N-30D 1 namcef-se.txt (NATIONAL ASSET MANAGEMENT CORE EQUITY FUND LOGO) NATIONAL ASSET MANAGEMENT CORE EQUITY FUND SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED OCTOBER 31, 2002 December 18, 2002 Dear Fellow Shareholder: We are pleased to provide you with this shareholder update on the National Asset Management Core Equity Fund. The Fund's value decreased over the six month period ended October 31st by 19.96%, and trailed it's benchmark the S&P 500 Index that also dropped sharply over the same period losing 17.03% of it's value. This weak period caused the fund's twelve month return to post a decline of 17.00% and to trail the benchmark that declined by 15.11% over the same period. Since the Fund's inception on June 2, 1999 it has declined by an annualized rate of 8.54% while the S&P 500 Index return was -9.48% annualized. The past three years have been very hostile to all types of common stocks. All the major market indices such as the Dow Jones Industrials, the S&P 500, and the NASDAQ have posted declines since mid-March of 2000 that exceed 40%. The market environment continues to be extremely volatile. While the U.S. economy is definitely growing again, the stock market has failed to sustain any advance. In each of the last four calendar quarters the gross domestic product, adjusted for inflation, has shown positive growth. During that same period the S&P 500 has posted a significant quarterly positive gain only once. Investors generally site two reasons for their reluctance to move more aggressively into the stock market. First corporate earnings growth still seems anemic, and second, geo political concerns, especially war jitters associated with Iraq, add to the anxiety. While we are waiting for the market to regain it's footing, our Multiple Attribute philosophy continues to provide good diversification across three different types of stocks. The portfolio includes investments in stocks demonstrating earnings growth more rapid than that of the broad market's, stocks that currently sell at a relatively low ratio of price to earning per share, and stocks that pay an above average dividend yield. We currently have a slight emphasis in low P/E stocks, which are benefiting from the improving economy. The Fund is still broadly diversified across the major economic sectors of the large capitalization equity market. Bottom-up security selection continues to dominate portfolio activity due to the lack of any overwhelming evidence emerging from the macro economic environment that would favor a more thematic approach. The largest sector weighting continues to be in financial stocks that comprise 23% of the portfolio. These stocks currently offer good value and are benefiting from the low interest rate environment. Technology stocks constitute the next largest weight composing 17% of the portfolio, a very similar weighting to that of the S&P 500 Index. Our technology holdings are generally considered the market leaders in their respective industry segments and we feel should be among the first to recover when conditions begin to improve in the tech sector. This bear market that began in March of 2000 and continued through a third calendar year has produced a decline now exceeded only by the record decline of 1929 through 1932. Investors are now asking if this bear market might continue into a fourth year. Obviously no one knows. But unlike the economic conditions that existed during the early part of the decade of the 1930's when the economy was in the Great Depression, today's economy is growing and corporate profits are increasing. From a fundamental perspective conditions are such that the economy can continue to strengthen. The Federal Reserve is pursuing a very accommodative monetary policy, the Federal Government is increasing spending at a faster rate and more tax cuts seem to be on the horizon. A stronger economy normally translates into positive stock market returns. The U.S. presidential election cycle may also improve the odds of a better market in 2003. History suggests that the odds substantially favor a positive rate of return from the equity market in the third and fourth years of a U.S. president's administration. Our goal for the Fund remains to earn a high total investment return. We continue to pursue this goal by staying fully invested in the stock market and by using two classic investment approaches, value and growth investing, in the portfolio. This philosophy is implemented by diversifying the portfolio with investments in three different types of stocks: growth, yield, and low P/E. Each performs differently during different economic conditions. The Fund invests in stocks with these attributes because they each have performed quite well over the long term. We thank you for your support and the trust you have expressed in us by investing in the Fund. We look forward to a time of more positive market conditions and to reporting positive investment returns. Sincerely, INVESCO-National Asset Management Equity Team Opinions expressed are those of the INVESCO-National Asset Management Equity Team and are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security. Past performance does not guarantee future results. 