[EDGAR LOMAX VALUE FUND LOGO]
EDGAR LOMAX VALUE FUND
ANNUAL REPORT
FOR THE PERIOD ENDED
OCTOBER 31, 1999
<PAGE>
EDGAR LOMAX VALUE FUND
Dear Fellow Shareholder:
We are pleased to present you with a report on the status of your mutual
fund through its nearly-second full year of operation. The Edgar Lomax Value
Fund, from its opening on December 12, 1997, has returned an annualized 10.07%.
The Fund's assets, as of October 31 of this year, had reached about $4.3
million.
Clearly, the stock market environment over the past two years has not
favored our "value" style of investing. In fact, the line between investing and
speculating has become blurred as an increasing number of people have placed
their hard-earned money in the most popular, and most expensive, stocks. This
emotional phenomenon, however, has created great buying opportunities for us.
Relative to the S&P 500 Index, for instance, we are able to purchase stocks like
J.P. Morgan at bargains rarely seen. Its price is only sixteen (16) times
earnings as compared to an S&P 500 price multiple of thirty-three (33) times
earnings.
Even so, why buy the "bargains" when they seem so out of tune with the
seemingly-assured success of technology names? Because the market's current
euphoric state is only temporary and, in the long run, stock values reflect two
things: real assets ("book value") the company has when the investment is made,
plus reasonably-projected future earnings that either accrue to book value or
are paid to shareholders as dividends. Our strategy takes advantage of this very
fact by paying low prices relative to both book value and earnings (that is, low
price-to-book and price-to-earning ratios) and seeking companies with high
and/or stable dividend yields. The stock market should inevitably reward the
internal financial performance of our companies. It is because of this, and its
unpredictable timing, that we remain focused on our type of investing in spite
of the speculative fever around us.
How much longer the 1990s' unprecedented bull market -- and the investment
community's recent preference for high-cost growth stocks -- will continue is
impossible to know for certain. What we ARE certain of, however, is that our
Fund is a "value" portfolio soundly constructed for all market environments. In
that regard, we encourage you to remain patient in allowing your investment to
realize its full potential. We promise to continue our best efforts on your
behalf, and are confident that you will be pleased with your long-term results.
Cordially,
/s/ Randall R. Eley
Randall R. Eley
<PAGE>
EDGAR LOMAX VALUE FUND
Footnotes:
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 not incur
expenses and are not available for investment.
The Fund's average annual total return for the year ended September 30, 1999 was
15.89% and since inception (December 12, 1997) to September 30, 1999 was 9.73%.
The Fund is distributed by First Fund Distributors, Inc., Phoenix, AZ. Member
NASD.
2
<PAGE>
EDGAR LOMAX VALUE FUND
Comparison of the change in value of a $10,000 investment in the Edgar Lomax
Value Fund versus the S & P 500 Composite Stock Price Index, the
S & P 500/Barra Value Index and the Lipper Growth and Income Index.
Average Annual Total Return(1)
One year.....................11.05%
Since inception (12/12/97)...10.07%
Edgar Lomax S & P 500 Composite S & P 500/Barra Lipper Growth &
Value Fund Stock Price Index Value Index Income Fund Index
---------- ----------------- ----------- -----------------
12-Dec-97 $10,000 $10,000 $10,000 $10,000
31-Dec-97 $10,169 $10,187 $10,187 $10,193
31-Jan-98 $ 9,949 $10,303 $10,062 $10,212
28-Feb-98 $10,639 $11,041 $10,816 $10,853
31-Mar-98 $11,030 $11,606 $11,365 $11,355
30-Apr-98 $11,150 $11,724 $11,499 $11,416
31-May-98 $10,889 $11,519 $11,337 $11,233
30-Jun-98 $10,929 $11,989 $11,423 $11,368
31-Jul-98 $10,619 $11,864 $11,175 $11,090
31-Aug-98 $9,418 $10,148 $ 9,376 $ 9,524
30-Sep-98 $10,199 $10,796 $ 9,948 $ 9,951
31-Oct-98 $10,789 $11,679 $10,727 $10,674
30-Nov-98 $11,280 $12,384 $11,286 $11,188
31-Dec-98 $11,274 $13,099 $11,682 $11,569
31-Jan-99 $11,031 $13,650 $11,918 $11,678
28-Feb-99 $10,489 $13,218 $11,662 $11,419
31-Mar-99 $11,092 $13,746 $12,015 $11,814
30-Apr-99 $12,770 $14,282 $13,051 $12,584
31-May-99 $12,649 $13,938 $12,820 $12,397
30-Jun-99 $12,891 $14,712 $13,266 $12,909
31-Jul-99 $12,517 $14,254 $12,858 $12,539
31-Aug-99 $12,295 $14,183 $12,532 $12,262
30-Sep-99 $11,820 $13,792 $12,042 $11,877
31-Oct-99 $11,981 $14,675 $12,722 $12,385
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 S&P/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.
