ELC
EDGAR LOMAX VALUE FUND
ANNUAL REPORT
OCTOBER 31, 2000
<PAGE>
EDGAR LOMAX VALUE FUND
Annual Report
December 18, 2000
Dear Fellow Shareholder:
It is with great pleasure that I report to you the successes of the Edgar
Lomax Value Fund at a time that may otherwise appear to be a difficult one for
stock investing. Specifically, your Fund rose 19.88% from June 30 to October 31
of this year (bringing its assets to $4.8 million) while the S&P 500 index
actually declined 1.36%. Furthermore, from its inception on December 12, 1997
through October 31, 2000 (nearly three years), the Fund's average annual total
return was 7.79%.
In the first ten months of the year 2000, we saw two very different stock
market environments. Through mid-March, technology and related stocks rose in
almost boundless fashion as investors eagerly bid their prices up. It was
believed that these companies' recently high earnings growth rates would
continue indefinitely and, thus, justify the rich prices paid for their shares.
As it turns out, the S&P 500's record high reached on March 24, 2000 would mark
at least a temporary end to this speculation. From that day through October 31,
the S&P 500 fell 5.79%. The resulting flow of money toward less "glamorous" but,
we believe, more dependable "Old Economy" stocks lifted your Fund to a 15.55%
gain over the same period.
We have consistently focused on the actual business results of the
companies in which we invest, rather than the movement of their stock prices. As
a result, during the period that "growth" (specifically, high-tech) investing
seemed the only show in town, we steadily accumulated the "bargain-priced"
shares of quality companies such as Honeywell. Very recently, not only have
investors in general begun to reward these undervalued companies but, in the
case of Honeywell, its shares rose just over 50% in the month of October as
General Electric decided to buy the company.
The sharp price swings in the stock market again remind all of us of the
risks of equity investing. Our philosophy is that we should minimize these
fluctuations to the extent possible, while still delivering the above-average
returns you expect from stock investing. In simple terms, we do this by
investing in large, asset-rich (and increasingly profitable) companies at times
when most investors seem to be ignoring these financial facts. Consequently, we
are given a bargain opportunity in exchange for simply having the confidence to
wait for stock prices to reflect corporate values as, in the long run, they
inevitably will.
As always, we greatly appreciate your investment in the Edgar Lomax Value
Fund. You can be sure that we are committed to serving you in the best way we
know how.
Cordially,
/s/ Randall R. Eley
Randall R. Eley
<PAGE>
EDGAR LOMAX VALUE FUND
--------------------------------------------------------------------------------
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/Barra Value Index and the
Lipper Large Cap Value Fund Index.
Average Annual Total Return(1)
One year......................3.65%
Since inception (12/12/97)....7.79%
<TABLE>
<CAPTION>
Edgar Lomax S & P 500 Composite S & P 500 Lipper Large Cap
Value Fund Stock Price Index Barra Value Index Value Fund Index
---------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
12-Dec-97 $10,000 $10,000 $10,000 $10,000
31-Jan-98 $ 9,949 $10,303 $10,062 $10,129
30-Apr-98 $11,150 $11,724 $11,499 $11,390
31-Jul-98 $10,619 $11,864 $11,175 $11,208
31-Oct-98 $10,789 $11,679 $10,727 $10,955
31-Jan-99 $11,031 $13,650 $11,918 $12,158
30-Apr-99 $12,770 $14,282 $13,051 $12,962
31-Jul-99 $12,517 $14,254 $12,858 $12,924
31-Oct-99 $11,981 $14,675 $12,722 $12,808
31-Jan-00 $11,038 $15,055 $13,862 $12,688
30-Apr-00 $11,276 $15,723 $14,254 $13,120
31-Jul-00 $10,758 $14,676 $14,009 $12,926
31-Oct-00 $12,418 $14,702 $15,224 $13,566
</TABLE>
--------------------------------------------------------------------------------
Past performance is no guarantee of future results. Share value will fluctuate,
so that an investor's shares, when redeemed, may be worth more or less than the
original investment. An Index does not incur expenses and is not available for
investment.
*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 Large Cap Value Fund Index consists of the largest value funds as
tracked by Lipper Inc. Large Cap Value funds seek long-term growth of capital of
investing in companies that are considered to be undervalued relative to a major
unmanaged stock index based on price-to-current earnings, book value, asset
value, or other factors.
