-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D5k5BJLSIPzQS0eE1RglTdD7RdEJzxKY0WH2Mm97nkyMufkHhq6B/fCkvEhYOUD7 5Vz3WykX+dhTT2LjnGpzwQ== 0000950147-00-000603.txt : 20000425 0000950147-00-000603.hdr.sgml : 20000425 ACCESSION NUMBER: 0000950147-00-000603 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVISORS SERIES TRUST CENTRAL INDEX KEY: 0001027596 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07959 FILM NUMBER: 607051 BUSINESS ADDRESS: STREET 1: 2020 E FINANCIAL WAY SUITE 100 CITY: GLENDORA STATE: CA ZIP: 91741 BUSINESS PHONE: 8188521033 MAIL ADDRESS: STREET 1: 2020 E FINANCIAL WAY STREET 2: SUITE 100 CITY: GLENDORA STATE: CA ZIP: 91741 N-30D 1 SEMI-ANNUAL REPORT DATED 2/29/00 CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND 1235 WESTLAKES DRIVE, SUITE 330 BERWYN, PA 19312 (610) 296-1400 SEMI-ANNUAL REPORT FEBRUARY 29, 2000 CHARTWELL SMALL CAP VALUE FUND Dear Shareholder: The period ending February 29, 2000 produced modest performance in the small cap value sector; all investor attention turned to the spectacular gains in small growth stocks and in particular, technology stocks. The Chartwell Small Cap Value Fund (the "Fund") returned 5.57% in the period, outpacing the Russell 2000 Value Index return of 4.93%. The Fund's investments in the utility, basic industry and energy sectors along with a few select technology stocks contributed the most to the period's strong performance. ICG Communications, specialty chemical companies Arch Chemical and Cytec Industries, Lone Star Technologies and Sipex are representative of each group. Healthcare sector returns were weakest as our unwillingness to invest in the biotechnology industry penalized returns. While some investors are embracing new-era beliefs, we hold to the same tested approaches of value investing. The most richly-valued stocks in the market were among the best performers in the latest period--we decline investing in such stocks. By comparison, our stocks are very inexpensively valued yet have barely participated in this market environment. In the meantime, we are outperforming our market benchmark and remain confident in the long-term attractiveness of smaller, more value-oriented stocks. /s/ David C. Dalrymple David C. Dalrymple, CFA Managing Partner and Portfolio Manager 2 CHARTWELL LARGE CAP VALUE FUND Dear Shareholder: The Chartwell Large Cap Value Fund (the "Fund") produced a negative total return of 3.72% for the period of October 1, 1999 (the Fund's inception) through February 29, 2000. The Fund's return exceeded both the value benchmark, the Russell 1000 Value Index, which returned a negative 5.59%, as well as the S&P 500 Index which returned a negative 7.05% for the same period. The value sector of the equity market continues to experience a steady head-wind as investors ponder the impact of increasing interest rates on the domestic economy. In this difficult environment, the Fund's portfolio continues to substantially outperform the value benchmark and many of our large cap value peers. Telecom was the strongest sector during the fourth quarter 1999, led by BCE, the Canadian utility that owns over 40% of Nortel. BCE advanced over 80% during the fourth quarter and was the portfolio's largest holding before we began selling into the year-end strength. Advances in technology issues such as National Semiconductor (+58% above the Fund's cost basis) and Lucent (+6%) were significant contributors to the portfolio's performance in January and February 2000. Selected Basic Industry issues also contributed positively to the Fund's return. Unfortunately, we did experience our share of surprisingly weak performers in the period. US Bancorp was clobbered in early December when they pre-announced disappointing results in their retail division. Pitney Bowes has suffered with the recent introduction of e-stamps. In the case of Pitney Bowes and others, we believe these high quality companies selling at extraordinarily low valuations, will be positive contributors to performance throughout 2000. We would be remiss if we did not comment on the narrowness of the equity market's advance. The unprecedented strength of several tech and internet-related issues masks the fact that most stocks declined in 1999. 