N-CSR 1 aff-ncsra.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07959 --------- ADVISORS SERIES TRUST --------------------- (Exact name of registrant as specified in charter) 615 EAST MICHIGAN ST. MILWAUKEE, WI 53202 ------------------- (Address of principal executive offices) (Zip code) ERIC M. BANHAZL ADVISORS SERIES TRUST 2020 EAST FINANCIAL WAY, SUITE 100 GLENDORA, CA 91741 ------------------ (Name and address of agent for service) (414) 765-5340 -------------- Registrant's telephone number, including area code Date of fiscal year end: DECEMBER 31, 2005 ----------------- Date of reporting period: DECEMBER 31, 2005 ----------------- ITEM 1. REPORT TO STOCKHOLDERS. ------------------------------ (AL FRANK LOGO) AL FRANK FUND AL FRANK DIVIDEND VALUE FUND ANNUAL REPORT DECEMBER 31, 2005 AL FRANK FUNDS 32392 COAST HIGHWAY, SUITE 260 LAGUNA BEACH, CA 92651 SHAREHOLDER SERVICES (888) 263-6443 WWW.ALFRANKFUNDS.COM AL FRANK ASSET MANAGEMENT, INC. 32392 Coast Highway, Suite 260, Laguna Beach, CA 92651 www.alfrankfunds.com February 2006 Dear Shareholder: While our time-tested approach of consistently buying and holding broadly diversified portfolios of undervalued stocks suggests that many will have a sense of deja vu as they read this year's Letter to Shareholders, we do hope that everyone takes a few minutes to read the paragraphs below in order to better understand their existing and/or potential new investment in the Al Frank Funds. We understand that many are concerned solely with performance, but it is imperative that folks appreciate the methodology that has created our solid long-term returns. We know that more than a few Al Frank Fund (VALUX) shareholders have only recently come on board, drawn to our market-beating 1-, 3- or 5-year performance figures, but it must be pointed out that those gains were not achieved without any setbacks. For example, VALUX was down for the year as much as 8.83% at one point in 2005, yet closed the year with a gain of 11.06%. For its part, The Al Frank Dividend Value Fund (VALDX) was off as much as 5.15% on April 28 but closed out 2005 up 7.95% for the entire year. Clearly, we will not always be able to beat our peers or the market in the short run, but those who have remained patient have generally been rewarded in the fullness of time. I have said it before, but it bears repeating, we wish we could force our shareholders to leave their money in our funds for the long-term, not for our sake, but for theirs! The table below documents the long-term performance numbers of which I speak. Of course, despite the market-beating returns, we realize that many shareholders will continue to try to time their purchases and sales of our Funds. Sadly, we are aware that quite a few short-term oriented folks have lost money investing in our Funds, even as both funds are priced near their all-time highs as of this writing. For what it is worth, rather than contemplating a sale, I have utilized periods of poor performance to add to my holdings in our Funds, a strategy also employed by many of our long-term shareholders. FUND PERFORMANCE AL FRANK AL FRANK DIVIDEND FUND VALUE FUND (INCEPTION (INCEPTION RUSSELL S&P WILSHIRE 1/2/98) 09/30/04) 2000 500 5000 ---------- ---------- ------- --- -------- RECENT RETURNS THROUGH 12/30/05 December 2005 1.92% 0.58% -0.46% 0.03% 0.14% 4Q05 4.07% 1.70% 1.13% 2.09% 2.21% AVERAGE ANNUAL TOTAL RETURNS THROUGH 12/30/05 1 Year 11.06% 7.95% 4.55% 4.91% 6.32% 3 Years 31.80% n/a 22.13% 14.40% 16.35% 5 Years 17.05% n/a 8.22% 0.54% 2.12% Since 1/2/98* 16.62% n/a 6.89% 4.73% 5.25% Since 9/30/04* 21.77% 15.35% 15.15% 11.49% 13.60%
* Inception date for the Al Frank Fund is 1/2/98. The inception date for the Al Frank Dividend Value Fund is 09/30/04. Performance data quoted represents past performance; 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. Current performance of the fund may be lower or higher than the performance quoted. Performance data to the most recent month end may be obtained by visiting www.alfrankfund.com. The Funds impose a 2% redemption fee on shares held for less than 60 days. We strive to educate our shareholders and prospective shareholders about our approach and the merits of thinking long-term. While many are already receiving our philosophical musings via their subscriptions to The Prudent Speculator newsletter, we encourage those who are not subscribers to visit www.alfrankfunds.com/sar06 for additional information and to sign up for our free twice-monthly Buckingham Report service. The next time the going gets tough, we hope that you will think twice before redeeming and we think the Buckingham Reports just might encourage you to stay the course or even add to your holdings! Given that both of our Funds are broadly diversified, one or two winning or losing stocks do not make or break performance and, as is generally the case, in 2005 favorable earnings comparisons powered the winning stocks while disappointing results drove the losers lower. VALUX benefited in 2005 from strong gains in: energy stocks like Valero Energy, Holly Corp, Tesoro Corp & Transocean; commodity stocks like Aleris Int'l & Ryerson; construction-related stocks like Lamson & Sessions, JLG Industries and Smith-Midland; aerospace- related stocks like LMI Aerospace, BE Aerospace & Boeing; retail stocks like JC Penney, Ann Taylor & Abercrombie & Fitch; technology stocks such as Peerless Systems, Diodes, Brightpoint, Apple Computer and Sandisk; homebuilding stocks such as Beazer Homes & KB Home and healthcare stocks like Humana, Aetna & McKesson. Also helping performance were buyout offers received on Vintage Petroleum, Toys R Us, Burlington Coat, Pacificare & Blue Martini. VALDX was powered higher by some of the same VALUX stellar performers such as Valero Energy, Kaman Corp, Ryerson and McKesson, but also by Empire Resources, Adtran, Marathon Oil, Circuit City and Devon Energy. In addition, the acquisitions of Haggar, Georgia Pacific and May Department Stores helped our performance. Obviously, not all of our picks were winners. In 2005, VALUX was held back by big losses in Dura Automotive, Gateway, Avici Systems, InFocus, Blonder Tongue and ActivCard. In VALDX, Doral Financial, General Motors, Alliance One Int'l, Ford and Sea Containers were among the largest losers. Keep in mind that our largest holding in either fund is less than 1%, so individual losers may not be very painful, and our historical experience has proven that our winners win more than our losers lose. We thus will happily take the bad with the good, as our market-beating returns are proof that our time-tested approach works. Certainly, we are always working to improve our research, but the same fundamental analysis that gave us the top performers also led us to the laggards. Those who are familiar with our investment approach are likely well aware that we remain very optimistic about the prospects for the securities we hold in our Funds. The reasons for our enthusiasm regarding stocks have changed little. As an important contrary indicator, investor sentiment remains neutral, if not negative, and equities in generally have posted below trend returns for the better part of this decade. On the whole, corporate balance sheets are in superb shape, corporate profits are likely to remain robust, the economy is moving along at a healthy clip and merger and acquisition activity is booming. Most important, valuations are for the most part attractive with the forward P/E ratio (based on 2006 estimated earnings) on the S&P 500 Index near 15. Valuations become even more inexpensive when compared to long-term interest rates which continue to reside near generational lows, despite 14 rate hikes from the Federal Reserve. While the Fed is likely to raise rates one or two times more in the coming months, we are of the belief that there will not be much more after that in the way of Fed tightening. This situation could prove a positive catalyst for stocks later in the year, just as it was for a short period of time in January 2006. Incredibly, we also can't forget that despite the Fed-Funds rate climbing from a 46-year low of 1% to 4.5%, the yields on long-term treasuries are lower today than when the Fed started boosting rates back in 2004! Certainly, we recognize that the talking heads and media pundits will continue to find plenty to worry about, but with our broad diversification and emphasis on out-of-favor stocks, we have every expectation that our portfolios should continue to perform well over the long-term. Of course, we can never forget that stocks in general have historically returned 10% to 12% per annum, with undervalued equities performing even better. While I recognize that VALUX and VALDX are classified as Small- to Mid-Cap Value Funds, I remind shareholders that we are never constrained by asset allocation style boxes. Take a look at the Top 10 Holdings (as a percentage of total assets on December 30, 2005) of each Fund to see what I mean. In VALUX, Valero Energy, United Healthcare and Advanced Micro Devices sport market capitalizations of more than $15 billion, not exactly small-cap, while in VALDX, companies like Adtran, McKesson and National Semiconductor could be considered more growth oriented as opposed to value-based. TOP TEN HOLDINGS AS OF DECEMBER 30, 2005 THE AL FRANK DIVIDEND THE AL FRANK FUND (VALUX) VALUE FUND (VALDX) 1. Valero Energy 0.98% 1. Valero Energy 1.07% 2. Beazer Homes 0.94% 2. Ryerson Tull Inc. 0.93% 3. Aleris Int'l. 0.91% 3. Trinity Industries 0.85% 4. Holly Corp. 0.89% 4. Marathon Oil 0.81% 5. Giant Industries 0.88% 5. AdTran 0.80% 6. Washington Mutual 0.87% 6. McKesson 0.79% 7. Humana 0.82% 7. Devon Energy 0.75% 8. United Healthcare 0.82% 8. Circuit City Stores 0.74% 9. Advanced Micro Devices 0.81% 9. National Semiconductor 0.71% 10. Vintage Petroleum 0.81% 10. Beazer Homes 0.70% Fund holdings are subject to change and are not recommendations to buy or sell any security We are style agnostic as we seek bargains wherever they reside. If Blue-Chips are cheap, we will buy them. If technology stocks are undervalued, we will not hesitate to pick them up. After all, we believe that if we limit our investment universe by market-cap or value-versus-growth distinctions, then we are likely to limit our returns! Generally speaking, mid- and large-cap stocks have become more attractive on a relative basis these days, especially as small-cap stocks have performed well, so