N-CSR 1 scharf-ncsra.htm SCHARF FUNDS ANNUAL REPORT 9-30-17
 
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 Street
Milwaukee, WI 53202
(Address of principal executive offices) (Zip code)


Douglas G. Hess, President
Advisors Series Trust
c/o U.S. Bancorp Fund Services, LLC
777 East Wisconsin Avenue, 5th Floor
Milwaukee, WI 53202
(Name and address of agent for service)



(414) 765-6609
(Registrant's telephone number, including area code)



Date of fiscal year end: September 30, 2017



Date of reporting period: September 30, 2017



Item 1. Reports to Stockholders.


 
SCHARF FUNDS

 

 

 

 

 
Scharf Fund
Retail Class – LOGRX
Institutional Class – LOGIX
 
Scharf Balanced Opportunity Fund
Retail Class – LOGBX
Institutional Class – LOGOX
 
Scharf Global Opportunity Fund
Retail Class – WRLDX
 
Scharf Alpha Opportunity Fund
Retail Class – HEDJX


 

 

 

 

 
ANNUAL REPORT
September 30, 2017


Scharf Investments, LLC


SCHARF FUNDS

TABLE OF CONTENTS

To Our Shareholders
2
Investment Highlights
11
Expense Examples
17
Sector Allocation of Portfolio Assets
19
Schedules of Investments
23
Statements of Assets and Liabilities
40
Statements of Operations
42
Statements of Changes in Net Assets
44
Statement of Cash Flows
50
Financial Highlights
51
Notes to Financial Statements
57
Report of Independent Registered Public Accounting Firm
78
Notice to Shareholders
79
Information about Trustees and Officers
81
Householding
85
Privacy Notice
86







SCHARF FUNDS

TO OUR SHAREHOLDERS
 
 
PERFORMANCE AS OF 9/30/2017
 
SCHARF FUND
           
           
Since
Since
   
6
One
Three
Five
Inception
Inception
 
Cumulative:
Months
Year
Year
Year
12/30/11
1/28/15
 
  Scharf Fund – Institutional Class
4.16%
  9.10%
21.43%
73.31%
  98.36%
N/A
 
  Scharf Fund – Retail Class
4.01%
  8.80%
N/A
N/A
N/A
16.86%
 
  S&P 500® Index
7.71%
18.61%
36.07%
94.44%
126.41%
33.22%
 
    (with dividends reinvested)
           
 
Annualized:
           
 
  Scharf Fund – Institutional Class
  6.69%
11.63%
  12.64%
N/A
 
  Scharf Fund – Retail Class
N/A
N/A
N/A
  6.01%
 
  S&P 500® Index
10.81%
14.22%
  15.26%
11.34%
 
    (with dividends reinvested)
           
 
SCHARF BALANCED OPPORTUNITY FUND
   
         
Since
Since
   
6
One
Three
Inception
Inception
 
Cumulative:
Months
Year
Year
12/31/12
1/21/16
 
  Scharf Balanced Opportunity
         
 
    Fund – Institutional Class
3.60%
  6.94%
16.70%
50.52%
N/A
 
  Scharf Balanced Opportunity
         
 
    Fund – Retail Class
3.47%
  6.68%
N/A
N/A
17.70%
 
  Lipper Balanced Funds Index
5.77%
10.91%
20.32%
46.73%
24.74%
 
    (with dividends reinvested)
         
 
  Bloomberg Barclays
         
 
    U.S. Aggregate Bond Index
2.31%
  0.07%
  8.36%
10.52%
  4.92%
 
  S&P 500® Index
         
 
    (with dividends reinvested)
7.71%
18.61%
36.07%
95.17%
39.74%
 
Annualized:
         
 
  Scharf Balanced Opportunity
         
 
    Fund – Institutional Class
  5.29%
  8.99%
N/A
 
  Scharf Balanced Opportunity
         
 
    Fund – Retail Class
N/A
N/A
10.10%
 
  Lipper Balanced Funds Index
  6.36%
  8.41%
13.97%
 
    (with dividends reinvested)
         
 
  Bloomberg Barclays
         
 
    U.S. Aggregate Bond Index
  2.71%
  2.13%
  2.88%
 
  S&P 500® Index
         
 
    (with dividends reinvested)
10.81%
15.12%
21.85%




2

SCHARF FUNDS

 
SCHARF GLOBAL OPPORTUNITY FUND
     
       
Since
   
6
One
Inception
 
Cumulative:
Months
Year
10/14/14
 
  Scharf Global Opportunity Fund
6.02%
12.10%
31.68%
 
  MSCI All Country World Index (Net)
9.68%
18.65%
30.12%
 
Annualized:
     
 
  Scharf Global Opportunity Fund
  9.74%
 
  MSCI All Country World Index (Net)
  9.30%
 
SCHARF ALPHA OPPORTUNITY FUND
     
       
Since
   
6
One
Inception
 
Cumulative:
Months
Year
12/31/15
 
  Scharf Alpha Opportunity Fund
0.21%
 -0.89%
  1.26%
 
  HFRX Equity Hedge Index
4.25%
  7.91%
  7.17%
 
  Bloomberg Barclays U.S. Aggregate Bond Index
2.31%
  0.07%
  5.87%
 
  S&P 500® Index (with dividends reinvested)
7.71%
18.61%
27.90%
 
Annualized:
     
 
  Scharf Alpha Opportunity Fund
  0.72%
 
  HFRX Equity Hedge Index
  4.04%
 
  Bloomberg Barclays U.S. Aggregate Bond Index
  3.31%
 
  S&P 500® Index (with dividends reinvested)
15.09%
 
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 Funds may be lower or higher than the performance quoted.  Performance data current to the most recent month end may be obtained by calling 1-866-572-4273.
 
The gross expense ratios, as of the Funds’ registration statement dated January 28, 2017,  for the Scharf Fund Institutional Class, Scharf Fund Retail Class, Scharf Balanced Opportunity Fund Institutional Class, Scharf Balanced Opportunity Fund Retail Class, Scharf Global Opportunity Fund, and Scharf Alpha Opportunity Fund are 1.25%, 1.49%, 1.51%, 1.78%, 2.05%, and 3.99%, respectively.  The net expense ratios, as of the Funds’ registration statement dated January 28, 2017, for the Scharf Fund Institutional Class, Scharf Fund Retail Class, Scharf Balanced Opportunity Fund Institutional Class, Scharf Balanced Opportunity Fund Retail Class, Scharf Global Opportunity Fund, and Scharf Alpha Opportunity Fund represent the percentages paid by investors and are 1.11%, 1.36%, 1.08%, 1.33%, 0.66%, and 2.54%, respectively, after fee waivers and expense reimbursements, including acquired fund fees and expenses, dividends on securities sold short and interest expense. Scharf Investments, LLC (the “Adviser”), the Funds’ investment adviser, has contractually agreed to waive fees through January 27, 2018 for the Scharf Fund and Scharf Alpha Opportunity Fund.  For the Scharf Balanced Opportunity Fund, the Expense Caps will remain in effect through January 27, 2019.  For the Global Opportunity Fund the 0.65% Expense Cap will remain in effect through January 27, 2018, after which the Expense Cap will increase to 1.50%.  The Scharf Fund charges a 2.00% redemption fee on redemptions or exchanges of fund shares that are made within 60 days of purchase. The Scharf Balanced Opportunity Fund, Scharf Global Opportunity Fund, and Scharf Alpha Opportunity Fund charge a 2.00% redemption fee on redemptions or exchanges of fund shares that are made within 15 days of purchase.  Had a fee been included, returns would be lower.
 

 
3

SCHARF FUNDS

Dear Fellow Shareholders,
 
For the fiscal year ended September 30, 2017, the Scharf Fund Institutional Class and Retail Class returned 9.10% and 8.80%, respectively, compared to the 18.61% return for the S&P 500® Index (the “S&P 500”).  The key contributors to relative performance for the period were Microsoft Corp., Apple, Inc. (“Apple”), Berkshire Hathaway, Inc., and Oracle Corp. (“Oracle”).  The key detractors from relative performance were Advance Auto Parts, Inc. (“Advance Auto”), Nielsen Holdings plc (“Nielsen Holdings”), Allergan plc (“Allergan”), and L Brands, Inc. (“L Brands”).
 
For the fiscal year ended September 30, 2017, the Scharf Balanced Opportunity Fund Institutional Class and Retail Class returned 6.94% and 6.68%, respectively, compared to the 10.91% return for the Lipper Balanced Funds Index, 0.07% return for the Bloomberg Barclays U.S. Aggregate Bond Index, and 18.61% return for the S&P 500.  The key contributors to relative performance for the period were Microsoft Corp. (“Microsoft”), Samsung Electronics Co., Ltd. (“Samsung”), Apple, and Berkshire Hathaway, Inc.  The key detractors from relative performance for the period were Advance Auto, Nielsen Holdings, Allergan, and L Brands.
 
For the fiscal year ended September 30, 2017, the Scharf Global Opportunity Fund returned 12.10% compared to the 18.65% return for the MSCI All Country World Index (Net).  The key contributors to relative performance for the period were Samsung Electronics, Oracle, Microsoft, and Cognizant Tech Solutions Corp.  The key detractors from relative performance were Advance Auto, L Brands, Nielsen Holdings, and Shire plc.
 
For the fiscal year ended September 30, 2017, the Scharf Alpha Opportunity Fund returned -0.89% compared to the 7.91% return for the HFRX Equity Hedge Index, 0.07% return for the Bloomberg Barclays U.S. Aggregate Bond Index, and 18.61% return for the S&P 500® Index.  The key contributors to relative performance for the period were Microsoft Corp., Apple, AON plc, and Oracle.  The key detractors from relative performance were Advance Auto, Nielsen Holdings, L Brands, and Allergan.
 
With the current bull market now well into its 9th year, we continue to believe we are conservatively positioned.  By remaining price disciplined, our cash balances have grown larger as fewer companies have met our investment criteria.  While this has been a drag on recent performance, we would rather hold cash than take potential undue risk.  An overweight allocation to consumer discretionary stocks also proved detrimental to performance.  We believe that several of these businesses are in appreciably better, long-term shape than prevailing expectations and that their prices sufficiently discount many of their risks.
 
 
MARKET COMMENTARY
 
Surviving the Amazon Effect:  Fundamentals for many retailers are not pretty.  This year has brought near record store closures with bankruptcies approaching 2008 levels.  As mall traffic continues to decline, we believe investor sentiment has become irrationally negative. For example, despite management optimism about its future, O’Reilly Automotive, Inc.’s stock was hammered nearly 20% earlier this year when they reported lower than expected (but still positive) same-store sales growth of 1.7%.  In total, retailers have lost nearly $50 billion in market cap over the past year.
 
Amazon.com, Inc. (“Amazon”), on the other hand, has tacked on another $65 billion to its market cap.  Offering convenience and superior price-transparency, the online behemoth is
 

 
4

SCHARF FUNDS

able to take share from brick and mortar retailers.  This has put considerable pressure on undifferentiated retailers.  Despite these competitive advantages, we believe there are segments in the retail space that offer value to consumers that are tougher to replicate.  For example, Dollar General Corp. is primarily located in hard to reach rural areas and primarily sells to customers who pay cash for small ticket items.  A customer in need of hotdog buns for a BBQ that afternoon is unlikely to turn to Amazon as a substitute.  We believe Advance Auto Parts is similarly insulated as the majority of its customers require parts in a matter of minutes or hours, not days.  Walgreens Boots Alliance, Inc. and CVS Health Corp. both offer healthcare services that Amazon does not.  Lastly, L Brands, owner of Victoria’s Secret and Bath and Body Works, has strong brand loyalty and its customers are likely to demand L Brands products regardless of how they are purchased.  While Amazon represents a threat to many retailers, this is nothing new.  There has always been fierce competition.  In spite of this, the high quality companies in our portfolios have historically thrived.  More importantly, we believe they possess sound competitive advantages to continue to do so in the future.
 
Tax Reform Coming?  With the healthcare debate over for now, the focus of Congress has shifted to tax reform.  After the healthcare debacle, it is easy to be skeptical that any major legislation can be passed.  It is important to remember, however, that tax reform is a major priority of the Republican Party.  Corporate tax reform is also one of the few issues with bipartisan support.  A look at the graph below makes it easy to see why.  Out of the 34 countries in the Organization for Economic Co-operation and Development (“OECD”), the U.S. has the highest corporate tax rate at 35%.
 

 
Source: OECD Tax Database
 
Tax reform won’t be easy and details are still very much unknown.  Current proposals include everything from reducing the number of tax brackets to eliminating most itemized deductions.  While it’s impossible to know what the final outcome will be (or even if it gets done at all) many U.S. corporations stand to benefit from tax reform.  The latest framework calls for slashing the corporate tax rate from 35% to 20%.  While the final rate could be higher, a rate more in line with the rest of the world (approximately 26-28%) would make the U.S. more competitive.
 

 
5

SCHARF FUNDS

Buyback Bonanza?  The plan also proposes major changes with significant implications for companies holding cash overseas.  U.S. multinationals are currently taxed at the higher 35% U.S. rate no matter where that income is earned.  The tax is only incurred, however, when the cash from foreign profits is repatriated (brought back) to the United States.  This has discouraged companies from bringing cash home.  Apple, for example, currently holds roughly $250 billion in overseas cash, accounting for nearly a third of the company’s market cap.  President Trump’s plan would shift the U.S. to some version of a territorial tax system and enact a one-time reduced tax on non-repatriated foreign earnings.
 
This proposal could provide significant benefits to shareholders.  Under today’s rules, if Apple wanted to repatriate its overseas cash, it would have to pay the existing corporate tax rate of 35%.  At this onerous rate, the company is keeping its cash abroad.  However, if Apple were forced to repatriate at a rate of 10%, the company would likely bring back the bulk of its cash.  Net of tax, Apple could repurchase up to 28% of its outstanding shares.  This would increase earnings per share by 38%!
 

 
Sources: Bloomberg, Scharf Investments
 
Lower Corporate Taxes = Enhanced Potential Upside:  While corporate tax reform should increase earnings for companies across the board, some will benefit more than others.  Companies with the most to gain include those with high effective tax rates and a large percentage of revenues from the U.S.  The following table estimates the potential impact of tax reform on earnings based on the percent of profits generated in the U.S.  For example, at a new 20% corporate tax rate, a company with half of its earnings from the U.S. would see a 10% bump.

 
6

SCHARF FUNDS


 
Source: Morningstar.  Assumes a 15% corporate tax on non-U.S. earnings.
 
Under these assumptions, several companies in our Funds could see after-tax earnings jump by more than 20%.  The table below shows the possible impact of tax reform on the earnings of five of our companies with the greatest U.S. revenue exposure.  Increased earnings would also dramatically enhance upside potential for these five companies.
 
Scharf Funds – Top 5 Equity Holdings by Domestic Revenue Percentage
 
   
Implied EPS
Implied Upside to
 
% U.S.
Increase at
Median High P/E
Company
Revenues
20% Tax Rate
After Tax Reform
Comcast Corp.
100%
   23%
  26%
CVS Health Corp.
100%
   23%
107%
Dollar General Corp.
100%
   23%
150%
Advance Auto Parts, Inc.
  97%
~22%
117%
L Brands Inc.
  89%
~20%
118%
 
Sources: Morningstar, Scharf Investments.  Assumes tax reform reduces rate on U.S. earnings from 35% to 20%.
 
L Brands, for example, is currently expected to earn $3.40 per share in 2018.  Based on these estimates, if it were to trade up to its historical median high valuation of 22 times earnings, the stock would increase to $75 from roughly $42 at quarter-end.  With lowered tax rates, however, estimates would jump to $4.08 which would increase the potential price at the median high valuation to nearly $90, a 118% increase.
 
What if Tax Reform Fails?  The S&P is now up roughly 20% since Trump was elected President nearly a year ago.  Some of this could be driven by the “Trump Trade” – stocks expected to do well based on perceived corporate tax cuts and deregulation.  If true, you would expect to see stocks decline if tax reform fails.  Counterintuitive to the “Trump Trade” though is the fact that international stocks have outperformed domestic ones since Trump took office.  And while high-tax stocks soared at the end of 2016 relative to the S&P, they have since given up that premium.  In fact, the stocks in the highest quartile of corporate tax rates have underperformed the lowest quartile by around 4% since the start of the year.  This begs the question of how much the market is actually pricing in new legislation passing.  If tax reform fails or is more disappointing than expected, stocks could very well pull back, but given the often irrational nature of markets, they could continue to climb.  With markets at all-time highs and valuations well above long-term averages, we continue to remain cautious yet confident in how we are positioned.
 


7

SCHARF FUNDS

INVESTMENT STRATEGY
 
Rather than build a portfolio around possible speculative outcomes, we continue to focus the bulk of our research on fundamental research and independent company analysis to identify securities which we believe are trading at significant discounts to fair value.  The median stock in our portfolio currently has 49% upside to its historical median high P/E.  While corporate-friendly tax reform could enhance this upside, it is not the primary driver of our decision making process.  We use a bottom-up, valuation-oriented strategy because stocks with low valuation ratios have often outperformed stocks with higher valuation ratios over the long term.  By purchasing securities when they appear to be at a discount to fair value, we also hope to mitigate potential downside risk.  In addition, the firm maintains a limited number of portfolios, favoring quality over quantity.  We focus only on our best ideas as we believe owning too many stocks is counterproductive to enhancing risk/reward.  Finally, we are style box agnostic and search for compelling investments in companies large and small, foreign and domestic.  To that end, we are optimistic about the current portfolios and believe the Funds are well positioned for long-term investors.
 
One of our largest positions, Oracle, represents one such example.  Oracle is the enterprise software king with nearly half of the database marketplace and a strong position in business applications thanks to several successful acquisitions.  The company recently made a strong push into the cloud space and saw cloud revenue rise 60% in fiscal year 2017.  Oracle has an earnings predictability score of 90 and has compounded earnings at 10% over the last 10 years.  Oracle recently traded at an estimated 16.4 times 2018 earnings, giving it 83% upside to its median high P/E and 4% downside to its median low.
 

 
Source: Value Line, Scharf Investments, LLC.  Data as of 9/30/2017
 
IN CLOSING
 
For over 30 years, Scharf Investments, LLC has operated as an independent, employee-owned firm dedicated to providing the highest quality investment management services.  During this time, the firm has established a track record based on a disciplined investment approach.  That approach continues today with the Scharf Fund, the Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund.
 
One of our core beliefs has always been that our personal interests should be aligned with those of our clients.  As such, every member of our investment committee is invested alongside
 
8

SCHARF FUNDS

our clients.  On a personal level, as the first and one of the largest individual shareholders in each of the Funds, my family has a significant interest in the Funds’ success.  As a shareholder, I hope you take comfort in the knowledge that having our own money invested alongside yours will be a powerful motivator to sharpen our focus.
 
We thank you for the trust and confidence you have placed in us.  We welcome your comments and questions.
 

 
Brian Krawez
President and Portfolio Manager

Mutual fund investing involves risk.  Principal loss is possible.  The Scharf Global Opportunity Fund and the Scharf Alpha Opportunity Fund are non-diversified, meaning they may concentrate their assets in fewer individual holdings than a diversified fund.  Therefore, the Funds are more exposed to volatility than a diversified fund.  Diversification does not assure a profit, nor does it protect against a loss in a declining market.  The Funds may invest in securities representing equity or debt.  These securities may be issued by small- and medium-sized companies, which involve additional risks such as limited liquidity and greater volatility.  The Funds may invest in foreign securities which involve greater volatility, political, economic and currency risks, and differences in accounting methods.  These risks are greater for emerging markets.  The Funds may invest in exchange-traded funds (“ETFs”) or mutual funds, the risks of owning either generally reflecting the risks of owning the underlying securities held by the ETF or mutual fund.  The Funds follow an investment style that favors relatively low valuations.  Investment in debt securities typically decrease in value when interest rates rise.  This risk is usually greater for longer-term debt securities.  Investment in lower-rated, non-rated and distressed securities presents a greater risk of loss to principal and interest than higher-rated securities.  The Scharf Alpha Opportunity Fund may make short sales of securities, which involves the risk that losses may exceed the original amount invested. The Scharf Alpha Opportunity Fund may use leverage which may exaggerate the effect of any increase or decrease in the value of portfolio securities or the net asset value of the Fund, and money borrowed will be subject to interest costs.
 