(1) Average Annual Total Return represents the average change in account value
over the periods indicated. This page left intentionally blank. This page
left intentionally blank.
2
<PAGE>
EDGAR LOMAX VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000
--------------------------------------------------------------------------------
Shares COMMON STOCKS: 98.65% Market Value
--------------------------------------------------------------------------------
AEROSPACE/DEFENSE: 4.06%
2,700 General Dynamics Corporation...................... $ 193,219
-----------
AUTOMOBILES: 3.82%
2,925 General Motors Corporation........................ 181,716
-----------
BANKS - MONEY CENTER: 5.04%
1,450 J.P. Morgan & Co., Incorporated................... 239,975
-----------
CHEMICALS: 5.32%
3,438 E. I. du Pont de Nemours and Company.............. 155,999
3,175 The Dow Chemical Company.......................... 97,234
-----------
253,233
-----------
CHEMICALS - SPECIALTY: 1.34%
3,800 International Flavors & Fragrances, Inc........... 63,650
-----------
ELECTRIC COMPANIES: 7.68%
4,475 American Electric Power Company, Inc.............. 185,712
6,125 The Southern Company.............................. 179,922
-----------
365,634
-----------
ELECTRICAL EQUIPMENT: 5.27%
2,465 Honeywell, Inc.................................... 132,648
3,000 Rockwell International Corporation................ 117,938
-----------
250,586
-----------
ELECTRONICS - DEFENSE: 3.90%
5,800 Raytheon Company, Class A......................... 185,600
-----------
INSURANCE - LIFE/HEALTH: 3.21%
1,900 American General Corporation...................... 152,950
-----------
INSURANCE - MULTI-LINE: 9.37%
1,825 CIGNA Corporation................................. 222,559
3,000 The Hartford Financial Services Group, Inc........ 223,312
-----------
445,871
-----------
3
<PAGE>
EDGAR LOMAX VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000, CONTINUED
--------------------------------------------------------------------------------
Shares Market Value
--------------------------------------------------------------------------------
LEISURE TIME - PRODUCTS: 2.61%
6,400 Brunswick Corporation............................. $ 124,400
-----------
MACHINERY - DIVERSIFIED: 3.61%
4,900 Caterpillar Inc................................... 171,806
-----------
MANUFACTURING - DIVERSIFIED: 4.67%
2,300 Minnesota Mining and Manufacturing Company........ 222,237
-----------
NATURAL GAS: 5.55%
3,500 The Coastal Corporation........................... 264,031
-----------
OIL - INTERNATIONAL INTEGRATED: 3.09%
1,650 Exxon Mobil Corporation........................... 147,159
-----------
PAPER & FOREST PRODUCTS: 2.39%
3,100 International Paper Company....................... 113,538
-----------
PHOTOGRAPHY/IMAGING: 2.62%
2,775 Eastman Kodak Company............................. 124,528
-----------
RAILROADS: 5.37%
5,900 Burlington Northern Inc........................... 156,719
7,000 Norfolk Southern Corporation...................... 98,875
-----------
255,594
-----------
RETAIL - GENERAL MERCHANDISE: 2.43%
4,400 The May Department Stores Company................. 115,500
-----------
RETAIL - SPECIALTY/RETAIL: 3.50%
6,600 The Limited, Inc.................................. 166,650
-----------
TELECOMMUNICATIONS - LONG DISTANCE: 0.54%
1,100 AT&T Corp......................................... 25,506
-----------
4
<PAGE>
EDGAR LOMAX VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000, CONTINUED
--------------------------------------------------------------------------------
Shares Market Value
--------------------------------------------------------------------------------
TELEPHONE: 7.76%
4,100 SBC Communications Inc............................ $ 236,519
2,300 Verizon Corporation............................... 132,969
-----------
369,488
-----------
TOBACCO: 5.50%
7,150 Philip Morris Companies Inc....................... 261,869
-----------
Total Common Stocks (Cost $4,420,559+)............ 4,694,740
-----------
Principal Amount SHORT-TERM INVESTMENTS: 1.63%
--------------------------------------------------------------------------------
$77,675 Firstar Stellar Treasury Fund (Cost $77,675)...... 77,675
-----------
Total Investments in Securities
(Cost $4,498,234): 100.28%...................... 4,772,415
Liabilities in Excess of Other Assets: (0.28%).... (13,243)
-----------
Total Net Assets: 100.00%......................... $ 4,759,172
===========
+ At October 31, 2000, the cost of securities for Federal tax purposes was
$4,508,382. Gross unrealized appreciation and depreciation of securities is
as follows:
Gross unrealized appreciation.............................. $ 726,340
Gross unrealized depreciation.............................. (462,307)
-----------
Net unrealized appreciation................................ $ 264,033
===========
See accompanying Notes to Financial Statements.