(1) Average Annual Total Return represents the average change in account value
over the periods indicated.
3
<PAGE>
EDGAR LOMAX VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 99.16% Market Value
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE: 2.86%
2,200 General Dynamics Corporation .......................... $ 121,963
-----------
AUTO PARTS & EQUIPMENT: 4.20%
1,345 Delphi Automotive Systems Corporation ................. 22,108
3,800 The Goodyear Tire & Rubber Company .................... 156,988
-----------
179,096
-----------
AUTOMOBILES: 3.83%
2,325 General Motors Corporation ............................ 163,331
-----------
BANKS - MONEY CENTER: 4.45%
1,450 J.P. Morgan & Co., Incorporated ....................... 189,769
-----------
BANKS - MAJOR REGIONAL: 3.14%
2,800 Wells Fargo & Company ................................. 134,050
-----------
CHEMICALS: 8.82%
1,325 The Dow Chemical Company .............................. 156,681
2,438 E.I. du Pont de Nemours and Company ................... 157,099
1,025 Union Carbide Corporation ............................. 62,525
-----------
376,305
-----------
CHEMICALS - SPECIALTY: 2.60%
2,900 International Flavors & Fragrances, Inc. .............. 110,925
-----------
COMMUNICATIONS EQUIPMENT: 1.88%
3,550 Harris Corporation .................................... 79,653
-----------
ELECTRIC COMPANIES: 5.14%
2,875 American Electric Power Company, Inc................... 99,187
4,525 The Southern Company................................... 120,195
-----------
219,382
-----------
ELECTRICAL EQUIPMENT: 3.65%
1,475 Honeywell, Inc. ....................................... 155,520
-----------
4
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EDGAR LOMAX VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
ELECTRONICS - DEFENSE: 0.19%
300 Raytheon Company Class A .............................. $ 8,138
-----------
ENGINEERING AND CONSTRUCTION: 2.94%
3,150 Fluor Corporation ..................................... 125,606
-----------
FINANCIAL - DIVERSIFIED: 8.22%
1,100 American Express Company............................... 169,400
3,350 Citigroup Inc.......................................... 181,319
-----------
350,719
-----------
HEALTH CARE - HOSPITAL MANAGEMENT: 0.45%
800 Columbia / HCA Healthcare Corporation ................. 19,300
-----------
INSURANCE - LIFE/HEALTH: 0.35%
200 American General Corporation .......................... 14,838
-----------
INSURANCE - MULTI-LINE: 5.64%
1,625 CIGNA Corporation...................................... 121,469
2,300 The Hartford Financial Services Group, Inc............. 119,169
-----------
240,638
-----------
LEISURE TIME - PRODUCTS: 2.70%
5,100 Brunswick Corporation.................................. 115,387
-----------
MACHINERY - DIVERSIFIED: 4.01%
3,100 Caterpillar Inc. ...................................... 171,275
-----------
MANUFACTURING - DIVERSIFIED: 5.88%
2,450 Minnesota Mining and Manufacturing Company............. 232,903
300 United Technologies Corporation........................ 18,150
-----------
251,053
-----------
NATURAL GAS: 0.49%
500 The Coastal Corporation................................ 21,063
-----------
5
<PAGE>
EDGAR LOMAX VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
OIL - DOMESTIC INTEGRATED: 3.91%
1,650 Atlantic Richfield Company............................. $ 153,759
477 Conoco Inc., Class B................................... 12,939
-----------
166,698
-----------
OIL - INTERNATIONAL INTEGRATED: 6.03%
1,400 Chevron Corporation.................................... 127,838
1,750 Exxon Mobil Corporation................................ 129,609
-----------
257,447
-----------
PHOTOGRAPHY/IMAGING: 2.71%
1,675 Eastman Kodak Company ................................. 115,470
-----------
RAILROADS: 2.72%
500 Burlington Northern Santa Fe Corporation............... 15,937
4,100 Norfolk Southern Corporation........................... 100,194
-----------
116,131
-----------
RETAIL - GENERAL MERCHANDISE: 2.58%
3,900 Sears, Roebuck and Co. ................................ 109,931
-----------
RETAIL - SPECIALTY/APPAREL: 4.30%
4,250 The Limited, Inc....................................... 174,781
549 Too Inc.*.............................................. 8,784
-----------
183,565
-----------
TELEPHONE: 3.20%
2,100 Bell Atlantic Corporation ............................. 136,369
-----------
TOBACCO: 2.27%