Forward earnings and EPS Growth are not measures of a Fund’s future performance.
 
The S&P 500® Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general.
 
The Lipper Balanced Funds Index is an index of open-end mutual funds whose primary objective is to conserve principal by maintaining at all times a balanced portfolio of both equities and bonds.
 
The Bloomberg Barclays U.S. Aggregate Bond Index is a broad based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government related and corporate securities.
 
MSCI All Country World Index is a broad measure of stock performance throughout the world.
 
MSCI World All Cap (Net) Index is a broad measure of stock performance throughout the world, with the exception of US based companies.
 
The HFRX Equity Hedge Index encompasses various equity hedge strategies, also known as long/short equity, that combine core long holdings of equities with short sales of stock, stock indices, related derivatives, or other financial instruments related to the equity markets.
 

 
9

SCHARF FUNDS

You cannot invest directly in an index.
 
Earnings Per Share (“EPS”) is the portion of a company’s profit allocated to each outstanding share of common stock and serves as an indicator of a company’s profitability.
 
Price to Earnings Ratio (“P/E”) is a valuation ratio of a company’s current share price compared to its per-share earnings.  Upside to historical median P/E and downside to historical median P/E are terms used to describe the adviser’s estimated reward and risk of an individual security.
 
Forward Price to Earnings Ratio is a current stock’s price over its predicted earnings per share.
 
Earnings Growth is the percentage change in a firm’s earnings per share (“EPS”) over a specific period of time.
 
Value Line is an independent investment research and financial publishing firm.
 
The information provided herein represents the opinion of the Funds’ manager, is subject to change at any time, is not guaranteed and should not be considered investment advice.
 
The Funds’ holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security.  Please refer to the Schedule of Investments in this report for a complete list of Fund holdings.
 
Must be preceded or accompanied by a prospectus.
 
The Scharf Funds are distributed by Quasar Distributors, LLC.
 


10

SCHARF FUND

Comparison of the change in value of a hypothetical $10,000
investment in the Scharf Fund – Institutional Class vs. the S&P 500® Index.
 


 
Average Annual Total Return for the Periods Ended 9/30/2017:
 
     
Since
Since
     
Inception
Inception
 
1 year
5 year
(12/30/11)
(1/28/15)
Scharf Fund – Institutional Class1
  9.10%
11.63%
12.64%
Scharf Fund – Retail Class2
  8.80%
  6.01%
S&P 500® Index
18.61%
14.22%
15.26%
11.34%
 
Performance data quoted on this page represents past performance and 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 current to the most recent month end may be obtained by calling 1-866-572-4273 (1-866-5SCHARF).
 
Returns reflect reinvestment of dividends and capital gains distributions.  Fee waivers are in effect.  In the absence of fee waivers, returns would be reduced. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions, or redemption of Fund shares. The performance data and graph do not reflect the 2.00% redemption fee imposed on shares held 60 days or less. Indices do not incur expenses and are not available for investment.
 
The S&P 500® Index is an unmanaged capitalization-weighted index of 500 stocks designed to represent the broad domestic economy.
 
1  The Fund commenced operations on December 30, 2011.
2  The Fund commenced operations on January 28, 2015.

11

SCHARF BALANCED OPPORTUNITY FUND

Comparison of the change in value of a hypothetical $10,000 investment in
the Scharf Balanced Opportunity Fund vs. the Lipper Balanced Funds Index,
the S&P 500® Index, and the Bloomberg Barclays U.S. Aggregate Bond Index.

 
 
Average Annual Total Return for the Periods Ended 9/30/2017:
   
Since
Since
   
Inception
Inception
 
1 year
(12/31/12)
(1/21/16)
Scharf Balanced Opportunity Fund –
     
  Institutional Class1
  6.94%
  8.99%
Scharf Balanced Opportunity Fund –
     
  Retail Class2
  6.68%
10.10%
S&P 500® Index
18.61%
15.12%
21.85%
Bloomberg Barclays U.S.
     
  Aggregate Bond Index
  0.07%
  2.13%
  2.88%
Lipper Balanced Funds Index
10.91%
  8.41%
13.97%
 
Performance data quoted on this page represents past performance and 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 current to the most recent month end may be obtained by calling 1-866-572-4273 (1-866-5SCHARF).
 
Returns reflect reinvestment of dividends and capital gains distributions.  Fee waivers are in effect.  In the absence of fee waivers, returns would be reduced. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on
 

 
12

SCHARF BALANCED OPPORTUNITY FUND

dividends, capital gains distributions, or redemption of Fund shares. The performance data and graph do not reflect the 2.00% redemption fee imposed on shares held 15 days or less. Indices do not incur expenses and are not available for investment.
 
The S&P 500® Index is an unmanaged capitalization-weighted index of 500 stocks designed to represent the broad domestic economy.
 
The Lipper Balanced Funds Index is an equally weighted index of the 30 largest U.S. balanced funds.
 
The Bloomberg Barclays U.S. Aggregate Bond Index is a broad based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government related and corporate securities.
 
1  The Fund commenced operations on December 31, 2012.
2  The Fund commenced operations on January 21, 2016.
 
 
 
 
 
 


13

SCHARF GLOBAL OPPORTUNITY FUND

Comparison of the change in value of a hypothetical $10,000 investment in
the Scharf Global Opportunity Fund vs. the MSCI All Country World Index (Net).

 
 
Average Annual Total Return for the Periods Ended 9/30/2017:
 
1 year
Since Inception1
Scharf Global Opportunity Fund
12.10%
9.74%
MSCI All Country World Index (Net)
18.65%
9.30%
 
Performance data quoted on this page represents past performance and 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 current to the most recent month end may be obtained by calling 1-866-572-4273 (1-866-5SCHARF).
 
Returns reflect reinvestment of dividends and capital gains distributions.  Fee waivers are in effect.  In the absence of fee waivers, returns would be reduced. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions, or redemption of Fund shares. The performance data and graph do not reflect the 2.00% redemption fee imposed on shares held 15 days or less. Indices do not incur expenses and are not available for investment.
 
The MSCI All Country World Index (Net) captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries.  Net total return indexes reinvest dividends after the deduction of withholding taxes, using a rate applicable to non-resident institutional investors who do not benefit from double taxation treaties.
 
1  The Fund commenced operations on October 14, 2014.

14

SCHARF ALPHA OPPORTUNITY FUND

Comparison of the change in value of a hypothetical $10,000 investment in
the Scharf Alpha Opportunity Fund vs. the HFRX Equity Hedge Index,
the S&P 500® Index, and the Bloomberg Barclays U.S. Aggregate Bond Index.

 
 
Cummulative Total Return for the Periods Ended 9/30/2017:
 
1 year
Since Inception1
Scharf Alpha Opportunity Fund
 -0.89%
  0.72%
HFRX Equity Hedge Index
  7.91%
  4.04%
Bloomberg Barclays U.S. Aggregate Bond Index
  0.07%
  3.31%
S&P 500® Index
18.61%
15.09%
 
Performance data quoted on this page represents past performance and 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 current to the most recent month end may be obtained by calling 1-866-572-4273 (1-866-5SCHARF).
 
Returns reflect reinvestment of dividends and capital gains distributions.  Fee waivers are in effect.  In the absence of fee waivers, returns would be reduced. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions, or redemption of Fund shares. The performance data and graph do not reflect the 2.00% redemption fee imposed on shares held 15 days or less. Indices do not incur expenses and are not available for investment.
 
The HFRX Equity Hedge Index encompasses various equity hedge strategies, also known as long/short equity, that combine core long holdings of equities with short sales of stock, stock indices, related derivatives, or other financial instruments related to the equity markets.
 

 
15

SCHARF ALPHA OPPORTUNITY FUND

The S&P 500® Index is an unmanaged capitalization-weighted index of 500 stocks designed to represent the broad domestic economy.
 
The Bloomberg Barclays U.S. Aggregate Bond Index is a broad based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government related and corporate securities.
 
1  The Fund commenced operations on December 31, 2015.


 

 


16

SCHARF FUNDS

EXPENSE EXAMPLES at September 30, 2017 (Unaudited)

Shareholders in mutual funds generally 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. The Scharf Fund, Scharf Balanced Opportunity Fund, Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund are no-load mutual funds. These Examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds 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 in the Scharf Fund, the Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund at the beginning of the period and held for the entire period (4/1/17-9/30/17).
 
Actual Expenses
The first line of each table below provides information about actual account values and actual expenses, with actual net expenses being limited.  Per the operating expense limitation agreement, the actual net expenses are being limited to 1.09% and 1.34% for the Scharf Fund Institutional Class and Retail Class, respectively, 0.65% for the Scharf Global Opportunity Fund, and 1.00% for the Scharf Alpha Opportunity Fund.  Effective June 30, 2017, per the operating expense limitation agreement, the actual net expenses are being limited to 0.98% and 1.23% for the Scharf Balanced Opportunity Fund Institutional Class and Retail Class, respectively. Prior to June 30, 2017, the Scharf Balanced Opportunity Fund’s actual net expenses for the Institutional Class and Retail Class were limited to 1.05% and 1.30%, respectively. Although the Funds 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 Examples below include, but are not limited to, management fees, fund accounting, custody and transfer agent fees. You may use the information in the first line of the tables, 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 each table 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
 

 
17

SCHARF FUNDS

EXPENSE EXAMPLES at September 30, 2017 (Unaudited), Continued

shown in the tables are meant to highlight your ongoing costs only and will not help you determine the relative total costs of owning different funds, as they may charge transaction costs, such as sales charges (loads), redemption fees, or exchange fees.
 
 
Beginning
Ending
Expenses Paid
Annualized
 
Account Value
Account Value
During Period*
Expense
Scharf Fund
4/1/17
9/30/17
4/1/17-9/30/17
Ratio*
Institutional Class
       
Actual
$1,000.00
$1,041.60
$  5.48
1.07%
Hypothetical (5% return
       
  before expenses)
$1,000.00
$1,019.70
$  5.42
1.07%
Retail Class
       
Actual
$1,000.00
$1,040.10
$  6.85
1.34%
Hypothetical (5% return
       
  before expenses)
$1,000.00
$1,018.35
$  6.78
1.34%
         
 
Beginning
Ending
Expenses Paid
Annualized
Scharf Balanced
Account Value
Account Value
During Period*
Expense
  Opportunity Fund
4/1/17
9/30/17
4/1/17-9/30/17
Ratio*
Institutional Class
       
Actual
$1,000.00
$1,036.00
$  5.16
1.01%
Hypothetical (5% return
       
  before expenses)
$1,000.00
$1,020.00
$  5.11
1.01%
Retail Class
       
Actual
$1,000.00
$1,034.70
$  6.43
1.26%
Hypothetical (5% return
       
  before expenses)
$1,000.00
$1,018.75
$  6.38
1.26%
         
 
Beginning
Ending
Expenses Paid
Annualized
Scharf Global
Account Value
Account Value
During Period*
Expense
  Opportunity Fund
4/1/17
9/30/17
4/1/17-9/30/17
Ratio*
Retail Class
       
Actual
$1,000.00
$1,060.20
$  3.46
0.67%
Hypothetical (5% return
       
  before expenses)
$1,000.00
$1,021.71
$  3.40
0.67%
         
 
Beginning
Ending
Expenses Paid
Annualized
Scharf Alpha
Account Value
Account Value
During Period*
Expense
  Opportunity Fund
4/1/17
9/30/17
4/1/17-9/30/17
Ratio*
Retail Class
       
Actual(1)
$1,000.00
$1,002.10
$  9.94
1.98%
Hypothetical (5% return
       
  before expenses)(1)
$1,000.00
$1,015.14
$10.00
1.98%
 
(1)
 
Excluding interest expense and dividends on short positions, your actual expenses would be $5.11 and your hypothetical expenses would be $5.15.
*
 
Expenses are equal to the Fund’s annualized expense ratio of each class, multiplied by the average account value over the period, multiplied by 183 (days in most recent fiscal half-year)/365 days to reflect the one-half year expense.

18

SCHARF FUND

SECTOR ALLOCATION OF PORTFOLIO ASSETS at September 30, 2017 (Unaudited)



 

 
Percentages represent market value as a percentage of total investments.


19

SCHARF BALANCED OPPORTUNITY FUND

SECTOR ALLOCATION OF PORTFOLIO ASSETS at September 30, 2017 (Unaudited)



 

 
Percentages represent market value as a percentage of total investments.

20

SCHARF GLOBAL OPPORTUNITY FUND

SECTOR ALLOCATION OF PORTFOLIO ASSETS at September 30, 2017 (Unaudited)



 

 
Percentages represent market value as a percentage of total investments.

21

SCHARF Alpha OPPORTUNITY FUND

SECTOR ALLOCATION OF PORTFOLIO ASSETS at September 30, 2017 (Unaudited)



 

 
Percentages represent market value as a percentage of total investments.

22

SCHARF FUND

SCHEDULE OF INVESTMENTS at September 30, 2017

Shares
 
COMMON STOCKS – 80.54%
 
Value
 
   
Auto Components – 2.63%
     
 
767,466
 
Gentex Corp.
 
$
15,195,827
 
               
     
Chemicals – 2.68%
       
 
43,135
 
Sherwin-Williams Co.
   
15,444,055
 
               
     
Communications Equipment – 1.97%
       
 
133,682
 
Motorola Solutions, Inc.
   
11,345,591
 
               
     
Diversified Financial Services – 5.11%
       
 
160,870
 
Berkshire Hathaway, Inc. – Class B (a)
   
29,490,689
 
               
     
Energy Equipment & Services – 2.25%
       
 
185,935
 
Schlumberger, Ltd.
   
12,970,826
 
               
     
Food & Staples Retailing – 6.83%
       
 
294,083
 
CVS Health Corp.
   
23,914,830
 
 
200,988
 
Walgreens Boots Alliance, Inc.
   
15,520,292
 
           
39,435,122
 
     
Food Products – 1.42%
       
 
75,200
 
Hershey Co.
   
8,209,584
 
               
     
Health Care Providers & Services – 3.09%
       
 
116,200
 
McKesson Corp.
   
17,849,482
 
               
     
Health Care Technology – 2.15%
       
 
174,132
 
Cerner Corp. (a)
   
12,419,094
 
               
     
Insurance – 8.51%
       
 
163,852
 
American International Group, Inc.
   
10,058,874
 
 
189,079
 
Aon plc
   
27,624,442
 
 
73,917
 
Willis Towers Watson plc
   
11,400,219
 
           
49,083,535
 
     
Internet & Direct Marketing Retail – 3.59%
       
 
11,312
 
Priceline Group, Inc. (a)
   
20,710,236
 
               
     
IT Services – 3.59%
       
 
285,640
 
Cognizant Technology Solutions Corp. – Class A
   
20,720,326
 
               
     
Media – 3.67%
       
 
549,957
 
Comcast Corp. – Class A
   
21,162,345
 
               
     
Multiline Retail – 4.61%
       
 
327,891
 
Dollar General Corp.
   
26,575,566
 

 
The accompanying notes are an integral part of these financial statements.

23

SCHARF FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Shares
 
COMMON STOCKS – 80.54%, Continued
 
Value
 
   
Pharmaceuticals – 5.26%
     
 
107,368
 
Allergan plc
 
$
22,005,072
 
 
96,884
 
Novartis AG – ADR
   
8,317,491
 
           
30,322,563
 
     
Road & Rail – 2.40%
       
 
127,250
 
Kansas City Southern
   
13,829,530
 
               
     
Software – 11.13%
       
 
422,778
 
Microsoft Corp.
   
31,492,733
 
 
676,223
 
Oracle Corp.
   
32,695,382
 
           
64,188,115
 
     
Specialty Retail – 6.55%
       
 
188,603
 
Advance Auto Parts, Inc.
   
18,709,418
 
 
459,150
 
L Brands, Inc.
   
19,105,231
 
           
37,814,649
 
     
Technology Hardware,
       
     
  Storage & Peripherals – 3.10%
       
 
116,233
 
Apple, Inc.
   
17,913,830
 
     
TOTAL COMMON STOCKS
       
     
  (Cost $389,363,969)
   
464,680,965
 
               
     
PREFERRED STOCK – 2.53%
       
     
Semiconductors &
       
     
  Semiconductor Equipment – 2.53%
       
 
8,105
 
Samsung Electronics Co., Ltd. (b)
   
14,591,618
 
     
TOTAL PREFERRED STOCK
       
     
  (Cost $6,666,985)
   
14,591,618
 
               
     
SHORT-TERM INVESTMENTS – 19.40%
       
     
Money Market Fund- 4.66%
       
 
26,874,231
 
First American Treasury Obligations
       
     
  Fund, Class Z, 0.88%, (c)
   
26,874,231
 
     
TOTAL MONEY MARKET FUND
       
     
  (Cost $26,874,231)
   
26,874,231
 



The accompanying notes are an integral part of these financial statements.

24

SCHARF FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Principal
         
Amount
 
SHORT-TERM INVESTMENTS – 19.40%, Continued
 
Value
 
   
U.S. Treasury Bills – 14.74%
     
$
4,600,000
 
1.04%, 10/12/17 (d)
 
$
4,598,538
 
 
12,500,000
 
1.015%, 11/16/17 (d)
   
12,483,788
 
 
17,188,000
 
0.968%, 11/30/17 (d)
   
17,160,276
 
 
19,970,000
 
0.94%, 12/14/17 (d)
   
19,931,429
 
 
18,000,000
 
1.031%, 12/28/17 (d)
   
17,954,651
 
 
12,950,000
 
0.998%, 1/11/18 (d)
   
12,913,396
 
     
TOTAL U.S. TREASURY BILLS
       
     
  (Cost $85,039,861)
   
85,042,078
 
     
TOTAL SHORT-TERM INVESTMENTS
       
     
  (Cost $111,914,092)
   
111,916,309
 
     
Total Investments in Securities
       
     
  (Cost $507,945,046) – 102.47%
   
591,188,892
 
     
Liabilities in Excess of Other Assets – (2.47)%
   
(14,262,286
)
     
TOTAL NET ASSETS – 100.00%
 
$
576,926,606
 

ADR
American Depository Receipt
(a)
Non-income producing security.
(b)
Foreign issuer.
(c)
Rate shown is 7-day annualized yield as of September 30, 2017.
(d)
Rate shown is the discount rate at September 30, 2017.

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”).  GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
 

 
The accompanying notes are an integral part of these financial statements.

25

SCHARF BALANCED OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017

Shares
 
COMMON STOCKS – 56.04%
 
Value
 
   
Auto Components – 1.86%
     
 
64,775
 
Gentex Corp.
 
$
1,282,545
 
               
     
Capital Markets – 0.46%
       
 
6,758
 
Oaktree Cap Group, LLC
   
317,964
 
               
     
Chemicals – 1.92%
       
 
3,711
 
Sherwin-Williams Co.
   
1,328,686
 
               
     
Communications Equipment – 1.27%
       
 
10,345
 
Motorola Solutions, Inc.
   
877,980
 
               
     
Diversified Financial Services – 3.59%
       
 
13,515
 
Berkshire Hathaway, Inc. – Class B (a)
   
2,477,570
 
               
     
Energy Equipment & Services – 1.45%
       
 
14,330
 
Schlumberger, Ltd.
   