our new buying in those areas is moving the median market capitalizations of both of our funds higher. All of us at Al Frank Asset Management appreciate the patronage of our long-term oriented shareholders and we continue to be guided by the motto, "In order to turn ordinary into extraordinary, you put in the extra." And why not, our money is invested right beside yours. Sincerely, /s/John Buckingham John Buckingham President & Chief Portfolio Manager Opinions expressed are those of John Buckingham, which are subject to change and are not intended to be a forecast of future events, a guarantee of future results, nor investment advice. INVESTING IN SECURITIES OF SMALL AND MEDIUM-CAPITALIZATION COMPANIES INVOLVES GREATER PRICE VOLATILITY THAN LARGE-CAPITALIZATION COMPANIES. Investment performance reflects voluntary fee waivers. In the absence of returns such waivers, total returns would be reduced. The S&P 500, Russell 2000 and Wilshire 5000 are unmanaged indices commonly used to measure performance of US stocks. The S&P 500 invests primarily in large-cap stocks; the Wilshire 5000 invests primarily in small-, mid- and large-cap stocks; and the Russell 2000 invests primarily in small-cap stocks. You cannot invest directly in an index. P/E Ratio is the current stock price divided by the earnings per share. This material must be preceded or accompanied by a current prospectus. Read it carefully before investing. Distributed by Quasar Distributors LLC. (2/06) AL FRANK FUND Comparison of the change in value of a hypothetical $10,000 investment in Al Frank Fund vs. the Dow Jones Wilshire 5000 (Full Cap) Index, the S&P/Barra Value Index, the Russell 2000 Index, and the S&P 500 Index Russell Dow Jones Al Frank 2000 Wilshire 5000 S&P 500 S&P/Barra Date Fund Index (Full Cap) Index Index Value Index ---- -------- ------- ---------------- ------- ----------- 1/2/98 $10,000 $10,000 $10,000 $10,000 $10,000 12/31/98 $9,070 $9,758 $12,309 $12,797 $11,447 12/31/99 $14,550 $11,833 $15,209 $15,489 $12,903 12/31/2000 $15,566 $11,475 $13,553 $14,080 $13,688 12/31/2001 $20,195 $11,761 $12,066 $12,406 $12,085 12/31/2002 $14,945 $9,352 $9,549 $9,664 $9,565 12/31/2003 $26,598 $13,771 $12,570 $12,436 $12,606 12/31/2004 $30,801 $16,296 $14,157 $13,789 $14,584 12/31/2005 $34,217 $17,037 $15,051 $14,466 $15,513 AVERAGE ANNUAL TOTAL RETURN1 Dow Jones S&P/ Russell S&P Al Frank Wilshire 5000 Barra 2000 500 Fund (Full Cap) Index Value Index Index Index -------- ---------------- ----------- ------- ----- 1 Year 11.06% 6.32% 6.37% 4.55% 4.91% 5 Year 17.05% 2.12% 2.53% 8.22% 0.54% Since inception (1/2/98) 16.62% 5.25% 5.65% 6.89% 4.73% 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. Current performance of the Funds may be lower or higher than the performance quoted. Performance data for the most recent month end is available at www.alfrankfunds.com. The Fund imposes a 2.00% redemption fee on shares held less than two months. Returns reflect the reinvestment of dividends and capital gains. Fee waivers are in effect. In the absence of fee waivers, returns would be reduced. The performance data and graphs above do not reflect the deduction of taxes that a shareholder may pay on dividends, capital gain distributions, or redemption of Fund shares. 1 Average Annual Total Return represents the average change in account value over the periods indicated. The Dow Jones Wilshire 5000 (Full Cap) Index tracks the performance of all equity securities issued by the U.S. head-quartered companies regardless of exchange. As of 12/31/05, the index was comprised of approximately 6,700 companies. The S&P/Barra Value Index is an unmanaged capitalization-weighted index that contains approximately 50% of the stocks in the S&P 500 Index with lower price- to-book ratios. The Russell 2000 Index is a widely regarded small cap index of the 2,000 smallest securities of the Russell 3000 Index which is comprised of the 3,000 largest U.S. securities as determined by total market capitalization. The S&P 500 Index is and unmanaged capitalization-weighted index of 500 stocks designed to represent the broad domestic economy. Indices do not incur expenses and are not available for investment. AL FRANK DIVIDEND VALUE FUND Comparison of the change in value of a $10,000 investment in The Al Frank Dividend Value Fund vs the Dow Jones Wilshire 5000 (Full Cap) Index, the S&P 400 Midcap Index, and the S&P 500 Index Al Frank Dow Jones Dividend Value S&P 500 Wilshire 5000 S&P 400 Date Fund Index (Full Cap) Index Midcap Index ---- -------------- ------- ---------------- ------------ 9/30/2004 $10,000 $10,000 $10,000 $10,000 12/31/2004 $11,077 $10,923 $11,033 $11,216 3/31/2005 $11,167 $10,689 $10,770 $11,171 6/30/2005 $11,428 $10,835 $11,036 $11,647 9/30/2005 $11,758 $11,225 $11,465 $12,215 12/31/2005 $11,958 $11,460 $11,731 $12,623 AVERAGE ANNUAL TOTAL RETURN1 Al Frank Dow Jones S&P 400 Dividend Value Wilshire 5000 Midcap S&P 500 Fund (Full Cap) Index Index Index -------------- ---------------- ------- ------- 1 Year 7.95% 6.32% 12.56% 4.91% Since inception (9/30/04) 15.35% 13.60% 20.46% 11.49% 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. Current performance of the Funds may be lower or higher than the performance quoted. Performance data for the most recent month end is available at www.alfrankfunds.com. The Fund imposes a 2.00% redemption fee on shares held less than two months. Returns reflect the reinvestment of dividends and capital gains. Fee waivers are in effect. In the absence of fee waivers, returns would be reduced. The performance data and graphs above do not reflect the deduction of taxes that a shareholder may pay on dividends, capital gain distributions, or redemption of Fund shares. 1 Average Annual Total Return represents the average change in account value over the periods indicated. The Dow Jones Wilshire 5000 (Full Cap) Index tracks the performance of all equity securities issued by the U.S. head-quartered companies regardless of exchange. As of 12/31/05, the index was comprised of approximately 6,700 companies. The S&P 400 Midcap Index is a capitalization-weighted indices which measures the performance of the mid-range sector of the U.S. stock market. The S&P 500 Index is and unmanaged capitalization-weighted index of 500 stocks designed to represent the broad domestic economy. Indices do not incur expenses and are not available for investment. AL FRANK FUNDS EXPENSE EXAMPLE AT DECEMBER 31, 2005 (UNAUDITED) Generally, shareholders of mutual funds incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund(s) and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (7/1/05 - 12/31/05). ACTUAL EXPENSES The first line of the tables below provides information about actual account values and actual expenses, with actual net expenses being limited to 1.98% per the advisory agreement. Please note that the Al Frank Fund operated below the expense cap at 1.67%. Although the Fund(s) charge no sales load or transaction fees, you will be assessed fees for outgoing wire transfers, returned checks, and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, the Funds' transfer agent. The example below includes, but is not limited to, management fees, 12b-1 fees, fund accounting, custody and transfer agent fees. You may use the information in the first line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the tables below provides information about hypothetical account values and hypothetical expenses based on the Funds' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. AL FRANK FUND BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD 7/1/05 12/31/05 7/1/05 - 12/31/05* ------------ ------------- ---------------------- Actual $1,000.00 $1,096.00 $8.82 Hypothetical (5% return $1,000.00 $1,016.79 $8.49 before expenses) * Expenses are equal to the Fund's annualized expense ratio of 1.67%, multiplied by the average account value over the period, multiplied by 184 (days in most recent fiscal half-year) divided by 365 days to reflect the one-half year expense. AL FRANK DIVIDEND VALUE FUND BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD 7/1/05 12/31/05 7/1/05 - 12/31/05* ------------ ------------- ---------------------- Actual $1,000.00 $1,046.40 $10.21 Hypothetical (5% return $1,000.00 $1,015.22 $10.06 before expenses) * Expenses are equal to the Fund's annualized expense ratio of 1.98%, multiplied by the average account value over the period, multiplied by 184 (days in most recent fiscal half-year) divided by 365 days to reflect the expenses for the period. AL FRANK FUNDS ALLOCATION OF PORTFOLIO ASSETS AT DECEMBER 31, 2005 (UNAUDITED) AL FRANK FUND Consumer Cyclical 19% Consumer Noncyclical 3% Energy 13% Financial 8% Health Care 7% Industrial 17% Technology 24% Basic Materials 4% Telecommunications 2% Short-Term Investments 3% AL FRANK DIVIDEND VALUE FUND Consumer Cyclical 22% Consumer Noncyclical 4% Energy 12% Financial 16% Health Care 7% Industrial 15% Technology 14% Basic Materials 6% Telecommunications 1% Short-Term Investments 3% AL FRANK FUND SCHEDULE OF INVESTMENTS AT DECEMBER 31, 2005 Shares Common Stocks: 96.78% Value ------ --------------------- ----- ADVANCED INDUSTRIAL EQUIPMENT: 0.88% 45,000 The Lamson & Sessions Co.* $ 1,125,900 76,200 O.I. Corp.* 944,880 57,000 Technology Research Corp. 242,250 ------------ 2,313,030 ------------ ADVANCED MEDICAL DEVICES: 0.68% 7,176 Advanced Medical Optics, Inc.* 299,957 37,650 Bio-logic Systems Corp.* 328,684 273,300 Cathay Merchant Group, Inc.* 106,587 15,074 Utah Medical Products, Inc. 482,971 75,000 Vascular Solutions, Inc.* 567,000 ------------ 1,785,199 ------------ AEROSPACE & DEFENSE: 4.47% 24,100 AAR Corp.* 577,195 50,000 The Allied Defense Group, Inc.* 1,138,500 40,000 BE Aerospace, Inc.* 880,000 15,500 The Boeing Co. 1,088,720 40,000 Ducommun, Inc.* 854,400 50,000 Kaman Corp. - Class A 984,500 129,900 LMI Aerospace, Inc.* 1,841,982 22,000 Lockheed Martin Corp. 1,399,860 143,750 Orbit International Corp.* 1,791,125 12,300 Pemco Aviation Group, Inc.* 216,591 15,000 Raytheon Co. 602,250 110,700 SIFCO Industries, Inc.* 431,730 ------------ 11,806,853 ------------ AIRLINES: 1.34% 22,000 Air France ADR 475,640 80,000 Airtran Holdings, Inc.* 1,282,400 75,000 Mesa Air Group, Inc.* 784,500 175,000 Midwest Air Group, Inc.