N-30D 1 cgf-se.txt CHASE GROWTH FUND Semi-Annual Report Dated March 31, 2003 Chase Investment Counsel Corporation 300 Preston Avenue Suite 403 Charlottesville, Virginia 22902-5091 Advisor: 434-293-9104 Shareholder Servicing: 888-861-7556 CHASE GROWTH FUND May 7, 2003 Dear Fellow Shareholders: As I write this semi-annual review, over 1,200 shareholders have $86 million invested in our Chase Growth Fund (NASDAQ: CHASX). We appreciate the trust all of you have placed in our management and I want to extend a special welcome to the new shareholders since my November 7th letter. For the year ended March 31, 2003 our fund had a total return of -15.63% (pretax and after tax) compared with -24.76% for the fully invested Standard & Poor's 500 Composite Stock Price Index (the S&P 500), -26.77% for the Russell 1000(R) Growth Index, and -27.38% for the Lipper Large-Cap Growth Funds Index. Although the Chase Growth Fund is an equity fund, during this past year we continued to partially cushion the portfolio against the risks and volatility of the stock market by investing 16.6% on average in interest bearing cash equivalents and U.S. Treasury Bills and Agencies. On March 31, the fund held investments in 38 stocks, which, on average, were A rated by Value Line. They ranged in market capitalization from $171.9 billion (Johnson & Johnson) to $3.2 billion (Lincare Holdings). Over the past year the stock market continued to suffer one of its worst declines in history. Most of our equities declined at least moderately. Including new purchases that were held at least part of the year, our ten best performing stocks were Apollo Group +29.1%, Teva Pharmaceutical ADR +20.9%%, Nokia Corp. ADS +16.5%, Countrywide Financial Corp. +14.2%, SLM Corp. +11.8%, Amgen Inc. +11.8%, L-3 Communications Holdings +8.3%, Lexmark International A +8.3%, United Health Group +7.8%, and Coach Inc. +7.5%. Although it was a very difficult year, we are pleased that Lipper Analytics ranked the Chase Growth Fund 12th in its Large Cap Growth universe of 646 funds for the one year ended 3/31/03, 4th out of 474 funds for the three years ended 3/31/03 and 4th among their 317 funds universe for the five years ended 3/31/03. Our investment process combines fundamental, quantitative, and technical research. We seek good quality companies that are leaders in their industries and enjoy above average, sustainable earnings growth with strong balance sheets to support that growth. The Chase Growth Fund (CHASX) portfolio includes a diversified group of companies that we believe represent relatively outstanding investment opportunities. As shown in the accompanying March 31, 2003 charts, we compare the characteristics of the fund's stocks to the S&P 500. CHASX stocks have enjoyed more consistent and substantially higher five-year average annual earnings per share growth rates of 20% vs. 7% for the S&P. They are significantly more profitable with a Return on Equity of 28% vs. 12%, and have stronger balance sheets with Debt to Total Capital of 22% vs. 40%. Yet on average, they sell at a 5% lower price/earnings multiple than the S&P 500 (20.6X vs. 21.7X) based on estimated 2003 reported earnings. Our stocks are selling at only 1.05 times their five-year historical growth rates compared to 3.01 times for the S&P 500 and at only 0.93 times their projected reinvestment rates compared to 4.16 times for the S&P 500. March 31, 2003 CHASE GROWTH FUND STOCKS VS. S&P 500 Chase Growth Fund Stocks S&P 500 ------------------------ ------- Last 5 Year Earnings Growth* 20% 7% Return on Equity 28% 12% Reinvestment Rate 22% 5% Debt/Total Capital 22% 40% Weighted Avg. Cap. (Billion) 35.7 76.6 Weighted Avg. Beta (Volatility) 0.94 1.00 Price/Earnings Estimated 