N-30D 1 clcvf_cscvf-a.txt (CHARTWELL LARGE CAP VALUE FUND/CHARTWELL SMALL CAP VALUE FUND LOGO) CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND 1235 WESTLAKES DRIVE, SUITE 330 BERWYN, PA 19312 (610) 296-1400 ANNUAL REPORT AUGUST 31, 2002 CHARTWELL SMALL CAP VALUE FUND Dear Shareholder: The past year was a difficult one for equity investors. We saw a mild recession and currently the economy seems to be exhibiting only faint signs of recovery. A dramatic decline in interest rates has helped to bolster equity valuations but corporate governance scandals, poor earnings and concerns about hostilities in the Middle East short-circuited the bounce after last autumn's decline. Consistent with the last two years, small cap value stocks were again the best choice among equities. A high concentration of steadily growing financial and consumer cyclical stocks along with low exposure to technology and healthcare issues generated this outperformance. Your portfolio returned (6.40%) for the year ended August 31, 2002, modestly behind of the Russell 2000 Value benchmark return of (5.59%) during that time. The Fund's annualized return since inception at October 1, 1999 was 12.93% as of August 31, 2002. Your portfolio's performance was the result of strength in the consumer cyclical and REIT sectors offset by weak technology and consumer service stocks. In consumer cyclicals, auto parts manufacturers Harman International and Borg- Warner were leading stocks. The entire REIT group has been up significantly over the last year due to the high dividend yields and modest cash flow growth. Home Properties and PS Business Parks were our best performers. Demand for technology products continues to suffer in the post-boom era and though we were underweighted in the group, nearly all our stocks were down. Consumer spending has held up well, but it has been concentrated in cars and homes. Our apparel retailing, lodging and media stocks such as Men's Warehouse, Orient Express and Spanish Broadcasting suffered. We continue to implement our disciplined investment process by focusing on stocks inexpensive both relative to the market and to the company's own history. We research the business fundamentals of our companies for improving prospects and only invest in stocks that demonstrate catalysts for price appreciation. Your portfolio is positioned for steady, modest economic growth yet is balanced across sectors. It would be surprising if small cap value stocks could continue their enormous outperformance versus growth stocks and large cap stocks. Much of the previously existing valuation disparity between growth and value and small and large has been corrected to nearer historical norms. However, small value stocks generally perform well through the early stages of an economic recovery. /s/David C. Dalrymple David C. Dalrymple, CFA Managing Partner and Portfolio Manager Past performance does not predict future performance. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. Please see the Schedule of Investments for fund holdings. Fund holdings are subject to change at any time and are not recommendations to buy or sell any security. The Fund invests in smaller companies, which may involve additional risks such as limited liquidity and greater volatility. Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales. The Russell 2000 Value Index Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. 11/02 CHARTWELL SMALL CAP VALUE FUND INSTITUTIONAL CLASS Comparison of the value of a $10,000 investment in the Chartwell Small Cap Value Fund Institutional Class and the Russell 2000 Index Chartwell Small Cap Value Fund Date Institutional Class Russell 2000 Index ---- ------------------- ------------------ 10/1/1999 $10,000 $10,000 11/30/1999 $10,130 $10,640 2/29/2000 $10,557 $13,579 5/31/2000 $11,419 $11,226 8/31/2000 $12,782 $12,713 11/30/2000 $12,502 $10,578 2/28/2001 $14,060 $11,292 5/31/2001 $14,900 $11,865 8/31/2001 $15,236 $11,235 11/30/2001 $14,763 $11,088 2/28/2002 $16,041 $11,331 5/31/2002 $17,262 $11,804 8/31/2002 $14,260 $9,500 Average Annual Total Return 1 Year (6.40%) Since inception (10/1/99) 12.93% CHARTWELL SMALL CAP VALUE FUND ADVISOR CLASS Comparison of the value of a $10,000 investment in the Chartwell Small Cap Value Fund Advisor Class versus the Russell 2000 Index Chartwell Small Cap Value Fund Date Advisor Class Russell 2000 Index ---- ------------- ------------------ 3/1/2002 $10,000 $10,000 3/31/2002 $10,506 $10,601 4/30/2002 $10,890 $10,697 5/31/2002 $10,593 $10,223 6/30/2002 $10,121 $9,715 7/31/2002 $8,854 $8,248 8/31/2002 $8,753 $8,228 Cumulative Total Return Since inception (3/1/02) (12.47%) Past performance does not predict future performance. The performance data and graphs do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions, or redemption of Fund shares. The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. Average Annual total return represents the average change in account value over the periods indicated. CHARTWELL LARGE CAP VALUE FUND Dear Shareholder: The last year has been volatile and difficult to say the least. Early in the period, the equity markets were advancing, as expected, in anticipation of economic recovery. Starting in late March, the concept of a smooth economic recovery began to be questioned. This, combined with major bankruptcies, corporate fraud, terrorist threats and the general loss of confidence in corporate earnings quality, precipitated a greater than 26% decline in the S&P 500 from peak to trough. Performances varied, but all indices were down meaningfully. 