CHARTWELL LARGE CAP VALUE FUND
CHARTWELL SMALL CAP VALUE FUND
1235 WESTLAKES DRIVE, SUITE 330
BERWYN, PA 19312
(610) 296-1400
SEMI-ANNUAL REPORT
FEBRUARY 29, 2000
<PAGE>
CHARTWELL SMALL CAP VALUE FUND
Dear Shareholder:
The period ending February 29, 2000 produced modest performance in the
small cap value sector; all investor attention turned to the spectacular gains
in small growth stocks and in particular, technology stocks. The Chartwell Small
Cap Value Fund (the "Fund") returned 5.57% in the period, outpacing the Russell
2000 Value Index return of 4.93%.
The Fund's investments in the utility, basic industry and energy sectors
along with a few select technology stocks contributed the most to the period's
strong performance. ICG Communications, specialty chemical companies Arch
Chemical and Cytec Industries, Lone Star Technologies and Sipex are
representative of each group. Healthcare sector returns were weakest as our
unwillingness to invest in the biotechnology industry penalized returns.
While some investors are embracing new-era beliefs, we hold to the same
tested approaches of value investing. The most richly-valued stocks in the
market were among the best performers in the latest period--we decline investing
in such stocks. By comparison, our stocks are very inexpensively valued yet have
barely participated in this market environment. In the meantime, we are
outperforming our market benchmark and remain confident in the long-term
attractiveness of smaller, more value-oriented stocks.
/s/ David C. Dalrymple
David C. Dalrymple, CFA
Managing Partner and Portfolio Manager
2
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
Dear Shareholder:
The Chartwell Large Cap Value Fund (the "Fund") produced a negative total
return of 3.72% for the period of October 1, 1999 (the Fund's inception) through
February 29, 2000. The Fund's return exceeded both the value benchmark, the
Russell 1000 Value Index, which returned a negative 5.59%, as well as the S&P
500 Index which returned a negative 7.05% for the same period.
The value sector of the equity market continues to experience a steady
head-wind as investors ponder the impact of increasing interest rates on the
domestic economy. In this difficult environment, the Fund's portfolio continues
to substantially outperform the value benchmark and many of our large cap value
peers.
Telecom was the strongest sector during the fourth quarter 1999, led by
BCE, the Canadian utility that owns over 40% of Nortel. BCE advanced over 80%
during the fourth quarter and was the portfolio's largest holding before we
began selling into the year-end strength. Advances in technology issues such as
National Semiconductor (+58% above the Fund's cost basis) and Lucent (+6%) were
significant contributors to the portfolio's performance in January and February
2000. Selected Basic Industry issues also contributed positively to the Fund's
return.
Unfortunately, we did experience our share of surprisingly weak performers
in the period. US Bancorp was clobbered in early December when they
pre-announced disappointing results in their retail division. Pitney Bowes has
suffered with the recent introduction of e-stamps. In the case of Pitney Bowes
and others, we believe these high quality companies selling at extraordinarily
low valuations, will be positive contributors to performance throughout 2000.
We would be remiss if we did not comment on the narrowness of the equity
market's advance. The unprecedented strength of several tech and
internet-related issues masks the fact that most stocks declined in 1999. 61% of
the NYSE issues and 54% of the S&P 500 issues declined during the year. An
equally concerning fact is that the price/earnings (P/E) ratio of the NASDAQ
composite is near 200x! Compare this to the Fund's portfolio, which is
statistically as cheap as we can ever recall. Your P/E at year-end was a very
reasonable 17x, which is very attractive given our forecast of 16% earnings
growth in 2000. Historically, this value portfolio performs well when a broad
economic advance is in-place and the earnings of the more cyclical areas of the
economy are rising rapidly. In this type of environment, investors seek
companies leveraged to the economic cycle and that includes sectors such as the
papers, chemicals, financials, consumer cyclicals and capital goods. With the
recovery in Asia and Europe just beginning and looking solid, we expect to see
much more interest in these economically sensitive areas. The question is when?
3
<PAGE>
It appears as though some investors are rotating away from the ridiculously
priced tech names and into the more economically sensitive groups. Good news for
the patient value investor.
We remain confident that valuations will, once again, matter. In the
meantime, we steadfastly maintain our discipline and remain focused on the
well-managed, attractively valued companies within the Chartwell Large Cap Value
Fund.
/s/ Kevin A. Melich /s/ Terry F. Bovarnick
Mr. Kevin A. Melich, CFA Ms. Terry F. Bovarnick, CFA
Managing Partner and Managing Partner and
Portfolio Manager Portfolio Manager
This information is authorized for use when preceded or accompanied by a current
prospectus for the Funds. Performance figures of the Funds and indices
referenced represent past performance and are not indicative of future
performance. Fund Share values will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original investment.