999,661
 
               
     
Food & Staples Retailing – 4.91%
       
 
24,525
 
CVS Health Corp.
   
1,994,373
 
 
18,080
 
Walgreens Boots Alliance, Inc.
   
1,396,138
 
           
3,390,511
 
     
Food Products – 1.19%
       
 
7,545
 
Hershey Co.
   
823,688
 
               
     
Health Care Providers & Services – 2.15%
       
 
9,650
 
McKesson Corp.
   
1,482,337
 
               
     
Health Care Technology – 1.37%
       
 
13,290
 
Cerner Corp. (a)
   
947,843
 
               
     
Insurance – 5.52%
       
 
13,325
 
American International Group, Inc.
   
818,022
 
 
14,578
 
Aon plc
   
2,129,846
 
 
5,605
 
Willis Towers Watson plc
   
864,459
 
           
3,812,327
 
     
Internet & Direct Marketing Retail – 2.38%
       
 
899
 
Priceline Group, Inc. (a)
   
1,645,907
 
               
     
IT Services – 2.52%
       
 
23,950
 
Cognizant Technology Solutions Corp. – Class A
   
1,737,333
 
               
     
Media – 2.36%
       
 
42,415
 
Comcast Corp. – Class A
   
1,632,129
 
               
     
Multiline Retail – 3.07%
       
 
26,178
 
Dollar General Corp.
   
2,121,727
 

 
The accompanying notes are an integral part of these financial statements.

26

SCHARF BALANCED OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Shares
 
COMMON STOCKS – 56.04%, Continued
 
Value
 
   
Pharmaceuticals – 3.83%
     
 
9,188
 
Allergan plc
 
$
1,883,081
 
 
8,844
 
Novartis AG – ADR
   
759,257
 
           
2,642,338
 
     
Road & Rail – 1.69%
       
 
10,740
 
Kansas City Southern
   
1,167,223
 
               
     
Software – 7.72%
       
 
34,659
 
Microsoft Corp.
   
2,581,749
 
 
56,940
 
Oracle Corp.
   
2,753,049
 
           
5,334,798
 
     
Specialty Retail – 4.72%
       
 
16,727
 
Advance Auto Parts, Inc.
   
1,659,318
 
 
38,377
 
L Brands, Inc.
   
1,596,867
 
           
3,256,185
 
     
Technology Hardware,
       
     
  Storage & Peripherals – 2.06%
       
 
9,227
 
Apple, Inc.
   
1,422,065
 
     
TOTAL COMMON STOCKS
       
     
  (Cost $31,787,034)
   
38,700,817
 
               
     
PREFERRED STOCKS – 5.57%
       
     
Closed-End Fund – 3.12%
       
 
42,653
 
GDL Fund – Series B
   
2,153,977
 
               
     
Semiconductors &
       
     
  Semiconductor Equipment – 2.45%
       
 
939
 
Samsung Electronics Co., Ltd. (b)
   
1,690,503
 
     
TOTAL PREFERRED STOCKS
       
     
  (Cost $2,966,381)
   
3,844,480
 
               
Principal
           
Amount
 
CORPORATE BONDS – 8.44%
       
     
Chemicals – 0.12%
       
     
Ecolab, Inc.
       
$
82,000
 
  1.45%, 12/8/2017
   
81,987
 

 
The accompanying notes are an integral part of these financial statements.

27

SCHARF BALANCED OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Principal
         
Amount
 
CORPORATE BONDS – 8.44%, Continued
 
Value
 
   
Computer and Electronic
     
   
  Product Manufacturing – 0.14%
     
   
Digital Equipment Corp.
     
$
89,000
 
  7.75%, 4/1/2023
 
$
97,889
 
               
     
Consumer Finance – 0.23%
       
     
American Express Credit Corp.
       
 
62,000
 
  1.875%, 11/5/2018
   
62,070
 
     
American Express Co.
       
 
100,000
 
  1.55%, 5/22/2018
   
100,002
 
           
162,072
 
     
Diversified Telecommunication Services – 0.57%
       
     
AT&T, Inc.
       
 
117,000
 
  1.40%, 12/1/2017
   
116,988
 
 
137,000
 
  2.375%, 11/27/2018
   
137,852
 
 
130,000
 
  5.80%, 2/15/2019
   
136,807
 
           
391,647
 
     
Food & Staples Retailing – 0.12%
       
     
Walgreens Boots Alliance, Inc.
       
 
82,000
 
  2.70%, 11/18/2019
   
83,161
 
               
     
Health Care Equipment & Supplies – 0.02%
       
     
Abbott Laboratories
       
 
11,000
 
  2.35%, 11/22/2019
   
11,095
 
               
     
Health Care Providers & Services – 0.05%
       
     
Express Scripts Holding Co.
       
 
34,000
 
  2.25%, 6/15/2019
   
34,149
 
               
     
Insurance – 0.06%
       
     
American International Group, Inc.
       
 
6,000
 
  5.85%, 1/16/2018
   
6,069
 
 
34,000
 
  2.30%, 7/16/2019
   
34,183
 
           
40,252
 
     
Internet & Direct Marketing Retail – 0.07%
       
     
Amazon.com, Inc.
       
 
47,000
 
  1.20%, 11/29/2017
   
46,994
 

 
The accompanying notes are an integral part of these financial statements.

28

SCHARF BALANCED OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Principal
         
Amount
 
CORPORATE BONDS – 8.44%, Continued
 
Value
 
   
Media – 0.06%
     
   
Comcast Corp.
     
$
31,000
 
  5.875%, 2/15/2018
 
$
31,498
 
     
Viacom, Inc.
       
 
11,000
 
  2.75%, 12/15/2019
   
11,108
 
           
42,606
 
     
Multiline Retail – 0.06%
       
     
Dollar General Corp.
       
 
45,000
 
  1.875%, 4/15/2018
   
45,053
 
               
     
Nondepository Credit Intermediation – 0.24%
       
     
General Electric Co.
       
 
165,000
 
  1.60%, 11/20/2017
   
165,089
 
               
     
Oil, Gas & Consumable Fuels – 0.24%
       
     
Chevron Corp.
       
 
165,000
 
  1.345%, 11/15/2017
   
165,018
 
               
     
Petroleum and Coal
       
     
  Products Manufacturing – 2.23%
       
     
Murphy Oil USA, Inc.
       
 
1,022,000
 
  6.00%, 8/15/2023
   
1,080,765
 
 
425,000
 
  5.625%, 5/1/2027
   
458,469
 
           
1,539,234
 
     
Rail Transportation – 0.24%
       
     
Canadian Pacific Railway Co.
       
 
160,000
 
  6.50%, 5/15/2018
   
164,456
 
               
     
Restaurants and Other Eating Places – 0.49%
       
     
McDonald’s Corp.
       
 
335,000
 
  5.35%, 3/1/2018
   
340,249
 
               
     
Securities and Commodity Contracts
       
     
  Intermediation and Brokerage – 2.97%
       
     
Goldman Sachs Group, Inc.
       
 
2,281,000
 
  4.00%, (3 Month LIBOR + 0.7675%), 6/1/2043 (c)
   
2,052,900
 
               
     
Software – 0.07%
       
     
Oracle Corp.
       
 
50,000
 
  1.20%, 10/15/2017
   
49,994
 

 
The accompanying notes are an integral part of these financial statements.

29

SCHARF BALANCED OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Principal
         
Amount
 
CORPORATE BONDS – 8.44%, Continued
 
Value
 
   
Specialty Retail – 0.36%
     
   
Advance Auto Parts, Inc.
     
$
50,000
 
  5.75%, 5/1/2020
 
$
53,937
 
     
L Brands, Inc.
       
 
31,000
 
  8.50%, 6/15/2019
   
34,216
 
 
56,000
 
  7.00%, 5/1/2020
   
61,880
 
 
90,000
 
  6.625%, 4/1/2021
   
99,450
 
           
249,483
 
     
Technology Hardware,
       
     
  Storage & Peripherals – 0.10%
       
     
Apple, Inc.
       
 
41,000
 
  1.30%, 2/23/2018
   
40,991
 
     
HP, Inc.
       
 
25,000
 
  2.75%, 1/14/2019
   
25,184
 
           
66,175
 
     
TOTAL CORPORATE BONDS
       
     
  (Cost $5,347,495)
   
5,829,503
 
               
     
MUNICIPAL BONDS – 5.14%
       
     
California Health Facilities Financing Authority,
       
     
  Revenue Bonds, Chinese Hospital Association
       
 
10,000
 
  3.00%, 6/1/2024, Series 2012
   
10,443
 
     
California Health Facilities Financing Authority,
       
     
  Revenue Bonds, Persons with
       
     
  Developmental Disabilities
       
 
80,000
 
  7.11%, 2/1/2021, Series 2011B
   
84,562
 
 
145,000
 
  7.875%, 2/1/2026, Series 2011B
   
156,652
 
     
California State, General Obligation,
       
     
  Highway Safety, Traffic Reduction,
       
     
  Air Quality and Port Security Bonds
       
 
90,000
 
  6.509%, 4/1/2039, Series 2009B
   
103,099
 
     
California State, General Obligation, Various Purpose
       
 
125,000
 
  6.20%, 10/1/2019
   
135,940
 
 
405,000
 
  5.60%, 11/1/2020
   
447,671
 
 
570,000
 
  6.65%, 3/1/2022, Series 2010
   
661,188
 
 
980,000
 
  7.95%, 3/1/2036, Series 2010
   
1,105,901
 

 
The accompanying notes are an integral part of these financial statements.

30

SCHARF BALANCED OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Principal
         
Amount
 
MUNICIPAL BONDS – 5.14%, Continued
 
Value
 
   
Commonwealth of Massachusetts,
     
   
  Build America Bonds
     
$
155,000
 
  4.20%, 12/1/2021
 
$
163,892
 
     
California State, Build America Bonds
       
 
35,000
 
  5.70%, 11/1/2021
   
39,427
 
 
15,000
 
  4.988%, 4/1/2039
   
16,339
 
     
State of Connecticut, Build America Bonds
       
 
100,000
 
  4.807%, 4/1/2022
   
106,191
 
 
215,000
 
  5.20%, 12/1/2022
   
238,394
 
 
25,000
 
  5.30%, 12/1/2023
   
28,080
 
 
10,000
 
  5.027%, 4/1/2024
   
10,647
 
     
State of Florida, Build America Bonds
       
 
10,000
 
  4.65%, 6/1/2020
   
10,483
 
     
State of Georgia, Build America Bonds
       
 
5,000
 
  4.503%, 11/1/2025
   
5,446
 
     
State of Georgia, School Construction Bonds
       
 
15,000
 
  4.35%, 2/1/2029
   
16,218
 
     
State of Illinois, Build America Bonds
       
 
100,000
 
  5.547%, 4/1/2019
   
103,917
 
 
20,000
 
  5.727%, 4/1/2020
   
21,248
 
     
State of Maryland, Build America Bonds
       
 
10,000
 
  4.10%, 3/1/2020
   
10,578
 
 
20,000
 
  4.20%, 3/1/2021
   
21,521
 
 
5,000
 
  4.55%, 8/15/2024
   
5,246
 
     
State of Michigan, General Obligation,
       
     
  School Loan and Refunding Bonds
       
 
40,000
 
  6.95%, 11/1/2020, Series 2009A
   
46,115
 
     
TOTAL MUNICIPAL BONDS
       
     
  (Cost $3,601,693)
   
3,549,198
 
               
Shares
 
SHORT-TERM INVESTMENTS – 25.62%
       
     
Money Market Fund – 10.76%
       
 
7,428,761
 
First American Treasury Obligations
       
     
  Fund, Class Z, 0.88%, (d)
   
7,428,761
 
     
TOTAL MONEY MARKET FUND
       
     
  (Cost $7,428,761)
   
7,428,761
 

 
The accompanying notes are an integral part of these financial statements.

31

SCHARF BALANCED OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Principal
         
Amount
 
SHORT-TERM INVESTMENTS – 25.62%, Continued
 
Value
 
   
U.S. Treasury Bills – 14.86%
     
$
560,000
 
0.945%, 10/5/17 (e)
 
$
559,941
 
 
1,021,000
 
1.111%, 10/12/17 (e)
   
1,020,653
 
 
675,000
 
0.973%, 10/19/17 (e)
   
674,672
 
 
675,000
 
0.978%, 11/2/17 (e)
   
674,413
 
 
675,000
 
0.993%, 11/9/17 (e)
   
674,274
 
 
560,000
 
1.015%, 11/16/17 (e)
   
559,274
 
 
675,000
 
1.023%, 11/24/17 (e)
   
673,964
 
 
682,000
 
0.94%, 12/14/17 (e)
   
680,683
 
 
687,000
 
1.031%, 12/28/17 (e)
   
685,269
 
 
675,000
 
1.017%, 1/4/18 (e)
   
673,189
 
 
690,000
 
0.998%, 1/11/18 (e)
   
688,050
 
 
675,000
 
1.168%, 3/29/18 (e)
   
671,078
 
 
675,000
 
1.169%, 4/26/18 (e)
   
670,461
 
 
685,000
 
1.174%, 5/24/18 (e)
   
679,752
 
 
685,000
 
1.18%, 6/21/18 (e)
   
679,092
 
     
TOTAL U.S. TREASURY BILLS
       
     
  (Cost $10,265,998)
   
10,264,765
 
     
TOTAL SHORT-TERM INVESTMENTS
       
     
  (Cost $17,694,759)
   
17,693,526
 
     
Total Investments in Securities
       
     
  (Cost $61,397,362) – 100.81%
   
69,617,524
 
     
Liabilities in Excess of Other Assets – (0.81)%
   
(558,955
)
     
TOTAL NET ASSETS – 100.00%
 
$
69,058,569
 

ADR
American Depository Receipt
(a)
Non-income producing security.
(b)
Foreign issuer.
(c)
Variable rate security. Rate shown reflects the rate in effect as of September 30, 2017.
(d)
Rate shown is 7-day annualized yield as of September 30, 2017.
(e)
Rate shown is the discount rate at September 30, 2017.

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”).  GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
 

 
The accompanying notes are an integral part of these financial statements.

32

SCHARF GLOBAL OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017

Shares
 
COMMON STOCKS – 86.53%
 
Value
 
   
Airlines – 3.45%
     
 
9,922
 
Ryanair Holdings plc – ADR (a)
 
$
1,045,977
 
               
     
Auto Components – 3.60%
       
 
50,962
 
Gentex Corp.
   
1,009,047
 
 
11,208
 
Nexen Corp. (b)
   
80,536
 
           
1,089,583
 
     
Automobiles – 0.55%
       
 
4,600
 
Subaru Corp. (b)
   
165,972
 
               
     
Chemicals – 3.01%
       
 
2,545
 
Sherwin-Williams Co.
   
911,212
 
               
     
Diversified Financial Services – 3.94%
       
 
6,520
 
Berkshire Hathaway, Inc. – Class B (a)
   
1,195,246
 
               
     
Food & Staples Retailing – 7.12%
       
 
15,465
 
CVS Health Corp.
   
1,257,614
 
 
11,668
 
Walgreens Boots Alliance, Inc.
   
901,003
 
           
2,158,617
 
     
Food Products – 3.96%
       
 
5,625
 
Hershey Co.
   
614,081
 
 
6,960
 
Nestle SA – ADR
   
584,710
 
           
1,198,791
 
     
Health Care Providers & Services – 3.95%
       
 
1,650
 
AmerisourceBergen Corp.
   
136,538
 
 
2,181
 
Anthem, Inc.
   
414,128
 
 
4,200
 
McKesson Corp.
   
645,162
 
           
1,195,828
 
     
Health Care Technology – 1.95%
       
 
8,300
 
Cerner Corp. (a)
   
591,956
 
               
     
Insurance – 5.12%
       
 
90,700
 
AIA Group Ltd. (b)
   
668,790
 
 
6,054
 
Aon plc
   
884,489
 
           
1,553,279
 
     
Internet & Direct Marketing Retail – 2.51%
       
 
416
 
Priceline Group, Inc. (a)
   
761,621
 

 
The accompanying notes are an integral part of these financial statements.

33

SCHARF GLOBAL OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Shares
 
COMMON STOCKS – 86.53%, Continued
 
Value
 
   
IT Services – 5.91%
     
 
14,610
 
Cognizant Technology Solutions Corp. – Class A
 
$
1,059,809
 
 
6,956
 
Visa, Inc. – Class A
   
732,050
 
           
1,791,859
 
     
Media – 2.73%
       
 
21,468
 
Comcast Corp. – Class A
   
826,089
 
               
     
Multiline Retail – 3.79%
       
 
14,160
 
Dollar General Corp.
   
1,147,668
 
               
     
Personal Products – 2.56%
       
 
13,187
 
Kao Corp. – ADR (a)
   
776,451
 
               
     
Pharmaceuticals – 6.54%
       
 
6,761
 
Allergan plc
   
1,385,667
 
 
6,951
 
Novartis AG – ADR
   
596,743
 
           
1,982,410
 
     
Road & Rail – 3.84%
       
 
10,720
 
Kansas City Southern
   
1,165,050
 
               
     
Software – 8.62%
       
 
16,396
 
Microsoft Corp.
   
1,221,338
 
 
28,775
 
Oracle Corp.
   
1,391,271
 
           
2,612,609
 
     
Specialty Retail – 9.13%
       
 
12,098
 
Advance Auto Parts, Inc.
   
1,200,121
 
 
28,711
 
L Brands, Inc.
   
1,194,665
 
 
1,729
 
O’Reilly Automotive, Inc. (a)
   
372,375
 
           
2,767,161
 
     
Technology Hardware,
       
     
  Storage & Peripherals – 0.87%
       
 
1,711
 
Apple, Inc.
   
263,699
 
               
     
Textiles, Apparel & Luxury Goods – 0.44%
       
 
2,600
 
NIKE, Inc. – Class B
   
134,810
 
               
     
Wireless Telecommunication Services – 2.94%
       
 
21,880
 
SoftBank Corp. – ADR (a)
   
889,641
 
     
TOTAL COMMON STOCKS
       
     
  (Cost $23,359,330)
   
26,225,529
 

 
The accompanying notes are an integral part of these financial statements.

34

SCHARF GLOBAL OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Shares
 
PREFERRED STOCKS – 6.30%
 
Value
 
   
Auto Components – 0.55%
     
 
14,157
 
Nexen Corp. (b)
 
$
64,027
 
 
19,043
 
Nexen Tire Corp. (b)
   
101,753
 
           
165,780
 
     
Capital Markets – 0.19%
       
 
2,000
 
Korea Investment Holdings Co., Ltd. (b)
   
56,577
 
               
     
Containers & Packaging – 0.04%
       
 
5,450
 
NPC (b)
   
14,085
 
               
     
Personal Products – 0.23%
       
 
1,519
 
AMOREPACIFIC Group (b)
   
69,627
 
               
     
Semiconductors &
       
     
  Semiconductor Equipment – 5.29%
       
 
891
 
Samsung Electronics Co., Ltd. (b)
   
1,604,088
 
     
TOTAL PREFERRED STOCKS
       
     
  (Cost $1,201,331)
   
1,910,157
 
               
Contracts
 
PURCHASED OPTION – 0.24%
 
Value
 
     
SPDR S&P 500 ETF Trust – Put Option
       
 
139
 
  Expiration: January 19, 2018
       
     
  Exercise Price: $250.00
       
     
  Notional amount: $3,492,097
   
71,446
 
     
TOTAL PURCHASED OPTION
       
     
  (Cost $89,226)
   
71,446
 
               
     
WARRANTS – 0.24%
       
     
Insurance – 0.24%
       
 
3,607
 
American International Group, Inc.
       