61% of the NYSE issues and 54% of the S&P 500 issues declined during the year. An equally concerning fact is that the price/earnings (P/E) ratio of the NASDAQ composite is near 200x! Compare this to the Fund's portfolio, which is statistically as cheap as we can ever recall. Your P/E at year-end was a very reasonable 17x, which is very attractive given our forecast of 16% earnings growth in 2000. Historically, this value portfolio performs well when a broad economic advance is in-place and the earnings of the more cyclical areas of the economy are rising rapidly. In this type of environment, investors seek companies leveraged to the economic cycle and that includes sectors such as the papers, chemicals, financials, consumer cyclicals and capital goods. With the recovery in Asia and Europe just beginning and looking solid, we expect to see much more interest in these economically sensitive areas. The question is when? 3 It appears as though some investors are rotating away from the ridiculously priced tech names and into the more economically sensitive groups. Good news for the patient value investor. We remain confident that valuations will, once again, matter. In the meantime, we steadfastly maintain our discipline and remain focused on the well-managed, attractively valued companies within the Chartwell Large Cap Value Fund. /s/ Kevin A. Melich /s/ Terry F. Bovarnick Mr. Kevin A. Melich, CFA Ms. Terry F. Bovarnick, CFA Managing Partner and Managing Partner and Portfolio Manager Portfolio Manager This information is authorized for use when preceded or accompanied by a current prospectus for the Funds. Performance figures of the Funds and indices referenced represent past performance and are not indicative of future performance. Fund Share values will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original investment. 4 CHARTWELL SMALL CAP VALUE FUND SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- Shares COMMON STOCKS: 99.86% Market Value - -------------------------------------------------------------------------------- BASIC INDUSTRY: 15.28% 810 AptarGroup, Inc............................... $ 19,389 780 Arch Chemicals, Inc........................... 14,869 460 Bemis Company, Inc............................ 13,685 850 Caraustar Industries, Inc..................... 14,131 640 CLARCOR Inc................................... 12,440 690 Cytec Industries Inc.......................... 16,733 570 Kaydon Corporation............................ 13,110 950 U.S. Aggregates, Inc........................ 14,191 330 Teekay Shipping Corporation.................. 7,095 --------- 125,643 --------- BUSINESS SERVICES: 4.17% 760 MSC Industrial Direct Co...................... 11,875 1,040 Ogden Corporation............................. 11,830 475 RemedyTemp, Inc. Class A Common Stock*........ 10,569 --------- 34,274 --------- CAPITAL SPENDING: 6.47% 640 Applied Power Inc............................. 15,480 850 Gardner Denver, Inc........................... 16,150 610 Regal-Beloit Corporation...................... 10,866 1,090 Stewart & Stevenson Services, Inc............. 10,696 --------- 53,191 --------- CONSUMER CYCLICAL: 2.50% 310 Borg-Warner Automotive, Inc................... 9,920 660 Furniture Brands International, Inc........... 10,601 --------- 20,521 --------- CONSUMER SERVICES: 9.37% 875 Central Garden & Pet Company, Class A......... 8,422 521 The Men's Wearhouse, Inc...................... 12,097 1,730 Pier 1 Imports, Inc........................... 15,138 780 Tropical Sportswear Int'l Corporation ....... 9,068 1,920 West Marine, Inc.............................. 16,560 950 WestPoint Stevens Inc......................... 15,794 --------- 77,078 --------- See Notes to Financial Statements. 5 CHARTWELL SMALL CAP VALUE FUND SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- CONSUMER STAPLES: 4.63% 330 Alberto-Culver Company Class B Common Stock................................ $ 7,054 210 Canandaigua Brands, Inc....................... 10,290 430 Corn Products International, Inc.............. 10,132 570 J & J Snack Foods Corp........................ 10,509 3 SUPERVALU INC................................. 52 --------- 38,037 --------- ENERGY: 11.04% 430 Barrett Resources Corporation................. 12,524 520 Cal Dive International, Inc................... 18,720 230 Dynegy Inc.................................... 10,781 870 Lone Star Technologies, Inc................... 32,625 780 Louis Dreyfus Natural Gas Corp............... 16,088 --------- 90,738 --------- FINANCIAL SERVICES: 15.16% 970 AmeriCredit Corp.............................. 13,459 800 Community First Bankshares, Inc............... 11,200 640 Cullen/Frost Bankers, Inc..................... 13,760 730 Financial Federal Corporation................. 12,501 2,840 MicroFinancial Incorporated................... 25,915 280 Radian Group Inc.............................. 9,713 1,800 Republic Security Financial Corporation....... 13,275 690 Southwest Bancorporation of Texas, Inc........ 12,593 260 Wilmington Trust Corporation.................. 12,204 --------- 124,619 --------- HEALTHCARE: 4.52% 1,060 ICU Medical, Inc.............................. 16,430 1,180 Renal Care Group, Inc......................... 20,724 --------- 37,154 --------- REITS: 9.67% 450 Alexandria Real Estate Equities, Inc.......... 13,753 525 Arden Realty, Inc............................. 10,927 450 Home Properties of New York, Inc.............. 12,038 610 PS Business Parks, Inc........................ 13,344 See Notes to Financial Statements. 