3,850 Philip Morris Companies Inc. .......................... 96,972
-----------
Total Equity Securities (Cost $3,971,830): 99.16% ..... 4,230,594
-----------
6
<PAGE>
EDGAR LOMAX VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999, CONTINUED
- --------------------------------------------------------------------------------
Shares Short-Term Investments: 1.19% Market Value
- --------------------------------------------------------------------------------
$50,917 Firstar Stellar Treasury Fund (Cost $50,917)........... $ 50,917
-----------
Total Investments in Securities
(Cost $4,022,747+): 100.35%.......................... 4,281,511
Liabilities in excess of Other Assets: (0.35%)......... (14,933)
-----------
TOTAL NET ASSETS: 100.00% ............................. $ 4,266,578
===========
*Non-income producing security.
+ At October 31, 1999, the cost of securities for Federal tax purposes was
$4,033,802. Gross unrealized appreciation and depreciation of securities on
a tax basis were as follows:
Gross unrealized appreciation.......................... $ 560,075
Gross unrealized depreciation.......................... (312,366)
-----------
Net unrealized appreciation....................... $ 247,709
===========
See accompanying Notes to Financial Statements.
7
<PAGE>
EDGAR LOMAX VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES AT OCTOBER 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (identified
cost of $4,022,747) ...................................... $4,281,511
Receivables
Due from Advisor ..................................... 2,625
Dividends and interest ............................... 4,818
Prepaid expenses ........................................... 1,942
----------
Total assets ................................... 4,290,896
----------
LIABILITIES
Accrued expenses ........................................... 24,318
----------
Total liabilities ................................. 24,318
----------
NET ASSETS ....................................................... $4,266,578
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($4,266,578/360,088 shares outstanding;
unlimited number of shares authorized, par value $0.01) .... $ 11.85
==========
COMPONENTS OF NET ASSETS
Paid-in capital ............................................ $3,765,238
Undistributed net investment income ........................ 26,643
Accumulated net realized gain on investments ............... 215,933
Net unrealized appreciation on investments ................. 258,764
----------
Net assets ........................................... $4,266,578
==========
See accompanying Notes to Financial Statements.
8
<PAGE>
EDGAR LOMAX VALUE FUND
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED OCTOBER 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends ................................................... $ 93,062
Interest .................................................... 2,423
---------
Total income .......................................... 95,485
---------
Expenses
Advisory fees (Note 3) ...................................... 37,229
Administration fees (Note 3) ................................ 29,999
Professional fees ........................................... 25,805
Fund accounting fees ........................................ 17,098
Transfer agent fees ......................................... 11,237
Custody fees ................................................ 3,623
Trustee fees ................................................ 2,869
Registration fees ........................................... 2,439
Other ....................................................... 1,706
Reports to shareholders ..................................... 1,616
Insurance expense ........................................... 1,535
---------
Total expenses ............................................ 135,156
Less: advisory fee waiver and absorption (Note 3) ......... (69,962)
---------
Net expenses .............................................. 65,194
---------
NET INVESTMENT INCOME ................................... 30,291
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions .................. 217,244
Net change in unrealized appreciation on investments .......... 91,218
---------
Net realized and unrealized gain on investments ............. 308,462
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...... $ 338,753
=========
See accompanying Notes to Financial Statements.