     
  Expiration: January 19, 2021
       
     
  Exercise Price: $44.1299
   
72,140
 
     
TOTAL WARRANTS
       
     
  (Cost $63,582)
   
72,140
 

 
The accompanying notes are an integral part of these financial statements.

35

SCHARF GLOBAL OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Shares
 
MONEY MARKET FUND – 7.78%
 
Value
 
 
2,357,831
 
First American Treasury Obligations
     
     
  Fund, Class Z, 0.88%, (c)
 
$
2,357,831
 
     
TOTAL MONEY MARKET FUND
       
     
  (Cost $2,357,831)
   
2,357,831
 
     
Total Investments in Securities
       
     
  (Cost $27,071,300) – 101.09%
   
30,637,103
 
     
Liabilities in Excess of Other Assets – (1.09)%
   
(329,958
)
     
TOTAL NET ASSETS – 100.00%
 
$
30,307,145
 

ADR
American Depository Receipt
ETF
Exchange-Traded Fund
(a)
Non-income producing security.
(b)
Foreign issuer.
(c)
Rate shown is 7-day annualized yield as of September 30, 2017.

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”).  GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
 


 
 


COUNTRY ALLOCATION

Country
% of Net Assets
United States
   
77.8
%
 
Republic of Korea
   
6.6
%
 
Japan
   
6.0
%
 
Switzerland
   
3.9
%
 
Ireland
   
3.5
%
 
Hong Kong
   
2.2
%
 
     
100.0
%
 

 
The accompanying notes are an integral part of these financial statements.

36

SCHARF ALPHA OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017

Shares
 
COMMON STOCKS – 94.14%
 
Value
 
   
Airlines – 1.15%
     
 
2,738
 
Ryanair Holdings plc – ADR (a)
 
$
288,640
 
               
     
Auto Components – 4.14%
       
 
52,497
 
Gentex Corp. (d)
   
1,039,441
 
               
     
Chemicals – 3.88%
       
 
2,723
 
Sherwin-Williams Co. (d)
   
974,943
 
               
     
Communications Equipment – 3.05%
       
 
9,030
 
Motorola Solutions, Inc. (d)
   
766,376
 
               
     
Diversified Financial Services – 5.28%
       
 
7,240
 
Berkshire Hathaway, Inc. – Class B (a) (d)
   
1,327,237
 
               
     
Energy Equipment & Services – 2.57%
       
 
9,254
 
Schlumberger, Ltd. (d)
   
645,559
 
               
     
Food & Staples Retailing – 7.15%
       
 
12,920
 
CVS Health Corp. (d)
   
1,050,655
 
 
9,650
 
Walgreens Boots Alliance, Inc. (d)
   
745,173
 
           
1,795,828
 
     
Food Products – 2.04%
       
 
4,690
 
Hershey Co.
   
512,007
 
               
     
Health Care Providers & Services – 3.39%
       
 
5,545
 
McKesson Corp. (d)
   
851,767
 
               
     
Health Care Technology – 2.39%
       
 
8,438
 
Cerner Corp. (a) (d)
   
601,797
 
               
     
Insurance – 9.90%
       
 
8,053
 
American International Group, Inc.
   
494,374
 
 
9,582
 
Aon plc (a) (d)
   
1,399,930
 
 
3,852
 
Willis Towers Watson plc (d)
   
594,094
 
           
2,488,398
 
     
Internet & Direct Marketing Retail – 4.10%
       
 
562
 
Priceline Group, Inc. (a) (d)
   
1,028,921
 
               
     
IT Services – 3.89%
       
 
13,481
 
Cognizant Technology Solutions Corp. – Class A (d)
   
977,912
 
               
     
Media – 3.80%
       
 
24,841
 
Comcast Corp. – Class A (d)
   
955,882
 

 
The accompanying notes are an integral part of these financial statements.

37

SCHARF ALPHA OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Shares
 
COMMON STOCKS – 94.14%, Continued
 
Value
 
   
Multiline Retail – 4.58%
     
 
14,206
 
Dollar General Corp. (d)
 
$
1,151,396
 
               
     
Pharmaceuticals – 5.84%
       
 
4,842
 
Allergan plc (d)
   
992,368
 
 
5,515
 
Novartis AG – ADR (d)
   
473,463
 
           
1,465,831
 
     
Road & Rail – 3.55%
       
 
8,215
 
Kansas City Southern (d)
   
892,806
 
               
     
Software – 11.81%
       
 
19,444
 
Microsoft Corp. (d)
   
1,448,384
 
 
31,420
 
Oracle Corp. (d)
   
1,519,156
 
           
2,967,540
 
     
Specialty Retail – 7.52%
       
 
9,330
 
Advance Auto Parts, Inc. (d)
   
925,536
 
 
23,190
 
L Brands, Inc. (d)
   
964,936
 
           
1,890,472
 
     
Technology Hardware,
       
     
  Storage & Peripherals – 4.11%
       
 
5,456
 
Apple, Inc. (d)
   
840,879
 
 
170
 
Samsung Electronics Co., Ltd. (b)
   
192,440
 
           
1,033,319
 
     
TOTAL COMMON STOCKS
       
     
  (Cost $21,064,848)
   
23,656,072
 


 

 
The accompanying notes are an integral part of these financial statements.

38

SCHARF ALPHA OPPORTUNITY FUND

SCHEDULE OF INVESTMENTS at September 30, 2017, Continued

Shares
 
MONEY MARKET FUND – 5.85%
 
Value
 
 
1,471,092
 
First American Treasury Obligations
     
     
  Fund, Class Z, 0.88%, (c)
 
$
1,471,092
 
     
TOTAL MONEY MARKET FUND
       
     
  (Cost $1,471,092)
   
1,471,092
 
     
Total Investments in Securities
       
     
  (Cost $22,535,940) – 99.99%
   
25,127,164
 
     
Other Assets in Excess of Liabilities – 0.01%
   
2,231
 
     
TOTAL NET ASSETS – 100.00%
 
$
25,129,395
 

ADR
American Depository Receipt
(a)
Non-income producing security.
(b)
Foreign issuer.
(c)
Rate shown is 7-day annualized yield as of September 30, 2017.
(d)
All or a portion of the security has been segregated for open short positions.





 


SCHEDULE OF SECURITIES SOLD SHORT at September 30, 2017

Shares
 
EXCHANGE-TRADED FUND – 60.74%
 
Value
 
 
60,763
 
SPDR S&P 500 ETF Trust
 
$
15,265,488
 
     
Total Securities Sold Short
       
     
  (Proceeds $12,923,403)
 
$
15,265,488
 

ETF
Exchange-Traded Fund

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”).  GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
 

 
The accompanying notes are an integral part of these financial statements.

39

SCHARF FUNDS

STATEMENTS OF ASSETS AND LIABILITIES at September 30, 2017

         
Scharf Balanced
 
   
Scharf Fund
   
Opportunity Fund
 
ASSETS
           
Investments in securities, at value (identified cost
           
  $507,945,046 and $61,397,362, respectively)
 
$
591,188,892
   
$
69,617,524
 
Receivables:
               
Investments sold
   
1,388,035
     
243,215
 
Fund shares issued
   
2,516,446
     
220,448
 
Dividends and interest
   
304,821
     
121,940
 
Dividend tax reclaim
   
118,755
     
11,681
 
Prepaid expenses
   
18,012
     
5,549
 
Total assets
 
$
595,534,961
   
$
70,220,357
 
LIABILITIES
               
Payables:
               
Investments purchased
   
16,572,947
     
1,026,705
 
Fund shares redeemed
   
1,131,960
     
10,986
 
Advisory fees
   
401,773
     
28,658
 
Shareholder servicing fees
   
210,056
     
10,901
 
Administration and fund accounting fees
   
153,222
     
35,325
 
Audit fees
   
21,400
     
21,400
 
12b-1 distribution fees
   
57,557
     
5,411
 
Custody fees
   
14,406
     
4,484
 
Transfer agent fees and expenses
   
21,004
     
8,093
 
Shareholder reporting
   
16,033
     
2,533
 
Chief Compliance Officer fee
   
3,000
     
3,000
 
Legal fees
   
3,565
     
3,088
 
Trustee fees and expenses
   
638
     
435
 
Accrued other expenses
   
794
     
769
 
Total liabilities
   
18,608,355
     
1,161,788
 
NET ASSETS
 
$
576,926,606
   
$
69,058,569
 
CALCULATION OF NET ASSET VALUE PER SHARE
               
Institutional Shares
               
Net assets applicable to shares outstanding
 
$
488,083,414
   
$
60,060,815
 
Shares issued and outstanding [unlimited number of shares
               
  (par value $0.01) authorized]
   
11,073,905
     
1,861,056
 
Net asset value, offering and redemption price per share
 
$
44.08
   
$
32.27
 
Retail Shares
               
Net assets applicable to shares outstanding
 
$
88,843,192
   
$
8,997,754
 
Shares issued and outstanding [unlimited number of shares
               
  (par value $0.01) authorized]
   
2,025,073
     
279,797
 
Net asset value, offering and redemption price per share
 
$
43.87
   
$
32.16
 
COMPOSITION OF NET ASSETS
               
Paid-in capital
 
$
480,067,283
   
$
59,566,777
 
Undistributed net investment income
   
891,172
     
120,153
 
Accumulated net realized gain from
               
  investments and foreign currency
   
12,723,753
     
1,151,672
 
Net unrealized appreciation/(depreciation) on:
               
Investments
   
83,243,846
     
8,220,162
 
Foreign currency
   
552
     
(195
)
Net assets
 
$
576,926,606
   
$
69,058,569
 

 
The accompanying notes are an integral part of these financial statements.

40

SCHARF FUNDS

STATEMENTS OF ASSETS AND LIABILITIES at September 30, 2017

   
Scharf Global
   
Scharf Alpha
 
   
Opportunity Fund
   
Opportunity Fund
 
ASSETS
           
Investments in securities, at value (identified cost
           
  $27,071,300 and $22,535,940, respectively)
 
$
30,637,103
   
$
25,127,164
 
Cash
   
     
269,772
 
Deposits at broker for short securities
   
     
15,209,103
 
Receivables:
               
Investments sold
   
273,713
     
 
Fund shares issued
   
     
170,000
 
Dividends and interest
   
9,958
     
16,989
 
Dividend tax reclaim
   
4,813
     
3,178
 
Due from Adviser (Note 4)
   
8,140
     
1,852
 
Prepaid expenses
   
14,103
     
7,240
 
Total assets
   
30,947,830
     
40,805,298
 
LIABILITIES
               
Securities sold short (proceeds $0
               
  and $12,923,403, respectively)
   
     
15,265,488
 
Payables:
               
Investments purchased
   
540,743
     
 
Fund shares redeemed
   
     
242,558
 
Dividends on short positions
   
     
75,017
 
Shareholder servicing fees
   
5,544
     
5,986
 
Administration and fund accounting fees
   
18,534
     
17,992
 
Audit fees
   
21,400
     
21,401
 
12b-1 distribution fees
   
37,821
     
26,876
 
Custody fees
   
3,679
     
5,382
 
Transfer agent fees and expenses
   
4,390
     
4,326
 
Shareholder reporting
   
1,611
     
1,372
 
Chief Compliance Officer fee
   
3,000
     
3,000
 
Legal fees
   
2,811
     
2,814
 
Trustee fees and expenses
   
427
     
433
 
Accrued other expenses
   
725
     
3,258
 
Total liabilities
   
640,685
     
15,675,903
 
NET ASSETS
 
$
30,307,145
   
$
25,129,395
 
CALCULATION OF NET ASSET VALUE PER SHARE
               
Retail Shares
               
Net assets applicable to shares outstanding
 
$
30,307,145
   
$
25,129,395
 
Shares issued and outstanding [unlimited number
               
  of shares (par value $0.01) authorized]
   
1,018,482
     
1,038,340
 
Net asset value, offering and
               
  redemption price per share
 
$
29.76
   
$
24.20
 
COMPOSITION OF NET ASSETS
               
Paid-in capital
 
$
24,394,352
   
$
24,627,819
 
Undistributed net investment income/(loss)
   
146,045
     
(113,841
)
Accumulated net realized gain from
               
  investments, foreign currency, securities
               
  sold short and purchased options
   
2,200,830
     
366,271
 
Net unrealized appreciation/(depreciation) on:
               
Investments
   
3,583,583
     
2,591,224
 
Foreign currency
   
115
     
7
 
Securities sold short
   
     
(2,342,085
)
Purchased options
   
(17,780
)
   
 
Net assets
 
$
30,307,145
   
$
25,129,395
 

 
The accompanying notes are an integral part of these financial statements.

41

SCHARF FUNDS

STATEMENTS OF OPERATIONS For the Year Ended September 30, 2017

         
Scharf Balanced
 
   
Scharf Fund
   
Opportunity Fund
 
INVESTMENT INCOME
           
Income
           
Dividends (net of foreign tax withheld and issuance
           
  fees of $173,870 and $15,040, respectively)
 
$
7,014,039
   
$
584,922
 
Interest
   
506,763
     
399,732
 
Total income
   
7,520,802
     
984,654
 
Expenses
               
Advisory fees (Note 4)
   
5,756,972
     
643,577
 
Administration and fund accounting fees (Note 4)
   
452,227
     
102,057
 
Shareholder servicing fees – Institutional Class (Note 6)
   
387,611
     
51,851
 
Shareholder servicing fees – Retail Class (Note 6)
   
88,092
     
8,378
 
12b-1 distribution fees – Retail Class (Note 5)
   
225,742
     
20,940
 
Custody fees (Note 4)
   
84,298
     
26,852
 
Registration fees
   
64,727
     
40,654
 
Transfer agent fees and expenses (Note 4)
   
59,062
     
23,571
 
Reports to shareholders
   
29,028
     
2,754
 
Audit fees
   
21,424
     
21,400
 
Miscellaneous expenses
   
19,338
     
5,999
 
Trustee fees and expenses
   
17,972
     
11,535
 
Insurance expense
   
11,654
     
2,583
 
Chief Compliance Officer fee (Note 4)
   
9,001
     
9,002
 
Legal fees
   
8,697
     
8,105
 
Total expenses
   
7,235,845
     
979,258
 
Less: advisory fee waiver (Note 4)
   
(777,429
)
   
(292,638
)
Net expenses
   
6,458,416
     
686,620
 
Net investment income
   
1,062,386
     
298,034
 
REALIZED AND UNREALIZED GAIN ON
               
  INVESTMENTS AND FOREIGN CURRENCY
               
Net realized gain on:
               
Investments
   
14,918,138
     
1,219,401
 
Foreign currency
   
7,932
     
1,043
 
Capital gain distributions from
               
  regulated investment companies
   
382
     
96
 
Net change in unrealized appreciation on:
               
Investments
   
33,693,587
     
2,866,990
 
Foreign currency
   
2,673
     
169
 
Net realized and unrealized gain on
               
  investments and foreign currency
   
48,622,712
     
4,087,699
 
Net Increase in Net Assets
               
  Resulting from Operations
 
$
49,685,098
   
$
4,385,733
 

 
The accompanying notes are an integral part of these financial statements.

42

SCHARF FUNDS

STATEMENTS OF OPERATIONS For the Year Ended September 30, 2017

   
Scharf Global
   
Scharf Alpha
 
   
Opportunity Fund
   
Opportunity Fund
 
INVESTMENT INCOME
           
Income
           
Dividends (net of foreign tax withheld and issuance
           
  fees of $12,813 and $7,339, respectively)
 
$
360,506
   
$
351,106
 
Interest
   
7,684
     
7,032
 
Total income
   
368,190
     
358,138
 
Expenses
               
Advisory fees (Note 4)
   
280,786
     
255,934
 
12b-1 distribution fees – Retail Class (Note 5)
   
56,687
     
54,759
 
Administration and fund accounting fees (Note 4)
   
52,920
     
51,282
 
Custody fees (Note 4)
   
28,536
     
27,057
 
Shareholder servicing fees – Retail Class (Note 6)
   
26,008
     
24,573
 
Audit fees
   
21,400
     
21,401
 
Registration fees
   
20,401
     
27,596
 
Transfer agent fees and expenses (Note 4)
   
12,845
     
13,104
 
Trustee fees and expenses
   
11,130
     
11,195
 
Chief Compliance Officer fee (Note 4)
   
9,001
     
9,003
 
Legal fees
   
8,393
     
7,333
 
Miscellaneous expenses
   
7,794
     
7,525
 
Insurance expense
   
1,941
     
1,502
 
Reports to shareholders
   
1,773
     
530
 
Total expenses before dividends and
               
  interest expense on short positions
   
539,615
     
512,794
 
Dividends on short positions
   
     
301,120
 
Interest expense on short positions
   
     
622
 
Total expenses before advisory fee waiver
               
  and expense reimbursement
   
539,615
     
814,536
 
Less: advisory fee waiver and
               
  expense reimbursement (Note 4)
   
(355,261
)
   
(260,274
)
Net expenses
   
184,354
     
554,262
 
Net investment income/(loss)
   
183,836
     
(196,124
)
REALIZED AND UNREALIZED GAIN/(LOSS)
               
  ON INVESTMENTS, FOREIGN CURRENCY,
               
  SECURITIES SOLD SHORT AND PURCHASED OPTIONS
               
Net realized gain/(loss) on:
               
Investments
   
1,302,134
     
587,909
 
Foreign currency
   
(43
)
   
14
 
Securities sold short
   
     
(565,375
)
Purchased options
   
     
(23,424
)
Capital gain distributions from
               
  regulated investment companies
   
2
     
3
 
Net change in unrealized appreciation/(depreciation) on:
               
Investments
   
1,790,187
     
1,625,541
 
Foreign currency
   
85
     
3
 
Securities sold short
   
     
(1,631,671
)
Purchased options
   
(17,780
)
   
5,833
 
Net realized and unrealized gain/(loss)
               
  on investments, foreign currency,
               
  securities sold short and purchased options
   
3,074,585
     
(1,167
)
Net Increase/(Decrease) in
               
  Net Assets Resulting from Operations
 
$
3,258,421
   
$
(197,291
)

 
The accompanying notes are an integral part of these financial statements.

43

SCHARF FUND

STATEMENTS OF CHANGES IN NET ASSETS

   
Year Ended
   
Year Ended
 
   
September 30, 2017
   
September 30, 2016
 
INCREASE IN NET ASSETS FROM:
           
OPERATIONS
           
Net investment income
 
$
1,062,386
   
$
652,053
 
Net realized gain from:
               
Investments
   
14,918,138
     
4,164,183
 
Foreign currency
   
7,932
     
 
Capital gain distributions from
               
  regulated investment companies
   
382
     
 
Net change in unrealized appreciation on:
               
Investments
   
33,693,587
     
41,125,046
 
Foreign currency
   
2,673
     
1,338
 
Net increase in net assets resulting from operations
   
49,685,098
     
45,942,620
 
DISTRIBUTIONS TO SHAREHOLDERS
               
From net investment income
               
Institutional Class Shares
   
(836,345
)
   
(226,106
)
Retail Class Shares
   
     
(27,082
)
From net realized gain on investments
               
Institutional Class Shares
   
     
(14,375,837
)
Retail Class Shares
   
     
(1,867,560
)
Total distributions to shareholders
   
(836,345
)
   
(16,496,585
)
CAPITAL SHARE TRANSACTIONS
               
Net increase/(decrease) in net assets derived
               
  from net change in outstanding shares (a)
   
(79,145,637
)
   
158,253,313
 
Total increase/(decrease) in net assets
   
(30,296,884
)
   
187,699,348
 
NET ASSETS
               
Beginning of year
   
607,223,490
     
419,524,142
 
End of year
 
$
576,926,606
   
$
607,223,490
 
Undistributed net investment income
 
$
891,172
   
$
657,198
 





The accompanying notes are an integral part of these financial statements.