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 their original cost. Sector allocations are as of 10/31/02 and are subject to change at any time. The S&P 500, Dow Jones Industrial, and NASDAQ Indices are unmanaged indices commonly used to measure performance of U.S. stocks. One cannot invest directly in an index. Mutual fund investing involves risk. Principal loss is possible. The information contained in this report is authorized for us when preceded or accompanied by a prospectus. The Fund is distributed by Quasar Distributors, LLC. SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2002 (UNAUDITED) Shares COMMONSTOCKS: 98.52% Market Value ------ --------------------- ------------ BASIC INDUSTRY: 5.80% 6,760 Air Products and Chemicals, Inc. $ 298,792 6,690 Phelps Dodge Corp.* 207,524 6,290 Praxair, Inc. 342,805 4,310 Weyerhaeuser Co. 195,243 ----------- 1,044,364 ----------- CAPITAL GOODS: 14.42% 11,510 Deere & Co. 533,949 25,402 General Electric Co. 641,401 10,660 Honeywell International, Inc. 255,200 9,830 Ingersoll-Rand Co. - Class A# 383,370 19,730 Masco Corp. 405,649 2,420 SPX Corp.* 101,664 9,340 The Boeing Co. 277,865 ----------- 2,599,098 ----------- COMMUNICATIONS: 1.00% 7,000 SBC Communications, Inc. 179,620 ----------- CONSUMER CYCLICAL: 11.54% 11,650 AOL Time Warner, Inc.* 171,837 6,360 Dow Jones & Co., Inc. 223,363 2,380 Johnson Controls, Inc. 185,640 3,550 Harley-Davidson, Inc. 185,665 10,260 Target Corp. 309,031 12,186 The Home Depot, Inc. 351,932 12,182 Wal-Mart Stores, Inc. 652,346 ----------- 2,079,814 ----------- CONSUMER STAPLES: 5.34% 9,850 PepsiCo., Inc. 434,385 9,050 Walgreen Co. 305,437 4,230 Wm. Wrigley Jr. Co. 223,217 ----------- 963,039 ----------- ENERGY: 6.56% 6,133 ChevronTexaco Corp. 414,775 15,662 Exxon Mobil Corp. 527,183 6,010 Schlumberger Limited 241,061 ----------- 1,183,019 ----------- FINANCE: 23.05% 7,387 American International Group, Inc. 462,057 13,146 Citigroup, Inc. 485,745 7,830 Fannie Mae 523,514 9,670 Freddie Mac 595,479 5,060 MGIC Investment Corp. 212,318 6,870 Morgan Stanley 267,380 13,838 Radian Group, Inc. 488,066 5,190 State Street Corp. 214,710 10,100 The Bank of New York Co., Inc. 262,600 5,110 The Goldman Sachs Group, Inc. 365,876 9,290 The PMI Group, Inc. 276,842 ----------- 4,154,587 ----------- HEALTHCARE: 13.84% 10,380 Johnson & Johnson 609,825 12,750 Medtronic, Inc. 571,200 5,403 Merck & Co, Inc. 293,059 15,470 Pfizer, Inc. 491,482 8,260 Tenet Healthcare Corp.* 237,475 8,670 Wyeth 290,445 ----------- 2,493,486 ----------- TECHNOLOGY: 16.59% 12,240 Altera Corp.* 143,453 7,050 Applied Micro Circuits Corp.* 27,495 32,052 Cisco Systems, Inc.* 358,341 12,930 Dell Computer Corp.* 369,927 8,860 EMC Corp.* 45,275 20,508 Intel Corp. 354,788 16,300 Jabil Circuit, Inc.* 251,509 3,940 Maxim Integrated Products, Inc 125,450 12,515 Microsoft Corp.* 669,177 20,870 Oracle Corp.* 212,665 9,010 QUALCOMM, Inc.* 311,025 21,420 Sanmina - SCI Corp.* 65,974 7,310 Siebel Systems, Inc.* 54,971 ----------- 2,990,050 ----------- UTILITY: 0.38% 2,180 Cinergy Corp. 67,820 ----------- Total Common Stocks (Cost $23,942,387) 17,754,897 ----------- Shares SHORT-TERM INVESTMENTS: 1.57% Market Value ------ ------------------------------ ------------ 283,663 Federated Cash Trust (Cost $283,663) 283,663 ----------- Total Investment in Securities (Cost $24,226,050): 100.09% 18,038,560 Liabilities in Excess of Other Assets: (0.09%) (16,540) ----------- Net Assets: 100.00% $18,022,020 ----------- ----------- * Non-income producing security. # U.S. Security of foreign issuer. See accompanying Notes to Financial Statements. STATEMENT OF ASSETS AND LIABILITIES AT OCTOBER 31, 2002 (UNAUDITED) ASSETS Investments in securities, at value (identified cost $24,226,050) $18,038,560 Cash 2,000 Receivables Securities sold 16,732 Dividends 20,408 Prepaid expenses 3,661 ----------- Total assets 18,081,361 ----------- LIABILITIES Payables Securities purchased 16,919 Due to Advisor 2,457 Administration fees 2,980 Accrued expenses 36,985 ----------- Total liabilities 59,341 ----------- NET ASSETS $18,022,020 ----------- ----------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE [$18,022,020 / 2,483,261 shares outstanding; unlimited number of shares (par value $0.01) authorized] $7.26 ----- ----- COMPONENTS OF NET ASSETS Paid-in capital $27,345,345 Undistributed net investment income 72,149 Accumulated net realized loss on investments (3,207,984) Net unrealized depreciation on investments (6,187,490) ----------- Net assets $18,022,020 ----------- ----------- See accompanying Notes to Financial Statements. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED OCTOBER 31, 2002 (UNAUDITED) INVESTMENT INCOME Income Dividend income $ 135,251 ----------- Expenses Advisory fees (Note 3) 51,513 Administration fee (Note 3) 20,605 Fund accounting fees 10,585 Professional fees 11,092 Custodian fees 8,067 Transfer agent fees 7,562 Registration fees 5,805 Reports to shareholders 3,025 Trustees' fees 2,469 Miscellaneous 2,269 Insurance fees 1,178 ----------- Total expenses 124,170 Less, advisory fee waiver (Note 3) (26,295) ----------- Net expenses 97,875 ----------- Net investment income 37,376 ----------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS Net realized loss from security transactions (2,139,792) Net change in unrealized depreciation on investments (2,629,417) ----------- Net realized and unrealized loss on investments (4,769,209) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(4,731,833) ----------- ----------- See accompanying Notes to Financial Statements. STATEMENTS OF CHANGES IN NET ASSETS Six Months Ended October 31, 2002 Year Ended (Unaudited) April 30, 2002 ---------------- -------------- DECREASE IN NET ASSETS FROM: OPERATIONS Net investment income $ 37,376 $ 35,362 Net realized loss on security transactions (2,139,792) (1,068,192) Net change in unrealized depreciation on investments (2,629,417) (2,209,330) ----------- ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (4,731,833) (3,242,160) ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income -- (13,956) Net realized gain on security transactions -- (109,543) ----------- ----------- TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- (123,499) ----------- ----------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Net (decrease)/increase in net assets derived from net change in outstanding shares (a) (1,039,971) 2,708,667 ----------- ----------- TOTAL DECREASE IN NET ASSETS (5,771,804) (656,992) ----------- ----------- NET ASSETS Beginning of period 23,793,824 24,450,816 ----------- ----------- END OF PERIOD $18,022,020 $23,793,824 ----------- ----------- ----------- ----------- Undistributed net investment income $ 72,149 $ 34,773 ----------- ----------- ----------- ----------- (a) A summary of shares transactions is as follows: Six Months Ended October 31, 2002 Year Ended (Unaudited) April 30, 2002 -------------------- -------------------- Shares Value Shares Value -------- -------- -------- -------- Shares sold 88,638 $ 729,784 524,090 $5,211,817 Shares issued in reinvestment of distributions 0 0 10,791 103,813 Shares redeemed (228,535) (1,769,755) (265,748) (2,606,963) -------- ----------- -------- ---------- Net (decrease)/increase (139,897) $(1,039,971) 269,133 $2,708,667 -------- ----------- -------- ---------- -------- ----------- -------- ---------- See accompanying Notes to Financial Statements. FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD Six Months Ended Year Year June 2, 1999* October 31, Ended Ended through 2002 April 30, April 30, April 30, (Unaudited) 2002 2001 2000 ---------- --------- --------- --------- Net asset value, beginning of period $ 9.07 $10.39 $11.42 $10.00 ------ ------ ------ ------ Income from investment operations: Net investment income 0.02 0.01 0.01 0.01 Net realized and unrealized (loss)/gain on investments (1.83) (1.28) (0.92) 1.42 ------ ------ ------ ------ Total from investment operations (1.81) (1.27) (0.91) 1.43 ------ ------ ------ ------ Less distributions: From net investment income -- (0.01) (0.01) (0.01) From net realized gains -- (0.04) (0.11) -- ------ ------ ------ ------ -- (0.05) (0.12) (0.01) ------ ------ ------ ------ Net asset value, end of period $ 7.26 $ 9.07 $10.39 $11.42 ------ ------ ------ ------ ------ ------ ------ ------ Total return (19.96%)++ (12.28%) (8.13%) 14.26%++ Ratios/supplemental data: Net assets, end of period (000) $18,022 $23,794 $24,451 $10,606 Ratio of expenses to average net assets: Before expense reimbursement 1.21%+ 1.13% 1.27% 5.47%+ After expense reimbursement 0.95%+ 0.95% 0.95% 0.95%+ Ratio of net investment income to average net assets: After expense reimbursement 0.36%+ 0.14% 0.12% 0.14%+ Portfolio turnover rate 11.33% 29.99% 21.88% 20.80%
* Commencement of operations. + Annualized. ++ Not Annualized. See accompanying Notes to Financial Statements. NOTES TO FINANCIAL HIGHLIGHTS AT OCTOBER 31, 2002 (UNAUDITED) NOTE 1 - ORGANIZATION The National Asset Management Core Equity 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 began operations on June 2, 1999. The investment objective of the Fund is to earn a high total return consisting of capital appreciation and current income by investing in common stocks of large and middle capitalization U.S. companies. 