2002 20.6 21.7 Source: Chase Investment Counsel Corporation. This information is based on certain assumptions and historical data and is not a prediction of future results for the Fund or companies held in the Fund's portfolio. *CICC normalized reported earnings, S&P 500 normalized operating earnings; S&P 500 reported earnings growth -1.8%. March 31, 2003 FUNDAMENTALS AND RATIOS Chase Growth Fund 1.05 Russell 1000 Growth 1.50 S&P 500 3.01 P/E TO FIVE-YEAR HISTORICAL GROWTH Chase Growth Fund 0.93 Russell 1000 Growth 1.07 S&P 500 4.16 P/E TO PROJECTED REINVESTMENT RATE During this past fiscal year we continued to underweight technology stocks. On March 31, 2003 that sector comprised just 6% of our portfolio, compared with only 4.6% a year earlier. We continued to emphasize more reasonably priced, good quality growth stocks, which we believed would have better defensive characteristics. Our stock selections, with the help of an average 16.6%+/- in cash equivalents, resulted in much less of a decline -15.63% last year than the -27.38% experienced by the Lipper Large-Cap Growth Fund Index. As of early May the economy continues to struggle. The March Purchasing Managers Index (now called ISM) declined to 46.2%, the lowest level in over a year and one consistent with economic contraction. Maybe widespread snowstorms and the effect of the Iraq war were temporary depressants, but it could be the harbinger of stagflation. Most major economies remain weak and are experiencing stiff global competition due to the Internet and worldwide excess capacity. For instance, March U.S. Capacity Utilization was only 74.8%. The recent U.S. recession has been the mildest since World War II, but with little pent up demand, and businesses, as well as individuals, heavily in debt, it is likely that earnings recovery for many companies will be disappointing. The harsh winter, with higher energy prices, and a weak dollar took a significant bite out of discretionary consumer purchases. Through March investor psychology was deteriorating, but after an estimated $9 billion net inflow into U.S. focus equity funds in April, year-to-date through April 30th, net outflow was only $1 billion. That compared with $43 billion net inflow YTD in 2002. The best long-term road map we have for the stock market is shown on the accompanying chart. Growth Fund Guide has combined the Four Year Presidential Cycle with the Ten Year Cycle. It suggests that we should have an important low this year from which a sustainable recovery would be consistent with past cycles. So far, the October 2002 lows in the major equity indexes have held. Two days in the first quarter qualified as "90% down days" evidencing substantial capitulation/panic selling. We had been expecting a more climactic panic bottom. On average during the last 70 years that has involved six 90% Downside Days. However, this is the type of market action we have been waiting to see before we'd have any confidence that we had reached a meaningful intermediate term low. We are mindful of the fact that since 1914, the average rise from the 22 mid-term election year lows (Dow 7,286 on 10/2/02) to the next year highs has averaged 50%! With a number of technical indicators improving and selling pressure declining as buying returns, the market seems to finally be building a base for a sustainable rising cyclical trend. GROWTH FUND GUIDE CHART Growth Fund Guide's Predictive Chart combines the Four Year Presidential Cycle and the Ten Year Cycle. Month Value ----- ----- Jan-81 10.008 Feb-81 10.060 Mar-81 10.270 Apr-81 10.450 May-81 10.340 Jun-81 10.360 Jul-81 10.370 Aug-81 10.400 Sep-81 10.230 Oct-81 10.050 Nov-81 10.200 Dec-81 10.260 Jan-82 10.120 Feb-82 10.220 Mar-82 10.240 Apr-82 