* 987,000 ------------ 3,529,540 ------------ ALUMINUM: 0.37% 33,000 Alcoa, Inc. 975,810 ------------ AUTOMOBILE MANUFACTURERS: 0.75% 20,000 DaimlerChrysler AG# 1,020,600 70,000 Ford Motor Co. 540,400 22,000 General Motors Corp. 427,240 ------------ 1,988,240 ------------ AUTOMOBILE PARTS & EQUIPMENT: 0.79% 35,000 ArvinMeritor, Inc. 503,650 23,000 Cooper Tire & Rubber Co. 352,360 80,000 Dura Automotive Systems, Inc.* 179,200 60,000 The Goodyear Tire & Rubber Co.* 1,042,800 ------------ 2,078,010 ------------ BANKS: 1.52% 20,000 Bank of America Corp. 923,000 20,000 BankAtlantic Bancorp, Inc. - Class A 280,000 102,480 BFC Financial Corp. - Class A* 565,690 38,000 Capstead Mortgage Corp. 220,780 18,000 Citigroup, Inc. 873,540 13,200 JPMorgan Chase & Co. 523,908 12,500 National City Corp. 419,625 10,000 Sovereign Bancorp, Inc. 216,200 ------------ 4,022,743 ------------ BROKERAGES: 0.81% 10,000 Lehman Brothers Holdings, Inc. 1,281,700 7,500 The Bear Stearns Companies, Inc. 866,475 ------------ 2,148,175 ------------ BUILDING MATERIALS: 2.06% 20,000 Ameron International Corp. 911,600 100,000 Huttig Building Products, Inc.* 840,000 17,000 International Aluminum Corp. 684,250 30,000 JLG Industries, Inc. 1,369,800 22,000 Ready Mix, Inc. 301,400 440,000 Smith-Midland Corp.*^ 1,342,000 ------------ 5,449,050 ------------ BUSINESS SERVICES: 3.67% 40,000 Ambassadors International, Inc. 620,000 260,000 Analysts International Corp.* 624,000 140,000 Computer Horizons Corp.* 609,000 110,000 Edgewater Technology, Inc.* 649,000 151,100 HealthStream, Inc.* 352,063 90,000 Insweb Corp.* 297,000 30,000 MasTec, Inc.* 314,100 125,000 Onvia.com, Inc.* 503,750 102,000 Optimal Group, Inc. - Class A*# 2,066,520 49,630 Quotesmith.com, Inc.* 148,890 14,500 Technology Solutions Co.* 110,200 210,000 Traffix, Inc. 1,075,200 89,999 ValueClick, Inc.* 1,629,882 90,000 Vicon Industries, Inc.* 274,500 200,000 Zomax, Inc.* 416,000 ------------ 9,690,105 ------------ CASINOS & CASINO EQUIPMENT: 0.25% 30,000 Alliance Gaming Corp.* 390,600 9,000 International Game Technology 277,020 ------------ 667,620 ------------ CHEMICALS, COMMODITY: 0.80% 15,000 E.I. Du Pont de Nemours and Co. 637,500 12,500 Lyondell Chemical Co. 297,750 60,000 Olin Corp. 1,180,800 ------------ 2,116,050 ------------ CHEMICALS, SPECIALTY: 0.69% 15,000 Octel Corp. 244,050 20,000 OM Group, Inc.* 375,200 25,000 The Mosaic Co.* 365,750 125,000 Wellman, Inc. 847,500 ------------ 1,832,500 ------------ CLOTHING/FABRICS: 1.96% 50,000 Delta Apparel, Inc. 777,500 120,000 Hartmarx Corp.* 937,200 10,000 Kellwood Co. 238,800 10,000 Oxford Industries, Inc. 547,000 84,850 Quaker Fabric Corp.* 182,427 80,000 Quiksilver, Inc.* 1,107,200 35,000 Russell Corp. 471,100 305,000 Unifi, Inc.* 927,200 ------------ 5,188,427 ------------ COMMUNICATIONS TECHNOLOGY: 4.63% 150,000 3Com Corp.* 540,000 45,000 Andrew Corp.* 482,850 200,000 APA Enterprises, Inc.* 270,000 65,000 AsiaInfo Holdings, Inc.* 258,700 100,000 Avanex Corp.* 137,000 30,000 Avaya, Inc.* 320,100 115,000 Avici Systems, Inc.* 449,650 241,000 Blonder Tongue Laboratories, Inc.* 469,950 65,000 Communications Systems, Inc. 798,200 30,000 Comverse Technology, Inc.* 797,700 230,000 deltathree, Inc. - Class A* 669,300 66,600 Digi International, Inc.* 698,634 435,000 Forgent Networks, Inc.* 1,131,000 52,000 McDATA Corp. - Class A* 197,600 65,000 Network Equipment Technologies, Inc.* 286,000 75,000 Novell, Inc.* 662,250 28,000 Polycom, Inc.* 428,400 100,000 Stratos International, Inc.* 610,000 27,609 Symmetricom, Inc.* 233,848 125,000 Tellabs, Inc.* 1,362,500 355,000 TII Network Technologies, Inc.* 894,600 60,000 TriQuint Semiconductor, Inc.* 267,000 100,000 Wireless Telecom Group, Inc. 265,000 ------------ 12,230,282 ------------ COMPUTERS/HARDWARE: 2.14% 49,050 AU Optronics Corp. ADR 736,240 20,000 Apple Computer, Inc.* 1,437,800 150,000 Gateway, Inc.* 376,500 35,000 GTSI Corp.* 245,000 30,000 Hewlett Packard Co. 858,900 25,000 SanDisk Corp.* 1,570,500 100,000 Sun Microsystems, Inc.* 419,000 ------------ 5,643,940 ------------ CONSUMER SERVICES: 0.04% 4,000 SINA Corp.*# 96,640 ------------ CONTAINERS & PACKAGING: 0.58% 80,000 American Biltrite, Inc.* 868,000 60,000 Rock of Ages Corp. 259,200 150,000 Rotonics Manufacturing, Inc. 400,500 ------------ 1,527,700 ------------ COSMETICS/PERSONAL CARE: 0.06% 10,000 Helen of Troy Ltd.*# 161,100 ------------ CREDIT CARDS: 0.23% 22,000 MBNA Corp. 597,300 ------------ DATA STORAGE/DISK DRIVES: 1.05% 70,000 Adaptec, Inc.* 407,400 170,000 Innovex, Inc.* 586,500 50,000 Iomega Corp.* 124,500 13,000 Seagate Technology# 259,870 75,000 Western Digital Corp.* 1,395,750 ------------ 2,774,020 ------------ ELECTRICAL COMPONENTS & EQUIPMENT: 1.91% 31,000 American Power Conversion Corp. 682,000 13,000 Applied Films Corp.* 270,010 50,000 AVX Corp. 724,000 32,000 C&D Technologies, Inc. 243,840 125,000 Fedders Corp. 215,000 55,000 Frequency Electronics, Inc. 576,950 50,000 Kemet Corp.* 353,500 40,000 OSI Systems, Inc.* 735,600 91,500 Vishay Intertechnology, Inc.* 1,259,040 ------------ 5,059,940 ------------ ELECTRONIC MANUFACTURING SERVICES: 0.54% 40,000 Flextronics International LTD*# 417,600 25,000 Nam Tai Electronics, Inc.# 562,500 125,000 Solectron Corp.* 457,500 ------------ 1,437,600 ------------ FIBER OPTIC COMPONENTS: 0.63% 319,900 Alliance Fiber Optic Products, Inc.* 364,686 75,000 Bookham, Inc.* 429,000 45,000 Corning, Inc.* 884,700 ------------ 1,678,386 ------------ FINANCIAL SERVICES, DIVERSIFIED: 0.56% 10,000 Fannie Mae 488,100 40,000 H & R Block, Inc. 982,000 ------------ 1,470,100 ------------ FIXED LINE COMMUNICATIONS: 0.35% 25,000 ADC Telecommunications, Inc.* 558,500 15,000 AT&T, Inc. 367,350 ------------ 925,850 ------------ FOOD MANUFACTURERS: 0.73% 45,000 Archer-Daniels-Midland Co. 1,109,700 43,000 Sara Lee Corp. 812,700 ------------ 1,922,400 ------------ FOOTWEAR: 0.56% 7,500 Deckers Outdoor Corp.* 207,150 21,000 Steven Madden, Ltd 613,830 20,000 The Timberland Co. - Class A* 651,000 ------------ 1,471,980 ------------ FOREST PRODUCTS: 0.11% 35,000 Pope & Talbot, Inc. 291,550 ------------ HEALTHCARE PROVIDERS: 3.45% 21,000 Aetna, Inc. 1,980,510 95,000 American Shared Hospital Services 596,600 20,000 HCA, Inc. 1,010,000 40,000 Humana, Inc.* 2,173,200 60,000 Res-Care, Inc.* 1,042,200 61,000 United American Healthcare Corp.* 146,400 34,667 UnitedHealth Group, Inc. 2,154,207 ------------ 9,103,117 ------------ HEAVY CONSTRUCTION: 0.12% 172,300 Williams Industries, Inc.* 308,417 ------------ HOME CONSTRUCTION: 7.13% 34,000 Beazer Homes USA, Inc. 2,476,560 20,000 Cavco Industries, Inc.* 765,600 22,500 Centex Corp. 1,608,525 46,666 D.R. Horton, Inc. 1,667,376 27,500 Hovanian Enterprises, Inc. - Class A* 1,365,100 25,000 KB Home 1,816,500 20,000 Lennar Corp. - Class A 1,220,400 5,200 M.D.C. Holdings, Inc. 322,296 35,000 Orleans Homebuilders, Inc. 642,250 40,000 Pulte Homes, Inc. 1,574,400 25,000 Ryland Group, Inc. 1,803,250 40,000 Standard Pacific Corp. 1,472,000 28,000 Toll Brothers, Inc.* 969,920 32,500 WCI Communities, Inc.* 872,625 2,500 William Lyon Homes, Inc.* 252,250 ------------ 18,829,052 ------------ HOME FURNISHINGS: 0.61% 55,000 Applica, Inc.* 86,900 32,700 Chromcraft Revington, Inc.* 428,370 6,000 Craftmade International, Inc. 120,060 33,896 The Dixie Group, Inc.* 467,087 6,000 Whirlpool Corp. 502,560 ------------ 1,604,977 ------------ HOUSE, DURABLE: 0.33% 71,200 Global-Tech Appliances, Inc.*# 267,712 45,000 Lenox Group, Inc.* 595,800 ------------ 863,512 ------------ HOUSE, NON-DURABLE: 0.06% 3,500 Central Garden & Pet Co.* 160,790 ------------ INDUSTRIAL DIVERSIFIED: 0.43% 3,200 3M Co. 248,000 35,000 McRae Industries, Inc. - Class A 357,000 44,900 P & F Industries, Inc. - Class A* 538,804 ------------ 1,143,804 ------------ INDUSTRIAL SERVICES & DISTRIBUTORS: 0.84% 30,000 Avnet, Inc.* 718,200 75,000 Nu Horizons Electronics Corp.* 757,500 50,908 Spectrum Control, Inc.* 316,139 75,000 Trio-Tech International* 441,750 ------------ 2,233,589 ------------ INSURANCE, FULL LINE: 0.32% 10,000 Hartford Financial Services Group, Inc. 858,900 ------------ INSURANCE, LIFE: 0.58% 2,500 National Western Life Insurance Co. - Class A 517,275 45,000 UnumProvident Corp. 1,023,750 ------------ 1,541,025 ------------ INSURANCE, PROPERTY & CASUALTY: 1.93% 15,000 Direct General Corp. 253,500 7,500 Endurance Specialty Holdings Ltd.# 268,875 20,000 Merchants Group, Inc. 603,000 10,500 MGIC Investment Corp. 691,110 30,000 PXRE Group LTD.# 388,800 11,500 Radian Group, Inc. 673,785 25,000 RTW, Inc.* 237,500 20,000 The Allstate Corp. 1,081,400 20,000 The St. Paul Travelers Companies, Inc. 893,400 ------------ 5,091,370 ------------ MARINE TRANSPORTATION/SHIPPING (NON-ENERGY): 0.27% 57,500 Sea Containers Ltd. - Class A# 721,050 ------------ MEDICAL SUPPLIES: 1.06% 25,000 Baxter International, Inc. 941,250 36,000 McKesson Corp. 1,857,240 ------------ 2,798,490 ------------ NATURAL GAS: 0.27% 30,000 KCS Energy, Inc.* 726,600 ------------ OIL, EQUIPMENT & SERVICES: 2.24% 50,000 Key Energy Services, Inc.* 673,500 4,700 Lone Star Technologies, Inc.* 242,802 40,000 Maverick Tube Corp.* 1,594,400 30,000 Oceaneering International, Inc.* 1,493,400 20,000 Offshore Logistics, Inc.* 584,000 30,000 Tidewater Inc. 1,333,800 ------------ 5,921,902 ------------ OIL, EXPLORATION & PRODUCTION/DRILLING: 2.18% 35,000 GlobalSantaFe Corp.# 1,685,250 18,000 Nabors Industries, Ltd.*# 1,363,500 6,800 Noble Energy, Inc. 274,040 10,000 Rowan Companies, Inc. 356,400 30,000 Transocean, Inc.*# 2,090,700 ------------ 5,769,890 ------------ OIL, INTEGRATED MAJORS: 1.66% 17,500 Anadarko Petroleum Corp. 1,658,125 5,500 Chevron Corp. 312,235 5,000 ConocoPhillips 290,900 5,500 Exxon Mobil Corp. 308,935 30,000 Marathon Oil Corp. 1,829,100 ------------ 4,399,295 ------------ OIL, REFINERS: 3.50% 45,000 Giant Industries, Inc.* 2,338,200 40,000 Holly Corp. 2,354,800 32,000 Tesoro Petroleum Corp. 1,969,600 50,000 Valero Energy Corp. 2,580,000 ------------ 9,242,600 ------------ OIL, SECONDARY: 1.07% 10,000 Apache Corp. 685,200 40,000 Vintage Petroleum, Inc. 2,133,200 ------------ 2,818,400 ------------ OIL, TRANSPORTATION/SHIPPING: 2.01% 25,000 Dryships, Inc.# 305,498 12,500 Frontline LTD.# 474,000 6,700 General Maritime Corp.# 248,168 10,000 Nordic American Tanker Shipping LTD.# 287,900 90,000 OMI Corp.# 1,633,500 15,000 Overseas Shipholding Group, Inc. 755,850 4,375 Ship Finance International Ltd.# 73,938 20,000 Teekay Shipping Corp.# 798,000 20,000 Tsakos Energy Navigation LTD.# 733,400 ------------ 5,310,254 ------------ OTHER NON-FERROUS: 0.77% 20,000 Inco, Ltd.