1ST HALF 2ND HALF FULL FISCAL YEAR INDEX 9/01 - 2/02 3/02 - 8/02 9/01 - 8/02 ----- ----------- ----------- ----------- Chartwell LCV Fund 0.80 -16.31 -15.65 Russell 1000 Value -0.79 -12.42 -13.07 S&P 500 -1.67 -16.51 -17.86 Russell 1000 Growth -2.41 -17.72 -22.15 Barra Value -5.81 -20.25 -20.46 Chartwell Large Cap Value Fund outperformed in the first 6 months of the fiscal year and then gave it back in the second half of the year. The primary reasons for this giveback are twofold. First, the portfolio was set up for economic recovery, which has been pushed out and second, the defensive pharmaceutical portion of the portfolio was hurt by headline events at Abbott Labs and Wyeth. During the fiscal year ending in August, the best and worst performers in the portfolio ranked by contribution to return were: 5 BEST PERFORMING STOCKS 5 WORST PERFORMING STOCKS ------------------------ ------------------------- Philip Morris 0.55% El Paso -1.38% McGraw-Hill 0.48% Wyeth -1.19% Wells Fargo 0.47% Household International -1.19% General Dynamics 0.44% Citigroup -1.14% Omnicom Group 0.33% Hartford Financial -0.87% We have recently eliminated Omnicom Group, McGraw-Hill and General Dynamics from the portfolio. These stocks were sold after strong moves relative to the market. We have added to our position in Hartford Financial. Hartford is a leading provider of variable annuities and is currently trading at 8x next year's earnings. We will continue to adhere to our disciplines: selling stocks that hit our price targets and yield sale hurdles, and redeploying assets into attractive areas of the market. The economic fundamentals continue to improve. The economy is recovering, corporate profits are slowly improving and there is ample liquidity. In six months the accounting issues will largely be a thing of the past, and valuations will likely be moving toward more normalized levels. Our strategy is to look for attractive stocks amid the current wreckage and to position the portfolio for improvement in the economy. We feel that the portfolio is extremely attractive and significantly undervalued. The risks from terrorist threats will not go away, and will act as a restraining influence, but stock prices will ultimately follow fundamentals. /s/Kevin A. Melich Kevin A. Melich Managing Partner & Portfolio Manager Past performance is no guarantee of future results. The principal value and investment return of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The S&P 500 Composite Stock Price Index is an unmanaged capitalization-weighted index of 500 stocks designed to represent the broad domestic economy. The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and forecasted growth values. The Barra Value Index is designed to differentiate between fast growing companies and growing or undervalued companies. Please refer to the Annual Report for performance, portfolio holdings and index information. All indices mentioned are unmanaged indices and are not available for investment. Fund holdings are subject to change and are not recommendations to buy or sell any security. 11/02 CHARTWELL LARGE CAP VALUE FUND INSTITUTIONAL CLASS Comparison of the value of a $10,000 investment in the Chartwell Large Cap Value Fund Institutional Class versus the Russell 1000 Index Chartwell Large Cap Value Fund Date Institutional Class Russell 2000 Index ---- ------------------- ------------------ 10/1/1999 $10,000 $10,000 11/30/1999 $10,230 $10,947 2/29/2000 $9,628 $11,101 5/31/2000 $10,661 $11,407 8/31/2000 $10,661 $12,355 11/30/2000 $10,480 $10,574 2/28/2001 $11,059 $10,023 5/31/2001 $11,321 $10,178 8/31/2001 $10,464 $9,214 11/30/2001 $10,444 $9,271 2/28/2002 $10,547 $9,066 5/31/2002 $10,313 $8,819 8/31/2002 $8,827 $7,603 Average Annual Total Return 1 Year (15.65%) Since inception (10/1/99) (4.19%) CHARTWELL LARGE CAP VALUE FUND ADVISOR CLASS Comparison of the value of a $10,000 investment in the Chartwell Large Cap Value Fund Advisor Class versus the Russell 1000 Index Chartwell Large Cap Value Fund Date Advisor Class Russell 2000 Index ---- ------------------- ------------------ 3/1/2002 $10,000 $10,000 3/31/2002 $10,360 $10,176 4/30/2002 $9,782 $9,593 5/31/2002 $9,565 $9,508 6/30/2002 $9,770 $8,807 7/31/2002 $8,108 $8,155 8/31/2002 $8,174 $8,197 Cumulative Total Return Since inception (3/1/02) (18.26%) Past performance does not predict future performance. The performance data and graphs do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions, or redemption of Fund shares. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Average Annual total return represents the average change in account value over the periods indicated. CHARTWELL SMALL CAP VALUE FUND SCHEDULE OF INVESTMENTS AS OF AUGUST 31, 2002 Shares COMMON STOCKS: 98.31% Market Value ------ --------------------- ------------ BASIC INDUSTRY: 15.96% 4,840 AptarGroup, Inc. $ 155,364 5,740 Arch Chemicals, Inc. 119,392 7,800 Buckeye Technologies, Inc.* 56,082 5,290 CLARCOR, Inc. 162,403 7,510 Cytec Industries, Inc.* 199,766 10,400 ElkCorp 174,200 8,200 H.B. Fuller Co. 220,990 10,300 Kadant, Inc. 156,972 5,100 Minerals Technologies, Inc. 202,725 5,700 NOVA Chemicals Corp. 119,244 12,100 Packaging Corp of America* 227,843 2,300 Texas Industries, Inc. 64,653 7,010 USFreightways Corp. 189,270 ----------- 2,048,904 ----------- BUSINESS SERVICES: 4.48% 8,400 ABM Industries, Inc. 140,952 6,500 G & K Services, Inc. - Class A 208,260 6,300 Insight Enterprises, Inc.* 70,938 11,940 MSC Industrial Direct Co., Inc.- Class A 154,981 ----------- 575,131 ----------- CAPITAL SPENDING: 5.93% 7,600 Albany International Corp. 166,440 9,920 Gardner Denver, Inc.* 198,400 6,910 Kaydon Corp. 145,801 5,500 Littlefuse, Inc.* 110,440 7,150 Regal-Beloit Corp. 139,425 ----------- 760,506 ----------- CONSUMER CYCLICAL: 6.00% 12,100 Aftermarket Technology Corp.* 187,671 4,590 BorgWarner, Inc. 276,502 7,650 Furniture Brands International, Inc.* 193,162 2,200 Harman International Industries, Inc. 113,146 ----------- 770,481 ----------- CONSUMER SERVICES: 14.23% 5,950 bebe stores, inc.* 80,325 5,400 Charlotte Russe Holding, Inc.* 69,822 13,600 CSK Auto Corp.* 172,040 10,700 Genesco, Inc.* 158,253 13,850 Helen of Troy Limited 165,646 4,100 Linens 'n Things, Inc.* 88,437 14,500 Prime Hospitality Corp.* 131,370 6,200 RARE Hospitality International, Inc.* 161,882 19,300 Spanish Broadcasting System, Inc.* 136,451 6,300 Speedway Motorsports, Inc.* 150,255 8,721 The Men's Wearhouse, Inc.* 164,827 17,300 Unifi, Inc.* 129,750 7,400 United Natural Foods, Inc.* 149,850 4,300 Wolverine World Wide, Inc. 67,381 ----------- 1,826,289 ----------- CONSUMER STAPLES: 2.89% 5,260 Corn Products International, Inc. 147,280 16,400 Rayovac Corp.* 223,040 ----------- 370,320 ----------- ENERGY: 3.76% 3,000 Atwood Oceanics, Inc.* 91,290 11,000 Cal Dive International, Inc.* 205,150 4,900 GulfMark Offshore, Inc.* 81,634 6,870 Lone Star Technologies, Inc.* 104,218 ----------- 482,292 ----------- FINANCIAL SERVICES: 18.21% 5,100 AmerUs Group Co. 163,149 6,160 Community First Bankshares, Inc. 167,675 6,510 Cullen/Frost Bankers, Inc. 243,474 8,430 Financial Federal Corp.* 257,958 8,050 Fulton Financial Corp. 150,535 9,004 Hudson United Bancorp 260,036 5,000 IPC Holdings, Ltd.* 150,900 4,200 Philadelphia Consolidated Holding Corp.* 152,124 5,500 Republic Bancorp, Inc. 74,525 2,800 StanCorp Financial Group, Inc. 153,160 8,700 Sterling Bancshares, Inc. 121,800 4,600 Webster Financial Corp. 175,444 6,400 Westamerica Bancorporation 267,008 ----------- 2,337,788 ----------- HEALTHCARE: 4.26% 4,500 Cambrex Corp. 172,395 10,300 Owens & Minor, Inc. 148,835 4,340 Renal Care Group, Inc.* 142,482 8,900 Sola International, Inc.* 83,215 ----------- 546,927 ----------- REITS: 10.45% 5,120 Alexandria Real Estate Equities, Inc. 224,922 6,235 Arden Realty, Inc. 156,249 4,400 BRE Properties, Inc. - Class A 144,980 7,720 Home Properties of New York, Inc. 265,722 8,500 Mission West Properties, Inc. 95,625 6,850 PS Business Parks, Inc. - Class A 239,750 6,450 SL Green Realty Corp. 213,301 ----------- 1,340,549 ----------- TECHNOLOGY: 6.83% 11,300 Asyst Technologies, Inc.* 101,361 4,700 DuPont Photomasks, Inc.* 114,492 8,300 Electronics for Imaging, Inc.* 124,749 9,700 Entegris, Inc.* 87,591 16,400 Integrated Silicon Solution, Inc.* 82,656 15,600 Lawson Software, Inc.* 70,200 7,500 Park Electrochemical Corp. 160,500 7,500 Radiant Systems, Inc.* 71,850 21,000 SIPEX Corp.* 63,000 ----------- 876,399 ----------- UTILITIES: 5.31% 8,100 Commonwealth Telephone Enterprises, Inc.* 309,825 14,800 El Paso Electric Co.* 173,900 8,400 Vectren Corp. 197,400 ----------- 681,125 ----------- Total Common Stocks (Cost $13,499,050) $12,616,711 ----------- SHORT-TERM INVESTMENTS: 1.92% ----------------------------- 246,136 Cash Trust Series II - Treasury Cash Series Fund II (Cost $246,136) 246,136 ----------- Total Investments in Securities (Cost $13,745,186): 100.23% 12,862,847 Liabilities in excess of Other Assets: (0.23%) (28,658) ----------- Net Assets: 100.00% $12,834,189 ----------- ----------- * Non-income producing security. See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND SCHEDULE OF INVESTMENTS AS OF AUGUST 31, 2002 Shares COMMON STOCKS: 96.82% Market Value ------ --------------------- ------------ BASIC INDUSTRY: 9.06% 16,695 Alcoa, Inc. $ 418,878 4,210 E.I. du Pont de Nemours 169,705 11,820 International Paper Co. 445,023 1,225 Johnson Controls, Inc. 105,705 7,440 MeadWestvaco Corp. 173,278 11,095 Monsanto Co. 203,815 9,985 The Dow Chemical Co. 301,747 ----------- 1,818,151 ----------- CAPITAL GOODS: 7.01% 14,485 Cooper Industries, Ltd. - Class A 473,949 3,520 Emerson Electric Co. 171,706 