10.080 May-82 10.070 Jun-82 9.760 Jul-82 10.140 Aug-82 10.320 Sep-82 10.130 Oct-82 10.200 Nov-82 10.280 Dec-82 10.600 Jan-83 10.870 Feb-83 11.100 Mar-83 11.190 Apr-83 11.280 May-83 11.270 Jun-83 10.890 Jul-83 10.290 Aug-83 10.740 Sep-83 10.290 Oct-83 10.320 Nov-83 10.210 Dec-83 10.730 Jan-84 10.980 Feb-84 10.840 Mar-84 10.910 Apr-84 10.760 May-84 10.850 Jun-84 11.260 Jul-84 11.590 Aug-84 11.780 Sep-84 12.010 Oct-84 12.350 Nov-84 13.030 Dec-84 13.290 Jan-85 13.580 Feb-85 13.900 Mar-85 13.770 Apr-85 14.070 May-85 14.330 Jun-85 14.220 Jul-85 14.520 Aug-85 14.970 Sep-85 15.410 Oct-85 16.080 Nov-85 16.280 Dec-85 16.840 Jan-86 17.390 Feb-86 16.570 Mar-86 16.410 Apr-86 16.420 May-86 16.460 Jun-86 16.240 Jul-86 16.510 Aug-86 16.090 Sep-86 15.580 Oct-86 15.410 Nov-86 15.600 Dec-86 15.720 Jan-87 15.990 Feb-87 16.000 Mar-87 15.570 Apr-87 15.880 May-87 15.560 Jun-87 15.740 Jul-87 16.390 Aug-87 16.100 Sep-87 16.090 Oct-87 15.140 Nov-87 15.470 Dec-87 15.740 Jan-88 15.600 Feb-88 15.150 Mar-88 16.170 Apr-88 16.680 May-88 17.210 Jun-88 16.990 Jul-88 17.300 Aug-88 18.090 Sep-88 17.940 Oct-88 18.670 Nov-88 19.430 Dec-88 19.450 Jan-89 19.670 Feb-89 19.160 Mar-89 19.550 Apr-89 19.840 May-89 19.480 Jun-89 19.720 Jul-89 20.090 Aug-89 20.830 Sep-89 20.390 Oct-89 19.790 Nov-89 18.780 Dec-89 19.260 Jan-90 18.980 Feb-90 19.280 Mar-90 19.570 Apr-90 19.150 May-90 19.050 Jun-90 17.500 Jul-90 17.730 Aug-90 18.380 Sep-90 17.890 Oct-90 17.640 Nov-90 17.800 Dec-90 17.680 Jan-91 18.370 Feb-91 19.090 Mar-91 18.620 Apr-91 18.470 May-91 17.540 Jun-91 18.110 Jul-91 17.780 Aug-91 17.980 Sep-91 16.400 Oct-91 16.380 Nov-91 16.160 Dec-91 15.910 Jan-92 15.840 Feb-92 16.130 Mar-92 16.270 Apr-92 15.290 May-92 14.520 Jun-92 14.520 Jul-92 15.500 Aug-92 17.030 Sep-92 16.940 Oct-92 16.200 Nov-92 16.360 Dec-92 16.580 Jan-93 16.340 Feb-93 15.610 Mar-93 15.940 Apr-93 17.240 May-93 17.680 Jun-93 17.870 Jul-93 18.040 Aug-93 18.390 Sep-93 18.430 Oct-93 18.450 Nov-93 18.280 Dec-93 18.680 Jan-94 19.490 Feb-94 19.630 Mar-94 19.630 Apr-94 19.700 May-94 19.460 Jun-94 19.580 Jul-94 18.570 Aug-94 18.030 Sep-94 17.830 Oct-94 18.300 Nov-94 19.100 Dec-94 19.350 Jan-95 20.210 Feb-95 20.360 Mar-95 20.970 Apr-95 22.940 May-95 23.380 Jun-95 24.950 Jul-95 25.700 Aug-95 26.360 Sep-95 26.980 Oct-95 27.970 Nov-95 28.800 Dec-95 29.080 Jan-96 29.510 Feb-96 29.860 Mar-96 30.890 Apr-96 30.120 May-96 29.930 Jun-96 30.430 Jul-96 31.010 Aug-96 31.020 Sep-96 31.700 Oct-96 32.150 Nov-96 32.270 Dec-96 32.230 Jan-97 32.180 Feb-97 31.530 Mar-97 31.440 Apr-97 31.120 May-97 31.500 Jun-97 31.970 Jul-97 32.740 Aug-97 32.280 Sep-97 30.550 Oct-97 28.580 Nov-97 27.840 Dec-97 27.920 Jan-98 28.210 Feb-98 27.850 Mar-98 26.390 Apr-98 27.840 May-98 28.620 Jun-98 30.380 Jul-98 31.430 Aug-98 32.360 Sep-98 32.080 Oct-98 32.430 Nov-98 32.450 Dec-98 33.470 Jan-99 33.690 Feb-99 34.330 Mar-99 35.150 Apr-99 35.710 May-99 36.330 Jun-99 36.300 Jul-99 37.730 Aug-99 37.530 Sep-99 38.350 Oct-99 38.690 Nov-99 37.650 Dec-99 37.590 Jan-00 36.820 Feb-00 35.720 Mar-00 36.120 Apr-00 35.120 May-00 33.800 Jun-00 33.860 Jul-00 34.310 Aug-00 34.640 Sep-00 33.630 Oct-00 34.430 Nov-00 35.110 Dec-00 35.580 Jan-01 35.488 Feb-01 35.850 Mar-01 36.653 Apr-01 37.115 May-01 36.773 Jun-01 36.714 Jul-01 36.546 Aug-01 36.100 Sep-01 35.356 Oct-01 34.882 Nov-01 35.594 Dec-01 35.665 Jan-02 35.237 Feb-02 35.138 Mar-02 35.188 Apr-02 34.962 May-02 34.739 Jun-02 33.835 Jul-02 34.864 Aug-02 36.154 Sep-02 35.586 Oct-02 36.540 Nov-02 37.103 Dec-02 38.090 Jan-03 39.065 Feb-03 40.026 Mar-03 40.394 Apr-03 41.105 May-03 40.916 Jun-03 39.934 Jul-03 38.025 Aug-03 39.478 Sep-03 38.262 Oct-03 38.292 Nov-03 38.269 Dec-03 39.754 Jan-04 40.223 Feb-04 39.379 Mar-04 39.662 Apr-04 39.266 May-04 39.101 Jun-04 40.469 Jul-04 41.287 