ - (0.01)
------ ------
Total from distributions................................ - (0.01)
------ ------
Net asset value, end of period.......................... $13.66 $10.68
====== ======
TOTAL RETURN ........................................... 27.90% 6.91%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands)................... $9,140 $4,010
Ratio of expenses to average net assets
Before expense reimbursement...................... 2.37% 3.98%+
After expense reimbursement....................... 1.48% 1.47%+
Ratio of net investment loss to average net assets
After expense reimbursement....................... (0.59%) (0.17%)+
Portfolio turnover rate................................. 62.49% 54.49%
</TABLE>
* Commencement of operations.
++ Not Annualized.
+ Annualized.
See Notes to Financial Statements.
11
<PAGE>
CHASE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Chase Growth Fund (the "Fund") is a series of shares of beneficial
interest 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's investment objective is growth of capital, and intends to
achieve its objective by investing in equity securities with above average
growth rates as defined in the prospectus. The Fund began operations on December
2, 1997.
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 value 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. Discounts and premiums on securities
purchased are amortized over the life of the respective securities.
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 year ended September 30, 1999, Chase Investment Counsel Corp. (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.
12
<PAGE>
CHASE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
For the year ended September 30, 1999, the Fund incurred $66,558 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 the Fund's 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
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 the Fund's 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' subsequent review and
ratification of the reimbursed amounts. Such reimbursement may not be paid prior
to the Fund's payment of current ordinary operating expenses. For the year ended
September 30, 1999, the Advisor reduced its fees and absorbed Fund expenses in
the amount of $59,556; no amounts were reimbursed to the Advisor. Cumulative
expenses subject to recapture pursuant to the aforementioned conditions amounted
to $120,289 at September 30, 1999.
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 following annual rate:
Fund asset level Fee rate
- ---------------- --------
Less than $15 million $30,000
$15 million to less than $50 million 0.20% of average daily net assets
$50 million to less than $100 million 0.15% of average daily net assets
$100 million to less than $150 million 0.10% of average daily net assets
More than $150 million 0.05% of average daily net assets
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 year ended September 30, 1999, the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, were
$6,627,828 and $3,656,286, respectively.
At September 30, 1999, the Fund had deferred capital losses occurring
subsequent to October 31, 1998 of approximately $58,000. For tax purposes, such
losses will be reflected in the year ending September 30, 2000.
At September 30, 1999, the Fund had tax basis capital losses of
approximately $225,000 which may be carried over to offset future capital gains.
Such losses expire September 30, 2007.
13
<PAGE>
CHASE GROWTH FUND
INDEPENDENT AUDITOR'S REPORT
To the Board of Trustees and Shareholders
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Chase Growth Fund, series of
Advisors Series Trust (the "Fund") at September 30, 1999, and the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at
September 30, 1999 by correspondence with the custodian, provides a reasonable
basis for the opinion expressed above. The financial statements for the period
from December 2, 1997 (commencement of operations) to September 30, 1998,
including financial highlights for the period then ended, were audited by other
independent accountants whose report dated October 23, 1998 expressed an
unqualified opinion on those financial statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
November 5, 1999
14
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CHASE GROWTH FUND
CHANGE IN INDEPENDENT ACCOUNTANT
On August 27, 1999, McGladrey & Pullen, LLP ("McGladrey") resigned as
independent auditors of the Fund pursuant to an agreement by
PricewaterhouseCoopers LLP ("PwC") to acquire McGladrey's investment company
practice. The McGladrey partners and professionals serving the Fund at the time
of the acquisition joined PwC.
The reports of McGladrey on the financial statements of the Fund during the
prior fiscal year contained no adverse opinion or disclaimer of opinion, and
were not qualified or modified as to uncertainty, audit scope or accounting
principles.
In connection with its audit for the period from December 2, 1997
(commencement of operations) through September 30, 1998, there were no
disagreements with McGladrey on any matter of accounting principle or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of McGladrey would have
caused it to make reference to the subject matter of disagreement in connection
with its report.
On September 10, 1999, the Fund, with the approval of its Board of Trustees
and its Audit Committee, engaged PwC as its independent auditors.
15
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ADVISOR
Chase Investment Counsel Corp.
300 Preston Avenue, Suite 403
Charlottesville, Virginia 22902-5091
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DISTRIBUTOR
First Fund Distributors, Inc.
4455 E. Camelback Road, Suite 261-E
Phoenix, Arizona 85018
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CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street, M/L 6118
Cincinnati, Ohio 45202
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TRANSFER AGENT
American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
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LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street
San Francisco, California 94104
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AUDITORS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