14,129 General Electric Co. 425,989 11,170 Honeywell International, Inc. 334,542 ----------- 1,406,186 ----------- CONSUMER CYCLICAL: 4.38% 11,355 Delphi Corp. 110,711 5,025 General Motors Corp. 240,496 15,115 The Stanley Works 527,211 ----------- 878,418 ----------- CONSUMER GOODS: 5.34% 3,200 Kimberly-Clark Corp. 191,488 12,880 Limited Brands 196,935 5,730 Maytag Corp. 187,027 7,345 Sears, Roebuck & Co. 334,271 5,525 The May Department Stores Co. 162,048 ----------- 1,071,769 ----------- CONSUMER STAPLES: 8.00% 5,968 Avon Products, Inc. 290,880 12,355 General Mills, Inc. 520,022 15,863 Philip Morris Companies, Inc. 793,150 ----------- 1,604,052 ----------- ENERGY: 12.68% 6,460 ChevronTexaco Corp. 495,030 1,160 DTE Energy Co. 49,776 5,855 Duke Energy Corp. 157,090 11,745 Exxon Mobil Corp. 416,360 23,335 Halliburton Co. 354,692 9,043 Kerr-McGee Corp. 423,665 7,235 Phillips Petroleum Co.* 380,416 5,490 TXU Corp. 265,496 ----------- 2,542,525 ----------- FINANCIAL SERVICES: 20.02% 7,555 AmSouth Bancorporation 169,761 6,155 Bank of America Corp. 431,342 11,240 BB&T Corp. 427,682 24,213 Citigroup, Inc. 792,976 3,455 Comerica, Inc. 202,117 18,035 FleetBoston Financial Corp. 435,185 3,045 Merrill Lynch & Co., Inc. 110,290 6,961 Morgan Stanley 297,374 13,580 PNC Financial Services Group 625,902 10,004 Wells Fargo & Co. 522,109 ----------- 4,014,738 ----------- HEALTHCARE: 4.88% 9,170 Abbott Laboratories 367,075 6,010 Bristol-Myers Squibb Co. 149,949 10,774 Wyeth 461,127 ----------- 978,151 ----------- INSURANCE/OTHER: 15.48% 21,427 ACE Limited 681,593 6,490 Freddie Mac 416,009 18,620 Household International, Inc. 672,368 6,615 Lincoln National Corp. 245,086 15,412 The Hartford Financial Services Group, Inc. 770,908 152 Travelers Property Casualty Corp.- Class A* 2,388 311 Travelers Property Casualty Corp.- Class B* 5,060 4,225 XL Capital Ltd. 311,002 ----------- 3,104,414 ----------- OFFICE EQUIPMENT: 1.28% 7,070 Pitney Bowes, Inc. 256,288 ----------- TECHNOLOGY: 6.77% 18,470 Electronic Data Systems Corp. 743,602 9,830 Flextronics International Ltd.* 93,090 6,905 International Business Machines Corp. 520,499 ----------- 1,357,191 ----------- TELECOMMUNICATIONS: 1.47% 11,897 SBC Communications, Inc. 294,332 ----------- UTILITIES: 0.45% 5,305 El Paso Corp. 89,708 ----------- Total Common Stocks (Cost $21,412,767) $19,415,923 ----------- SHORT-TERM INVESTMENTS: 2.54% ----------------------------- 510,049 Cash Trust Series II - Treasury Cash Series Fund II (Cost $510,049) 510,049 ----------- Total Investments in Securities (Cost $21,922,816): 99.36% 19,925,972 Other Assets less Liabilities: 0.64% 128,281 ----------- Net Assets: 100.00% $20,054,253 ----------- ----------- * Non-income producing security. See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND STATEMENTS OF ASSETS AND LIABILITIES AT AUGUST 31, 2002 SMALL CAP LARGE CAP VALUE FUND VALUE FUND ---------- ---------- ASSETS Investments in securities, at value (identified cost $13,745,186 and $21,922,816, respectively) $12,862,847 $19,925,972 Cash 14,624 0 Receivables: Investment securities sold 38,571 494,560 Fund shares sold 0 768 Dividends 6,809 48,567 Due From Advisor 2,800 2,773 Prepaid expenses 2,447 1,680 ----------- ----------- Total assets 12,928,098 20,474,320 ----------- ----------- LIABILITIES Payables Securities purchased 51,610 377,053 Accrued expenses 42,299 43,014 ----------- ----------- Total liabilities 93,909 420,067 ----------- ----------- NET ASSETS $12,834,189 $20,054,253 ----------- ----------- ----------- ----------- COMPONENTS OF NET ASSETS Paid-in capital $13,445,981 $24,551,346 Undistributed net investment income 24,706 303,218 Accumulated net realized gain/(loss) on investments 245,841 (2,803,467) Net unrealized depreciation on investments (882,339) (1,996,844) ----------- ----------- Net assets $12,834,189 $20,054,253 ----------- ----------- ----------- ----------- ADVISOR CLASS Net assets applicable to shares outstanding $ 100,334 $ 821 Shares outstanding 7,730 95 Net asset value, offering and redemption price per share $12.98 $8.64 ------ ----- ------ ----- INSTITUTIONAL CLASS Net assets applicable to shares outstanding $12,733,855 $20,053,432 Shares outstanding 981,451 2,313,905 Net asset value, offering and redemption price per share $12.97 $8.67 ------ ----- ------ ----- See Notes to Financial Statements. STATEMENTS OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2002 SMALL CAP LARGE CAP VALUE FUND VALUE FUND ---------- ---------- INVESTMENT INCOME Dividend Income (Net of foreign tax on dividends of $304 and $0, respectively) $ 126,331 $ 465,857 ----------- ----------- Expenses Advisory fees (Note 3) 73,003 108,399 Administration fees (Note 3) 37,356 46,374 Professional fees 26,005 27,864 Fund Accounting fees 22,289 25,569 Transfer Agent fees 16,617 14,983 Custody fees 12,886 19,093 Trustees' fees 6,480 7,101 Other 2,629 4,219 Insurance fees 1,278 3,213 Registration fees 879 5,547 Reports to shareholders 691 1,661 Distribution fees - Advisor Class 67 2 ----------- ----------- Total expenses 200,180 264,025 Less: advisory fee waiver and absorption (Note 3) (99,651) (101,510) ----------- ----------- Net expenses 100,529 162,515 ----------- ----------- Net investment income 25,802 303,342 ----------- ----------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from security transactions 247,513 (2,660,714) Net change in unrealized depreciation on investments (1,378,424) (1,144,964) ----------- ----------- Net realized and unrealized loss on investments (1,130,911) (3,805,678) ----------- ----------- Net Decrease in Net Assets Resulting From Operations $(1,105,109) $(3,502,336) ----------- ----------- ----------- ----------- See Notes to Financial Statements. CHARTWELL SMALL CAP VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS Year Ended Year Ended Aug. 31, 2002 Aug. 31, 2001 ------------- ------------- INCREASE/(DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income $ 25,802 $ 24,749 Net realized gain from security transactions 247,513 334,147 Net change in unrealized (depreciation)/ appreciation on investments (1,378,424) 333,464 ----------- ---------- NET (DECREASE)/INCREASE IN NET ASSETS RESULTING FROM OPERATIONS (1,105,109) 692,360 ----------- ---------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income (19,603) (7,779) Net realized gain on securities transactions (296,647) (95,767) ----------- ---------- TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (316,250) (103,546) ----------- ---------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold Advisor Class* 186,599 -- Institutional Class** 8,706,518 4,255,170 Proceeds from dividends reinvested Advisor Class* -- -- Institutional Class** 223,581 78,235 Cost of shares redeemed Advisor Class* (69,637) -- Institutional Class** (1,098,865) (12) ----------- ---------- Net increase in net assets derived from net change in outstanding shares (a) 7,948,196 4,333,393 ----------- ---------- TOTAL INCREASE IN NET ASSETS 6,526,837 4,922,207 NET ASSETS Beginning of year 6,307,352 1,385,145 ----------- ---------- END OF YEAR*** $12,834,189 $6,307,352 ----------- ---------- ----------- ---------- (a) A summary of share transactions is as follows: Advisor Class Shares* Shares sold 12,812 -- Shares redeemed (5,082) -- ----------- ---------- Net increase 7,730 -- ----------- ---------- ----------- ---------- Institutional Class Shares** Shares sold 612,656 320,335 Shares reinvested 16,073 5,826 Shares redeemed (82,048) (1) ----------- ---------- Net increase 546,681 326,160 ----------- ---------- ----------- ----------
* Advisor Class commenced offering on March 1, 2002. ** Institutional Class commenced operations on October 1, 1999. *** Includes undistributed net investment income of $24,706 and $19,594 in 2002 and 2001, respectively. See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS Year Ended Year Ended Aug. 31, 2002 Aug. 31, 2001 ------------- ------------- INCREASE / (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income $ 303,342 $ 229,606 Net realized loss from security transactions (2,660,714) (74,012) Net change in unrealized depreciation on investments (1,144,964) (1,124,787) ----------- ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (3,502,336) (969,193) ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income (229,500) (64,746) Net realized gain on securities transactions -- (50,138) ----------- ----------- TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (229,500) (114,884) ----------- ----------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold Advisor Class* 1,000 -- Institutional Class** 5,795,166 19,847,429 Proceeds from dividends reinvested Advisor Class* -- -- Institutional Class** 205,050 114,884 Cost of shares redeemed Advisor Class* -- -- Institutional Class** (9,691,633) (297,381) ----------- ----------- Net (decrease)/increase in net assets derived from net change in outstanding shares (a) (3,690,417) 19,664,932 ----------- ----------- TOTAL (DECREASE)/INCREASE IN NET ASSETS (7,422,253) 18,580,855 NET ASSETS Beginning of year 27,476,506 8,895,651 ----------- ----------- END OF YEAR*** $20,054,253 $27,476,506 ----------- ----------- ----------- ----------- (a) A summary of share transactions is as follows: Advisor Class Shares* Shares sold 95 -- Shares redeemed -- -- ----------- ----------- Net increase 95 -- ----------- ----------- ----------- ----------- Institutional Class Shares** Shares sold 625,004 1,828,348 Shares reinvested 19,869 10,221 Shares redeemed (978,700) (27,489) ----------- ----------- Net (decrease)/increase (333,827) 1,811,080 ----------- ----------- ----------- -----------