# 871,400 8,000 Phelps Dodge Corp. 1,150,960 ------------ 2,022,360 ------------ PAPER PRODUCTS: 0.22% 17,000 International Paper Co. 571,370 ------------ PHARMACEUTICALS: 2.26% 15,000 Abbott Laboratories 591,450 22,000 Bristol-Myers Squibb Co. 505,560 6,000 Eli Lilly & Co. 339,540 8,000 Forest Laboratories, Inc.* 325,440 18,500 Johnson & Johnson 1,111,850 50,000 King Pharmaceuticals, Inc.* 846,000 20,000 Merck & Co. Inc. 636,200 30,000 Pfizer, Inc. 699,600 20,000 Wyeth 921,400 ------------ 5,977,040 ------------ POLLUTION CONTROL/WASTE MANAGEMENT: 0.91% 75,000 Aleris International, Inc.* 2,418,000 ------------ PRECIOUS METALS: 0.29% 65,000 Stillwater Mining Co.* 752,050 ------------ RAILROADS: 1.72% 32,000 CSX Corp. 1,624,640 40,000 Norfolk Southern Corp. 1,793,200 14,000 Union Pacific Corp. 1,127,140 ------------ 4,544,980 ------------ REAL ESTATE INVESTMENT: 0.48% 60,000 HRPT Properties Trust 621,000 130,000 Jameson Inns, Inc.* 279,500 10,000 New Century Financial Corp. 360,700 ------------ 1,261,200 ------------ RECREATIONAL PRODUCTS: 1.11% 15,000 Brunswick Corp. 609,900 30,000 Callaway Golf Co. 415,200 225,000 Concord Camera Corp.* 267,750 20,000 Eastman Kodak Co. 468,000 30,000 K2, Inc.* 303,300 30,000 The Nautilus Group, Inc. 559,800 12,500 The Walt Disney Co. 299,625 ------------ 2,923,575 ------------ RESTAURANTS: 0.25% 25,000 Landry's Restaurants, Inc. 667,750 ------------ RETAILERS, APPAREL: 1.48% 16,667 Abercrombie & Fitch Co. - Class A 1,086,355 50,000 American Eagle Outfitters, Inc. 1,149,000 25,000 AnnTaylor Stores Corp.* 863,000 20,000 Burlington Coat Factory Warehouse Corp. 804,200 ------------ 3,902,555 ------------ RETAILERS, BROADLINE: 0.65% 24,000 J. C. Penney Company, Inc. 1,334,400 10,000 Nordstrom, Inc. 374,000 ------------ 1,708,400 ------------ RETAILERS, FOOD: 0.16% 20,000 Albertson's, Inc. 427,000 ------------ RETAILERS, SPECIALTY: 1.36% 35,000 AutoNation, Inc.* 760,550 25,000 Claire's Stores, Inc. 730,500 25,000 Jo-Ann Stores, Inc. - Class B* 295,000 16,000 OfficeMax, Inc. 405,760 29,000 The Home Depot, Inc. 1,173,920 40,000 Trans World Entertainment Corp.* 228,000 ------------ 3,593,730 ------------ SAVINGS & LOANS: 1.64% 17,000 Countrywide Financial Corp. 581,230 16,000 FirstFed Financial Corp.* 872,320 4,000 Golden West Financial Corp. 264,000 29,524 PVF Capital Corp. 316,793 53,035 Washington Mutual, Inc. 2,307,022 ------------ 4,341,365 ------------ SEMICONDUCTOR, CAPITAL EQUIPMENT: 3.12% 130,000 Aetrium, Inc.* 589,563 35,000 Brooks Automation, Inc.* 438,550 40,000 Cohu, Inc. 914,800 50,000 Credence Systems Corp.* 348,000 75,000 Electroglas, Inc.* 217,500 90,000 Kulicke and Soffa Industries, Inc.* 795,600 37,500 Lam Research Corp.* 1,338,000 60,000 Mattson Technology, Inc.* 603,600 25,000 Novellus Systems, Inc.* 603,000 25,000 Teradyne, Inc.* 364,250 35,976 Ultratech, Inc.* 590,726 23,000 Varian Semiconductor Equipment Associates, Inc.* 1,010,390 25,000 Veeco Instruments, Inc.* 433,250 ------------ 8,247,229 ------------ SEMICONDUCTOR, GRAPHICS CHIPS: 0.65% 75,000 ESS Technology, Inc.* 257,250 30,000 NVIDIA Corp.* 1,096,800 163,900 Tvia, Inc.* 360,580 ------------ 1,714,630 ------------ SEMICONDUCTOR, MICROPROCESSORS: 3.61% 70,000 Advanced Micro Devices, Inc.* 2,142,000 150,000 Atmel Corp.* 463,500 40,000 Ceva, Inc.* 250,400 30,000 Cypress Semiconductor Corp.* 427,500 80,000 Dataram Corp. 420,800 61,500 Diodes, Inc.* 1,909,575 115,000 Integrated Silicon Solution, Inc.* 740,600 20,000 International Rectifier Corp.* 638,000 40,000 Micron Technology, Inc.* 532,400 40,000 National Semiconductor Corp. 1,039,200 60,000 Silicon Storage Technology, Inc.* 303,000 21,000 Texas Instruments, Inc. 673,470 ------------ 9,540,445 ------------ SEMICONDUCTOR, PROGRAMMABLE LOGIC DEVICES: 0.88% 125,000 Applied Micro Circuits Corp.* 321,250 42,500 Genesis Microchip, Inc.* 768,825 75,000 Integrated Device Technology, Inc.* 988,500 30,000 Pericom Semiconductor Corp.* 239,100 ------------ 2,317,675 ------------ SOFT DRINKS: 0.09% 6,000 Coca-Cola Co. 241,860 ------------ SOFTWARE: 4.44% 100,000 ActivCard Corp.* 349,000 170,500 American Software, Inc. - Class A 1,114,729 53,100 CAM Commerce Solutions, Inc. 1,105,006 100,000 Captaris, Inc.* 369,000 16,000 Click Commerce, Inc.* 336,320 145,000 Compuware Corp.* 1,300,650 40,000 Electronics for Imaging, Inc.* 1,064,400 85,000 iPass, Inc.* 557,600 100,000 Keynote Systems, Inc.* 1,285,000 12,000 Microsoft Corp. 313,800 50,000 Napster, Inc.* 176,000 65,000 NetManage, Inc.* 347,750 150,000 Peerless Systems Corp.* 1,264,500 155,000 Quovadx, Inc.* 373,550 27,000 RSA Security, Inc.* 303,210 20,000 SafeNet, Inc.* 644,400 100,000 Selectica, Inc.* 285,000 25,000 SonicWALL, Inc.* 198,000 20,000 Symantec Corp.* 350,000 ------------ 11,737,915 ------------ STEEL: 1.01% 70,000 Ryerson Tull, Inc. 1,702,400 20,000 United States Steel Corp. 961,400 ------------ 2,663,800 ------------ TOBACCO: 1.10% 90,000 Alliance One International, Inc. 351,000 10,000 Altria Group, Inc. 747,200 13,500 Reynolds American, Inc. 1,286,955 13,000 UST, Inc. 530,790 ------------ 2,915,945 ------------ TOYS: 1.33% 25,000 Hasbro, Inc. 504,500 60,000 Mattel, Inc. 949,200 37,000 The Topps Co. 274,910 75,000 THQ, Inc.* 1,788,750 ------------ 3,517,360 ------------ TRANSPORTATION EQUIPMENT: 0.40% 9,000 Navistar International Corp.* 257,580 18,000 Trinity Industries, Inc. 793,260 ------------ 1,050,840 ------------ TRUCKING: 0.41% 15,000 Arkansas Best Corp. 655,200 9,500 Yellow Roadway Corp.* 423,795 ------------ 1,078,995 ------------ WIRELESS COMMUNICATIONS: 1.22% 60,000 Brightpoint, Inc.* 1,663,800 34,856 Sprint Nextel Corp. 814,236 40,000 Nokia Corp. ADR 732,000 ------------ 3,210,036 ------------ Total Common Stocks (Cost $184,136,221) 255,675,279 ------------ Warrants: 0.01% --------------- 20,000 Air France ADR* Expiration 11/5/2007, Exercise Price $20.00 (Acquired 5/5/2004, Cost $18,752) 31,000 ------------ Short-Term Investments: 3.89% ----------------------------- MONEY MARKET FUNDS: 3.89% 4,850,881 Dreyfus Treasury Prime Cash Management Fund - Investor Class 4,850,881 5,433,234 SEI Daily Income Trust Government Fund - Class B 5,433,234 ------------ 10,284,115 ------------ Total Short-Term Investments (Cost $10,284,115) 10,284,115 ------------ Total Investments in Securities (Cost $194,439,088): 100.68% 265,990,394 Liabilities in Excess of Assets: (0.68%) (1,804,092) ------------ Net Assets: 100.00% $264,186,302 ------------ ------------ * Non-income producing security. # U.S. security of a foreign issuer. ^ Affiliated Company; the fund owns 5% or more of the outstanding voting securities of the issuer. See Note 4 in the Notes to Financial Statements. ADR - American Depositary Receipt See accompanying Notes to Financial Statements. AL FRANK DIVIDEND VALUE FUND SCHEDULE OF INVESTMENTS AT DECEMBER 31, 2005 Shares Common Stocks: 97.31% Value ------ --------------------- ----- ADVANCED INDUSTRIAL EQUIPMENT: 0.96% 1,800 Eaton Corp. $ 120,762 7,700 Insteel Industries, Inc. 127,512 ----------- 248,274 ----------- AEROSPACE & DEFENSE: 1.53% 2,300 The Boeing Co. 161,552 5,500 Kaman Corp. - Class A 108,295 2,000 Lockheed Martin Corp. 127,260 ----------- 397,107 ----------- AIRLINES: 0.67% 6,500 SkyWest, Inc. 174,590 ----------- ALUMINUM: 1.06% 4,500 Alcoa, Inc. 133,065 13,000 Empire Resources, Inc. 141,570 ----------- 274,635 ----------- AUTOMOBILE MANUFACTURERS: 1.26% 12,000 Ford Motor Co. 92,640 4,500 General Motors Corp. 87,390 1,400 Toyota Motor Corp. ADR 146,468 ----------- 326,498 ----------- AUTOMOBILE PARTS & EQUIPMENT: 1.21% 9,000 ArvinMeritor, Inc. 129,510 5,500 Cooper Tire & Rubber Co. 84,260 4,500 Superior Industries International, Inc. 100,170 ----------- 313,940 ----------- BANKS: 2.99% 3,000 Bank of America Corp. 138,450 15,000 Capstead Mortgage Corp. 87,150 3,200 Citigroup, Inc. 155,296 3,000 Fifth Third Bancorp 113,160 3,700 JPMorgan Chase & Co. 146,853 4,000 National City Corp. 134,280 ----------- 775,189 ----------- BROKERAGES: 2.35% 1,400 Lehman Brothers Holdings, Inc. 179,438 2,500 Merrill Lynch & Co., Inc. 169,325 2,000 Morgan Stanley 113,480 1,150 The Goldman Sachs Group, Inc. 146,867 ----------- 609,110 ----------- BUILDING MATERIALS: 1.55% 3,500 Ameron International Corp. 159,530 1,500 Building Materials Holding Corp. 102,315 3,500 International Aluminum Corp. 140,875 ----------- 402,720 ----------- BUSINESS SERVICES: 2.13% 9,300 Ambassadors International, Inc. 144,150 13,000 IKON Office Solutions, Inc. 135,330 6,000 Sabre Holdings Corp. 144,660 25,000 Traffix, Inc. 128,000 ----------- 552,140 ----------- CASINOS & CASINO EQUIPMENT: 0.59% 5,000 International Game Technology 153,900 ----------- CHEMICALS, COMMODITY: 1.77% 2,700 E.I. Du Pont de Nemours and Co. 114,750 4,500 Lyondell Chemical Co. 107,190 6,000 Olin Corp. 118,080 2,700 The Dow Chemical Co. 118,314 ----------- 458,334 ----------- CHEMICALS, SPECIALTY: 0.34% 13,000 Wellman, Inc. 88,140 ----------- CLOTHING/FABRICS: 1.76% 10,600 Delta Apparel, Inc. 164,830 4,000 Kellwood Co. 95,520 4,000 Kenneth Cole Productions, Inc. 102,000 7,000 Russell Corp. 94,220 ----------- 456,570 ----------- COMMUNICATIONS TECHNOLOGY: 2.58% 7,000 ADTRAN, Inc. 208,180 8,000 Motorola, Inc. 180,720 3,300 QUALCOMM, Inc. 142,164 52,000 Wireless Telecom Group, Inc. 137,800 ----------- 668,864 ----------- COMPUTERS/HARDWARE: 1.69% 10,682 AU Optronics Corp. ADR 160,337 6,000 Hewlett Packard Co. 171,780 1,300 International Business Machines Corp. 106,860 ----------- 438,977 ----------- CONTAINERS & PACKAGING: 0.44% 42,500 Rotonics Manufacturing, Inc. 113,475 ----------- CREDIT CARDS: 0.52% 5,000 MBNA Corp. 135,750 ----------- DATA STORAGE/DISK DRIVES: 0.48% 6,200 Seagate Technology# 123,938 ----------- DISTILLERS & BREWERS: 0.40% 2,400 Anheuser-Busch Companies, Inc. 103,104 ----------- ELECTRICAL COMPONENTS & EQUIPMENT: 1.89% 4,900 American Power Conversion Corp. 107,800 9,700 AVX Corp. 140,456 14,000 C&D Technologies, Inc. 106,680 13,000 Frequency Electronics, Inc. 136,370 ----------- 491,306 ----------- ELECTRONIC MANUFACTURING SERVICES: 0.49% 5,700 Nam Tai Electronics, Inc.