44

SCHARF FUND

STATEMENTS OF CHANGES IN NET ASSETS, Continued

(a)   A summary of share transactions is as follows:
 
Institutional Class
 
 
Year Ended
   
Year Ended
 
 
 
September 30, 2017
   
September 30, 2016
 
 
 
Shares
   
Paid-in Capital
   
Shares
   
Paid-in Capital
 
Shares sold
   
2,003,817
   
$
83,841,086
     
5,195,996
   
$
201,893,512
 
Shares issued on
                               
  reinvestments of distributions
   
20,558
     
828,692
     
372,564
     
14,541,157
 
Shares redeemed*
   
(3,527,496
)
   
(147,136,199
)
   
(2,875,023
)
   
(110,603,303
)
Net increase/(decrease)
   
(1,503,121
)
 
$
(62,466,421
)
   
2,693,537
   
$
105,831,366
 
* Net of redemption fees of
         
$
2,840
           
$
15,236
 
 
                               
Retail Class
                               
 
 
Year Ended
   
Year Ended
 
 
 
September 30, 2017
   
September 30, 2016
 
 
 
Shares
   
Paid-in Capital
   
Shares
   
Paid-in Capital
 
Shares sold
   
252,962
   
$
10,441,408
     
1,610,374
   
$
62,530,416
 
Shares issued on
                               
  reinvestments of distributions
   
     
     
48,576
     
1,893,485
 
Shares redeemed*
   
(665,882
)
   
(27,120,624
)
   
(308,433
)
   
(12,001,954
)
Net increase/(decrease)
   
(412,920
)
 
$
(16,679,216
)
   
1,350,517
   
$
52,421,947
 
* Net of redemption fees of
         
$
4,350
           
$
6,269
 

 
 
 
 
 
The accompanying notes are an integral part of these financial statements.

45

SCHARF BALANCED OPPORTUNITY FUND

STATEMENTS OF CHANGES IN NET ASSETS

   
Year Ended
   
Year Ended
 
   
September 30, 2017
   
September 30, 2016
 
INCREASE IN NET ASSETS FROM:
           
OPERATIONS
           
Net investment income
 
$
298,034
   
$
248,863
 
Net realized gain from:
               
Investments
   
1,219,401
     
1,091,773
 
Foreign currency
   
1,043
     
 
Capital gain distributions from
               
  regulated investment companies
   
96
     
 
Net change in unrealized appreciation on:
               
Investments
   
2,866,990
     
2,857,003
 
Foreign currency
   
169
     
97
 
Net increase in net assets resulting from operations
   
4,385,733
     
4,197,736
 
DISTRIBUTIONS TO SHAREHOLDERS
               
From net investment income
               
Institutional Class
   
(365,561
)
   
(119,730
)
Retail Class
   
(48,151
)
   
 
From net realized gain on investments
               
Institutional Class
   
(384,621
)
   
(1,863,122
)
Retail Class
   
(59,741
)
   
 
Total distributions to shareholders
   
(858,074
)
   
(1,982,852
)
CAPITAL SHARE TRANSACTIONS
               
Net increase in net assets derived from
               
  net change in outstanding shares (a)
   
5,055,728
     
11,196,731
 
Total increase in net assets
   
8,583,387
     
13,411,615
 
NET ASSETS
               
Beginning of year
   
60,475,182
     
47,063,567
 
End of year
 
$
69,058,569
   
$
60,475,182
 
Undistributed net investment income
 
$
120,153
   
$
226,726
 


 
The accompanying notes are an integral part of these financial statements.

46

SCHARF BALANCED OPPORTUNITY FUND

STATEMENTS OF CHANGES IN NET ASSETS, Continued

(a)   A summary of share transactions is as follows:
 
Institutional Class
 
 
Year Ended
   
Year Ended
 
 
 
September 30, 2017
   
September 30, 2016
 
 
 
Shares
   
Paid-in Capital
   
Shares
   
Paid-in Capital
 
Shares sold
   
296,792
   
$
9,224,277
     
408,657
   
$
11,946,713
 
Shares issued on
                               
  reinvestments of distributions
   
24,887
     
745,357
     
66,833
     
1,970,898
 
Shares redeemed*
   
(208,501
)
   
(6,469,050
)
   
(317,351
)
   
(9,465,549
)
Net increase
   
113,178
   
$
3,500,584
     
158,139
   
$
4,452,062
 
* Net of redemption fees of
         
$
4
           
$
121
 
 
                               
Retail Class
                               
 
                 
January 21, 2016**
 
 
 
Year Ended
   
to
 
 
 
September 30, 2017
   
September 30, 2016
 
 
 
Shares
   
Paid-in Capital
   
Shares
   
Paid-in Capital
 
Shares sold
   
82,197
   
$
2,533,898
     
241,419
   
$
7,130,136
 
Shares issued on
                               
  reinvestments of distributions
   
3,607
     
107,892
     
     
 
Shares redeemed
   
(34,900
)
   
(1,086,646
)
   
(12,526
)
   
(385,467
)
Net increase
   
50,904
   
$
1,555,144
     
228,893
   
$
6,744,669
 

**   Commencement of operations.
 
 

 
The accompanying notes are an integral part of these financial statements.

47

SCHARF GLOBAL OPPORTUNITY FUND

STATEMENTS OF CHANGES IN NET ASSETS

   
Year Ended
   
Year Ended
 
   
September 30, 2017
   
September 30, 2016
 
INCREASE/(DECREASE) IN NET ASSETS FROM:
           
OPERATIONS
           
Net investment income
 
$
183,836
   
$
159,294
 
Net realized gain/(loss) from:
               
Investments
   
1,302,134
     
219,102
 
Foreign currency
   
(43
)
   
 
Capital gain distributions from
               
  regulated investment companies
   
2
     
 
Net change in unrealized appreciation/(depreciation) on:
               
Investments
   
1,790,187
     
2,421,653
 
Foreign currency
   
85
     
 
Purchased options
   
(17,780
)
   
 
Net increase in net assets resulting from operations
   
3,258,421
     
2,800,049
 
DISTRIBUTIONS TO SHAREHOLDERS
               
From net investment income
   
(145,384
)
   
(159,894
)
From net realized gain on investments
   
(204,780
)
   
(810,028
)
Total distributions to shareholders
   
(350,164
)
   
(969,922
)
CAPITAL SHARE TRANSACTIONS
               
Net increase/(decrease) in net assets derived
               
  from net change in outstanding shares (a)
   
(45,307
)
   
7,266,204
 
Total increase in net assets
   
2,862,950
     
9,096,331
 
NET ASSETS
               
Beginning of year
   
27,444,195
     
18,347,864
 
End of year
 
$
30,307,145
   
$
27,444,195
 
Undistributed net investment income
 
$
146,045
   
$
107,634
 

(a)  A summary of share transactions is as follows:
 
 
 
Year Ended
   
Year Ended
 
 
 
September 30, 2017
   
September 30, 2016
 
 
 
Shares
   
Paid-in Capital
   
Shares
   
Paid-in Capital
 
Shares sold
   
131,041
   
$
3,726,714
     
321,502
   
$
8,266,274
 
Shares issued on
                               
  reinvestments of distributions
   
13,279
     
350,163
     
38,003
     
969,475
 
Shares redeemed*
   
(146,452
)
   
(4,122,184
)
   
(76,759
)
   
(1,969,545
)
Net increase/(decrease)
   
(2,132
)
 
$
(45,307
)
   
282,746
   
$
7,266,204
 
* Net of redemption fees of
         
$
92
           
$
 


The accompanying notes are an integral part of these financial statements.

48

SCHARF ALPHA OPPORTUNITY FUND

STATEMENTS OF CHANGES IN NET ASSETS

         
December 31, 2015*
 
   
Year Ended
   
to
 
   
September 30, 2017
   
September 30, 2016
 
INCREASE/(DECREASE) IN NET ASSETS FROM:
           
OPERATIONS
           
Net investment loss
 
$
(196,124
)
 
$
(122,449
)
Net realized gain/(loss) from:
               
Investments
   
587,909
     
157,892
 
Foreign currency
   
14
     
 
Securities sold short
   
(565,375
)
   
 
Purchased options
   
(23,424
)
   
 
Capital gain distributions from
               
  regulated investment companies
   
3
     
 
Net change in unrealized appreciation/(depreciation) on:
               
Investments
   
1,625,541
     
249,440
 
Foreign currency
   
3
     
 
Securities sold short
   
(1,631,671
)
   
 
Purchased options
   
5,833
     
 
Net increase/(decrease) in net assets
               
  resulting from operations
   
(197,291
)
   
284,883
 
DISTRIBUTIONS TO SHAREHOLDERS
               
From net realized gain on investments
   
(106,305
)
   
 
Total distributions to shareholders
   
(106,305
)
   
 
CAPITAL SHARE TRANSACTIONS
               
Net increase in net assets derived from
               
  net change in outstanding shares (a)
   
412,267
     
24,735,841
 
Total increase in net assets
   
108,671
     
25,020,724
 
NET ASSETS
               
Beginning of period
   
25,020,724
     
 
End of period
 
$
25,129,395
   
$
25,020,724
 
Accumulated net investment loss
 
$
(113,841
)
 
$
 

(a)   A summary of share transactions is as follows:

 
             
December 31, 2015*
 
 
 
Year Ended
   
to
 
 
 
September 30, 2017
   
September 30, 2016
 
 
 
Shares
   
Paid-in Capital
   
Shares
   
Paid-in Capital
 
Shares sold
   
361,662
   
$
8,699,395
     
849,701
   
$
20,652,162
 
Shares issued on
                               
  reinvestments of distributions
   
3,871
     
91,211
     
     
 
Shares issued in connection
                               
  with transfer in-kind
   
     
     
184,713
     
4,433,107
 
Shares redeemed
   
(347,538
)
   
(8,378,339
)
   
(14,069
)
   
(349,428
)
Net increase
   
17,995
   
$
412,267
     
1,020,345
   
$
24,735,841
 

*  Commencement of operations.

 
The accompanying notes are an integral part of these financial statements.

49

SCHARF ALPHA OPPORTUNITY FUND

STATEMENT OF CASH FLOWS For the Year Ended September 30, 2017

Increase/(decrease) in cash —
     
       
Cash flows from operating activities:
     
Net increase/(decrease) in net assets from operations
 
$
(197,291
)
Adjustments to reconcile net increase/(decrease) in
       
  net assets from operations to net cash used in operating activities:
       
Purchases of investment securities
   
(9,021,629
)
Proceeds for sales of investment securities
   
10,945,005
 
Proceeds on securities sold short
   
1,716,149
 
Closed short sale transactions
   
(3,309,170
)
Proceeds for short-term investments, net
   
82,727
 
Increase in deposits at broker
   
(601,284
)
Decrease in dividends and interest receivable
   
8,080
 
Decrease in receivable for securities sold
   
908,607
 
Increase in due from Adviser
   
(1,373
)
Decrease in prepaid expenses and other assets
   
4,813
 
Decrease in payable for securities purchased
   
(1,064,435
)
Increase in payable for dividends on short positions
   
3,300
 
Increase in accrued administration fees
   
8,898
 
Increase in 12b-1 distribution and service fees
   
14,453
 
Increase in compliance fees
   
1,502
 
Increase in custody fees
   
2,674
 
Increase in transfer agent fees and expenses
   
2,589
 
Increase in other accrued expenses
   
9,366
 
Unrealized depreciation on securities
   
294
 
Net realized loss on investments
   
890
 
Proceeds received through merger
   
126,560
 
Net cash used in operating activities
   
(359,275
)
         
Cash flows from financing activities:
       
Proceeds from shares sold
   
8,765,500
 
Payment on shares redeemed
   
(8,135,780
)
Distributions paid in cash
   
(15,094
)
Net cash provided by financing activities
   
614,626
 
         
Net increase in cash
   
255,351
 
         
Cash:
       
Beginning balance
   
14,421
 
Ending balance
 
$
269,772
 
         
Supplemental information:
       
Non-cash financing activities not included herein consists of dividend
       
  reinvestment of dividends and distributions
 
$
91,211
 
Cash paid for interest
 
$
622
 

 
The accompanying notes are an integral part of these financial statements.

50

SCHARF FUND

FINANCIAL HIGHLIGHTS For a share outstanding throughout each year

Institutional Class
   
Year Ended September 30,
 
   
2017
   
2016
   
2015
   
2014
   
2013
 
Net asset value,
                             
  beginning of year
 
$
40.47
   
$
38.24
   
$
39.00
   
$
32.43
   
$
27.47
 
                                         
Income from investment operations:
                                       
Net investment income^
   
0.09
     
0.06
     
0.03
     
0.05
     
0.05
 
Net realized and unrealized
                                       
  gain on investments
                                       
  and foreign currency
   
3.59
     
3.53
     
0.60
     
6.56
     
5.02
 
Total from investment operations
   
3.68
     
3.59
     
0.63
     
6.61
     
5.07
 
                                         
Less distributions:
                                       
From net investment income
   
(0.07
)
   
(0.02
)
   
(0.03
)
   
(0.02
)
   
(0.07
)
From net realized
                                       
  gain on investments
   
     
(1.34
)
   
(1.36
)
   
(0.02
)
   
(0.04
)
Total distributions
   
(0.07
)
   
(1.36
)
   
(1.39
)
   
(0.04
)
   
(0.11
)
Paid-in capital from
                                       
  redemption fees^#
   
0.00
     
0.00
     
0.00
     
0.00
     
0.00
 
Net asset value, end of year
 
$
44.08
   
$
40.47
   
$
38.24
   
$
39.00
   
$
32.43
 
                                         
Total return
   
9.10
%
   
9.52
%
   
1.62
%
   
20.39
%
   
18.55
%
                                         
Ratios/supplemental data:
                                       
Net assets, end of year (thousands)
 
$
488,084
   
$
508,930
   
$
377,974
   
$
188,453
   
$
79,068
 
Ratio of expenses
                                       
  to average net assets:
                                       
Before fee waivers
   
1.20
%
   
1.19
%
   
1.26
%
   
1.30
%
   
1.46
%
After fee waivers
   
1.07
%
   
1.05
%
   
1.13
%**
   
1.25
%
   
1.25
%
Ratio of net investment income/(loss)
                                       
  to average net assets:
                                       
Before fee waivers
   
0.09
%
   
0.02
%
   
(0.05
)%
   
0.08
%
   
(0.05
)%
After fee waivers
   
0.22
%
   
0.16
%
   
0.08
%
   
0.13
%
   
0.16
%
Portfolio turnover rate
   
21.63
%
   
30.58
%
   
33.85
%
   
31.20
%
   
36.51
%

**
 
Effective January 28, 2015, the adviser contractually agreed to lower the net annual operating expense limit to 1.09%.
^
 
Based on average shares outstanding.
#
 
Amount is less than $0.01.

 
The accompanying notes are an integral part of these financial statements.

51

SCHARF FUND

FINANCIAL HIGHLIGHTS For a share outstanding throughout each period

Retail Class
               
January 28,
 
               
2015*
 
   
Year Ended
   
to
 
   
September 30,
   
September 30,
 
   
2017
   
2016
   
2015
 
Net asset value, beginning of period
 
$
40.32
   
$
38.21
   
$
38.85
 
                         
Income from investment operations:
                       
Net investment loss^
   
(0.02
)
   
(0.05
)
   
(0.02
)
Net realized and unrealized gain/(loss)
                       
  on investments and foreign currency
   
3.57
     
3.52
     
(0.62
)
Total from investment operations
   
3.55
     
3.47
     
(0.64
)
                         
Less distributions:
                       
From net investment income
   
     
(0.02
)
   
 
From net realized gain on investments
   
     
(1.34
)
   
 
Total distributions
   
     
(1.36
)
   
 
Paid-in capital from redemption fees^#
   
0.00
     
0.00
     
0.00
 
Net asset value, end of period
 
$
43.87
   
$
40.32
   
$
38.21
 
                         
Total return
   
8.80
%
   
9.20
%
   
(1.65
)%‡
                         
Ratios/supplemental data:
                       
Net assets, end of period (thousands)
 
$
88,843
   
$
98,293
   
$
41,551
 
Ratio of expenses to average net assets:
                       
Before fee waivers
   
1.47
%
   
1.47
%
   
1.53
%†
After fee waivers
   
1.34
%
   
1.34
%
   
1.34
%†
Ratio of net investment loss to average net assets:
                       
Before fee waivers
   
(0.17
)%
   
(0.25
)%
   
(0.27
)%†
After fee waivers
   
(0.04
)%
   
(0.12
)%
   
(0.08
)%†
Portfolio turnover rate
   
21.63
%
   
30.58
%
   
33.85
%‡**

*
 
Commencement of operations.
^
 
Based on average shares outstanding.
 
Annualized.
 
Not annualized.
#
 
Amount is less than $0.01.
**
 
Portfolio turnover calculated for the period ended September 30, 2015.


The accompanying notes are an integral part of these financial statements.

52

SCHARF BALANCED OPPORTUNITY FUND

FINANCIAL HIGHLIGHTS For a share outstanding throughout each period

Institutional Class
                           
December 31,
 
                           
2012*
 
                           
to
 
   
Year Ended September 30,
   
September 30,
 
   
2017
   
2016
   
2015
   
2014
   
2013
 
Net asset value,
                               
  beginning of period
 
$
30.60
   
$
29.60
   
$
30.46
   
$
27.16
   
$
24.00
 
                                         
Income from investment operations:
                                       
Net investment income
 
0.15
^  
0.14
^  
0.08
^    
0.14
   
0.13
^
Net realized and unrealized
                                       
  gain on investments and
                                       
  foreign currency
   
1.94
     
2.08
     
0.34
     
3.60
     
3.03
 
Total from investment operations
   
2.09
     
2.22
     
0.42
     
3.74
     
3.16
 
                                         
Less distributions:
                                       
From net investment income
   
(0.20
)
   
(0.07
)
   
(0.10
)
   
(0.14
)
   
 
From net realized
                                       
  gain on investments
   
(0.22
)
   
(1.15
)
   
(1.18
)
   
(0.30
)
   
 
Total distributions
   
(0.42
)
   
(1.22
)
   
(1.28
)
   
(0.44
)
   
 
Paid-in capital from
                                       
  redemption fees
 
0.00
^#  
0.00
^#  
0.00
^#    
   
0.00
^#
Net asset value, end of period
 
$
32.27
   
$
30.60
   
$
29.60
   
$
30.46
   
$
27.16
 
                                         
Total return
   
6.94
%
   
7.68
%‡
   
1.38
%
   
13.93
%
   
13.17
%‡
                                         
Ratios/supplemental data:
                                       
Net assets, end of period
                                       
  (thousands)
 
$
60,061
   
$
53,485
   
$
47,064
   
$
37,935
   
$
17,693
 
Ratio of expenses
                                       
  to average net assets:
                                       
Before fee waivers
   
1.47
%
   
1.47
%
   
1.45
%
   
1.69
%
   
2.10
%†
After fee waivers
   
1.02
%**
   
1.08
%
   
1.20
%
   
1.20
%
   
1.20
%†
Ratio of net investment income/(loss)
                                       
  to average net assets:
                                       
Before fee waivers
   
0.04
%
   
0.08
%
   
0.00
%
   
0.13
%
   
(0.22
)%†
After fee waivers
   
0.49
%
   
0.47
%
   
0.25
%
   
0.62
%
   
0.68
%†
Portfolio turnover rate
   
30.04
%
   
34.43
%
   
39.09
%
   
36.18
%
   
23.01
%‡

*
 
Commencement of operations.
**
 
Effective June 30, 2017, the adviser contractually agreed to lower the net annual operating expense limit to 0.98%.
^
 
Based on average shares outstanding.
 