* Advisor Class commenced offering on March 1, 2002. ** Institutional Class commenced operations on October 1, 1999. *** Includes undistributed net investment income of $303,218 and $229,376 in 2002 and 2001, respectively. See Notes to Financial Statements. CHARTWELL SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD Advisor Class Institutional Class ------------- ------------------------------------------------------- March 1, 2002++ Year Year Oct. 1, 1999* through Ended Ended through Aug. 31, 2002 Aug. 31, 2002 Aug. 31, 2001 Aug. 31, 2000 ------------- ------------- ------------- ------------- Net asset value, beginning of period $14.83 $14.51 $12.75 $10.00 ------ ------ ------ ------ Income from investment operations: Net investment (loss)/income (0.01) 0.04 0.07 0.05 Net realized and unrealized (loss)/gain on investments (1.84) (0.93) 2.33 2.73 ------ ------ ------ ------ Total from investment operations (1.85) (0.89) 2.40 2.78 ------ ------ ------ ------ Less distributions: From net investment income 0.00 (0.04) (0.05) (0.03) From net realized gains 0.00 (0.61) (0.59) -- ------ ------ ------ ------ Total distributions 0.00 (0.65) (0.64) (0.03) ------ ------ ------ ------ Net asset value, end of period $12.98 $12.97 $14.51 $12.75 ------ ------ ------ ------ ------ ------ ------ ------ TOTAL RETURN (12.47%)+ (6.40%) 19.20% 27.82%+ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $100 $12,734 $6,307 $1,385 Ratio of expenses to average net assets: Before expense reimbursement 2.40%** 2.19% 3.31% 15.23%** After expense reimbursement 1.35%** 1.10% 1.10% 1.10%** Ratio of net investment income to average net assets: After expense reimbursement (0.14%)** 0.28% 0.62% 0.48%** Portfolio turnover rate 52.09% 52.09% 68.13% 68.77%
* Commencement of operations for Institutional Class. ++ Commencement of offering for Advisor Class. ** Annualized. + Not Annualized. See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD Advisor Class Institutional Class ------------- ------------------------------------------------------- March 1, 2002++ Year Year Oct. 1, 1999* through Ended Ended through Aug. 31, 2002 Aug. 31, 2002 Aug. 31, 2001 Aug. 31, 2000 ------------- ------------- ------------- ------------- Net asset value, beginning of period $10.57 $10.38 $10.63 $10.00 ------ ------ ------ ------ Income from investment operations: Net investment income 0.05 0.14 0.04 0.11 Net realized and unrealized (loss)/gain on investments (1.98) (1.75) (0.23) 0.55 ------ ------ ------ ------ Total from investment operations (1.93) (1.61) (0.19) 0.66 ------ ------ ------ ------ Less distributions: From net investment income 0.00 (0.10) (0.03) (0.03) From net realized gains 0.00 0.00 (0.03) -- ------ ------ ------ ------ Total distributions 0.00 (0.10) (0.06) (0.03) ------ ------ ------ ------ Net asset value, end of period $ 8.64 $ 8.67 $10.38 $10.63 ------ ------ ------ ------ ------ ------ ------ ------ TOTAL RETURN (18.26%)+ (15.65%) (1.85%) 6.61%+ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $1 $20,053 $27,477 $8,896 Ratio of expenses to average net assets: Before expense reimbursement 1.53%** 1.22% 1.18% 2.89%** After expense reimbursement 1.00%** 0.75% 0.75% 0.75%** Ratio of net investment income to average net assets: After expense reimbursement 1.14%** 1.40% 1.18% 1.38%** Portfolio turnover rate 190.54% 190.54% 173.68% 169.14%
* Commencement of operations for Institutional Class. ++ Commencement of offering for Advisor Class. ** Annualized. + Not Annualized. See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS AT AUGUST 31, 2002 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 offer two classes of shares - the Institutional Class and the Advisor Class. Each class of shares has identical voting, dividend, liquidation and other rights, except that each class bears different distribution expenses and has exclusive voting rights with respect to its Distribution Plan, as applicable. The Institutional Class of each Fund began operations on October 1, 1999. The Advisor Class of each Fund commenced offering on March 1, 2002. 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 accounting principles generally accepted in the United States of America. 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 Trust'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. Realized gains and losses on securities sold are determined on the basis of identified cost. Dividend income and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions to shareholders from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations which differs from accounting principles generally accepted in the United States of America. D. Income and Expenses: All income earned and expenses incurred by the Funds are borne by each outstanding class of shares on a prorata basis, based on the proportionate interest in the Funds represented by the net assets of such class. Class specific expenses are borne by the respective classes. E. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 August 31, 2002, 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 average daily net assets of the Chartwell Small Cap Value Fund. For the year ended August 31, 2002, the Chartwell Large Cap Value Fund and the Chartwell Small Cap Value Fund incurred $108,399 and $73,003, 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 for the Chartwell Large Cap Value Fund - Institutional Class, 1.00% for the Chartwell Large Cap Value Fund - Advisor Class, 1.10% for the Chartwell Small Cap Value Fund - Institutional Class and 1.35% of average net assets for the Chartwell Small Cap Value Fund - Advisor Class. 