# 128,250 ----------- FINANCIAL SERVICES, DIVERSIFIED: 0.97% 2,300 Fannie Mae 112,263 647 Fidelity National Title Group, Inc. - Class A 15,754 5,000 H & R Block, Inc. 122,750 ----------- 250,767 ----------- FIXED LINE COMMUNICATIONS: 0.97% 5,500 AT&T, Inc. 134,695 4,300 BellSouth Corp. 116,530 ----------- 251,225 ----------- FOOD MANUFACTURERS: 1.01% 6,000 Archer-Daniels-Midland Co. 147,960 6,000 Sara Lee Corp. 113,400 ----------- 261,360 ----------- FOOTWEAR: 0.98% 1,200 Nike, Inc. - Class B 104,148 2,600 Reebok International LTD. 151,398 ----------- 255,546 ----------- HEALTHCARE PROVIDERS: 0.99% 17,000 American Shared Hospital Services 106,760 3,000 HCA, Inc. 151,500 ----------- 258,260 ----------- HEAVY MACHINERY: 1.10% 2,600 Caterpillar, Inc. 150,202 2,000 Deere & Co. 136,220 ----------- 286,422 ----------- HOME CONSTRUCTION: 4.56% 2,500 Beazer Homes USA, Inc. 182,100 4,400 D.R. Horton, Inc. 157,212 1,900 KB Home 138,054 2,700 Lennar Corp. - Class A 164,754 1,950 M.D.C. Holdings, Inc. 120,861 7,000 Orleans Homebuilders, Inc. 128,450 1,900 Ryland Group, Inc. 137,047 4,200 Standard Pacific Corp. 154,560 ----------- 1,183,038 ----------- HOME FURNISHINGS: 0.55% 3,200 National Presto Industries, Inc. 141,920 ----------- HOUSE, DURABLE: 0.49% 5,300 Newell Rubbermaid, Inc. 126,034 ----------- HOUSE, NON-DURABLE: 0.46% 2,200 Colgate-Palmolive Co. 120,670 ----------- INDUSTRIAL DIVERSIFIED: 0.85% 1,500 3M Co. 116,250 3,000 General Electric Co. 105,150 ----------- 221,400 ----------- INSURANCE, FULL LINE: 1.74% 1,800 Hartford Financial Services Group, Inc. 154,602 2,500 MBIA, Inc. 150,400 1,500 The Chubb Corp. 146,475 ----------- 451,477 ----------- INSURANCE, LIFE: 0.57% 6,500 UnumProvident Corp. 147,875 ----------- INSURANCE, PROPERTY & CASUALTY: 4.64% 3,900 American Financial Group, Inc. 149,409 6,000 Direct General Corp. 101,400 3,300 Endurance Specialty Holdings Ltd.# 118,305 3,700 Fidelity National Financial, Inc. 136,123 2,000 MGIC Investment Corp. 131,640 8,500 PXRE Group LTD.# 110,160 2,400 The Allstate Corp. 129,768 3,300 The St. Paul Travelers Companies, Inc. 147,411 3,750 W.R. Berkley Corp. 178,575 ----------- 1,202,791 ----------- MEDICAL SUPPLIES: 1.30% 3,500 Baxter International, Inc. 131,775 4,000 McKesson Corp. 206,360 ----------- 338,135 ----------- OIL, EQUIPMENT & SERVICES: 0.51% 3,000 Tidewater Inc. 133,380 ----------- OIL, EXPLORATION & PRODUCTION/DRILLING: 1.08% 3,300 GlobalSantaFe Corp.# 158,895 3,000 Noble Energy, Inc. 120,900 ----------- 279,795 ----------- OIL, INTEGRATED MAJORS: 3.07% 1,700 Anadarko Petroleum Corp. 161,075 2,200 Chevron Corp. 124,894 2,800 ConocoPhillips 162,904 2,400 Exxon Mobil Corp. 134,808 3,472 Marathon Oil Corp. 211,688 ----------- 795,369 ----------- OIL, REFINERS: 1.07% 5,400 Valero Energy Corp. 278,640 ----------- OIL, SECONDARY: 3.03% 2,400 Apache Corp. 164,448 2,000 Ashland, Inc. 115,800 3,100 Devon Energy Corp. 193,874 2,000 Kerr-McGee Corp. 181,720 2,600 Pogo Producing Co. 129,506 ----------- 785,348 ----------- OIL, TRANSPORTATION/SHIPPING: 3.18% 8,500 Dryships, Inc.# 103,869 2,500 Frontline LTD# 94,800 3,200 Nordic American Tanker Shipping LTD# 92,128 6,500 OMI Corp.# 117,975 2,000 Overseas Shipbuilding Group, Inc. 100,780 5,250 Ship Finance International LTD# 88,725 2,500 Teekay Shipping Corp.# 99,750 3,500 Tsakos Energy Navigation LTD# 128,345 ----------- 826,372 ----------- PAPER PRODUCTS: 0.45% 3,500 International Paper Co. 117,635 ----------- PHARMACEUTICALS: 4.81% 2,800 Abbott Laboratories 110,404 5,050 Bristol-Myers Squibb Co. 116,049 2,500 Eli Lilly & Co. 141,475 2,300 GlaxoSmithKline plc ADR 116,104 1,900 Johnson & Johnson 114,190 3,900 Merck & Co. Inc. 124,059 7,500 Mylan Laboratories, Inc. 149,700 2,500 Novartis AG ADR 131,200 5,000 Pfizer, Inc. 116,600 2,800 Wyeth 128,996 ----------- 1,248,777 ----------- POLLUTION CONTROL/WASTE MANAGEMENT: 0.45% 8,000 American Ecology Corp. 115,440 ----------- RAILROADS: 2.47% 2,500 Burlington Northern Santa Fe Corp. 177,050 3,200 CSX Corp. 162,464 3,500 Norfolk Southern Corp. 156,905 1,800 Union Pacific Corp. 144,918 ----------- 641,337 ----------- REAL ESTATE INVESTMENT TRUSTS: 0.49% 3,500 New Century Financial Corp. 126,245 ----------- RECREATIONAL PRODUCTS: 2.11% 2,600 Brunswick Corp. 105,716 9,000 Callaway Golf Co. 124,560 4,000 Eastman Kodak Co. 93,600 5,625 Nautilus Group, Inc. 104,963 5,000 The Walt Disney Co. 119,850 ----------- 548,689 ----------- RESTAURANTS: 0.48% 3,700 McDonald's Corp. 124,764 ----------- RETAILERS, APPAREL: 2.34% 6,000 American Eagle Outfitters, Inc. 137,880 4,500 Deb Shops, Inc. 133,785 6,800 The Finish Line, Inc. 118,456 5,500 The Gap, Inc. 97,020 4,300 The Talbots, Inc. 119,626 ----------- 606,767 ----------- RETAILERS, BROADLINE: 1.92% 4,100 Family Dollar Stores, Inc. 101,639 2,600 J. C. Penney Company, Inc. 144,560 4,000 Nordstrom, Inc. 149,600 2,170 Wal-Mart Stores, Inc. 101,556 ----------- 497,355 ----------- RETAILERS, SPECIALTY: 3.29% 3,750 Best Buy Co., Inc. 163,050 8,500 Circuit City Stores, Inc. 192,015 5,500 Claire's Stores, Inc. 160,710 3,900 OfficeMax, Inc. 98,904 3,500 The Home Depot, Inc. 141,680 6,500 The Pep Boys - Manny, Moe & Jack 96,785 ----------- 853,144 ----------- SAVINGS & LOANS: 1.82% 3,800 Countrywide Financial Corp. 129,922 7,500 Doral Financial Corp.# 79,500 3,400 IndyMac Bancorp, Inc. 132,668 3,000 Washington Mutual, Inc. 130,500 ----------- 472,590 ----------- SEMICONDUCTOR, CAPITAL EQUIPMENT: 2.40% 8,500 Applied Materials, Inc. 152,490 5,000 Cognex Corp. 150,450 7,500 Cohu, Inc. 171,525 3,000 KLA-Tencor Corp. 147,990 ----------- 622,455 ----------- SEMICONDUCTOR, MICROPROCESSORS: 2.76% 3,200 Analog Devices, Inc. 114,784 21,000 Dataram Corp. 110,460 5,600 Intel Corp. 139,776 7,100 National Semiconductor Corp. 184,458 5,200 Texas Instruments, Inc. 166,764 ----------- 716,242 ----------- SEMICONDUCTOR, PROGRAMMABLE LOGIC DEVICES: 0.88% 3,000 Maxim Integrated Products, Inc. 108,720 4,700 Xilinx, Inc. 118,487 ----------- 227,207 ----------- SOFT DRINKS: 0.47% 3,000 The Coca-Cola Co. 120,930 ----------- SOFTWARE: 1.08% 23,000 American Software, Inc. - Class A 150,374 5,000 Microsoft Corp. 130,750 ----------- 281,124 ----------- STEEL: 2.62% 2,000 Nucor Corp. 133,440 10,000 Ryerson Tull, Inc. 243,200 5,000 The Timken Co. 160,100 3,000 United States Steel Corp. 144,210 ----------- 680,950 ----------- TOBACCO: 0.95% 1,675 Altria Group, Inc. 125,156 3,000 UST, Inc. 122,490 ----------- 247,646 ----------- TOYS: 0.38% 6,300 Mattel, Inc. 99,666 ----------- TRANSPORTATION EQUIPMENT: 1.69% 1,150 Cummins, Inc. 103,189 2,800 Ryder System, Inc. 114,856 5,000 Trinity Industries, Inc. 220,350 ----------- 438,395 ----------- TRUCKING: 1.08% 3,500 Arkansas Best Corp. 152,880 5,600 J.B. Hunt Transport Services, Inc. 126,784 ----------- 279,664 ----------- WIRELESS COMMUNICATIONS: 0.59% 8,400 Nokia Corp. ADR 153,720 ----------- Total Common Stocks (Cost $22,454,412) 25,251,377 ----------- Short-Term Investments: 3.70% ----------------------------- MONEY MARKET FUNDS: 3.70% 961,540 SEI Daily Income Trust Government Fund - Class B 961,540 ----------- Total Short-Term Investments (Cost $961,540) 961,540 ----------- Total Investments in Securities (Cost $23,415,952): 101.01% 26,212,917 Liabilities in Excess of Other Assets: (1.01%) (262,572) ----------- Net Assets: 100.00% $25,950,345 ----------- ----------- # U.S. security of a foreign issuer. ADR - American Depositary Receipt See accompanying Notes to Financial Statements. AL FRANK FUNDS STATEMENTS OF ASSETS AND LIABILITIES AT DECEMBER 31, 2005 AL FRANK AL FRANK DIVIDEND FUND VALUE FUND -------- ---------- ASSETS Investments in securities, at value: Non-affiliates (cost $193,984,640 and $23,415,952, respectively) $264,648,394 $26,212,917 Affiliates (cost $454,448 and $0, respectively) 1,342,000 -- ------------ ----------- Total investments in securities, at value 265,990,394 26,212,917 ------------ ----------- Cash 4,675 593 Receivables: Securities sold 65,902 -- Fund shares sold 473,471 15,736 Dividends and interest 201,097 43,692 Prepaid expenses 21,549 7,208 ------------ ----------- Total assets 266,757,088 26,280,146 ------------ ----------- LIABILITIES Payables: Securities purchased 1,891,806 206,816 Fund shares redeemed 235,301 57,212 Due to advisor 223,364 19,593 Transfer agent fees and expenses 73,549 7,250 Distribution fees 55,841 5,590 Administration fees 23,908 4,473 Audit fees 22,522 15,818 Fund accounting fees 10,322 6,001 Custody fees 6,241 840 Chief Compliance Officer fee 1,140 112 Accrued expenses 26,792 6,096 ------------ ----------- Total liabilities 2,570,786 329,801 ------------ ----------- NET ASSETS $264,186,302 $25,950,345 ------------ ----------- ------------ ----------- CALCULATION OF NET ASSET VALUE PER SHARE Net assets applicable to shares outstanding $264,186,302 $25,950,345 Shares issued and outstanding [unlimited number of shares (par value $0.01) authorized] 8,673,370 2,182,030 ------------ ----------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 30.46 $ 11.89 ------------ ----------- ------------ ----------- COMPONENTS OF NET ASSETS Paid-in capital $189,809,429 $23,049,242 Undistributed net investment income -- 15,062 Accumulated net realized gain on investments 2,825,567 89,076 Net unrealized appreciation on investments 71,551,306 2,796,965 ------------ ----------- Net assets $264,186,302 $25,950,345 ------------ ----------- ------------ -----------
See accompanying Notes to Financial Statements. AL FRANK FUNDS STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005 AL FRANK AL FRANK DIVIDEND FUND VALUE FUND -------- ---------- INVESTMENT INCOME Income Dividends (Net of foreign taxes withheld of $18,069 and $1,871, respectively) $ 2,488,208 $ 501,620 Interest 138,843 26,167 ----------- ---------- Total income 2,627,051 527,787 ----------- ---------- Expenses Advisory fees (Note 3) 2,478,975 228,661 Distribution fees (Note 5) 619,744 57,165 Transfer agent fees and expenses 444,096 42,280 Administration fees (Note 3) 273,948 45,734 Fund accounting fees 60,730 38,091 Reports to shareholders 43,210 1,812 Registration expense 39,558 28,438 Professional fees 33,133 22,252 Miscellaneous 26,587 8,239 Trustee fees 12,340 7,795 Custody fees 10,236 6,831 Chief Compliance Officer fee (Note 3) 6,878 624 ----------- ---------- Total expenses 4,049,435 487,922 Less: waived by advisor (Note 3) -- (35,174) ----------- ---------- Net expenses 4,049,435 452,748 ----------- ---------- NET INVESTMENT INCOME/(LOSS) (1,422,384) 75,039 ----------- ---------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments 12,531,214 144,757 Net change in unrealized appreciation on investments 14,247,744 1,568,578 ----------- ---------- Net realized and unrealized gain on investments 26,778,958 1,713,335 ----------- ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $25,356,574 $1,788,374 ----------- ---------- ----------- ----------