Aug-04 42.657 Sep-04 43.195 Oct-04 44.067 Nov-04 45.892 Dec-04 46.800 Jan-05 48.214 Feb-05 49.111 Mar-05 48.619 Apr-05 49.397 May-05 50.563 Jun-05 50.391 Jul-05 51.349 Aug-05 52.530 Sep-05 53.717 Oct-05 55.951 Nov-05 57.294 Dec-05 59.472 Jan-06 61.184 Feb-06 59.961 Mar-06 60.284 Apr-06 60.079 May-06 60.800 Jun-06 60.277 Jul-06 60.446 Aug-06 59.854 Sep-06 57.591 Oct-06 57.776 Nov-06 58.573 Dec-06 58.842 Jan-07 61.255 Feb-07 61.659 Mar-07 60.808 Apr-07 61.648 May-07 62.597 Jun-07 63.874 Jul-07 66.774 Aug-07 66.280 Sep-07 65.935 Oct-07 59.777 Nov-07 59.836 Dec-07 61.368 Jan-08 61.049 Feb-08 60.353 Mar-08 63.117 Apr-08 64.986 May-08 66.623 Jun-08 66.650 Jul-08 67.543 Aug-08 69.407 Sep-08 69.490 Oct-08 71.992 Nov-08 74.123 Dec-08 74.568 Jan-09 76.447 Feb-09 74.306 Mar-09 75.748 Apr-09 77.460 May-09 76.747 Jun-09 77.238 Jul-09 79.803 Aug-09 82.628 Sep-09 80.942 Oct-09 78.757 Nov-09 75.937 Dec-09 77.745 Jan-10 75.910 Feb-10 77.064 Mar-10 78.451 Apr-10 76.803 May-10 77.771 Jun-10 72.731 Jul-10 73.604 Aug-10 74.311 Sep-10 71.799 Oct-10 70.952 Nov-10 72.144 Dec-10 72.187 Source: GROWTH FUND GUIDE, January 2003 (VOL. 35, NO. 7) Growth Fund Research Building P.O. Box 6600 Rapid City, SD 57709 Valuations are still high. On March 31st, Ned Davis Research estimated total common stock market capitalization stood at 88.2% of nominal GDP. While that is down 49% from its March 2000 mania peak of 171.5%, it is still very high compared to ratios of 86.5% and 79.2% respectively at the 1929 and 1973 peaks. Moreover, there is still too much bullishness/complacency. For instance, mutual funds are still fully invested with only 4.2% in reserves compared with 10% to 12% at major bottoms since 1965. On April 30th Merrill Lynch's survey of Wall Street strategists showed that on average they were recommending 65.3% in equities, close to their record highs. Intelligent Investors survey of 90 advisory services indicates Bearish advisers only exceeded Bullish ones for 2 Weeks compared to about 20 or more at previous major bottoms. By May 7th Bullish advisory services were up to 55.8%, Bears down to 24.4% quite overbought for that indicator. We believe our investment strategy with a well defined investment process that involves significant valuation and technical parameters seeking attractive growth stocks at reasonable prices will continue to perform relatively well. However, when low quality, severely depressed stocks lead a recovery, as they did in the fourth quarter of 2002 and in April of 2003, our fund will under perform. We do not like speculating on low quality, depressed stocks with little or no earnings visibility. We emphasize good quality growth stocks. To us this is a sounder long term strategy than buying so called "value" stocks with little or no growth, many of which face particularly rough competition and earnings difficulties during this sluggish cyclical recovery. Although we are in a volatile Buy and Sell market as opposed to a Buy and Hold one, we believe our investment process will continue to provide relatively good results as it has over numerous previous market cycles. Chase Investment Counsel Corp. now manages $2 billion for clients in 30 states. The Chase Growth Fund is managed by the same investment team headed by David Scott and myself that manage our large separate accounts. As a moderate size firm, we have much more flexibility in buying and selling large and mid-cap stocks without a significant market impact. We remain tax sensitive and expect no taxable capital gains distributions this year. As the largest individual shareholder I assure you that we will be working very hard to find, analyze and invest in relatively attractive stocks. The officers and employees of Chase Investment