9
<PAGE>
EDGAR LOMAX VALUE FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------
Year December 12, 1997*
Ended through
October 31, 1999 October 31, 1998
---------------- ----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment income ................................. $ 30,291 $ 19,206
Net realized gain on security transactions ............ 217,244 11,374
Net change in unrealized appreciation on investments .. 91,218 167,546
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 338,753 198,126
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............................ (21,112) (1,875)
From net realized gains ............................... (12,685) --
----------- -----------
Total dividends and distibution to shareholders .... (33,797) (1,875)
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) ............................. 667,788 3,097,583
----------- -----------
TOTAL INCREASE IN NET ASSETS ....................... 972,744 3,293,834
NET ASSETS
Beginning of period ...................................... 3,293,834 0
----------- -----------
END OF PERIOD ............................................ $ 4,266,578 $ 3,293,834
=========== ===========
(a) A summary of capital shares transactions is as follows:
Year December 12, 1997*
Ended through
October 31, 1999 October 31, 1998
------------------------ ------------------------
Shares Paid in Capital Shares Paid in Capital
------ --------------- ------ ---------------
Shares sold .................. 69,273 $ 835,121 334,640 $ 3,410,803
Shares issued on reinvestments
of distributions ........... 782 8,441 185 1,875
Shares redeemed .............. (15,423) (175,774) (29,369) (315,095)
------ --------- ------- -----------
Net increase ................. 54,632 $ 667,788 305,456 $ 3,097,583
====== ========= ======= ===========
</TABLE>
*Commencement of operations.
See accompanying Notes to Financial Statements.
10
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EDGAR LOMAX VALUE FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ---------------------------------------------------------------------------------------------
Year December 12, 1997*
Ended through
October 31, 1999 October 31, 1998
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period..................... $10.78 $10.00
------ ------
Income from investment operations:
Net investment income.............................. 0.08 0.07
Net realized and unrealized gain on investments.... 1.10 0.72
------ ------
Total from investment operations......................... 1.18 0.79
------ ------
Less distributions:
From net investment income......................... (0.07) (0.01)
From net realized gains............................ (0.04) 0.00
------ ------
Total distributions...................................... (0.11) (0.01)
------ ------
Net asset value, end of period........................... $11.85 $10.78
====== ======
TOTAL RETURN ............................................ 11.05% 7.89%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands).................... $4,267 $3,294
Ratio of expenses to average net assets:
Before expense reimbursement....................... 3.63% 4.67%+
After expense reimbursement........................ 1.75% 1.75%+
Ratio of net investment income to average net assets
After expense reimbursement........................ 0.81% 0.81%+
Portfolio turnover rate.................................. 41.85% 32.71%
</TABLE>
*Commencement of operations.
+Annualized.
++Not Annualized.
11
<PAGE>
EDGAR LOMAX VALUE FUND
NOTES TO FINANCIAL STATEMENTS AT OCTOBER 31, 1999
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Edgar Lomax Value 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 to seek growth of capital, with a
secondary objective of providing income. The Fund began operations on December
12, 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 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. 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 October 31, 1999, The Edgar Lomax Company (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.
12
<PAGE>
EDGAR LOMAX VALUE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
- --------------------------------------------------------------------------------
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 year ended October 31, 1999, the Fund incurred $37,229 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 1.75% 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
October 31, 1999, the Advisor reduced its fees and absorbed Fund expenses in the
amount of $69,962; no amounts were reimbursed to the Advisor. Cumulative
expenses subject to recapture pursuant to the aforementioned conditions amount
to $139,049 at October 31, 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 October 31, 1999, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $2,193,596 and
$1,529,038, respectively.
13
<PAGE>
EDGAR LOMAX VALUE 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 Edgar Lomax Value Fund, series
of Advisors Series Trust (the "Fund") at October 31, 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 October 31, 1999 by correspondence with the
custodian, provides a reasonable basis for the opinion expressed above. The
financial statements for the period from December 12, 1997 (commencement of
operations) to October 31, 1998, including financial highlights for the period
then ended, were audited by other independent accountants whose report dated
December 4, 1998 expressed an unqualified opinion on those financial statements.
PricewaterhouseCoopers LLP
New York, New York
December 2, 1999
/s/ PriceWaterhnouseCoopers LLP
14
<PAGE>
EDGAR LOMAX VALUE 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 12, 1997 (commencement
of operations) through October 31, 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
<PAGE>
ADVISOR
The Edgar Lomax Company
6564 Loisdale Court, Suite 310
Springfield, VA 22150
www.edgarlomax.cihost.com
DISTRIBUTOR
First Fund Distributors, Inc.
4455 E. Camelback Rd., Ste. 261E
Phoenix, AZ 85018
CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street, M/L 6118
Cincinnati, OH 45202
TRANSFER AGENT
American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
(800) 385-7003
AUDITORS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