See accompanying Notes to Financial Statements. AL FRANK FUND STATEMENTS OF CHANGES IN NET ASSETS Year Ended Year Ended December 31, December 31, 2005 2004 ------------ ------------ INCREASE/(DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment loss $ (1,422,384) $ (1,020,715) Net realized gain on investments 12,531,214 1,535,277 Net change in unrealized appreciation on investments 14,247,744 27,531,072 ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 25,356,574 28,045,634 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS From net realized gain on investments (9,305,640) (75,802) ------------ ------------ CAPITAL SHARE TRANSACTIONS Net increase/(decrease) in net assets derived from net change in outstanding shares (a) (11,171,607) 50,957,105 ------------ ------------ TOTAL INCREASE IN NET ASSETS 4,879,327 78,926,937 ------------ ------------ NET ASSETS Beginning of year 259,306,975 180,380,038 ------------ ------------ END OF YEAR $264,186,302 $259,306,975 ------------ ------------ ------------ ------------
(a) A summary of share transactions is as follows: Year Ended Year Ended December 31, 2005 December 31, 2004 --------------------------- --------------------------- Shares Paid-in Capital Shares Paid-in Capital ------ --------------- ------ --------------- Shares sold 2,069,979 $ 60,195,223 7,821,456 $200,294,494 Shares issued on reinvestment of distributions 290,553 8,774,712 2,520 71,267 Shares redeemed* (2,806,014) (80,141,542) (6,049,722) (149,408,656) ---------- ------------ ---------- ------------ Net increase/(decrease) (445,482) $(11,171,607) 1,774,254 $ 50,957,105 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ * Net of redemption fees of $ 54,160 $ 209,930 ------------ ------------ ------------ ------------
See accompanying Notes to Financial Statements. AL FRANK DIVIDEND VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS Year Ended September 30, 2004** December 31, to 2005 December 31, 2004 ------------ ----------------- INCREASE/(DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income $ 75,039 $ 21,379 Net realized gain/(loss) on investments 144,757 (7,995) Net change in unrealized appreciation on investments 1,568,578 1,228,387 ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,788,374 1,241,771 ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income (59,671) (24,563) From net realized gain on investments (47,992) -- ----------- ----------- (107,663) (24,563) ----------- ----------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares (a) 8,125,945 14,926,481 ----------- ----------- TOTAL INCREASE IN NET ASSETS 9,806,656 16,143,689 ----------- ----------- NET ASSETS Beginning of period 16,143,689 -- ----------- ----------- END OF PERIOD $25,950,345 $16,143,689 ----------- ----------- ----------- ----------- Accumulated net investment income $ 15,062 $ -- ----------- ----------- ----------- -----------
(a) A summary of share transactions is as follows: Year Ended Year Ended December 31, 2005 December 31, 2004 --------------------------- --------------------------- Shares Paid-in Capital Shares Paid-in Capital ------ --------------- ------ --------------- Shares sold 1,262,171 $14,240,295 1,476,057 $15,094,761 Shares issued on reinvestment of distributions 8,645 102,794 2,078 22,898 Shares redeemed* (548,968) (6,217,144) (17,953) (191,178) --------- ----------- --------- ----------- Net increase 721,848 $ 8,125,945 1,460,182 $14,926,481 --------- ----------- --------- ----------- --------- ----------- --------- ----------- * Net of redemption fees of $ 19,792 $ 28 ----------- ----------- ----------- -----------
** Commencement of operations. See accompanying Notes to Financial Statements. AL FRANK FUND FINANCIAL HIGHLIGHTS - FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR Year Ended December 31, ---------------------------------------------------------------- 2005 2004 2003 2002 2001 ---- ---- ---- ---- ---- Net asset value, beginning of year $28.44 $24.56 $13.80 $18.77 $14.58 ------ ------ ------ ------ ------ Income from investment operations: Net investment loss (0.17)+ (0.11) (0.07) (0.23) (0.13) Net realized and unrealized gain/(loss) on investments 3.30 3.98 10.81 (4.66) 4.47 ------ ------ ------ ------ ------ Total from investment operations 3.13 3.87 10.74 (4.89) 4.34 ------ ------ ------ ------ ------ Less distributions: From net realized gain on investments (1.12) (0.01) -- (0.09) (0.15) ------ ------ ------ ------ ------ Redemption fees retained 0.01+ 0.02 0.02 0.01 -- ------ ------ ------ ------ ------ Net asset value, end of year $30.46 $28.44 $24.56 $13.80 $18.77 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total return 11.06% 15.83% 77.97% (25.99%) 29.83% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (thousands) $264,186 $259,307 $180,380 $48,472 $47,243 Ratio of expenses to average net assets 1.63% 1.61% 1.79% 2.25% 2.25% Ratio of net investment loss to average net assets (0.57%) (0.41%) (0.74%) (1.34%) (1.15%) Portfolio turnover rate 3.84% 24.59% 13.64% 28.14% 18.11%
+ Based on average shares outstanding. See accompanying Notes to Financial Statements. AL FRANK DIVIDEND VALUE FUND FINANCIAL HIGHLIGHTS - FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD September 30, Year Ended 2004* to December 31, December 31, 2005 2004 ------------ ----------- Net asset value, beginning of period $11.06 $10.00 ------ ------ Income from investment operations: Net investment income 0.04^ 0.02 Net realized and unrealized gain on investments 0.83 1.06 ------ ------ Total from investment operations 0.87 1.08 ------ ------ Less distributions: From net investment income (0.03) (0.02) From net realized gain on investments (0.02) -- ------ ------ (0.05) (0.02) ------ ------ Redemption fees retained 0.01^ 0.00# ------ ------ Net asset value, end of period $11.89 $11.06 ------ ------ ------ ------ Total return 7.95% 10.77%+ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $25,950 $16,144 Ratio of expenses to average net assets: Before expense reimbursement 2.13% 2.84%** After expense reimbursement 1.98% 1.98%** Ratio of net investment income to average net assets: Before expense reimbursement 0.17% (0.14%) After expense reimbursement 0.33% 0.75%** Portfolio turnover rate 8.83% 1.57%+
* Commencement of operations. ** Annualized. + Not annualized. # Amount is less than $0.01. ^ Based on average shares outstanding. See accompanying Notes to Financial Statements. AL FRANK FUNDS NOTES TO FINANCIAL STATEMENTS AT DECEMBER 31, 2005 NOTE 1 - ORGANIZATION The Al Frank Fund and the Al Frank Dividend Value Fund (the "Funds") are each diversified series of Advisors Series Trust (the "Trust"), which is registered under the Investment Company Act of 1940 as an open-end management investment company. The investment objective of the Al Frank Fund is to seek growth of capital, which it attempts to achieve by investing in out of favor and undervalued equity securities. The investment objective of the Al Frank Dividend Value Fund is long-term total return from both capital appreciation and, secondarily, dividend income, which it seeks to achieve by investing in dividend-paying equity securities that it believes are out of favor and undervalued. The Al Frank Fund and the Al Frank Dividend Value Fund commenced operations on January 2, 1998 and September 30, 2004, respectively. 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 using the NASDAQ Official Closing Price ("NOCP"). If the NOCP is not available, such securities 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, or if the closing price doesn't represent fair value, are valued following procedures approved by the Board of Trustees. These procedures consider many factors, including the type of security, size of holding, trading volume, and news events. Short-term investments are valued at amortized cost, which approximates market value. B. Federal Income Taxes: It is the Funds' policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. Security Transactions, Dividends and Distributions: Security transactions are accounted for on the trade date. 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 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. E. Reclassification of Capital Accounts: Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting These reclassifications have no effect on net assets or net asset value per share. For the year ended December 31, 2005, the Al Frank Fund increased accumulated net realized gain on investments by $21,685, and decreased accumulated net investment loss and paid-in capital by $1,422,384 and $1,444,069, respectively, due to certain permanent book and tax differences. For the year ended December 31, 2005, the Al Frank Dividend Value Fund decreased accumulated net investment income by $306, and increased accumulated net realized gain by $306 due to certain permanent book and tax differences. F. Redemption Fees. The Funds charge a 2% redemption fee to shareholders who redeem shares held for less than two months. Such fees are retained by the Fund and accounted for as an addition to paid-in capital. NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER AGREEMENTS For the year ended December 31, 2005, Al Frank Asset Management (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 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 each Fund. For the year ended December 31, 2005, the Al Frank Fund and the Al Frank Dividend Value Fund incurred $2,478,975 and $228,661 respectively, in advisory fees. The Funds are responsible for their own operating expenses. For the year ended December 31, 2005, the Advisor agreed to reduce fees payable to it by the Funds and to pay the Funds' operating expenses to the extent necessary to limit each Fund's aggregate annual operating expenses to 1.98% of average net assets. Any such reduction 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 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 each 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 year ended December 31, 2005, there were no expenses of the Al Frank Fund subject to recapture pursuant to the aforementioned conditions. For the year ended December 31, 2005, the Advisor reduced its fees and absorbed Fund expenses in the amount of $35,174 for the Al Frank Dividend Value Fund; no amounts were reimbursed to the Advisor. Cumulative expenses subject to recapture pursuant to the aforementioned conditions