Counsel Corp., most of whom are fellow shareholders, appreciate your confidence and we look forward to a long investment relationship together. Although we have already eliminated Fox Entertainment Group, listed below are the 10 largest holdings as of March 31, 2003. TOP 10 HOLDINGS (alphabetically) AFLAC Inc. Fox Entertainment Group Amgen Johnson & Johnson Avon Products Inc. Procter & Gamble Bed Bath & Beyond SLM Corporation Forest Labs Vodafone Grp Plc ADR /s/Derwood S. Chase, Jr. Derwood S. Chase, Jr., President Chase Investment Counsel Corporation As of March 31, 2003, the Chase Growth Fund returned 2.36% and 4.82% for the 5- year and since inception (December 2, 1997) periods, respectively. As of March 31, 2003, the S&P 500 returned -3.77% and -1.16% for the 5-year and since inception (December 2, 1997) periods, respectively. As of March 31, 2003, the Russell 1000 Growth Index returned -6.71% and -3.88% for the 5-year and since inception (December 2, 1997) periods, respectively. As of March 31, 2003, the Lipper Large-Cap Growth Index returned -7.03% and -4.23% for the 5-year and since inception (December 2, 1997) periods, respectively. Performance Figures of the fund and indexes referenced represent past performance and are not indicative of future performance of the fund or the indexes. 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 investment. The Russell 1000 Growth and S&P 500 Indexes are unmanaged indexes commonly used to measure performance of U.S. stocks. The Lipper Large-Cap Growth Fund Index is comprised of funds that invest at least 75% of their equity assets in companies with market capitalizations (on a three- year weighted basis) of greater than 300% of the dollar-weighted median market capitalization of the S&P Mid-Cap 400 Index. Indexes do not incur expenses and are not available for investment. Sector allocations and fund holdings are subject to change and are not recommendations to buy or sell any security. Lipper Analytical Services, Inc. is an independent mutual fund research and rating service. Each Lipper average represents a universe of Funds with similar investment objectives. Ranking for the periods shown are based on Fund total returns with dividends and distributions reinvested and do not reflect sales charges. Please note this fund does not have any sales charges. This material must be preceded or accompanied by a current prospectus. Quasar Distributors, LLC, distributor. SCHEDULE OF INVESTMENTS AT MARCH 31, 2003 (UNAUDITED) Shares COMMON STOCKS: 80.57% Market Value ------ --------------------- ------------ BEVERAGE: 2.53% 38,300 Anheuser-Busch Companies, Inc. $ 1,785,163 ----------- BIOTECHNOLOGY: 4.23% 51,800 Amgen, Inc. * 2,981,090 ----------- BROADCAST MEDIA: 3.03% 80,100 Fox Entertainment Group, Inc. * 2,136,267 ----------- BUILDING: 1.33% 17,200 Centex Corp. 934,992 ----------- CHEMICALS - SPECIALTY: 1.89% 27,000 Ecolab, Inc. 1,331,910 ----------- COMPUTER - PERIPHERALS: 1.79% 18,800 Lexmark International, Inc. * 1,258,660 ----------- COMPUTER SOFTWARE & SERVICES: 1.88% 30,000 Affiliated Computer Services, Inc. - Class A * 1,327,800 ----------- DRUGS - GENERIC: 2.59% 43,800 Teva Pharmaceutical Industries, Ltd. # 1,824,270 ----------- DRUGS - PROPRIETARY: 5.54% 40,800 Forest Laboratories, Inc. * 2,201,976 31,100 Merck & Co., Inc. 1,703,658 ----------- 3,905,634 ----------- ENERGY/OIL/GAS/COAL: 4.75% 38,300 Anadarko Petroleum Corp. 1,742,650 91,600 Suncor Energy, Inc. 1,600,252 ----------- 3,342,902 ----------- ENERGY/OIL SERVICE: 0.73% 16,300 Noble Corp. * 512,146 ----------- FINANCE/BANKS: 5.55% 17,200 First Tennessee National Corp. 683,012 20,600 Golden West Financial Corp. 1,481,758 18,500 New York Community Bancorp, Inc. 