6 CHARTWELL SMALL CAP VALUE FUND SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- REITS, CONTINUED 760 Reckson Associates Realty Corp.............. $ 14,060 660 SL Green Realty Corp.......................... 15,345 --------- 79,466 --------- TECHNOLOGY: 11.92% 400 Avant! Corporation............................ 5,925 620 Park Electrochemical Corp..................... 14,105 920 The Reynolds & Reynolds Company............... 25,415 780 SIPEX Corporation............................. 34,954 490 Sterling Software, Inc........................ 17,579 --------- 97,978 --------- UTILITIES: 5.15% 660 ICG Communications Inc........................ 20,708 760 MDU Resources Group, Inc...................... 14,488 297 SCANA Corporation............................. 7,072 --------- 42,267 --------- Total Common Stocks (Cost $813,863): 99.86%..................... 820,964 --------- SHORT-TERM INVESTMENTS: 0.93% - -------------------------------------------------------------------------------- $7,687 Firstar Stellar Treasury Fund (Cost $7,687)... 7,687 --------- Total Investment In Securities (Cost $821,550): 100.79%.................... 828,651 Liabilities in excess of Other Assets: (0.79%) (6,478) --------- Total Net Assets: 100.00%..................... $ 822,173 ========= + Gross unrealized appreciation and depreciation of securities is as follows: Gross unrealized appreciation................. $ 87,854 Gross unrealized depreciation................. (80,753) --------- Net unrealized appreciation............. $ 7,101 ========= See Notes to Financial Statements. 7 CHARTWELL LARGE CAP VALUE FUND SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- Shares COMMON STOCKS: 96.67% Market Value - -------------------------------------------------------------------------------- BASIC INDUSTRY: 8.30% 6,835 Abitibi-Consolidated Inc...................... $ 60,661 1,510 Alcoa Inc..................................... 103,435 973 The Dow Chemical Company...................... 105,571 4,040 Rohm and Haas Company......................... 163,115 1,445 Temple-Inland Inc............................. 73,876 2,470 Weyerhaeuser Company.......................... 126,742 ----------- 633,399 ----------- CAPITAL GOODS: 17.91% 3,250 Dana Corporation.............................. 69,266 2,670 Eaton Corporation............................. 200,083 630 Hewlett-Packard Company....................... 84,735 1,330 International Business Machines Corporation................................. 135,660 2,780 Lucent Technologies Inc....................... 165,410 1,045 Motorola, Inc................................. 178,173 3,970 National Semiconductor Corporation............ 298,246 4,760 Pitney Bowes Inc.............................. 235,620 ----------- 1,367,193 ----------- COMMUNICATIONS: 12.73% 4,337 AT&T Corp..................................... 214,410 2,405 ALLTEL Corporation............................ 139,490 1,555 BCE Inc....................................... 170,953 2,070 Cable & Wireless PLC.......................... 133,774 1,596 GTE Corporation............................... 94,164 1,350 MediaOne Group, Inc........................... 105,975 2,965 SBC Communications Inc........................ 112,678 ----------- 971,444 ----------- CONSUMER CYCLICAL: 6.59% 1,850 Dow Jones & Company, Inc...................... 115,394 3,840 Ford Motor Company............................ 159,840 3,572 The Limited, Inc.............................. 121,448 4,755 Starwood Hotels & Resorts Worldwide, Inc...... 106,690 ----------- 503,372 ----------- See Notes to Financial Statements. 8 CHARTWELL LARGE CAP VALUE FUND SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- CONSUMER STAPLES: 6.49% 2,535 Bausch & Lomb Incorporated.................... $ 133,721 3,655 Kimberly-Clark Corporation.................... 188,918 3,390 The McGraw-Hill Companies, Inc................ 172,466 ----------- 495,105 ----------- ENERGY: 11.11% 5,790 Baker Hughes Incorporated..................... 149,816 7,665 Conoco Inc. - Class B......................... 150,905 2,585 Exxon Mobil Corporation....................... 194,683 2,110 Kerr-McGee Corporation........................ 94,423 6,170 The Williams Companies, Inc................... 257,983 ----------- 847,809 ----------- FINANCIAL: 18.63% 2,374 American General Corporation.................. 123,893 3,500 The Bank of New York Company, Inc............. 116,594 2,935 The Chase Manhattan Bank...................... 233,699 5,325 Fannie Mae.................................... 282,225 5,896 Fleet Boston Corporation...................... 