4
<PAGE>
CHARTWELL SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 99.86% Market Value
- --------------------------------------------------------------------------------
BASIC INDUSTRY: 15.28%
810 AptarGroup, Inc............................... $ 19,389
780 Arch Chemicals, Inc........................... 14,869
460 Bemis Company, Inc............................ 13,685
850 Caraustar Industries, Inc..................... 14,131
640 CLARCOR Inc................................... 12,440
690 Cytec Industries Inc.......................... 16,733
570 Kaydon Corporation............................ 13,110
950 U.S. Aggregates, Inc........................ 14,191
330 Teekay Shipping Corporation.................. 7,095
---------
125,643
---------
BUSINESS SERVICES: 4.17%
760 MSC Industrial Direct Co...................... 11,875
1,040 Ogden Corporation............................. 11,830
475 RemedyTemp, Inc. Class A Common Stock*........ 10,569
---------
34,274
---------
CAPITAL SPENDING: 6.47%
640 Applied Power Inc............................. 15,480
850 Gardner Denver, Inc........................... 16,150
610 Regal-Beloit Corporation...................... 10,866
1,090 Stewart & Stevenson Services, Inc............. 10,696
---------
53,191
---------
CONSUMER CYCLICAL: 2.50%
310 Borg-Warner Automotive, Inc................... 9,920
660 Furniture Brands International, Inc........... 10,601
---------
20,521
---------
CONSUMER SERVICES: 9.37%
875 Central Garden & Pet Company, Class A......... 8,422
521 The Men's Wearhouse, Inc...................... 12,097
1,730 Pier 1 Imports, Inc........................... 15,138
780 Tropical Sportswear Int'l Corporation ....... 9,068
1,920 West Marine, Inc.............................. 16,560
950 WestPoint Stevens Inc......................... 15,794
---------
77,078
---------
See Notes to Financial Statements.
5
<PAGE>
CHARTWELL SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
CONSUMER STAPLES: 4.63%
330 Alberto-Culver Company Class B
Common Stock................................ $ 7,054
210 Canandaigua Brands, Inc....................... 10,290
430 Corn Products International, Inc.............. 10,132
570 J & J Snack Foods Corp........................ 10,509
3 SUPERVALU INC................................. 52
---------
38,037
---------
ENERGY: 11.04%
430 Barrett Resources Corporation................. 12,524
520 Cal Dive International, Inc................... 18,720
230 Dynegy Inc.................................... 10,781
870 Lone Star Technologies, Inc................... 32,625
780 Louis Dreyfus Natural Gas Corp............... 16,088
---------
90,738
---------
FINANCIAL SERVICES: 15.16%
970 AmeriCredit Corp.............................. 13,459
800 Community First Bankshares, Inc............... 11,200
640 Cullen/Frost Bankers, Inc..................... 13,760
730 Financial Federal Corporation................. 12,501
2,840 MicroFinancial Incorporated................... 25,915
280 Radian Group Inc.............................. 9,713
1,800 Republic Security Financial Corporation....... 13,275
690 Southwest Bancorporation of Texas, Inc........ 12,593
260 Wilmington Trust Corporation.................. 12,204
---------
124,619
---------
HEALTHCARE: 4.52%
1,060 ICU Medical, Inc.............................. 16,430
1,180 Renal Care Group, Inc......................... 20,724
---------
37,154
---------
REITS: 9.67%
450 Alexandria Real Estate Equities, Inc.......... 13,753
525 Arden Realty, Inc............................. 10,927
450 Home Properties of New York, Inc.............. 12,038
610 PS Business Parks, Inc........................ 13,344
See Notes to Financial Statements.