551,300 26,600 Wells Fargo & Co. 1,196,734 ----------- 3,912,804 ----------- FINANCIAL SERVICES - DIVERSIFIED: 3.32% 21,100 SLM Corp. 2,340,412 ----------- FINANCIAL SERVICES - MORTGAGE RELATED: 2.29% 28,100 Countrywide Financial Corp. 1,615,750 ----------- FOOD: 1.99% 55,200 Sysco Corp. 1,404,288 ----------- GAMING AND LODGING: 2.48% 21,300 International Game Technology * 1,744,470 ----------- HEALTH CARE BENEFITS: 2.58% 13,700 UnitedHealth Group, Inc. 1,255,879 7,300 WellPoint Health Networks, Inc. * 560,275 ----------- 1,816,154 ----------- HEALTH CARE PRODUCTS: 2.76% 33,600 Johnson & Johnson 1,944,432 ----------- HOUSEHOLD PRODUCTS: 3.16% 25,000 The Procter & Gamble Co. 2,226,250 ----------- INFORMATION SERVICES: 2.32% 44,100 First Data Corp. 1,632,141 ----------- INSURANCE - LIFE: 3.34% 73,500 AFLAC, Inc. 2,355,675 ----------- INSURANCE - PROPERTY/CASUALTY/TITLE: 0.91% 18,800 Fidelity National Financial, Inc. 642,020 ----------- MEDIA & ADVERTISING: 2.45% 24,500 Gannett Co., Inc. 1,725,535 ----------- MEDICAL SUPPLIES & EQUIPMENT: 4.25% 15,700 Lincare Holdings, Inc. * 481,833 33,700 Medtronic, Inc. 1,520,544 14,400 Stryker Corp. 988,560 ----------- 2,990,937 ----------- PERSONAL CARE: 2.79% 34,400 Avon Products, Inc. 1,962,520 ----------- RETAIL - APPAREL: 0.93% 17,000 Coach, Inc. * 651,610 ----------- RETAIL - SPECIALTY: 4.48% 55,100 Bed Bath & Beyond, Inc. * 1,903,154 68,400 Staples, Inc. * 1,253,772 ----------- 3,156,926 ----------- SERVICE COMPANIES: 2.07% 29,200 Apollo Group, Inc. - Class A * 1,457,080 ----------- TELECOMMUNICATIONS SERVICES: 2.61% 100,900 Vodafone Group Plc # 1,838,398 ----------- Total Common Stocks (Cost $55,256,210) 56,758,236 ----------- Principal Amount U.S. GOVERNMENT AGENCY: 4.51% --------- ----------------------------- FEDERAL HOME LOAN BANK $2,000,000 4.375%, 02/15/05 2,099,468 1,000,000 5.080%, 10/14/05 1,077,153 ----------- Total U.S. Government Agency (Cost $3,007,361) 3,176,621 ----------- Shares/Principal Amount SHORT-TERM INVESTMENTS: 14.95% ------------- ------------------------------ 7,549,552 Federated Cash Trust Treasury Money Market (Cost $7,549,552) 7,549,552 3,000,000 U.S. Treasury Bill (Cost $2,986,090) 2,985,843 ----------- Total Short-Term Investments (Cost $10,535,642) 10,535,395 ----------- Total Investments in Securities (Cost $68,799,213): 100.03% 70,470,252 Liabilities in Excess of Other Assets : (0.03%) (19,540) ----------- Net Assets: 100.00% $70,450,712 ----------- ----------- * Non-income producing security. # American Depository Receipt. See accompanying Notes to Financial Statements. STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2003 (UNAUDITED) ASSETS Investments in securities, at value (identified cost $68,799,213) $70,470,252 Receivables Securities sold 1,312,812 Fund shares issued 403,733 Dividends and interest 64,788 Prepaid expenses 9,927 ----------- Total assets 72,261,512 ----------- LIABILITIES Payables Securities purchased 1,648,692 Fund shares redeemed 82,396 Due to Advisor 59,950 Due to Custodian 3,617 Accrued expenses 16,145 ----------- Total liabilities 1,810,800 ----------- NET ASSETS $70,450,712 ----------- ----------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE [$70,450,712 / 5,581,467 shares outstanding; unlimited number of shares (par value $0.01) authorized] $ 12.62 ----------- ----------- COMPONENTS OF NET ASSETS Paid-in capital $79,283,229 Accumulated net realized loss on investments (10,503,556) Net unrealized appreciation on investments 1,671,039 ----------- Net assets $70,450,712 ----------- ----------- See accompanying Notes to Financial Statements. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2003 (UNAUDITED) INVESTMENT INCOME Income Dividends (net of withholding tax of $1,488) $ 194,484 Interest 91,096 ----------- Total income 285,580 ----------- Expenses Advisory fees (Note 3) 309,320 Administration fees (Note 3) 58,863 Transfer agent fees 16,372 Fund accounting fees 14,871 Registration fees 9,443 Audit fees 9,230 Custody fees 8,055 Legal fees 4,668 Printing and mailing fees 3,652 Directors fees 3,207 Miscellaneous 1,812 Insurance fees 1,754 ----------- Total expenses 441,247 Add: Expense recoupment by Advisor (Note 3) 16,547 ----------- Net expenses 457,794 ----------- NET INVESTMENT LOSS (172,214) ----------- REALIZED AND UNREALIZED GAIN / (LOSS) ON INVESTMENTS Net realized loss from security transactions (4,366,121) Net change in unrealized appreciation on investments 1,028,464 ----------- Net realized and unrealized loss on investments (3,337,657) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,509,871) ----------- ----------- See accompanying Notes to Financial Statements. STATEMENTS OF CHANGES IN NET ASSETS Six Months Year Ended Ended March 31, 2003 Sept. 30, 2002 (Unaudited) -------------- -------------- NET DECREASE IN NET ASSETS FROM OPERATIONS Net investment loss $ (172,214) $ (132,450) Net realized loss on security transactions (4,366,121) (3,672,556) Net change in unrealized appreciation on investments 1,028,464 378,745 ----------- ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (3,509,871) (3,426,261) ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income -- (93,602) Net realized gain on security transactions -- -- ----------- ----------- TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- (93,602) ----------- ----------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Net increase in net assets derived from net change in outstanding shares (a) 23,157,544 20,400,438 ----------- ----------- Total increase in net assets 19,647,673 16,880,575 NET ASSETS Beginning of period 50,803,039 33,922,464 ----------- ----------- END OF PERIOD $70,450,712 $50,803,039 ----------- ----------- ----------- -----------
(a) A summary of share transactions is as follows: Six Months Ended Year March 31, 2003 Ended (Unaudited) September 30, 2002 ----------------------------- ----------------------------- Shares Paid in Capital Shares Paid in Capital Shares sold 2,629,492 $34,345,428 1,704,838 $24,117,264 Shares issued on reinvestments of distributions -- -- 6,122 88,765 Shares redeemed* (871,171) (11,187,884) (271,112) (3,805,591) --------- ----------- --------- ----------- Net increase 1,758,321 $23,157,544 1,439,848 $20,400,438 --------- ----------- --------- ----------- --------- ----------- --------- ----------- * Net of redemption fees of $ 228 $ 0 ----------- ----------- ----------- -----------
See accompanying Notes to Financial Statements. FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD Six Months Ended Year Year Year Year Mar. 31, Ended Ended Ended Ended Dec. 2, 1997* 2003 Sept. 30, Sept. 30, Sept. 30, Sept. 30, through (Unaudited) 2002 2001 2000 1999 Sept. 30, 1998 ---------- --------- --------- --------- --------- -------------- Net asset value, beginning of period $13.29 $14.23 $17.69 $13.66 $10.68 $10.00 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income / (loss) (0.03) (0.05)# 0.05 (0.01) (0.05) (0.01) Net realized and unrealized gain / (loss) on investments (0.64) (0.85) (3.28) 4.04 3.03 0.70 ------ ------ ------ ------ ------ ------ Total from investment operations (0.67) (0.90) (3.23) 4.03 2.98 0.69 ------ ------ ------ ------ ------ ------ Less distributions: From net investment income -- (0.04) (0.01) -- -- (0.01) From net realized gain -- -- (0.22) -- -- -- ------ ------ ------ ------ ------ ------ Total distributions -- (0.04) (0.23) -- -- (0.01) ------ ------ ------ ------ ------ ------ Net asset value, end of period $12.62 $13.29 $14.23 $17.69 $13.66 $10.68 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ TOTAL RETURN (5.04%)++ (6.36%) (18.47%) 29.50% 27.90% 6.91%++ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $70,451 $50,803 $33,922 $23,131 $9,140 $4,010 Ratio of expenses to average net assets: Before expense reimbursement 1.48%+ 1.53% 1.57% 1.70% 2.37% 3.98%+ After expense reimbursement 1.48%+ 1.48% 1.48% 1.48% 1.48% 1.47%+ Ratio of net investment income (loss) to average net assets: After expense reimbursement (0.56%)+ (0.32%) 0.34% (0.06%) (0.59%) (0.17%)+ Portfolio turnover rate 83.28% 96.06% 94.84% 73.94% 62.49% 54.49%
* Commencement of operations. # Based on average shares outstanding. + Annualized. ++ Not Annualized. See accompanying Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS AT MARCH 31, 2003 (UNAUDITED) NOTE 1 - ORGANIZATION The Chase Growth 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 growth of capital and it intends to achieve its objective by investing primarily in common stocks of domestic companies with large market capitalizations of $10 billion and above. The Fund began operations on December 2, 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 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 generally accepted accounting principles. To the extent these book/tax differences are permanent, such amounts are reclassified within 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 March 31, 2003, Chase Investment Counsel 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 1.00% based upon the average daily net assets of the Fund. For the six months ended March 31, 2003, the Fund incurred $309,320 in Advisory Fees. The Fund is responsible for its own operating expenses. The Advisor has agreed to reduce fees payable to it by the Fund and to pay the Fund's operating expenses to the extent necessary to limit the Fund's aggregate annual operating expenses to 1.48% of average net assets (the "expense cap"). 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 six months ended March 31, 2003, the Advisor recouped $16,547 of such expenses it previously reimbursed to the Fund. Cumulative expenses subject to recapture pursuant to the aforementioned conditions amounted to $187,168 at March 31, 2003. Cumulative expenses subject to recapture expire as follows: Year Amount ---- ------ 2003 $103,742 2004 $ 60,594 2005 $ 22,832 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 and the Distributor. NOTE 4 - SECURITIES TRANSACTIONS For the six months ended March 31, 2003, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were $63,643,393 and $45,972,786, respectively. NOTE 5 - INCOME TAXES As of March 31, 2003, the components of net assets on a tax basis were as follows: Cost of investments $68,799,213 ----------- ----------- Gross tax unrealized appreciation $ 3,484,737 Gross tax unrealized depreciation (1,813,698) ----------- Net unrealized appreciation $ 1,671,039 ----------- Capital loss carryforward expiring 2010 $(3,440,852) ----------- ----------- Net investment loss differs for financial statement and tax purposes due to differing treatments of net operating losses. ADVISOR Chase Investment Counsel Corporation 300 Preston Avenue, Suite 403 Charlottesville, VA 22902-5091 DISTRIBUTOR Quasar Distributors, LLC 615 East Michigan Street Milwaukee, WI 53202 TRANSFER AGENT Fund Services, Incorporated 1500 Forest Avenue, Suite 111 Richmond, VA 23229 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 55 Second Street, 24th Floor San Francisco, CA 94105 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. For a current prospectus please call 1-888-861-7556. 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.