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 reimbursement is made. Such reimbursement may not be paid prior to a Fund's payment of current ordinary operating expenses. For the year ended August 31, 2002, the Advisor reduced its fees and absorbed Fund expenses in the amount of $101,510 for the Chartwell Large Cap Value Fund and $99,651 for the Chartwell Small Cap Value Fund; no amounts were reimbursed to the Advisor. Cumulative expenses subject to recapture pursuant to the aforementioned conditions amounted to $289,337 for the Chartwell Large Cap Value Fund and $300,824 for the Chartwell Small Cap Value Fund at August 31, 2002. Accumulative expenses subject to recapture for the Chartwell Large Cap Value Fund expire as follows: Year Amount ---- ------ 2005 187,827 2006 101,510 Accumulative expenses subject to recapture for the Chartwell Small Cap Value Fund expire as follows: Year Amount ---- ------ 2005 201,173 2006 99,651 U.S. Bancorp Fund Services, LLC, formerly Investment Company Administration, LLC, (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 Funds' custodian, transfer agent and accountants; coordinates the preparation and payment of the Funds' expenses and reviews the Funds' 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 Annual fee of $15,000 for each additional share class Quasar Distributors, LLC (the "Distributor") acts as the Funds' principal underwriter in a continuous public offering of the Funds' shares. The Distributor is an affiliate of the Administrator. Certain officers of the Funds are also officers of the Administrator and the Distributor. NOTE 4 - DISTRIBUTION COSTS The Advisor Class of each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 (the "Plan"). The Plan permits the Funds to pay for distribution and related expenses at an annual rate of up to 0.25% of the Funds' average daily net assets annually. The expenses covered by the Plan may include the cost of preparing and distributing prospectuses and other sales material, advertising and public relations expenses, payments to financial intermediaries and compensation of personnel involved in selling shares of the Funds. Payments made pursuant to the Plan will represent compensation for distribution and service activities, not reimbursements for specific expenses incurred. Pursuant to a distribution coordination agreement adopted under the Plan, distribution fees are paid to the Advisor as "Distribution Coordinator". For the year ended August 31, 2002, the Chartwell Large Cap Value Fund Advisor Class and the Chartwell Small Cap Value Fund Advisor Class paid the Distribution Coordinator $2 and $67, respectively. NOTE 5 - PURCHASES AND SALES OF SECURITIES For the year ended August 31, 2002, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, for the Chartwell Large Cap Value Fund were $40,613,802 and $44,349,620, respectively. For the year ended August 31, 2002, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, for the Chartwell Small Cap Value Fund were $12,233,810 and $4,647,382, respectively. NOTE 6 - INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS Net realized and unrealized gains and losses differ for financial statement and tax purposes due to differing treatments of wash sale losses deferred and losses realized subsequent to October 31 on the sale of securities. Large Cap Small Cap --------- --------- As of August 31, 2002, the components of net assets on a tax basis were as follows: Cost of investments $22,379,082 $13,844,948 ----------- ----------- ----------- ----------- Gross tax unrealized appreciation $ 297,592 $ 423,546 Gross tax unrealized depreciation (2,750,702) (1,405,647) ----------- ----------- Net tax unrealized depreciation $(2,453,110) $ (982,101) ----------- ----------- ----------- ----------- Capital loss carryforward expiring as follows: 2009 $ (102,289) $ -- 2010 (1,100,234) -- ----------- ----------- $(1,202,523) $ -- ----------- ----------- ----------- ----------- Undistributed long term gain $ -- $ 346,405 ----------- ----------- ----------- ----------- Undistributed ordinary income $ 303,218 $ 23,904 ----------- ----------- ----------- ----------- At August 31, 2002, the Chartwell Large Cap Value Fund had deferred capital losses occurring subsequent to October 31, 2001 of ($1,144,678). For tax purposes, such losses will be reflected in the year ending August 31, 2003. The tax composition of dividends during the year ended August 31, 2002 was as follows: Ordinary income $ 229,500 $ 252,759 Long term capital gain -- 63,491 ----------- ----------- $ 229,500 $ 316,250 ----------- ----------- ----------- ----------- REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF CHARTWELL SMALL CAP VALUE FUND CHARTWELL LARGE CAP VALUE FUND In our opinion, the accompanying statements of assets and liabilities, including the schedules 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 Chartwell Small Cap Value Fund and Chartwell Large Cap Value Fund, each a series of Advisors Series Trust (the "Funds") at August 31, 2002, the results of each of