Annualized.
 
Not annualized.
#
 
Amount is less than $0.01.

 
The accompanying notes are an integral part of these financial statements.

53

SCHARF BALANCED OPPORTUNITY FUND

FINANCIAL HIGHLIGHTS For a share outstanding throughout each period

Retail Class
         
January 21, 2016*
 
   
Year Ended
   
to
 
   
September 30, 2017
   
September 30, 2016
 
Net asset value, beginning of period
 
$
30.54
   
$
27.68
 
                 
Income from investment operations:
               
Net investment income
 
0.07
^  
0.05
^
Net realized and unrealized gain
               
  on investments and foreign currency
   
1.94
     
2.81
 
Total from investment operations
   
2.01
     
2.86
 
                 
Less distributions:
               
From net investment income
   
(0.17
)
   
 
From net realized gain on investments
   
(0.22
)
   
 
Total distributions
   
(0.39
)
   
 
Net asset value, end of period
 
$
32.16
   
$
30.54
 
                 
Total return
   
6.68
%
   
10.33
%‡
                 
Ratios/supplemental data:
               
Net assets, end of period (thousands)
 
$
8,998
   
$
6,990
 
Ratio of expenses to average net assets:
               
Before fee waivers
   
1.73
%
   
1.75
%†
After fee waivers
 
1.28
%~    
1.30
%†
Ratio of net investment income/(loss) to average net assets:
               
Before fee waivers
   
(0.21
)%
   
(0.23
)%†
After fee waivers
   
0.24
%
   
0.22
%†
Portfolio turnover rate
   
30.04
%
   
34.43
%‡**

*
 
Commencement of operations.
~
 
Effective June 30, 2017, the adviser contractually agreed to lower the net annual operating expense limit to 1.23%.
^
 
Based on average shares outstanding.
**
 
Portfolio turnover calculated for the period ended September 30, 2016.
 
Annualized.
 
Not annualized.

 
The accompanying notes are an integral part of these financial statements.

54

SCHARF GLOBAL OPPORTUNITY FUND

FINANCIAL HIGHLIGHTS For a share outstanding throughout each period

Retail Class
               
October 14, 2014*
 
   
Year Ended
   
to
 
   
September 30,
   
September 30,
 
   
2017
   
2016
   
2015
 
Net asset value, beginning of period
 
$
26.89
   
$
24.87
   
$
24.00
 
                         
Income from investment operations:
                       
Net investment income
 
0.18
^    
0.16
     
0.19
 
Net realized and unrealized gain
                       
  on investments, foreign currency
                       
  and purchased options
   
3.03
     
3.06
     
0.71
 
Total from investment operations
   
3.21
     
3.22
     
0.90
 
                         
Less distributions:
                       
From net investment income
   
(0.14
)
   
(0.20
)
   
(0.03
)
From net realized gain on investments
   
(0.20
)
   
(1.00
)
   
 
Total distributions
   
(0.34
)
   
(1.20
)
   
(0.03
)
Paid-in capital from redemption fees
 
0.00
^#    
     
 
Net asset value, end of period
 
$
29.76
   
$
26.89
   
$
24.87
 
                         
Total return
   
12.10
%
   
13.21
%
   
3.75
%‡
                         
Ratios/supplemental data:
                       
Net assets, end of period (thousands)
 
$
30,307
   
$
27,444
   
$
18,348
 
Ratio of expenses to average net assets:
                       
Before fee waivers and expense reimbursement
   
1.90
%
   
1.97
%
   
2.36
%†
After fee waivers and expense reimbursement
   
0.65
%
   
0.55
%
   
0.50
%†
Ratio of net investment income/(loss)
                       
  to average net assets:
                       
Before fee waivers and expense reimbursement
   
(0.60
)%
   
(0.74
)%
   
(1.01
)%†
After fee waivers and expense reimbursement
   
0.65
%
   
0.68
%
   
0.85
%†
Portfolio turnover rate
   
75.78
%
   
52.75
%
   
60.44
%‡**

*
 
Commencement of operations.
^
 
Based on average shares outstanding.
 
Annualized.
 
Not annualized.
**
 
Portfolio turnover calculated for the period ended September 30, 2015.
#
 
Amount is less than $0.01.

 
The accompanying notes are an integral part of these financial statements.

55

SCHARF ALPHA OPPORTUNITY FUND

FINANCIAL HIGHLIGHTS For a share outstanding throughout each period

Retail Class
         
December 31, 2015*
 
   
Year Ended
   
to
 
   
September 30, 2017
   
September 30, 2016
 
Net asset value, beginning of period
 
$
24.52
   
$
24.00
 
                 
Income from investment operations:
               
Net investment loss
   
(0.19
)
 
(0.21
)^
Net realized and unrealized gain/(loss)
               
  on investments, foreign currency,
               
  securities sold short and purchased options
   
(0.03
)
   
0.73
 
Total from investment operations
   
(0.22
)
   
0.52
 
                 
Less distributions:
               
From net realized gain on investments
   
(0.10
)
   
 
Total distributions
   
(0.10
)
   
 
Net asset value, end of period
 
$
24.20
   
$
24.52
 
                 
Total return
   
(0.89
)%
   
2.17
%‡
                 
Ratios/supplemental data:
               
Net assets, end of period (thousands)
 
$
25,129
   
$
25,021
 
Ratio of expenses to average net assets:
               
Before fee waivers and expense reimbursement
   
3.15
%
   
3.98
%†
After fee waivers and expense reimbursement
   
2.14
%
   
2.53
%†
Ratio of net investment loss to average net assets:
               
Before fee waivers and expense reimbursement
   
(1.77
)%
   
(2.62
)%†
After fee waivers and expense reimbursement
   
(0.76
)%
   
(1.17
)%†
Portfolio turnover rate
   
27.42
%
   
25.13
%‡

*
 
Commencement of operations.
^
 
Based on average shares outstanding.
 
Annualized.
 
Not annualized.

 
The accompanying notes are an integral part of these financial statements.

56

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017

NOTE 1 – ORGANIZATION
 
The Scharf Fund, the Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund (each a “Fund” and collectively, the “Funds”) are each a series of Advisors Series Trust (the “Trust”), which is registered under the Investment Company Act of 1940, as amended, (the “1940 Act”) as an open-end management investment company. The Scharf Fund and the Scharf Balanced Opportunity Fund are diversified and the Scharf Global Opportunity Fund and the Scharf Alpha Opportunity Fund are non-diversified. The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services – Investment Companies”.
 
The investment objective of the Scharf Fund and the Scharf Global Opportunity Fund is to seek long-term capital appreciation. The investment objective of the Scharf Balanced Opportunity Fund is to seek long-term capital appreciation and income. The investment objective of the Scharf Alpha Opportunity Fund is to seek long-term capital appreciation and to provide returns above inflation while exposing investors to less volatility than typical equity investments. The Scharf Fund Institutional Class and Retail Class commenced operations on December 30, 2011 and January 28, 2015, respectively. The Scharf Balanced Opportunity Fund Institutional Class and Retail Class commenced operations on December 31, 2012 and January 21, 2016, respectively.
 
The Scharf Global Opportunity Fund commenced operations on October 14, 2014. The initial purchase into the Fund included a transfer in-kind of securities and cash. The transfer in-kind was nontaxable. The Fund issued 419,054 shares on October 14, 2014. The fair value and cost of securities received by the Fund was $7,814,245 and $6,536,468, respectively. In addition, the Fund received $2,243,043 of cash. For financial reporting purposes, assets received and shares issued by the Fund were recorded at fair value; however, the cost basis of the investments received was carried forward to align ongoing reporting of the Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.
 
The Scharf Alpha Opportunity Fund commenced operations on December 31, 2015. The initial purchase into the Fund included a transfer in-kind of securities and cash. The transfer in-kind was nontaxable. The Fund issued 184,713 shares on December 31, 2015. The fair value and cost of securities received by the Fund was $3,729,932 and $3,291,912, respectively. In addition, the Fund received $703,175 of cash. For financial reporting purposes, assets received and shares issued by the Fund were recorded at fair value; however, the cost basis of the investments received was carried forward to align ongoing reporting of the Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.
 
57

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

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: All investments in securities are recorded at their estimated fair value, as described in note 3.
 
B.
Federal Income Taxes: It is the Funds’ policy to comply with the requirements of Subchapter M 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 or excise tax provision is required.
 
 
The Funds recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the tax positions of the Scharf Fund and the Scharf Balanced Opportunity Fund and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for the open tax years 2014-2016, or expected to be taken in the Funds’ 2017 tax returns. Management has analyzed the Scharf Global Opportunity Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for the open tax years 2015-2016, or expected to be taken in the Fund’s 2017 tax returns. Management has analyzed the Scharf Alpha Opportunity Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for the open tax year 2016, or expected to be taken in the Fund’s 2017 tax returns.  The Funds identify their major tax jurisdictions as U.S. Federal and the state of Wisconsin; however, the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
 
C.
Securities Transactions, Income and Distributions: Securities transactions are accounted for on the trade date. Realized gains and losses on securities sold are calculated on the basis of specified cost.  Interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are accreted/amortized over the life of the respective security using the effective interest method. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Withholding taxes on foreign dividends have been provided for in accordance with each Fund’s understanding of the applicable country’s tax rules and rates.

 
58

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

 
Investment income, expenses (other than those specific to the class of shares), and realized and unrealized gains and losses on investments are allocated to the separate classes of each Fund based upon their relative net assets on the date income is earned or expensed and realized and unrealized gains and losses are incurred.
 
 
Each Fund is charged for those expenses that are directly attributable to the Fund, such as investment advisory, custody and transfer agent fees. Expenses that are not attributable to a Fund are typically allocated among the Funds in proportion to their respective net assets.  Common expenses of the Trust are typically allocated among the funds in the Trust based on a fund’s respective net assets, or by other equitable means.
 
 
The Funds distribute substantially all net investment income, if any, and net realized capital gains, if any, annually.  Distributions from net realized gains for book purposes may include short-term capital gains.  All short-term capital gains are included in ordinary income for tax purposes.
 
 
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.
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 September 30, 2017, the Funds made the following permanent tax adjustments on the statements of assets and liabilities:

     
Undistributed
   
Accumulated
       
     
Net Investment
   
Net Realized
   
Paid-in
 
     
Income/(Loss)
   
Gain/(Loss)
   
Capital
 
 
Scharf Fund
 
$
7,933
   
$
(7,933
)
 
$
 
 
Scharf Balanced
                       
 
  Opportunity Fund
   
9,105
     
(9,105
)
   
 
 
Scharf Global
                       
 
  Opportunity Fund
   
(41
)
   
41
     
 
 
Scharf Alpha
                       
 
  Opportunity Fund
   
82,283
     
(14
)
   
(82,269
)

59

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

E.
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets during the reporting period. Actual results could differ from those estimates.
 
F.
Redemption Fees: The Scharf Fund charges a 2.00% redemption fee to shareholders who redeem shares held for 60 days or less. The Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund each charge a 2.00% redemption fee to shareholders who redeem shares held for 15 days or less. Such fees are retained by the Funds and accounted for as an addition to paid-in capital.  During the year ended September 30, 2017, the Scharf Fund, Scharf Balanced Opportunity Fund, and the Scharf Global Opportunity Fund retained $7,190, $4, and $92, respectively, in redemption fees.
 
G.
Foreign Securities: The Funds may invest in securities of foreign companies. Foreign economies may differ from the U.S. economy and individual foreign companies may differ from domestic companies in the same industry. Foreign companies or entities are frequently not subject to accounting and financial reporting standards applicable to domestic companies, and there may be less information available about foreign issuers. Securities of foreign issuers are generally less liquid and more volatile than those of comparable domestic issuers. There is frequently less government regulation of broker-dealers and issuers than in the United States. In addition, investments in foreign countries are subject to the possibility of expropriation, confiscatory taxation, political or social instability or diplomatic developments that could adversely affect the value of those investments.
 
H.
Leverage and Short Sales: The Scharf Alpha Opportunity Fund may use leverage in connection with its investment activities and may affect short sales of securities. Leverage can increase the investment returns of the Fund if the securities purchased increase in value in an amount exceeding the cost of the borrowing. However, if the securities decrease in value, the Fund will suffer a greater loss than would have resulted without the use of leverage. A short sale is the sale by the Fund of a security which it does not own in anticipation of purchasing the same security in the future at a lower price to close the short position. A short sale will be successful if the price of the shorted security decreases. However, if the underlying security goes up in price during the period in which the short position is outstanding, the Fund will realize a loss. The risk on a short sale is unlimited because the Fund must buy the shorted security at the

 
60

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

 
higher price to complete the transaction. Therefore, short sales may be subject to greater risks than investments in long positions.
 
 
With a long position, the maximum sustainable loss is limited to the amount paid for the security plus the transaction costs, whereas there is no maximum attainable price of the shorted security. The Fund would also incur increased transaction costs associated with selling securities short. In addition, if the Fund sells securities short, it must maintain a segregated account with its custodian containing cash or high-grade securities equal to (i) the greater of the current market value of the securities sold short or the market value of such securities at the time they were sold short, less (ii) any collateral deposited with the Fund’s broker (not including the proceeds from the short sales). The Fund may be required to add to the segregated account as the market price of a shorted security increases. As a result of maintaining and adding to its segregated account, the Fund may maintain higher levels of cash or liquid assets (for example, U.S. Treasury bills, repurchase agreements, high quality commercial paper and long equity positions) for collateral needs thus reducing its overall managed assets available for trading purposes. In lieu of maintaining cash or high-grade securities in a segregated account to cover the Fund’s short sale obligations, the Fund may earmark cash or high-grade securities on the Fund’s records or hold offsetting positions.
 
I.
Derivatives: The Funds have adopted the financial accounting reporting rules as required by the Derivatives and Hedging Topic of the FASB Accounting Standards Codification. The Funds are required to include enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity’s results of operations and financial position.
 
 
The Funds may utilize options for hedging purposes as well as direct investment. Some options strategies, including buying puts, tend to hedge the Funds’ investments against price fluctuations. Other strategies, such as writing puts and calls and buying calls, tend to increase market exposure. Options contracts may be combined with each other in order to adjust the risk and return characteristics of each Fund’s overall strategy in a manner deemed appropriate to the Adviser and consistent with each Fund’s investment objective and policies. When a call or put option is written, an amount equal to the premium received is recorded as a liability. The liability is marked-to-market daily to reflect the current fair value of the written option. When a written option expires, a gain is realized in the amount of the premium originally received. If a closing purchase contract is entered into, a gain or loss is realized in the amount of the original premium less the cost of the closing transaction. If a written call option is exercised, a gain or

 
61

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

 
loss is realized from the sale of the underlying security, and the proceeds from such sale are increased by the premium originally received. If a written put option is exercised, the amount of the premium originally received reduces the cost of the security which is purchased upon the exercise of the option.
 
 
With options, there is minimal counterparty credit risk to the Funds since the options are covered or secured, which means that the Funds will own the underlying security or, to the extent they do not hold the security, will maintain liquid assets consisting of cash, short-term securities, or equity or debt securities equal to the market value of the security underlying the option, marked to market daily.
 
 
Options purchased are recorded as investments and marked-to-market daily to reflect the current fair value of the option contract. If an option purchased expires, a loss is realized in the amount of the cost of the option contract. If a closing transaction is entered into, a gain or loss is realized to the extent that the proceeds from the sale are greater or less than the cost of the option. If a purchase put option is exercised, a gain or loss is realized from the sale of the underlying security by adjusting the proceeds from such sale by the amount of the premium originally paid. If a purchased call option is exercised, the cost of the security purchased upon exercise is increased by the premium originally paid.
 
 
The Scharf Fund, the Scharf Balanced Opportunity Fund, and the Scharf Alpha Opportunity Fund did not invest in derivative instruments during the year ended September 30, 2017. The purchased option held on September 30, 2016 in the Scharf Alpha Opportunity Fund expired in November 2016.
 
Scharf Global Opportunity Fund
 
 
The locations of derivatives in the statements of assets and liabilities and the value of the derivative instruments categorized by risk exposure, which are not accounted for as hedging instruments under ASC 815, are as follows:

 
Derivative Type
Statements of Assets and Liabilities Location
Value
 
Equity Contracts
Investments in securities at fair value
$71,446
 
 
The effect of derivative instruments on the statements of operations for the year ended September 30, 2017 is as follows:

 
Derivative Type
Location of Loss on Derivatives Recognized in Income
Value
 
Equity Contracts
Change in unrealized depreciation on purchased options
$(17,780)

 

 
62

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

Scharf Alpha Opportunity Fund
 
 
The effect of derivative instruments on the statements of operations for the year ended September 30, 2017 is as follows:

 
Derivative Type
Location of Loss on Derivatives Recognized in Income
 
Value
 
 
Equity Contracts
Realized loss on purchased options
 
$
(23,424
)
 
Equity Contracts
Change in unrealized appreciation on purchased options
 
$
5,833
 
 
J.
Events Subsequent to the Fiscal Year End: In preparing the financial statements as of September 30, 2017, management considered the impact of subsequent events for potential recognition or disclosure in the financial statements.
 
NOTE 3 – SECURITIES VALUATION
 
The Funds have adopted authoritative fair value accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value.  These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value, a discussion in changes in valuation techniques and related inputs during the period and expanded disclosure of valuation levels for major security types.  These inputs are summarized in the three broad levels listed below:
 
 
Level 1 –
Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access.
 
 
Level 2 –
Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
 
 
Level 3 –
Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
 
Following is a description of the valuation techniques applied to the Funds’ major categories of assets and liabilities measured at fair value on a recurring basis.
 
Each Fund determines the fair value of its investments and computes its net asset value per share as of the close of regular trading on the New York Stock Exchange (4:00 pm EST).
 
Equity Securities: The Funds’ investments are carried at fair value. Equity securities, including common stocks, preferred stocks and exchange-traded funds, that are
 
63

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

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 Global 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 securities which are not traded in the NASDAQ Global Market System shall be valued at the most recent sales price.  Investments in open-end mutual funds are valued at their net asset value per share.  To the extent, these securities are actively traded and valuation adjustments are not applied, they are categorized in level 1 of the fair value hierarchy.
 
Fixed Income Securities: Debt securities, such as corporate bonds, asset backed securities, municipal bonds, and U.S. government agency issues are valued at market on the basis of valuations furnished by an independent pricing service which utilizes both dealer-supplied valuations and formula-based techniques.  The pricing service may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer.  In addition, the model may incorporate market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data.  Certain securities are valued principally using dealer quotations.  These securities will generally be classified in level 2 of the fair value hierarchy.
 
Options: Exchange-traded options are valued at the composite price, using the National Best Bid and Offer quotes. Specifically, composite pricing looks at the last trades on the exchanges where the options are traded. If there are no trades for the option on a given business day, composite option pricing calculates the mean of the highest bid price and the lowest ask price across the exchanges where the option is traded. Exchange-traded options that are actively traded are categorized in level 1 of the fair value hierarchy.
 
Short-Term Securities: Short-term debt securities, including those securities having a maturity of 60 days or less, are valued at the evaluated mean between the bid and asked prices. To the extent the inputs are observable and timely, these securities would be classified in level 2 of the fair value hierarchy.
 
The Board of Trustees (the “Board”) has delegated day-to-day valuation issues to a Valuation Committee of the Trust which is comprised of representatives from U.S. Bancorp Fund Services, LLC, the Funds’ administrator. The function of the Valuation Committee is to value securities where current and reliable market quotations are not readily available or the closing price does not represent fair value by following procedures approved by the Board. These procedures consider many factors,
 

 
64

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

including the type of security, size of holding, trading volume and news events. All actions taken by the Valuation Committee are reviewed and ratified by the Board.
 