6
<PAGE>
CHARTWELL SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
REITS, CONTINUED
760 Reckson Associates Realty Corp.............. $ 14,060
660 SL Green Realty Corp.......................... 15,345
---------
79,466
---------
TECHNOLOGY: 11.92%
400 Avant! Corporation............................ 5,925
620 Park Electrochemical Corp..................... 14,105
920 The Reynolds & Reynolds Company............... 25,415
780 SIPEX Corporation............................. 34,954
490 Sterling Software, Inc........................ 17,579
---------
97,978
---------
UTILITIES: 5.15%
660 ICG Communications Inc........................ 20,708
760 MDU Resources Group, Inc...................... 14,488
297 SCANA Corporation............................. 7,072
---------
42,267
---------
Total Common Stocks
(Cost $813,863): 99.86%..................... 820,964
---------
SHORT-TERM INVESTMENTS: 0.93%
- --------------------------------------------------------------------------------
$7,687 Firstar Stellar Treasury Fund (Cost $7,687)... 7,687
---------
Total Investment In Securities
(Cost $821,550): 100.79%.................... 828,651
Liabilities in excess of Other Assets: (0.79%) (6,478)
---------
Total Net Assets: 100.00%..................... $ 822,173
=========
+ Gross unrealized appreciation and depreciation of securities is as follows:
Gross unrealized appreciation................. $ 87,854
Gross unrealized depreciation................. (80,753)
---------
Net unrealized appreciation............. $ 7,101
=========
See Notes to Financial Statements.
7
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 96.67% Market Value
- --------------------------------------------------------------------------------
BASIC INDUSTRY: 8.30%
6,835 Abitibi-Consolidated Inc...................... $ 60,661
1,510 Alcoa Inc..................................... 103,435
973 The Dow Chemical Company...................... 105,571
4,040 Rohm and Haas Company......................... 163,115
1,445 Temple-Inland Inc............................. 73,876
2,470 Weyerhaeuser Company.......................... 126,742
-----------
633,399
-----------
CAPITAL GOODS: 17.91%
3,250 Dana Corporation.............................. 69,266
2,670 Eaton Corporation............................. 200,083
630 Hewlett-Packard Company....................... 84,735
1,330 International Business Machines
Corporation................................. 135,660
2,780 Lucent Technologies Inc....................... 165,410
1,045 Motorola, Inc................................. 178,173
3,970 National Semiconductor Corporation............ 298,246
4,760 Pitney Bowes Inc.............................. 235,620
-----------
1,367,193
-----------
COMMUNICATIONS: 12.73%
4,337 AT&T Corp..................................... 214,410
2,405 ALLTEL Corporation............................ 139,490
1,555 BCE Inc....................................... 170,953
2,070 Cable & Wireless PLC.......................... 133,774
1,596 GTE Corporation............................... 94,164
1,350 MediaOne Group, Inc........................... 105,975
2,965 SBC Communications Inc........................ 112,678
-----------
971,444
-----------
CONSUMER CYCLICAL: 6.59%
1,850 Dow Jones & Company, Inc...................... 115,394
3,840 Ford Motor Company............................ 159,840
3,572 The Limited, Inc.............................. 121,448
4,755 Starwood Hotels & Resorts Worldwide, Inc...... 106,690
-----------
503,372
-----------
See Notes to Financial Statements.
8
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
CONSUMER STAPLES: 6.49%
2,535 Bausch & Lomb Incorporated.................... $ 133,721
3,655 Kimberly-Clark Corporation.................... 188,918
3,390 The McGraw-Hill Companies, Inc................ 172,466
-----------
495,105
-----------
ENERGY: 11.11%
5,790 Baker Hughes Incorporated..................... 149,816
7,665 Conoco Inc. - Class B......................... 150,905
2,585 Exxon Mobil Corporation....................... 194,683
2,110 Kerr-McGee Corporation........................ 94,423
6,170 The Williams Companies, Inc................... 257,983
-----------
847,809
-----------
FINANCIAL: 18.63%
2,374 American General Corporation.................. 123,893
3,500 The Bank of New York Company, Inc............. 116,594
2,935 The Chase Manhattan Bank...................... 233,699
5,325 Fannie Mae.................................... 282,225
5,896 Fleet Boston Corporation...................... 160,666
3,245 The Hartford Financial Services Group, Inc.... 101,406
4,170 Household International, Inc.................. 133,179
1,575 Merrill Lynch & Co., Inc...................... 161,438
3,290 Wells Fargo & Company......................... 108,776
-----------
1,421,876
-----------
HEALTHCARE: 7.36%
4,100 American Home Products Corporation............ 178,350
3,930 Baxter International Inc...................... 214,185
1,980 Warner-Lambert Company........................ 169,414
-----------
561,949
-----------
UTILITIES: 8.12%
5,105 The Coastal Corporation....................... 214,729
3,971 Dynegy Inc.................................... 186,141
5,560 The Montana Power Company..................... 218,925
-----------
619,795
-----------
Total Common Stocks
(Cost $ 7,728,749): 97.24%.................. 7,421,942
===========
See Notes to Financial Statements.