their operations for the year then ended, the changes in each of their net assets for the two years in the period then ended and the financial highlights for the periods indicated, 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 Funds' 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 August 31, 2002 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York October 21, 2002 INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED) The business and affairs of the Fund are managed under the direction of the Fund's Board of Trustees. Information pertaining to the Trustees and Officers of the Fund is set forth below. Unless noted otherwise, each person has held the position listed for a minimum of five years. The SAI includes additional information about the Fund's officers and trustees and is available, without charge, upon request by calling the advisor. INDEPENDENT TRUSTEES -------------------- # of Term of Funds in Other Position Office and complex Directorships Name, Age Held with Length of Principal Occupation overseen Held by and Address the Trust Time Served During Past Five Years by Trustee Trustee ----------- --------- ----------- ---------------------- ---------- ------------- Walter E. Auch Trustee Indefinite Management 19 Nicholas- (Born 1921) Term Consultant Applegate 2020 E. Financial Way Funds, Glendora, CA 91741 Since Salomon 1997 Smith Barney Funds, Bayan Strategic Realty Trust, Legend Properties, Pimco Advisors LLP, and Senele Group James Clayburn Trustee Indefinite Dean Emeritus, John E. 19 The Payden LaForce Term Anderson Graduate & Rygel (Born 1927) School of Management, Investment 2020 E. Financial Way Since University of California, Group, PIC Glendora, CA 91741 May 2002 Los Angeles Investment Trust, PIC Small Cap Portfolio, PIC Balanced Portfolio, PIC Growth Portfolio, PIC Mid Cap Portfolio, Provident Investment Counsel Institutional Money Market Fund, Black Rock Funds, Jacobs Engineering, Timken Co., Concervex Donald E. O'Connor Trustee Indefinite Financial Consultant; 19 The Parnassus (Born 1936) Term formerly Executive Fund 2020 E. Financial Way Vice President and The Parnassus Glendora, CA 91741 Since Chief Operating officer Income Fund 1997 of ICI Mutual Insurance The Forward Company (until January, Funds 1997); Vice President, Operations, Investment Company Institute (until July , 1993). George J. Rebhan Trustee Indefinite Retired; formerly 19 E*Trade (Born 1934) Term President, Hotchkis Funds 2020 E. Financial Way and Wiley Funds Glendora, CA 91741 Since (mutual funds) May 2002 from 1985 to 1993. George T. Wofford III Trustee Indefinite Senior Vice President, 19 None (Born 1939) Term Information Services, 2020 E. Financial Way Federal Home Loan Glendora, CA 91741 Since Bank of San Francisco. 1997
INTERESTED TRUSTEES AND OFFICERS -------------------------------- # of Funds in Other Term of complex Directorships Position Office and overseen Held by Name, Age Held with Length of Principal Occupation by Trustee Trustee and Address the Trust Time Served During Past Five Years or Officer or Officer ----------- --------- ----------- ---------------------- ---------- ------------- Eric M. Banhazl Trustee & Indefinite Senior Vice President, 19 None (Born 1957) President Term U.S. Bancorp Fund 2020 E. Financial Way Services, LLC, the Glendora, CA 91741 Since Fund's administrator 1997 (since July, 2001); Treasurer, Investec Funds; formerly, Executive Vice President, Investment Company Administration, LLC (ICA) (The Fund's former administrator). John S. Wagner Treasurer Indefinite Assistant Vice None (Born 1965) Term President Compliance 615 E. Michigan Street and Administration, Milwaukee, WI 53202 Since U.S. Bancorp Fund September Services, LLC since 2002 June 1999. Chad E. Fickett Secretary Indefinite Compliance 19 None (Born 1973) Term Administrator, U.S. 615 E. Michigan Street Bancorp Fund Services, Milwaukee, WI 53202 Since LLC since July 2000. March 2002
ADDITIONAL TAX INFORMATION (UNAUDITED) Under section 852(b)(3)(c) of the Internal Revenue Code, the Chartwell Small Cap Value Fund hereby designates $63,491 as a long-term capital gain dividend for the fiscal year ended August 31, 2002. Of the ordinary income (including short-term capital gain) distributions made by the Chartwell Large Cap Value Fund and the Small Cap Value Fund during the fiscal year ended August 31, 2002, 0.05% and 0.01%, respectively, qualifies for the dividend received deduction available to corporate shareholders. ADVISOR Chartwell Investment Partners 1235 Westlakes Drive Suite 400 Berwyn, PA 19312 (610) 296-1400 DISTRIBUTOR Quasar Distributors, LLC 615 East Michigan Street Milwaukee, WI 53202 TRANSFER AGENT U.S. Bancorp Fund Services, LLC 615 East Michigan Street Milwaukee, WI 53202 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street M/L 6118 Cincinnati, OH 45202 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, NY 10036 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker, LLP 515 S. Flower Street, 25th Floor Los Angeles, CA 90071 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.