Depending on the relative significance of the valuation inputs, fair valued securities may be classified in either level 2 or level 3 of the fair value hierarchy.
 
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.  The following is a summary of the inputs used to value the Funds’ securities as of September 30, 2017:
 
Scharf Fund
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Common Stocks
                       
  Consumer Discretionary
 
$
121,458,622
   
$
   
$
   
$
121,458,622
 
  Consumer Staples
   
47,644,707
     
     
     
47,644,707
 
  Energy
   
12,970,826
     
     
     
12,970,826
 
  Financials
   
78,574,224
     
     
     
78,574,224
 
  Healthcare
   
60,591,139
     
     
     
60,591,139
 
  Industrials
   
13,829,530
     
     
     
13,829,530
 
  Information Technology
   
114,167,862
     
     
     
114,167,862
 
  Materials
   
15,444,055
     
     
     
15,444,055
 
Total Common Stocks
   
464,680,965
     
     
     
464,680,965
 
Preferred Stocks
                               
  Information Technology
   
14,591,618
     
     
     
14,591,618
 
Total Preferred Stocks
   
14,591,618
     
     
     
14,591,618
 
U.S. Treasury Bills
   
     
85,042,078
     
     
85,042,078
 
Money Market Fund
   
26,874,231
     
     
     
26,874,231
 
Total Investments
                               
  in Securities
 
$
506,146,814
   
$
85,042,078
   
$
   
$
591,188,892
 

 

 
65

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

Scharf Balanced Opportunity Fund
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Common Stocks
                       
  Consumer Discretionary
 
$
9,938,494
   
$
   
$
   
$
9,938,494
 
  Consumer Staples
   
4,214,198
     
     
     
4,214,198
 
  Energy
   
999,661
     
     
     
999,661
 
  Financials
   
6,607,861
     
     
     
6,607,861
 
  Healthcare
   
5,072,517
     
     
     
5,072,517
 
  Industrials
   
1,167,223
     
     
     
1,167,223
 
  Information Technology
   
9,372,176
     
     
     
9,372,176
 
  Materials
   
1,328,687
     
     
     
1,328,687
 
Total Common Stocks
   
38,700,817
     
     
     
38,700,817
 
Preferred Stocks
                               
  Closed-End Funds
   
     
2,153,977
     
     
2,153,977
 
  Information Technology
   
1,690,503
     
     
     
1,690,503
 
Total Preferred Stocks
   
1,690,503
     
2,153,977
     
     
3,844,480
 
Fixed Income
                               
  Corporate Bonds
   
     
5,829,503
     
     
5,829,503
 
  Municipal Bonds
   
     
3,549,198
     
     
3,549,198
 
Total Fixed Income
   
     
9,378,701
     
     
9,378,701
 
U.S. Treasury Bills
   
     
10,264,765
     
     
10,264,765
 
Money Market Fund
   
7,428,761
     
     
     
7,428,761
 
Total Investments
                               
  in Securities
 
$
47,820,081
   
$
21,797,443
   
$
   
$
69,617,524
 


 

 
66

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

Scharf Global Opportunity Fund
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Common Stocks
                       
  Consumer Discretionary
 
$
6,892,904
   
$
   
$
   
$
6,892,904
 
  Consumer Staples
   
4,133,858
     
     
     
4,133,858
 
  Financials
   
2,748,526
     
     
     
2,748,526
 
  Healthcare
   
3,770,194
     
     
     
3,770,194
 
  Industrials
   
2,211,027
     
     
     
2,211,027
 
  Information Technology
   
4,668,167
     
     
     
4,668,167
 
  Materials
   
911,212
     
     
     
911,212
 
  Telecommunication Services
   
889,641
     
     
     
889,641
 
Total Common Stocks
   
26,225,529
     
     
     
26,225,529
 
Preferred Stocks
                               
  Consumer Discretionary
   
165,780
     
     
     
165,780
 
  Consumer Staples
   
69,627
     
     
     
69,627
 
  Financials
   
56,577
     
     
     
56,577
 
  Information Technology
   
1,604,088
     
     
     
1,604,088
 
  Materials
   
14,085
     
     
     
14,085
 
Total Preferred Stocks
   
1,910,157
     
     
     
1,910,157
 
Warrants
   
72,140
     
     
     
72,140
 
Purchased Options
   
71,446
     
     
     
71,446
 
Money Market Fund
   
2,357,831
     
     
     
2,357,831
 
Total Investments
                               
  in Securities
 
$
30,637,103
   
$
   
$
   
$
30,637,103
 

 

 
67

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

Scharf Alpha Opportunity Fund
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets:
                       
Common Stocks
                       
  Consumer Discretionary
 
$
6,066,111
   
$
   
$
   
$
6,066,111
 
  Consumer Staples
   
2,307,835
     
     
     
2,307,835
 
  Energy
   
645,559
     
     
     
645,559
 
  Financials
   
3,815,635
     
     
     
3,815,635
 
  Healthcare
   
2,919,396
     
     
     
2,919,396
 
  Industrials
   
1,181,446
     
     
     
1,181,446
 
  Information Technology
   
5,745,147
     
     
     
5,745,147
 
  Materials
   
974,943
     
     
     
974,943
 
Total Common Stocks
   
23,656,072
     
     
     
23,656,072
 
Money Market Fund
   
1,471,092
     
     
     
1,471,092
 
Total Investments
                               
  in Securities
 
$
25,127,164
   
$
   
$
   
$
25,127,164
 
Liabilities:
                               
Securities Sold Short
                               
  Exchange-Traded Funds
 
$
15,265,488
   
$
   
$
   
$
15,265,488
 
Total Securities Sold Short
 
$
15,265,488
   
$
   
$
   
$
15,265,488
 
 
Refer to the Funds’ schedule of investments for a detailed break-out of securities by industry classification. Transfers between levels are recognized at September 30, 2017, the end of the reporting period. The Funds recognized no transfers to/from Level 1 or Level 2. There were no Level 3 securities held in the Funds during the year ended September 30, 2017.
 
NOTE 4 – INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
 
The Funds have an investment advisory agreement with Scharf Investments, LLC (the “Adviser”) pursuant to which the Adviser is responsible for providing investment management services to the Funds.  The Adviser furnished all investment advice, office space and facilities, and provides most of the personnel needed by each Fund.  As compensation for its services, the Adviser is entitled to a fee, computed daily and payable monthly.  The Funds pay fees calculated at an annual rate of 0.99% based upon the average daily net assets of each Fund.  For the year ended September 30, 2017, Funds incurred the following in advisory fees.
 

 
68

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

     
Advisory Fees
 
 
Scharf Fund
 
$
5,756,972
 
 
Scharf Balanced Opportunity Fund
   
643,577
 
 
Scharf Global Opportunity Fund
   
280,786
 
 
Scharf Alpha Opportunity Fund
   
255,934
 
 
The Funds are responsible for their own operating expenses. The Adviser has agreed to reduce fees payable to it by the Funds and to pay Fund operating expenses (excluding acquired fund fees and expenses, interest expense, dividends on securities sold short, taxes and extraordinary expenses) to the extent necessary to limit the Fund’s aggregate annual operating expenses as follows:
 
   
Institutional Class
Retail Class
 
Scharf Fund
1.09%
1.34%
 
Scharf Balanced Opportunity Fund*
0.98%
1.23%
 
Scharf Global Opportunity Fund
0.65%
 
Scharf Alpha Opportunity Fund
1.00%
       
 
Percent of average daily net assets of the Funds.
   
 
 
*
Effective June 30, 2017, the Scharf Balanced Opportunity Fund’s expense caps for the Institutional Class and Retail Class were 1.05% and 1.30%, respectively.
 
Any such reduction made by the Adviser in its fees or payment of expenses which are the Funds’ obligation are subject to reimbursement by the Funds to the Adviser, if so requested by the Adviser, in any subsequent month in the three year period from the date of the management fee reduction and expense payment if the aggregate amount actually paid by the Funds toward the operating expenses for such fiscal year (taking into account the reimbursement) will not cause the Fund to exceed the lesser of: (1) the expense limitation in place at the time of the management fee reduction and expense payment; or (2) the expense limitation in place at the time of the reimbursement.  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 Funds’ payment of current ordinary operating expenses.  For the year ended September 30, 2017, the Adviser reduced its fees in the amount of $777,429, $292,638, $355,261, and $260,274, for the Scharf Fund, the Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund, respectively.
 

 
69

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

No amounts were reimbursed to the Adviser. The expense limitation for the Scharf Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund will remain in effect through at least January 27, 2018.  The expense limitation for the Scharf Balanced Opportunity Fund will remain in effect through at least January 27, 2019.  The expense cap may be terminated only by the Board of Trustees (the “Board”) of the Trust.  Cumulative expenses subject to recapture and the date of expiration is as follows:

         
Scharf Balanced
   
Scharf Global
   
Scharf Alpha
 
   
Scharf
   
Opportunity
   
Opportunity
   
Opportunity
 
   
Fund
   
Fund
   
Fund
   
Fund
 
Year
 
Amount
   
Amount
   
Amount
   
Amount
 
9/30/18
 
$
397,364
   
$
116,422
   
$
282,681
       
9/30/19
   
742,298
     
214,058
     
331,358
   
$
152,260
 
9/30/20
   
777,429
     
292,638
     
355,261
     
260,274
 
   
$
1,917,091
   
$
623,118
   
$
969,300
   
$
412,534
 
 
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.  U.S. Bancorp Fund Services, LLC (“USBFS” or the “Transfer Agent”) also serves as the fund accountant and transfer agent to the Funds. U.S. Bank N.A., an affiliate of USBFS, serves as the Funds’ custodian.
 
For the year ended September 30, 2017, the Funds incurred the following expenses for administration and fund accounting, custody, transfer agency, and Chief Compliance Officer fees:
 
           
Scharf
   
Scharf
   
Scharf
 
           
Balanced
   
Global
   
Alpha
 
     
Scharf
   
Opportunity
   
Opportunity
   
Opportunity
 
     
Fund
   
Fund
   
Fund
   
Fund
 
 
Administration and
                       
 
  Fund Accounting
 
$
452,227
   
$
102,057
   
$
52,920
   
$
51,282
 
 
Custody
   
84,298
     
26,852
     
28,536
     
27,057
 
 
Transfer Agency (a)
   
36,589
     
21,428
     
11,690
     
11,920
 
 
Chief Compliance Officer
   
9,001
     
9,002
     
9,001
     
9,003
 
                                   
 
(a) Does not include out-of-pocket expenses.
                               

 
70

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

At September 30, 2017, the Funds had payables due to USBFS for administration and fund accounting, U.S. Bank, N.A. for custody fees, transfer agency, and Chief Compliance Officer fees in the following amounts:
 
           
Scharf
   
Scharf
   
Scharf
 
           
Balanced
   
Global
   
Alpha
 
     
Scharf
   
Opportunity
   
Opportunity
   
Opportunity
 
     
Fund
   
Fund
   
Fund
   
Fund
 
 
Administration and
                       
 
  Fund Accounting
 
$
153,222
   
$
35,325
   
$
18,534
   
$
17,992
 
 
Custody
   
14,406
     
4,484
     
3,679
     
5,382
 
 
Transfer Agency (a)
   
12,308
     
7,203
     
3,949
     
3,882
 
 
Chief Compliance Officer
   
3,000
     
3,000
     
3,000
     
3,000
 
                                   
 
(a) Does not include out-of-pocket expenses.
                               
 
Quasar Distributors, LLC (the “Distributor”) acts as the Funds’ principal underwriter in a continuous public offering of the Funds’ shares.  The Distributor is an affiliate of the Administrator.
 
Certain officers of the Funds are employees of the Administrator. The Trust’s Chief Compliance Officer is also an employee of USBFS.  A Trustee of the Trust is affiliated with USBFS and U.S. Bank N.A. as he was recently, previously employed by USBFS.  This same Trustee was recently an interested person of the Distributor.
 
NOTE 5 – 12B-1 DISTRIBUTION FEES
 
The Retail Class of each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 (the “Plan”). The Plan permits each class to pay for distribution and related expenses up to an annual rate of 0.25% of its average daily net assets.  The expenses covered by the Plan may include the cost in connection with the promotion and distribution of shares and the provision of personal services to shareholders, including, but not necessarily limited to, advertising, compensation to underwriters, dealers and selling personnel, the printing and mailing of prospectuses to other than current Fund shareholders, and the printing and mailing of sales literature.  Payments made pursuant to the Plan will represent compensation for distribution and service activities, not reimbursements for specific expenses incurred.  For the year ended September 30, 2017, the Funds paid the Distributor the following in 12b-1 fees:
 
     
12b-1 Fees
 
 
Scharf Fund – Retail Class
 
$
225,742
 
 
Scharf Balanced Opportunity Fund – Retail Class
   
20,940
 
 
Scharf Global Opportunity Fund
   
56,687
 
 
Scharf Alpha Opportunity Fund
   
54,759
 

 
71

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

NOTE 6 – SHAREHOLDER SERVICING FEE
 
The Funds have entered into a Shareholder Servicing Agreement (the “Agreement”) with the Adviser, under which the Funds may pay servicing fees at an annual rate of 0.10% of the average daily net assets of each Fund.  Payments to the Adviser under the Agreement may reimburse the Adviser for payments it makes to selected brokers, dealers and administrators which have entered into service agreements with the Adviser for services provided to shareholders of the Funds. The services provided by such intermediaries are primarily designed to assist shareholders of the Funds and include the furnishing of office space and equipment, telephone facilities, personnel and assistance to the Funds in servicing such shareholders. Services provided by such intermediaries also include the provision of support services to the Funds and include establishing and maintaining shareholders’ accounts and record processing, purchase and redemption transactions, answering routine client inquiries regarding the Funds, and providing such other personal services to shareholders as the Funds may reasonably request. For the year ended September 30, 2017, the Funds incurred the following shareholder servicing fees under the agreement:
 
   
Shareholder Servicing Fees
 
Scharf Fund
     
 
  Institutional Class
 
$
387,611
 
 
  Retail Class
   
88,092
 
 
Scharf Balanced Opportunity Fund
       
 
  Institutional Class
   
51,851
 
 
  Retail Class
   
8,378
 
 
Scharf Global Opportunity Fund
   
26,008
 
 
Scharf Alpha Opportunity Fund
   
24,573
 
 
NOTE 7 – LINES OF CREDIT
 
The Scharf Fund, Scharf Balanced Opportunity Fund, Scharf Global Opportunity Fund, and Scharf Alpha Opportunity Fund have lines of credit in the amount of $20,000,000, $5,000,000, $2,000,000, and $1,500,000, respectively. These lines of credit are intended to provide short-term financing, if necessary, subject to certain restrictions, in connection with shareholder redemptions. The credit facility is with the Funds’ custodian, U.S. Bank N.A. During the year ended September 30, 2017, the Scharf Fund, the Scharf Balanced Opportunity Fund, and the Scharf Alpha Opportunity Fund did not draw upon their lines of credit.
 
During the year ended September 30, 2017, the Scharf Global Opportunity Fund drew on its line of credit.  The Fund had an outstanding average balance of $175, paid a weighted average interest rate of 4.25%, and incurred interest expense of $8.  The maximum borrowing by the Fund occurred on August 10, 2017 in the amount of $64,000.  At September 30, 2017, the Fund had no outstanding loan amounts.
 

 
72

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

NOTE 8 – PURCHASES AND SALES OF SECURITIES
 
For the year ended September 30, 2017, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were as follows:
 
     
Purchases
   
Sales
 
 
Scharf Fund
 
$
108,072,769
   
$
193,564,957
 
 
Scharf Balanced Opportunity Fund
   
16,293,601
     
14,444,211
 
 
Scharf Global Opportunity Fund
   
20,776,974
     
20,411,176
 
 
Scharf Alpha Opportunity Fund
   
9,021,629
     
11,071,565
 
 
There were no purchases and sales of U.S. Government securities during the year ended September 30, 2017.
 
For the year ended September 30, 2017, the Scharf Alpha Opportunity Fund had $1,716,149 and $3,309,170 of proceeds from short sales and buy cover transactions, respectively.  This activity is included in the portfolio turnover disclosed in the financial highlights.
 
NOTE 9 – INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS
 
As of September 30, 2017, the components of accumulated earnings/(losses) on a tax basis were as follows:
 
         
Scharf
 
         
Balanced
 
   
Scharf
   
Opportunity
 
   
Fund
   
Fund
 
Cost of investments (a)
 
$
509,631,784
   
$
61,470,691
 
Gross unrealized appreciation
   
104,715,612
     
10,006,137
 
Gross unrealized depreciation
   
(23,158,504
)
   
(1,859,304
)
Net unrealized appreciation
   
81,557,108
     
8,146,833
 
Net unrealized appreciation/(depreciation)
               
  on foreign currency
   
552
     
(195
)
Undistributed ordinary income
   
891,172
     
120,153
 
Undistributed long-term capital gains
   
14,410,491
     
1,225,001
 
Total distributable earnings
   
15,301,663
     
1,345,154
 
Other accumulated gains/(losses)
   
     
 
Total accumulated earnings/(losses)
 
$
96,859,323
   
$
9,491,792
 

 
73

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

   
Scharf
   
Scharf
 
   
Global
   
Alpha
 
   
Opportunity
   
Opportunity
 
   
Fund
   
Fund
 
Cost of investments (a)
 
$
26,476,533
   
$
22,633,136
 
Gross unrealized appreciation
   
5,827,720
     
4,032,082
 
Gross unrealized depreciation
   
(1,667,150
)
   
(1,538,054
)
Net unrealized appreciation
   
4,160,570
     
2,494,028
 
Net unrealized appreciation on foreign currency
   
115
     
7
 
Net unrealized depreciation on short sales
   
     
(2,342,085
)
Undistributed ordinary income
   
170,803
     
 
Undistributed long-term capital gains
   
1,581,305
     
463,467
 
Total distributable earnings
   
1,752,108
     
463,467
 
Other accumulated gains/(losses)
   
     
(113,841
)
Total accumulated earnings/(losses)
 
$
5,912,793
   
$
501,576
 
 
(a)
The difference between book-basis and tax basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales, tax adjustments related to partnerships and a transfer in-kind.
 
At September 30, 2017, the Scharf Alpha Opportunity Fund deferred, on a tax basis, late year losses of $113,841.
 
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after December 31, 2010, may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses.  Under the law in effect prior to the Act, pre-enactment net capital losses were carried forward for eight years and treated as short-term losses.  As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
 
The tax character of distributions paid during the years ended September 30, 2017 and September 30, 2016 was as follows:
 
     
September 30, 2017
   
September 30, 2016
 
     
Ordinary
   
Long-Term
   
Ordinary
   
Long-Term
 
     
Income
   
Capital Gains
   
Income
   
Capital Gains
 
 
Scharf Fund
 
$
836,345
   
$
   
$
482,536
   
$
16,014,049
 
 
Scharf Balanced
                               
 
  Opportunity Fund
   
413,712
     
444,362
     
119,730
     
1,863,122
 
 
Scharf Global
   
145,384
     
204,780
     
165,449
     
804,473
 
 
Scharf Alpha
   
28,875
     
77,430
     
     
 

 

 
74

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

The Scharf Balanced Opportunity Fund, Scharf Global Opportunity Fund and the Scharf Alpha Opportunity Fund designated as long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(3), the amount necessary to reduce the earnings and profits of the Funds related to net capital gain to zero for the tax year ended September 30, 2017.
 
NOTE 10 – REPORT OF THE TRUST’S SPECIAL SHAREHOLDER MEETING (UNAUDITED)
 
A Special Meeting of Shareholders (the “Meeting”) took place on March 3, 2017, to elect one new Trustee to the Board and to ratify the prior appointment of two current Trustees of the Board.
 