9
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares SHORT-TERM INVESTMENTS: 3.33% Market Value
- --------------------------------------------------------------------------------
$255,886 Firstar Stellar Treasury Fund
(Cost $ 255,886)............................ $ 255,886
-----------
Total Investments in Securities
(Cost $7,984,635): 100.59%.................. 7,677,828
-----------
Liabilities in excess of other assets: (0.59%) (45,078)
-----------
Total Net Assets: 100.00%..................... $ 7,632,750
===========
Gross unrealized appreciation and depreciation of securities is as follows:
Gross unrealized appreciation................. $ 409,343
Gross unrealized depreciation................. (716,150)
-----------
Net unrealized appreciation............ $ (306,808)
===========
See Notes to Financial Statements.
10
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
CHARTWELL SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES AT FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL CAP LARGE CAP
VALUE FUND VALUE FUND
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(identified cost $821,550 and
$7,984,635, respectively) ................ $828,651 7,713,043
-------- -----------
Receivables:
Due From Advisor ......................... 7,007 1,470
Dividends and interest ................... 512 16,896
Prepaid expenses ............................ 577 576
-------- -----------
Total assets .......................... 836,747 7,731,985
-------- -----------
LIABILITIES
Payables:
Due to administrator ..................... 2,384 2,384
Investment securities purchased .......... 0 85,426
Accrued expenses ............................ 12,190 11,425
-------- -----------
Total liabilities ..................... 14,574 99,235
-------- -----------
NET ASSETS ..................................... $822,173 $ 7,632,750
======== ===========
Net asset value and redemption price per
share ($822,173/78,087 and
$7,632,750/795,469 shares outstanding;
unlimited number of shares (par value
$0.01) authorized) .......................... $ 10.53 $ 9.60
======== ===========
COMPONENTS OF NET ASSETS
Paid-in capital ............................. $798,897 $ 8,040,797
Accumulated net investment income ........... 342 17,245
Accumulated net realized gain (loss)
on investments ........................... 15,833 (118,484)
Net unrealized appreciation
(depreciation) on investments ............ 7,101 (306,808)
-------- -----------
Net assets ............................ $822,173 $ 7,632,750
======== ===========
See Notes to Financial Statements.
11
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
CHARTWELL SMALL CAP VALUE FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 1, 1999* THROUGH FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL CAP LARGE CAP
VALUE FUND VALUE FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends ....................................... $ 3,643 $ 25,563
Interest ........................................ 488 2,798
-------- ---------
Total income ................................. 4,131 28,361
-------- ---------
Expenses
Organization expense ............................ 25,000 25,000
Administration fees (Note 3) .................... 12,493 12,493
Professional fees ............................... 9,996 9,996
Fund accounting fee ............................. 5,831 5,831
Transfer agent fees ............................. 5,414 5,414
Custodian ....................................... 2,999 2,999
Advisory fees (Note 3) .......................... 1,851 5,796
Other ........................................... 1,249 1,249
Trustees' fees .................................. 1,041 1,041
Reports to shareholders ......................... 833 833
Registration fees ............................... 332 306
-------- ---------
Total expenses ............................... 67,039 70,958
Less: advisory fee waiver and
absorption (Note 3) ....................... (64,463) (62,085)
-------- ---------
Net expenses ................................. 2,576 8,873
-------- ---------
Net investment income ..................... 1,555 19,487
-------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions ..................................... 15,833 (118,484)
Net change in unrealized appreciation
(depreciation)on investments ..................... 7,101 (306,808)
-------- ---------
Net realized and unrealized gain
(loss) on investments ........................... 22,934 (425,292)
-------- ---------
Net Increase (Decrease) in Net Assets
Resulting from Operations ...................... $ 24,489 $(405,805)
======== =========
See Notes to Financial Statements.
12
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
CHARTWELL SMALL CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD OCTOBER 1, 1999* THROUGH FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL CAP LARGE CAP
VALUE FUND VALUE FUND
- --------------------------------------------------------------------------------
NET INCREASE IN ASSETS FROM
OPERATIONS
Net investment income .......................... $ 1,555 $ 19,487
Net realized gain (loss) from security
transactions .................................. 15,833 (118,484)
Net change in unrealized appreciation
(depreciation) on investments ................. 7,101 (306,808)
--------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ..................... 24,489 (405,805)
--------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income .......................... (1,213) (2,242)
--------- -----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from
net change in outstanding shares (a) .......... 798,897 8,040,797
--------- -----------
TOTAL INCREASE IN NET ASSETS ................... 822,173 7,632,750
--------- -----------
NET ASSETS
Beginning of period ............................... 0 0
--------- -----------
END OF PERIOD ..................................... $ 822,173 $ 7,632,750
========= ===========
(a) A summary of capital shares transactions is as follows:
October 1, 1999* to October 1, 1999* to
February 29, 2000# February 29, 2000#
------------------------ ------------------------
Shares Paid in Capital Shares Paid in Capital
------ --------------- ------ ---------------
Shares sold ............. 104,795 $ 1,063,277 795,769 $ 8,043,669
Shares issued in
reinvestment of
distributions .......... 120 1,213 224 2,242
Shares redeemed ......... (26,828) (265,593) (523) (5,114)
-------- ----------- -------- -----------
Net increase ............ 78,087 $ 798,897 795,469 $ 8,040,797
======== =========== ======== ===========
- ----------
* Commencement of operations.