5
<PAGE>
EDGAR LOMAX VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES AT OCTOBER 31, 2000
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(identified cost of $4,498,234) ............................... $4,772,415
Receivables
Due from Advisor ............................................. 1,741
Dividends and interest ....................................... 6,053
Fund shares sold ............................................. 200
Prepaid expenses ............................................... 1,446
----------
Total assets ............................................... 4,781,855
----------
LIABILITIES
Accrued expenses ............................................... 22,683
----------
Total liabilities .......................................... 22,683
----------
NET ASSETS ...................................................... $4,759,172
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($4,759,172 / 413,065 shares outstanding;
unlimited number of shares [par value $0.01] authorized) ....... $ 11.52
==========
COMPONENTS OF NET ASSETS
Paid-in capital ................................................ $4,333,633
Undistributed net investment income ............................ 46,220
Accumulated net realized gain on investments ................... 105,138
Net unrealized appreciation on investments ..................... 274,181
----------
Net assets ................................................. $4,759,172
==========
See accompanying Notes to Financial Statements.
6
<PAGE>
EDGAR LOMAX VALUE FUND
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED OCTOBER 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends .................................................... $ 112,130
Interest ..................................................... 2,992
---------
Total income ............................................... 115,122
---------
Expenses
Advisory fees (Note 3) ....................................... 38,679
Administration fees (Note 3) ................................. 30,082
Professional fees ............................................ 21,363
Fund accounting fees ......................................... 20,751
Transfer agent fees .......................................... 13,538
Custody fees ................................................. 5,614
Trustee fees ................................................. 3,671
Other ........................................................ 1,465
Registration fees ............................................ 2,643
Insurance expense ............................................ 1,136
---------
Total expenses ............................................. 138,942
Less, advisory fee waiver and absorption (Note 3) .......... (71,048)
---------
Net expenses ............................................... 67,894
---------
NET INVESTMENT INCOME ................................... $ 47,228
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions ................... 116,193
Net change in unrealized appreciation on investments ........... 15,417
---------
Net realized and unrealized gain on investments ............ 131,610
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $ 178,838
=========
See accompanying Notes to Financial Statements.
7
<PAGE>
EDGAR LOMAX VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year
Ended Ended
October 31, October 31,
2000 1999
----------- -----------
INCREASE IN NET ASSETS FROM
OPERATIONS
<S> <C> <C>
Net investment income ................................ $ 47,228 $ 30,291
Net realized gain on security transactions ........... 116,193 217,244
Net change in unrealized appreciation on investments . 15,417 91,218
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 178,838 338,753
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ........................... (36,575) (21,112)
From net realized gains .............................. (218,064) (12,685)
----------- -----------
Total dividends and distibution to shareholders .... (254,639) (33,797)
----------- -----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase in net assets derived
from net change in outstanding shares (a) ............ 568,395 667,788
----------- -----------
TOTAL INCREASE IN NET ASSETS ....................... 492,594 972,744
NET ASSETS
Beginning of year ...................................... 4,266,578 3,293,834
----------- -----------
END OF YEAR ............................................ $ 4,759,172 $ 4,266,578
=========== ===========
</TABLE>
(a) A summary of share transactions is as follows:
<TABLE>
<CAPTION>
Year Year
Ended Ended
October 31, 2000 October 31, 1999
----------------------- -----------------------
Shares Paid in Capital Shares Paid in Capital
------ --------------- ------ ---------------
<S> <C> <C> <C> <C>
Shares sold ................................... 78,917 $ 840,075 69,273 $ 835,121
Shares issued on reinvestments of distributions 4,763 51,488 782 8,441
Shares redeemed ............................... (30,703) (323,168) (15,423) (175,774)
------ --------- ------ ---------
Net increase .................................. 52,977 $ 568,395 54,632 $ 667,788
====== ========= ====== =========
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
EDGAR LOMAX VALUE FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 12,
Year Year 1997*
Ended Ended through
October 31, October 31, October 31,
2000 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period ............... $ 11.85 $ 10.78 $ 10.00
--------- --------- ---------
Income from investment operations:
Net investment income ............................ 0.12 0.08 0.07
Net realized and unrealized gain on investments .. 0.26 1.10 0.72
--------- --------- ---------
Total from investment operations ................... 0.38 1.18 0.79
--------- --------- ---------
Less distributions:
From net investment income ....................... (0.10) (0.07) (0.01)
From net realized gains .......................... (0.61) (0.04) 0.00
--------- --------- ---------
Total distributions ................................ (0.71) (0.11) (0.01)
--------- --------- ---------
Net asset value, end of period ..................... $ 11.52 $ 11.85 $ 10.78
========= ========= =========
TOTAL RETURN ....................................... 3.65% 11.05% 7.89%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) .............. $ 4,759 $ 4,267 $ 3,294
Ratio of expenses to average net assets:
Before expense reimbursement ..................... 3.59% 3.63% 4.67%+
After expense reimbursement ...................... 1.75% 1.75% 1.75%+
Ratio of net investment income to average net assets
After expense reimbursement ...................... 1.22% 0.81% 0.81%+
Portfolio turnover rate ............................ 47.43% 41.85% 32.71%
</TABLE>
* Commencement of operations.