expire as follows: Year Amount ---- ------ 2009 $60,426 U.S. Bancorp Fund Services, 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 For the year ended December 31, 2005, the Al Frank Fund and the Al Frank Dividend Value Fund incurred $273,948 and $45,734, respectively, in administration fees. U.S. Bancorp Fund Services, LLC also serves as the fund accountant and transfer agent to the Funds. U.S. Bank, N.A., an affiliate of U.S. Bancorp Fund Services, serves as the Funds' custodian. Quasar Distributors, LLC (the "Distributor") acts as the Funds' principal underwriter in a continuous public offering of the Funds' shares. Certain officers of the Funds are also officers of the Administrator and Distributor. For the year ended December 31, 2005, the Al Frank Fund and the Al Frank Dividend Value Fund were allocated $6,878 and $624, respectively, of the Chief Compliance Officer fee. NOTE 4 - OTHER AFFILIATES Investments representing 5% or more of the outstanding securities of a portfolio company result in that company being considered an affiliated company, as defined in the 1940 Act. The aggregate market value of all securities of affiliated companies as of December 31, 2005 amounted to $1,342,000 representing 0.51% of net assets. Transactions during the year ended December 31, 2005 in which the issuer was an "affiliated person" are as follows: SMITH-MIDLAND CORP. ------------------- Beginning Shares 440,000 Beginning Cost $454,448 Purchase Cost $ -- Sales Cost $ -- -------- Ending Cost $454,448 -------- -------- Ending Shares 440,000 Dividend Income $ -- Net Realized Gain/(Loss) $ -- NOTE 5 - DISTRIBUTION COSTS The Funds have 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 each Fund's 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 December 31, 2005, the Al Frank Fund and the Al Frank Dividend Value Fund paid the Distribution Coordinator $619,744 and $57,165, respectively. NOTE 6 - PURCHASES AND SALES OF SECURITIES For the year ended December 31, 2005, the cost of purchases and the proceeds from sales of securities, excluding short-term securities for the Al Frank Fund, were $9,370,852 and $34,976,272, respectively. For the year ended December 31, 2005, the cost of purchases and the proceeds from sales of securities, excluding short-term securities for the Al Frank Dividend Value Fund, were $9,707,435 and $1,926,589, respectively. NOTE 7 - INCOME TAXES Net investment income/(loss) and net realized gains/(losses) differ for financial statement and tax purposes due to differing treatments of distributions received from Real Estate investment Trusts, wash sale losses deferred, and losses realized subsequent to October 31 on the sale of securities. The tax character of distributions paid during the years ended December 31 for the Al Frank Fund was as follows: 2005 2004 ---- ---- Long-term capital gains $9,305,640 $75,802 The tax character of distributions paid during the years ended December 31 for the Al Frank Dividend Value Fund were as follows: 2005 2004 ---- ---- Ordinary income $71,965 $24,563 Long-term capital gains $35,698 -- As of December 31, 2005, the components of accumulated earnings/(losses) on a tax basis were as follows: Al Frank Al Frank Dividend Value Fund Fund -------- -------------- Cost of investments $194,546,396 $23,415,952 ------------ ----------- Gross tax unrealized appreciation 91,974,513 4,055,038 Gross tax unrealized depreciation (20,530,515) (1,258,073) ------------ ----------- Net tax unrealized appreciation $ 71,443,998 $ 2,796,965 ------------ ----------- ------------ ----------- Undistributed ordinary income $ -- $ 71,448 Undistributed long-term capital gain 2,932,875 32,690 ------------ ----------- Total distributable earnings $ 2,932,875 $ 104,138 ------------ ----------- ------------ ----------- Other accumulated gains/(losses) $ -- $ -- ------------ ----------- Total accumulated earnings/(losses) $ 74,376,873 $ 2,901,103 ------------ ----------- ------------ ----------- The Al Frank Dividend Value Fund utilized its capital loss carryforward of $7,995 in the year ended December 31, 2005. AL FRANK FUNDS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE BOARD OF TRUSTEES ADVISORS SERIES TRUST AND SHAREHOLDERS OF AL FRANK FUND AL FRANK DIVIDEND VALUE FUND We have audited the accompanying statements of assets and liabilities of Al Frank Fund and Al Frank Dividend Value Fund, each a series of Advisors Series Trust (the "Trust"), including the schedules of investments as of December 31, 2005, and the related statements of operations for the year then ended, and with respect to the Al Frank Fund, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the three years in the period then ended, and with respect to the Al Frank Dividend Value Fund, the statements of changes in net assets and the financial highlights for the year then ended and for the period September 30, 2004 (commencement of operations) to December 31, 2004. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of Al Frank Fund for each of the two years in the period ended December 31, 2002 have been audited by other auditors, whose report dated February 21, 2003 expressed an unqualified opinion on such financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Trust's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2005 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Al Frank Fund and Al Frank Dividend Value Fund as of December 31, 2005, the results of their operations, the changes in their net assets and their financial highlights for the periods referred to above, in conformity with accounting principles generally accepted in the United States of America. TAIT, WELLER & BAKER LLP PHILADELPHIA, PENNSYLVANIA FEBRUARY 3, 2006 AL FRANK FUNDS NOTICE TO SHAREHOLDERS AT DECEMBER 31, 2005 (UNAUDITED) For the year ended December 31, 2005, the Al Frank Fund designated $9,305,640 and the Al Frank Dividend Value Fund designated $35,698 as long-term capital gains for purposes of the dividends paid deduction. For the year ended December 31, 2005, the Al Frank Dividend Value Fund designated $71,965 as ordinary income for purposes of the dividends paid deduction. For the year ended December 31, 2005, certain dividends paid by the Al Frank Dividend Value Fund may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The percentage of dividends declared from net investment income designated as qualified dividend income was 100%. For corporate shareholders in the Al Frank Dividend Value Fund, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the period ended December 31, 2005 was 100%. HOW TO OBTAIN A COPY OF THE FUNDS' PROXY VOTING POLICIES A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge upon request by calling (888) 263-6443 or on the U.S. Securities and Exchange Commission's (SEC's) website at http://www.sec.gov. ------------------ HOW TO OBTAIN A COPY OF THE FUNDS' PROXY VOTING RECORDS FOR THE 12-MONTH PERIOD ENDED JUNE 30, 2005 Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, 2005 is available without charge, upon request, by calling (888) 263-6443. Furthermore, you can obtain the Funds' proxy voting records on the SEC's website at http://www.sec.gov. ------------------ QUARTERLY FILINGS ON FORM N-Q The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the SEC's website at http://www.sec.gov. The Funds' ------------------ Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC and information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. Information included in the Funds' Form N-Q is also available by calling (888) 263-6443. AL FRANK FUNDS INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED) This chart provides information about the Trustees and Officers who oversee the Funds. Officers elected by the Trustees manage the day-to-day operations of the Funds and execute policies formulated by the Trustees. INDEPENDENT TRUSTEES NAME, AGE NUMBER OF ADDRESS PORTFOLIOS POSITION HELD WITH FUNDS TRUSTEE OVERSEEN PRINCIPAL OCCUPATION(S) AND OTHER OF FUNDS IN FUND DIRECTORSHIPS DURING PAST FIVE YEARS SINCE COMPLEX* ------------------------------------ -------- ------------- Walter E. Auch, Born 1921 1997 2 2020 E. Financial Way Glendora, CA 91741 Trustee Management Consultant, formerly Chairman, CEO of Chicago Board Options Exchange and former President of Paine Webber. Other Directorships: Nicholas-Applegate Funds, Citigroup, Pimco Advisors LLP, Senele Group and UBS Capital Management James Clayburn LaForce, Born 1928 2002 2 2020 E. Financial Way Glendora, CA 91741 Trustee Dean Emeritus, John E. Anderson Graduate School of Management, University of California, Los Angeles. Other Directorships: The Payden & Rygel Investment Group, The Metzler/Payden Investment Group, BlackRock Funds, Arena Pharmaceuticals and Cancervax Donald E. O'Connor, Born 1936 1997 2 2020 E. Financial Way Glendora, CA 91741 Trustee Financial Consultant, formerly Executive Vice President and Chief Operating Officer of ICI Mutual Insurance Company (until January, 1997). Other Directorships: The Forward Funds George J. Rebhan, Born 1934 2002 2 2020 E. Financial Way Glendora, CA 91741 Trustee Retired; formerly President, Hotchkis and Wiley Funds (mutual funds) from 1985 to 1993. Trustee: E*Trade Funds George T. Wofford III, Born 1939 1997 2 2020 E. Financial Way Glendora, CA 91741 Trustee Senior Vice President, Information Services, Federal Home Loan Bank of San Francisco. Other Directorships: None INTERESTED TRUSTEES AND OFFICERS Eric M. Banhazl, Born 1957 1997 2 2020 E. Financial Way Glendora, CA 91741 Interested Trustee, President Senior Vice President, U.S. Bancorp Fund Services, LLC, the Fund's administrator (since July 2001); formerly, Executive Vice President, Investment Company Administration, LLC ("ICA"). Robert M. Slotky, Born 1947 N/A N/A 2020 E. Financial Way Glendora, CA 91741 Chief Compliance Officer, Vice President Vice President, U.S. Bancorp Fund Services, LLC, the Funds' administrator (since July 2001); formerly Senior Vice President, ICA. Rodney A. DeWalt, Born 1967 N/A N/A 615 E. Michigan Street Milwaukee, WI 53202 Secretary Senior Counsel, Fund Administration, U.S. Bancorp Fund Services, LLC (since January 2003); Thrivent Financial for Lutherans from 2000 to 2003; Attorney Private Practice, 1997 to 2000. Douglas G. Hess, Born 1967 N/A N/A 615 E. Michigan Street Milwaukee, WI 53202 Treasurer Vice President Compliance and Administration, U.S. Bancorp Fund Services, LLC (since March 1997).