# Unaudited.
See Notes to Financial Statements.
13
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SMALL CAP LARGE CAP
VALUE FUND VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
October 1, 1999* October 1, 1999*
to to
February 29, 2000# February 29, 2000#
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period ............ $10.00 $10.00
------ ------
Income from investment operations:
Net investment income ........................ 0.02 0.02
Net realized and unrealized gain on
investments .............................. 0.53 (0.40)
------ ------
Total from investment operations ................ 0.55 (0.38)
------ ------
Less distributions:
From net investment income ................... (0.02) (0.02)
------ ------
Net asset value, end of period .................. $10.53 $ 9.60
====== ======
Total return .................................... 5.57%+ (3.72%)+
Ratios/supplemental data:
Net assets, end of period (thousands) ........... $ 822 $7,635
Ratio of expenses to average net assets:
Before expense reimbursement ................. 30.75%** 3.90%**
After expense reimbursement .................. 1.10%** 0.75%**
Ratio of net investment income to
average net assets
After expense reimbursement .................. 0.66%** 1.65%**
Portfolio turnover rate ......................... 30.24% 64.92%
</TABLE>
- ----------
* Commencement of operations.
** Annualized.
+ Not Annualized.
# Unaudited.
See Notes to Financial Statements.
14
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
CHARTWELL SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS AT FEBRUARY 29, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Chartwell Large Cap Value Fund and Chartwell Small Cap Value Fund (the
"Funds") are each 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. Each Fund's
investment objective is growth of capital, with a secondary objective to provide
current income. The Funds began operations on October 1, 1999.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. These policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION: The Funds' 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 Funds' 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, which are determined in accordance with
income tax regulations, are recorded on the ex-dividend date.
Distributions which exceed net realized gains for financial reporting
purposes but not for tax purposes are reported as distributions in
15
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
CHARTWELL SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
excess of net realized gains and are primarily due to differing
treatments for wash sales and realized losses subsequent to October 31
on sale of securities. 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 period ended February 29, 2000, Chartwell Investment Partners (the
"Advisor") provided the Funds 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 each
Fund. As compensation for its services, the Advisor is entitled to a monthly fee
at the annual rate of 0.50% based upon the average daily net assets of the
Chartwell Large Cap Value Fund and 0.80% based upon the daily net assets of the
Chartwell Small Cap Value Fund. For the period ended February 29, 2000, the
Chartwell Large Cap Value Fund and the Chartwell Small Cap Value Fund incurred
$5,796 and $1,851, respectively, in Advisory Fees.
The Funds are responsible for their own operating expenses. The Advisor has
agreed to reduce fees payable to it by each Fund and to pay each Fund's
operating expenses to the extent necessary to limit each Fund's aggregate annual
operating expenses to 0.75% of average net assets (the "expense cap") for the
Chartwell Large Cap Value Fund and 1.10% of average net assets (the "expense
cap") for the Chartwell Small Cap Value Fund. Any such reductions made by the
Advisor in its fees or payment of expenses which are a 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 review and approval at the time the reimbursed is made.
16
<PAGE>
CHARTWELL LARGE CAP VALUE FUND
CHARTWELL SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Such reimbursement may not be paid prior to a Fund's payment of current ordinary
operating expenses. For the period ended February 29, 2000, the Advisor reduced
its fees and absorbed Fund expenses in the amount of $37,085 for the Chartwell
Large Cap Value Fund and $69,463 for the Chartwell Small Cap Value Fund; no
amounts were reimbursed to the Advisor.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Funds; 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 Fund expenses and reviews each 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 Funds'
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 - PURCHASES AND SALES OF SECURITIES
For the period ended February 29, 2000, the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, for the
Chartwell Large Cap Value Fund were $9,896,099 and $2,130,495, respectively.
For the period ended February 29, 2000, the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, for the
Chartwell Small Cap Value Fund were $718,044 and $162,958, respectively.
17
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This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