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 accounting principles generally accepted in the United States of America. A. Security Valuation: The Fund's investments are carried at fair value. Securities that are primarily traded on a national securities exchange shall be valued at the last sale price on the exchange on which they are primarily traded on the day of valuation or, if there has been no sale on such day, at the mean between the bid and asked prices. Securities primarily traded in the NASDAQ National Market System for which market quotations are readily available shall be valued at the last sale price on the day of valuation, or if there has been no sale on such day, at the mean between the bid and asked prices. Over-the-counter ("OTC") securities which are not traded in the NASDAQ National Market System shall be valued at the most recent trade price. Securities for which market quotations are not readily available, if any, are valued following procedures approved by the Board of Trustees. Short-term investments are valued at amortized cost, which approximates market value. B. Federal Income Taxes: It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. Security Transactions, Dividends and Distributions: Security transactions are accounted for on the trade date. 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. To the extent these book/tax differences are permanent such amounts are reclassified with the capital accounts based on their Federal tax treatment. D. 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 six months ended October 31, 2002, INVESCO - National Asset Management Corporation (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 0.50% based upon the average daily net assets of the Fund. For the six months ended October 31, 2002, the Fund incurred $51,513 in Advisory Fees. The Fund is responsible for its own operating expenses. The Advisor has agreed to reduce fees payable to it by the Fund and to pay Fund operating expenses to the extent necessary to limit the Fund's aggregate annual operating expenses to 0.95% 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 the Fund's payment of current ordinary operating expenses. For the six months ended October 31, 2002, the Advisor reduced its fees and absorbed Fund expenses in the amount of $26,295; no amounts were reimbursed to the Advisor. Cumulative expenses subject to recapture pursuant to the aforementioned conditions amounted to $228,339 at October 31, 2002. Cumulative expenses subject to recapture expire as follows: Year Amount ---- ------ 2005 $110,407 2006 $46,984 2007 $44,653 2008 $26,295 U.S. Bancorp Fund Services, LLC (the "Administrator") acts as the Fund's Administrator under an Administration Agreement. The Administrator prepares various federal and state regulatory filings, reports and returns for the Fund; prepares reports and materials to be supplied to the Trustees; monitors the activities of the Fund's custodian, transfer agent and accountants; coordinates the preparation and payment of the Fund's expenses and reviews the Fund's expense accruals. For its services, the Administrator receives a monthly fee at the following annual rate: Fund asset level Fee rate ---------------- -------- Less than $15 million $30,000 $15 million to less than $50 million 0.20% of average daily net assets $50 million to less than $100 million 0.15% of average daily net assets $100 million to less than $150 million 0.10% of average daily net assets More than $150 million 0.05% of average daily net assets Quasar Distributors, LLC (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 of the Administrator. NOTE 4 - PURCHASES AND SALES OF SECURITIES For the six months ended October 31, 2002, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were $2,309,464 and $3,198,226 respectively. NOTE 5 - INCOME TAXES Net investment income and net realized gains 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. As of October 31, 2002, the components of net assets on a tax basis were as follows: Cost of investments $24,239,974 Gross tax unrealized appreciation 515,358 Gross tax unrealized depreciation (6,716,772) ----------- Net tax unrealized depreciation $(6,201,414) ----------- ----------- Capital loss carryforward expiring in 2010 $(312,802) ----------- ----------- ADVISOR INVESCO - National Asset Management 400 West Market Street, Suite 2500 Louisville, Kentucky 40202 DISTRIBUTOR Quasar Distributors, LLC 615 East Michigan Street, 2nd Floor Milwaukee, Wisconsin 53202 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street Cincinnati, Ohio 45202 TRANSFER AGENT U.S. Bancorp Fund Services, LLC 615 East Michigan Street, 2nd Floor Milwaukee, Wisconsin 53202 1-800-576-8229 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers, LLP 1177 Avenue of the Americas New York, New York 10036 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker, LLP 515 South Flower Street, 25th Floor Los Angeles, California 90071 This report is intended for the shareholders of the Fund and may not be used as sales literature unless preceded or accompanied by a current prospectus. For a current prospectus please call 1-800-576-8229. Past performance results shown in this report should not be considered a representation of future performance. The investment return and principal value of an investment 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.