* The Trust is comprised of numerous portfolios managed by unaffiliated investment advisors. The term "Fund Complex" applies only to the Al Frank Funds. The Al Frank Funds do not hold themselves out as related to any other series within the Trust for investment purposes, nor do they share the same investment advisor with any other series. AL FRANK FUNDS BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT At a meeting held on December 15, 2005, the board of trustees (the "Board"), including the independent trustees ("Independent Trustees"), considered and approved the continuance of the investment advisory agreements (the "Advisory Agreements") with Al Frank Asset Management (the "Advisor") pertaining to the Al Frank Fund and Al Frank Dividend Value Fund (each a "Fund" and collectively the "Funds") for a period ending December 15, 2006. Prior to the meeting, the Independent Trustees had requested detailed information from the Advisor regarding the Funds. This information together with the information provided to the Independent Trustees throughout the course of year formed the primary (but not exclusive) basis for the Board's determinations. Below is a summary of the factors considered by the Board and the conclusions thereto that formed the basis for the Board approving the continuance of the Advisory Agreements: 1. THE NATURE, EXTENT AND QUALITY OF THE SERVICES PROVIDED AND TO BE PROVIDED BY THE ADVISOR UNDER THE ADVISORY AGREEMENTS. The Board considered the Advisor's specific responsibilities in all aspects of day-to-day investment management of the Funds. The Board considered the qualifications, experience and responsibilities of the portfolio managers, as well as the responsibilities of other key personnel at the Advisor involved in the day- to-day activities of the Funds, including administration, marketing and compliance. The Board noted the Advisor's commitment to responsible fund growth. The Board also considered the resources and compliance structure of the Advisor, including information regarding its compliance program, its chief compliance officer and the Advisor's compliance record, and the Advisor's business continuity plan. The Board also considered the prior relationship between the Advisor and the Trust, as well as the Board's knowledge of the Advisor's operations, and noted that during the course of the prior year they had met with the Advisor in person to discuss various marketing and compliance topics. The Board concluded that the Advisor had the quality and depth of personnel, resources, investment methods and compliance policies and procedures essential to performing its duties under the Advisory Agreements and that the nature, overall quality, cost and extent of such management services are satisfactory and reliable. 2. THE FUNDS' HISTORICAL YEAR-TO-DATE PERFORMANCE AND THE OVERALL PERFORMANCE OF THE ADVISOR. In assessing the quality of the portfolio management services delivered by the Advisor, the Trustees reviewed the short-term and long-term performance of the Funds on both an absolute basis, and in comparison to their peer funds, as classified by Lipper, Inc., and the Funds' benchmark indices. AL FRANK FUND - The Board noted that the Fund's year-to-date performance was above the median of its peer group and its benchmark indices. The Trustees particularly noted the Fund's first quartile performance ranking for all relevant periods. The Trustees also noted that during the course of the prior year they had met with the Advisor in person to discuss various performance topics. The Board concluded that the advisor's overall performance was highly satisfactory under current market conditions. AL FRANK DIVIDEND VALUE FUND - The Board noted that the Fund's year-to-date performance was slightly above the median of its peer group. The Board also noted that the Fund's one-year performance was above the median of its peer group and was ranked in the first quartile. It was also noted that during the course of the prior year they had met with the Advisor in person to discuss various performance topics. The Board concluded that the advisor's overall performance was highly satisfactory under current market conditions. 3. THE COSTS OF THE SERVICES TO BE PROVIDED BY THE ADVISOR AND THE STRUCTURE OF THE ADVISOR'S FEES UNDER THE ADVISORY AGREEMENTS. In considering the advisory fee and total fees and expenses of the Funds, the Board reviewed comparisons to their peer funds and accounts for other types of other similar accounts managed by the Advisor, as well as all expense waivers and reimbursements. AL FRANK FUND. The Board noted that the Advisor had agreed to cap its annual expense ratio at 1.98% but had actual expenses of 1.61%. The Board further noted that the Fund has consistently and clearly disclosed to shareholders the expense ratio that shareholders should expect to experience and the Advisor had honored its agreement to cap expenses. It was noted that the Fund's total expense ratio was above its peer group median and its expense structure was in line with the fees charged by the Advisor to its other investment management clients. The Trustees noted that a factor in the expense ratio was the recoupment by the Advisor of amounts that the Advisor had previously paid to support the Fund (either in the form of fee waivers or fund subsidies), and that - given the continuity in the shareholder base - such recoupment was fair and did not unfairly increase the Fund's total expenses. It was also noted that the Fund's 12b-1 fees were at an acceptable level. The Board concluded that the fees paid to the Advisor were fair and reasonable in light of comparative performance and expense and advisory fee information. AL FRANK DIVIDEND VALUE FUND. The Board noted that the Advisor had agreed to maintain an annual expense ratio of 1.98%. The Trustees noted that, while the Fund's total expense ratio was above its peer group median, the expense structure was in line with the fees charged by the Advisor to its other investment management clients. It was also noted that the Fund's 12b-1 fees were at an acceptable level. After taking into account all waivers and reimbursements, the Board concluded that the fees paid to the Advisor were fair and reasonable in light of comparative performance and expense and advisory fee information. 4. ECONOMIES OF SCALE. The Board also considered that economies of scale would be expected to be realized by the Advisor as the assets of each Fund grow and each Fund's expense ratio begins to show signs of reduction. As the level of the Funds' assets grow, the Advisor expects to be able to cover existing Fund overhead, although there are other Fund expenses that will increase with greater assets. The Board noted that although the Funds do not have advisory fee breakpoints, the Advisor has contractually agreed to reduce its advisory fees or reimburse expenses through the specified period so that the Funds do not exceed their specified expense limitation, and the Advisor is of the opinion that breakpoints will be appropriate when the Funds have grown to a larger size. The Board concluded that there were no effective economies of scale to be shared by the Advisor at current asset levels, but considered revisiting this issue in the future as circumstances changed and asset levels increased. 5. THE PROFITS TO BE REALIZED BY THE ADVISOR AND ITS AFFILIATES FROM THEIR RELATIONSHIP WITH THE FUNDS. The Board reviewed the Advisor's financial information and took into account both the direct benefits and the indirect benefits to the Advisor from advising the Funds. The Board considered that the Advisor benefits from positive reputational value in advising the Funds. The Board noted that the Advisor continued to subsidize a portion of the Fund's operating expenses, and reviewed the Advisor's compliance with its reimbursement requirements. The Board also considered the Advisor's estimate of the Funds' asset levels at which they would reach breakeven levels by covering allocated overhead costs. After such review, the Board determined that the profitability rates to the Advisor with respect to the Advisory Agreements are not excessive, and that the Advisor had maintained adequate profit levels to support the services to the Funds. No single factor was determinative of the Board's decision to approve the continuance of the Advisory Agreements, but rather the Trustees based their determination on the total mix of information available to them. Based on a consideration of all the factors in their totality, the Trustees determined that the advisory arrangements with the Advisor, including the advisory fee, were fair and reasonable to the Funds, and that the Funds' shareholders received reasonable value in return for the advisory fees paid. The Board (including a majority of the Independent Trustees) therefore determined that the continuance of the Advisory Agreements would be in the best interests of the Funds and their shareholders. ADVISOR Al Frank Asset Management, Inc. 32392 Coast Highway, Suite 260 Laguna Beach, CA 92651 www.alfrankfunds.com 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 (888) 263-6443 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street Cincinnati, OH 45202 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Tait, Weller & Baker, LLP 1818 Market Street, Suite 2400 Philadelphia, PA 19103 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker, LLP 55 Second Street, 24th Floor San Francisco, CA 94105 This report is intended for shareholders of the Funds and may not be used as sales literature unless preceded or accompanied by a current prospectus. Statements and other information herein are dated and are subject to change. ITEM 2. CODE OF ETHICS. ----------------------- The registrant has adopted a code of ethics that applies to the registrant's principal executive officer and principal financial officer. The registrant has not made any amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report. A copy of the registrant's Code of Ethics is filed herewith. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. ---------------------------------------- The registrant's board of trustees has determined that it does not have an audit committee financial expert serving on its audit committee. At this time, the registrant believes that the experience provided by each member of the audit committee together offers the registrant adequate oversight for the registrant's level of financial complexity. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. ----------------------------------------------- The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. "Audit services" refer to performing an audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. "Audit-related services" refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. "Tax services" refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. There were no "other services" provided by the principal accountant. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant. FYE 12/31/2005 FYE 12/31/2004 --------------- --------------- Audit Fees $34,100 $33,500 Audit-Related Fees N/A N/A Tax Fees $4,400 $4,000 All Other Fees N/A N/A The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the registrant, including services provided to any entity affiliated with the registrant. All of the principal accountant's hours spent on auditing the registrant's financial statements were attributed to work performed by full-time permanent employees of the principal accountant. The following table indicates the non-audit fees billed or expected to be billed by the registrant's accountant for services to the registrant and to the registrant's investment adviser (and any other controlling entity, etc.--not sub-adviser) for the last two years. The audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser is compatible with maintaining the principal accountant's independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant's independence. Non-Audit Related Fees FYE 12/31/2005 FYE 12/31/2004 ---------------------- --------------- --------------- Registrant N/A N/A Registrant's Investment Adviser N/A N/A ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. ---------------------------------------------- Not applicable to open-end investment companies. ITEM 6. SCHEDULE OF INVESTMENTS. -------------------------------- Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END ------------------------------------------------------------------------- MANAGEMENT INVESTMENT COMPANIES. -------------------------------- Not applicable to open-end investment companies. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. ------------------------------------------------------------------------- Not applicable to open-end investment companies. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT --------------------------------------------------------------------------- COMPANY AND AFFILIATED PURCHASES. --------------------------------- Not applicable to open-end investment companies. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. ------------------------------------------------------------ The registrant's independent trustees serve as its nominating committee, however, they do not make use of a nominating committee charter. DURING THE LAST SIX MONTHS, THERE HAS BEEN A MATERIAL CHANGE TO THE PROCEDURES BY WHICH SHAREHOLDERS MAY RECOMMEND NOMINEES TO THE REGISTRANT'S BOARD OF TRUSTEES. THE NOMINATING COMMITTEE WILL NOW CONSIDER NOMINEES RECOMMENDED BY SHAREHOLDERS. ITEM 11. CONTROLS AND PROCEDURES. --------------------------------- (a) The Registrant's President/Chief Executive Officer and Treasurer/Chief Financial Officer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant's service provider. (b) There were no significant changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. ----------------- (a) (1) Any code of ethics or amendment thereto, that is subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Filed herewith. (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. (3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies. (b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Advisors Series Trust -------------------------------------------- By (Signature and Title)* /s/ Eric M. Banhazl -------------------------- Eric M. Banhazl, President Date 3/7/06 ----------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Eric M. Banhazl -------------------------- Eric M. Banhazl, President Date 3/7/06 ----------- By (Signature and Title)* /s/ Douglas G. Hess -------------------------- Douglas G. Hess, Treasurer Date 3/7/06 ----------- * Print the name and title of each signing officer under his or her signature.