All Trust shareholders of record, in the aggregate across all Funds of the Trust, were entitled to attend or submit proxies.  As of the applicable record date, the Trust had 315,776,916 shares outstanding.  The results of the voting for each proposal were as follows:
 
Proposal No. 1.  Election of One New Trustee
 
Nominee
For Votes
Votes Withheld
David G. Mertens
206,896,354
1,556,814
 
Proposal No. 2.  Ratification of the Prior Appointment of Two Current Trustees of the Board
 
Current Trustee
For Votes
Votes Withheld
Gail S. Duree
205,321,820
3,131,348
Raymond B. Woolson
206,321,270
2,131,897
 
Effective March 3, 2017, the Board of Trustees of Advisors Series Trust consists of the following individuals:
 
Gail S. Duree, Independent Trustee
Joe D. Redwine, Interested Trustee
David G. Mertens, Independent Trustee
George T. Wofford, Independent Trustee
George J. Rebhan, Independent Trustee
Raymond B. Woolson, Independent Trustee
 
Effective March 13, 2017, following Mr. Wofford’s resignation, the Board of Trustees of Advisors Series Trust consists of the following individuals:
 
Gail S. Duree, Independent Trustee
Joe D. Redwine, Interested Trustee
David G. Mertens, Independent Trustee
Raymond B. Woolson, Independent Trustee
George J. Rebhan, Independent Trustee
 

 

 
75

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

NOTE 11 – PRINCIPAL RISKS
 
Below is a summary of some, but not all, of the principal risks of investing in the Funds, each of which may adversely affect a Fund’s net asset value and total return. The Funds’ most recent prospectus provides further descriptions of each Fund’s investment objective, principal investment strategies and principal risks.
 
 
Non-Diversification Risk (Scharf Global Opportunity Fund and Scharf Alpha Opportunity Fund).  To the extent that the Funds invest their assets in fewer securities, the Funds are subject to a greater risk of loss if any of those securities become permanently impaired than a fund that invests more widely.
 
 
Foreign and Emerging Market Securities Risk.  The risks of investing in the securities of foreign issuers can include fluctuations in foreign currencies, foreign currency exchange controls, political and economic instability, differences in securities regulation and trading, and foreign taxation issues.  These risks are greater in emerging markets.
 
 
Investment Style Risk.  The Adviser follows an investing style that favors relatively low valuations.  At times when this style is out of favor, the Funds may underperform funds that use different investing styles.
 
 
Small- and Medium-Sized Company Risk.  Small- and medium-sized companies often have less predictable earnings, more limited product lines, markets, distribution channels or financial resources and the management of such companies may be dependent upon one or few key people.  The market movements of equity securities of small- and medium-sized companies may be more abrupt and volatile than the market movements of equity securities of larger, more established companies or the stock market in general and small-sized companies in particular, are generally less liquid than the equity securities of larger companies.
 
 
Special Situations Risk.  There is a risk that the special situation (i.e., spin-off, liquidation, merger, etc.) might not occur, which could have a negative impact on the price of the issuer’s securities and fail to produce gains or produce a loss for the Funds.  In addition, investments in special situation companies may be illiquid and difficult to value, which will require a Fund to employ fair value procedures to value its holdings in such investments.
 
 
Short Sales Risk (Scharf Alpha Opportunity Fund).  A short sale is the sale by the Alpha Opportunity Fund of a security which it does not own in anticipation of purchasing the same security in the future at a lower price to close the short position.  A short sale will be successful if the price of the shorted security decreases.  However, if the underlying security goes up in price during the period in which the short position is outstanding, the Fund

 
76

SCHARF FUNDS

NOTES TO FINANCIAL STATEMENTS at September 30, 2017, Continued

   
will realize a loss.  The risk on a short sale is unlimited because the Fund must buy the shorted security at the higher price to complete the transaction.  Therefore, short sales may be subject to greater risks than investments in long positions.
 
 
Leverage Risk (Scharf Alpha Opportunity Fund).  Leverage is investment exposure which exceeds the initial amount invested.  Leverage can cause the portfolio to lose more than the principal amount invested.  Leverage can magnify the portfolio’s gains and losses and therefore increase its volatility.

 

 

 

 

 

 
77

SCHARF FUNDS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees Advisors Series Trust and Shareholders of:
Scharf Funds
 
We have audited the accompanying statements of assets and liabilities of the Scharf Fund, the Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund (each a “Fund” and collectively, the “Funds”), each a series of Advisors Series Trust (the “Trust”), including the schedules of investments, as of September 30, 2017, and with respect to the Scharf Fund, the related statement of operations for the year then ended, 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 five years in the period then ended, with respect to the Scharf Balanced Opportunity Fund, the related statement of operations for the year then ended, 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 four years in the period then ended and for the period December 31, 2012 (commencement of operations) to September 30, 2013, with respect to the Scharf Global Opportunity Fund, the related statement of operations for the year then ended, 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 two years in the period then ended and for the period October 14, 2014 (commencement of operations) to September 30, 2015, with respect to the Scharf Alpha Opportunity Fund, the related statement of operations and statement of cash flows for the year then ended, the statements of changes in net assets and the financial highlights for the year then ended and for the period December 31, 2015 (commencement of operations) to September 30, 2016. 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.
 
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. The Trust is not required to have, nor were we engaged to perform, an audit of its 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2017, by correspondence with the custodian and brokers. 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 the Scharf Fund, the Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and Scharf Alpha Opportunity Fund as of September 30, 2017, and the results of their operations and cash flows, the changes in their net assets, and the financial highlights for the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
 
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
November 29, 2017
 

 
78

SCHARF FUNDS

NOTICE TO SHAREHOLDERS at September 30, 2017 (Unaudited)

For the year ended September 30, 2017, the Scharf Fund, the Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund designated $836,345, $413,712, $145,384 and $28,875, respectively, as ordinary income. The Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund designated $444,362, $204,780 and $77,430, respectively, as long-term capital gains for purposes of the dividends paid deduction.
 
For the year ended September 30, 2017, certain dividends paid by the Funds may be subject to a maximum tax rate of 23.8%, 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 for the Scharf Fund, the Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund was 100%, 100%, 100%, and 100%, respectively.
 
For corporate shareholders in the Scharf Fund, the Scharf Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the year ended September 30, 2017 was 100%, 100%, 100%, and 100%, respectively.
 
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871(k)(2)(C) for the Scharf Fund, the Scharf  Balanced Opportunity Fund, the Scharf Global Opportunity Fund, and the Scharf Alpha Opportunity Fund was 0%, 0%, 0%, and 100%, respectively.
 
 
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 1-866-572-4273 (1-866-5SCHARF) or on the U.S. Securities and Exchange Commission’s (“SEC”) 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
 
Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling 1-866-572-4273 (1-866-5SCHARF). Furthermore, you can obtain the Fund’s proxy voting records on the SEC’s website at http://www.sec.gov.
 

 
79

SCHARF FUNDS

NOTICE TO SHAREHOLDERS at September 30, 2017 (Unaudited), Continued

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’ Form N-Q is available on the SEC’s website at http://www.sec.gov. The Funds’ Form 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 1-202-551-8090. Information included in the Funds’ Form N-Q is also available by calling 1-866-572-4273 (1-866-5SCHARF).
 

 

 

 

 

 

 

 
80

SCHARF FUNDS

INFORMATION ABOUT TRUSTEES AND OFFICERS (Unaudited), Continued

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.
 
   
Term of
 
Number of
 
   
Office
 
Portfolios
Other
 
Position
and
Principal
in Fund
Directorships
 
Held
Length
Occupation
Complex
Held During
Name, Address
with the
of Time
During Past
Overseen by
Past Five
and Age
Trust
Served
Five Years
Trustee(2)
Years(3)
Independent Trustees(1)
         
           
Gail S. Duree
Trustee
Indefinite
Director, Alpha
4
Trustee,
(age 71)
 
term; since
Gamma Delta
 
Advisors
615 E. Michigan Street
 
March
Housing Corporation
 
Series Trust
Milwaukee, WI 53202
 
2014.
(collegiate housing
 
(for series not
     
management) (2012
 
affiliated with
     
to present); Trustee
 
the Funds);
     
and Chair (2000 to
 
Independent
     
2012), New Covenant
 
Trustee from
     
Mutual Funds
 
1999 to 2012,
     
(1999 to 2012); Director
 
New Covenant
     
and Board Member,
 
Mutual Funds
     
Alpha Gamma Delta
 
(an open-end
     
Foundation
 
investment
     
(philanthropic
 
company with
     
organization)
 
4 portfolios).
     
(2005 to 2011).
   
           
David G. Mertens
Trustee
Indefinite
Retired; formerly
4
Trustee,
(age 57)
 
term*;
Managing Director and
 
Advisors
615 E. Michigan Street
 
since
Vice President, Jensen
 
Series Trust
Milwaukee, WI 53202
 
March
Investment Management,
 
(for series not
   
2017.
Inc. (a privately-held
 
affiliated with
     
investment advisory
 
the Funds).
     
firm) (2002 to 2017).
   
           
George J. Rebhan
Chairman
Indefinite
Retired; formerly
4
Trustee,
(age 83)
of the
term; since
President, Hotchkis and
 
Advisors
615 E. Michigan Street
Board and
May
Wiley Funds (mutual
 
Series Trust
Milwaukee, WI 53202
Trustee
2002.
funds) (1985 to 1993).
 
(for series not
       
affiliated with
       
the Funds);
       
Independent
       
Trustee from
       
1999 to 2009,
       
E*TRADE
       
Funds.

 
81

SCHARF FUNDS

INFORMATION ABOUT TRUSTEES AND OFFICERS (Unaudited), Continued

   
Term of
 
Number of
 
   
Office
 
Portfolios
Other
 
Position
and
Principal
in Fund
Directorships
 
Held
Length
Occupation
Complex
Held During
Name, Address
with the
of Time
During Past
Overseen by
Past Five
and Age
Trust
Served
Five Years
Trustee(2)
Years(3)
Raymond B. Woolson
Trustee
Indefinite
President, Apogee
4
Trustee,
(age 58)
 
term*;
Group, Inc. (financial
 
Advisors
615 E. Michigan Street
 
since
consulting firm)
 
Series Trust
Milwaukee, WI 53202
 
January
(1998 to present).
 
(for series not
   
2016.
   
affiliated with
         
the Funds);
         
Independent
         
Trustee,
         
DoubleLine
         
Funds Trust
         
(an open-end
         
investment
         
company with
         
15 portfolios),
         
DoubleLine
         
Opportunistic
         
Credit Fund
         
and
         
DoubleLine
         
Income
         
Solutions
         
Fund, from
         
2010 to
         
present;
         
Independent
         
Trustee,
         
DoubleLine
         
Equity Funds
         
from 2010
         
to 2016.
Interested Trustee
         
           
Joe D. Redwine(4)
Interested
Indefinite
Retired; formerly
4
Trustee,
(age 70)
Trustee
term; since
President, CEO, U.S.
 
Advisors
615 E. Michigan Street
 
September
Bancorp Fund Services,
 
Series Trust
Milwaukee, WI 53202
 
2008.
LLC (May 1991 to July
 
(for series not
     
2017); formerly, Manager,
 
affiliated with
     
U.S. Bancorp Fund
 
the Funds).
     
Services, LLC (1998
   
     
to July 2017).
   

82

SCHARF FUNDS

INFORMATION ABOUT TRUSTEES AND OFFICERS (Unaudited), Continued

   
Term of Office
 
Name, Address
Position Held
and Length of
Principal Occupation
and Age
with the Trust
Time Served
During Past Five Years
Officers
     
       
Douglas G. Hess
President, Chief
Indefinite
Senior Vice President, Compliance and
(age 50)
Executive Officer
term; since
Administration, U.S. Bancorp Fund
615 E. Michigan Street
and Principal
June 2003.
Services, LLC (March 1997 to present).
Milwaukee, WI 53202
Executive Officer
   
       
Cheryl L. King
Treasurer and
Indefinite
Vice President, Compliance and
(age 56)
Principal
term; since
Administration, U.S. Bancorp Fund
615 E. Michigan Street
Financial Officer
December 2007.
Services, LLC (October 1998 to
Milwaukee, WI 53202
   
present).
       
Kevin J. Hayden
Assistant
Indefinite
Assistant Vice President, Compliance
(age 46)
Treasurer
term; since
and Administration, U.S. Bancorp Fund
615 E. Michigan Street
 
September 2013.
Services, LLC (June 2005 to present).
Milwaukee, WI 53202
     
       
Michael L. Ceccato
Vice President,
Indefinite
Senior Vice President, U.S. Bancorp
(age 60)
Chief Compliance
term; since
Fund Services, LLC and Vice President,
615 E. Michigan Street
Officer and
September 2009.
U.S. Bank N.A. (February 2008 to
Milwaukee, WI 53202
AML Officer
 
present).
       
Jeanine M. Bajczyk, Esq.
Secretary
Indefinite
Senior Vice President and Counsel,
(age 52)
 
term; since
U.S. Bancorp Fund Services, LLC
615 E. Michigan Street
 
September 2015.
(May 2006 to present).
Milwaukee, WI 53202
     

 

 
83

SCHARF FUNDS

INFORMATION ABOUT TRUSTEES AND OFFICERS (Unaudited), Continued

   
Term of Office
 
Name, Address
Position Held
and Length of
Principal Occupation
and Age
with the Trust
Time Served
During Past Five Years
Emily R. Enslow, Esq.
Assistant
Indefinite
Assistant Vice President, U.S. Bancorp
(age 30)
Secretary
term; since
Fund Services, LLC (July 2013 to
615 E. Michigan Street
 
September 2015.
present); Proxy Voting Coordinator and
Milwaukee, WI 53202
   
Class Action Administrator, Artisan
     
Partners Limited Partnership
     
(September 2012 to July 2013); Legal
     
Internship, Artisan Partners Limited
     
Partnership (February 2012 to
     
September 2012); J.D. Graduate,
     
Marquette University Law School
     
(2009 to 2012).

*
 
Under the Trust’s Agreement and Declaration of Trust, a Trustee serves during the continued lifetime of the Trust until he/she dies, resigns, is declared bankrupt or incompetent by a court of appropriate jurisdiction, or is removed, or, if sooner, until the election and qualification of his/her successor.  In addition, the Trustees have designated a mandatory retirement age of 75, such that each Trustee first elected or appointed to the Board after December 1, 2015, serving as such on the date he or she reaches the age of 75, shall submit his or her resignation not later than the last day of the calendar year in which his or her 75th birthday occurs.
(1)
 
The Trustees of the Trust who are not “interested persons” of the Trust as defined under the 1940 Act (“Independent Trustees”).
(2)
 
As of September 30, 2017, the Trust was comprised of 45 active portfolios managed by unaffiliated investment advisers.  The term “Fund Complex” applies only to the Funds.  The Funds do not hold themselves out as related to any other series within the Trust for investment purposes, nor does it share the same investment adviser with any other series.
(3)
 
“Other Directorships Held” includes only directorships of companies required to register or file reports with the SEC under the Securities Exchange Act of 1934, as amended, (that is, “public companies”) or other investment companies registered under the 1940 Act.
(4)
 
Mr. Redwine is an “interested person” of the Trust as defined by the 1940 Act.  Mr. Redwine is an interested Trustee of the Trust by virtue of the fact that he was recently an interested person of Quasar Distributors, LLC who acts as principal underwriter to the series of the Trust.

 
The Statement of Additional Information includes additional information about the Funds’ Trustees and Officers and is available, without charge, upon request by calling 1-866-572-4273 (1-866-5SCHARF).
 

 
84

SCHARF FUNDS

HOUSEHOLDING

In an effort to decrease costs, the Funds intend to reduce the number of duplicate prospectuses, annual and semi-annual reports, proxy statements and other similar documents you receive by sending only one copy of each to those addresses shared by two or more accounts and to shareholders the Transfer Agent reasonably believes are from the same family or household. Once implemented, if you would like to discontinue householding for your accounts, please call toll-free at 1-866-572-4273 (1-866-5SCHARF) to request individual copies of these documents. Once the Transfer Agent receives notice to stop householding, the Transfer Agent will begin sending individual copies thirty days after receiving your request. This policy does not apply to account statements.
 
 
 
 


85

SCHARF FUNDS

PRIVACY NOTICE

The Funds collect non-public information about you from the following sources:
 
 Information we receive about you on applications or other forms;
 
 Information you give us orally; and/or
 
 Information about your transactions with us or others.
 
We do not disclose any non-public personal information about our customers or former customers without the customer’s authorization, except as permitted by law or in response to inquiries from governmental authorities. We may share information with affiliated and unaffiliated third parties with whom we have contracts for servicing the Funds.  We will provide unaffiliated third parties with only the information necessary to carry out their assigned responsibilities.  We maintain physical, electronic and procedural safeguards to guard your non-public personal information and require third parties to treat your personal information with the same high degree of confidentiality.
 
In the event that you hold shares of the Funds through a financial intermediary, including, but not limited to, a broker-dealer, bank, or trust company, the privacy policy of your financial intermediary would govern how your non-public personal information would be shared by those entities with unaffiliated third parties.
 
 

 

 

 
86


 

 

 

 
 

 
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Investment Adviser
Scharf Investments, LLC
5619 Scotts Valley Drive, Suite 140
Scotts Valley, CA 95066

Distributor
Quasar Distributors, LLC
777 East Wisconsin Avenue, 6th Floor
Milwaukee, WI  53202

Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302
Milwaukee, WI 53212

Transfer Agent
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI  53202
(866) 572-4273

Independent Registered Public Accounting Firm
Tait, Weller & Baker LLP
1818 Market Street, Suite 2400
Philadelphia, PA 19103

Legal Counsel
Schiff Hardin LLP
666 Fifth Avenue, Suite 1700
New York, NY 10103







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.  For a current prospectus please call (866)-5SCHARF.  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 substantive 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 there is at least one audit committee financial expert serving on its audit committee.  Ms. Gail S. Duree is the “audit committee financial expert” and is considered to be “independent” as each term is defined in Item 3 of Form N‑CSR.

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  9/30/2017
FYE  9/30/2016
Audit Fees
          $68,600
          $64,300
Audit-Related Fees
          N/A
          N/A
Tax Fees
          $14,000
          $13,600
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.

The percentage of fees billed by Tait, Weller & Baker LLP applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:
 
 
FYE  9/30/2017
FYE  9/30/2016
Audit-Related Fees
0%
0%
Tax Fees
0%
0%
All Other Fees
0%
0%

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  9/30/2017
FYE  9/30/2016
Registrant
N/A
N/A
Registrant’s Investment Adviser
N/A
N/A
 
Item 5. Audit Committee of Listed Registrants.

(a)   Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).
 
(b)   Not Applicable.

Item 6. Investments.

(a)
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
 
(b)   Not Applicable.
 
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 Purchasers.

Not applicable to open-end investment companies.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees.

Item 11. Controls and Procedures.

(a)
The Registrant’s President/Chief Executive Officer/Principal Executive Officer and Treasurer/Principal 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, as amended, (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 changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the fourth 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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies

Not applicable to open-end investment companies.

Item 13. 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) A separate certification for each principal executive officer and principal financial officer 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.

        (4) Change in the registrant’s independent public accountant.  There was no change in the registrant’s independent public accountant for the period covered by this report.

(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/ Douglas G. Hess
Douglas G. Hess, President/Chief Executive Officer/
Principal Executive Officer

Date  12/4/17



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/ Douglas G. Hess
Douglas G. Hess, President/Chief Executive Officer/
Principal Executive Officer

Date  12/4/17

By (Signature and Title)*    /s/ Cheryl L. King
Cheryl L. King, Treasurer/Principal Financial Officer

Date 12/4/17

* Print the name and title of each signing officer under his or her signature.