+ Annualized.
++ Not Annualized.
See accompanying Notes to Financial Statements.
9
<PAGE>
EDGAR LOMAX VALUE FUND
NOTES TO FINANCIAL STATEMENTS AT OCTOBER 31, 2000
--------------------------------------------------------------------------------
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
are 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 on the NASDAQ National Market System for which market
quotations are readily available are 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
are valued at the most recent traded 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, 2000, 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.
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, 2000, the Fund incurred $38,679 in Advisory Fees.
10
<PAGE>
EDGAR LOMAX VALUE FUND
NOTES TO FINANCIAL STATEMENTS, continued
--------------------------------------------------------------------------------
The Fund is responsible for its own operating expenses. The Advisor has
agreed to reduce fees payable to it by the Fund and to pay Fund operating
expenses to the extent necessary to limit the Fund's aggregate annual operating
expenses to 1.75% of average net assets (the "expense cap"). Any such reduction
made by the Advisor in its fees or payment of expenses which are the Fund's
obligation are subject to reimbursement by the Fund to the Advisor, if so
requested by the Advisor, in subsequent fiscal years if the aggregate amount
actually paid by the Fund toward the operating expenses for such fiscal year
(taking into account the reimbursement) does not exceed the applicable
limitation on Fund expenses. The Advisor is permitted to be reimbursed only for
fee reductions and expense payments made in the previous three fiscal years, but
is permitted to look back five years and four years, respectively, during the
initial six years and seventh year of the Fund's operations. Any such
reimbursement is also contingent upon Board of Trustees review and approval at
the time the reimbursement is made. Such reimbursement may not be paid prior to
a Fund's payment of current ordinary operating expenses. For the year ended
October 31, 2000, the Advisor reduced its fees and absorbed Fund expenses in the
amount of $71,048; no amounts were reimbursed to the Advisor. Cumulative
expenses subject to recapture pursuant to the aforementioned conditions amounted
to $210,097.
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 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 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, 2000, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $2,180,608 and
$1,848,072, respectively.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
Edgar Lomax Value Fund
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 Edgar Lomax Value Fund (the "Fund")
at October 31, 2000, the results of its operations for the year then ended, the
changes in its net assets and the financial highlights for each of the two years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America. 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 audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, 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 audits, which included confirmation of securities at October
31, 2000 by correspondence with the custodian, provide a reasonable basis for
our opinion. The financial highlights for the period prior from December 12,
1997 through October 31, 1998, were audited by other independent accountants
whose report dated December 4, 1998 expressed an unqualified opinion on those
financial statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
December 5, 2000
12
<PAGE>
TAX DESIGNATION
The Fund hereby designates $160,044 as a capital gain dividend for the year
ended October 31, 2000 under Section 852(b)(3)(c) of the Internal Revenue Code.
13
<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 Institutional Custody Services
425 Walnut Street
Cincinnati, OH 45202
TRANSFER AGENT
ICA Fund Services Corp.
4455 E. Camelback Rd., Ste. 261E
Phoenix, AZ 85018
(800) 385-7003
INDEPENDENT ACCOUNTANTS
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