160,666 3,245 The Hartford Financial Services Group, Inc.... 101,406 4,170 Household International, Inc.................. 133,179 1,575 Merrill Lynch & Co., Inc...................... 161,438 3,290 Wells Fargo & Company......................... 108,776 ----------- 1,421,876 ----------- HEALTHCARE: 7.36% 4,100 American Home Products Corporation............ 178,350 3,930 Baxter International Inc...................... 214,185 1,980 Warner-Lambert Company........................ 169,414 ----------- 561,949 ----------- UTILITIES: 8.12% 5,105 The Coastal Corporation....................... 214,729 3,971 Dynegy Inc.................................... 186,141 5,560 The Montana Power Company..................... 218,925 ----------- 619,795 ----------- Total Common Stocks (Cost $ 7,728,749): 97.24%.................. 7,421,942 =========== See Notes to Financial Statements. 9 CHARTWELL LARGE CAP VALUE FUND SCHEDULE OF INVESTMENTS AT FEBRUARY 29, 2000 (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Shares SHORT-TERM INVESTMENTS: 3.33% Market Value - -------------------------------------------------------------------------------- $255,886 Firstar Stellar Treasury Fund (Cost $ 255,886)............................ $ 255,886 ----------- Total Investments in Securities (Cost $7,984,635): 100.59%.................. 7,677,828 ----------- Liabilities in excess of other assets: (0.59%) (45,078) ----------- Total Net Assets: 100.00%..................... $ 7,632,750 =========== Gross unrealized appreciation and depreciation of securities is as follows: Gross unrealized appreciation................. $ 409,343 Gross unrealized depreciation................. (716,150) ----------- Net unrealized appreciation............ $ (306,808) =========== See Notes to Financial Statements. 10 CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES AT FEBRUARY 29, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- SMALL CAP LARGE CAP VALUE FUND VALUE FUND - -------------------------------------------------------------------------------- ASSETS Investments in securities, at value (identified cost $821,550 and $7,984,635, respectively) ................ $828,651 7,713,043 -------- ----------- Receivables: Due From Advisor ......................... 7,007 1,470 Dividends and interest ................... 512 16,896 Prepaid expenses ............................ 577 576 -------- ----------- Total assets .......................... 836,747 7,731,985 -------- ----------- LIABILITIES Payables: Due to administrator ..................... 2,384 2,384 Investment securities purchased .......... 0 85,426 Accrued expenses ............................ 12,190 11,425 -------- ----------- Total liabilities ..................... 14,574 99,235 -------- ----------- NET ASSETS ..................................... $822,173 $ 7,632,750 ======== =========== Net asset value and redemption price per share ($822,173/78,087 and $7,632,750/795,469 shares outstanding; unlimited number of shares (par value $0.01) authorized) .......................... $ 10.53 $ 9.60 ======== =========== COMPONENTS OF NET ASSETS Paid-in capital ............................. $798,897 $ 8,040,797 Accumulated net investment income ........... 342 17,245 Accumulated net realized gain (loss) on investments ........................... 15,833 (118,484) Net unrealized appreciation (depreciation) on investments ............ 7,101 (306,808) -------- ----------- Net assets ............................ $822,173 $ 7,632,750 ======== =========== See Notes to Financial Statements. 11 CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND STATEMENT OF OPERATIONS FOR THE PERIOD OCTOBER 1, 1999* THROUGH FEBRUARY 29, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- SMALL CAP LARGE CAP VALUE FUND VALUE FUND - -------------------------------------------------------------------------------- INVESTMENT INCOME Income Dividends ....................................... $ 3,643 $ 25,563 Interest ........................................ 488 2,798 -------- --------- Total income ................................. 4,131 28,361 -------- --------- Expenses Organization expense ............................ 25,000 25,000 Administration fees (Note 3) .................... 12,493 12,493 Professional fees ............................... 9,996 9,996 Fund accounting fee ............................. 5,831 5,831 Transfer agent fees ............................. 5,414 5,414 Custodian ....................................... 2,999 2,999 Advisory fees (Note 3) .......................... 1,851 5,796 Other ........................................... 1,249 1,249 Trustees' fees .................................. 1,041 1,041 Reports to shareholders ......................... 833 833 Registration fees ............................... 332 306 -------- --------- Total expenses ............................... 67,039 70,958 Less: advisory fee waiver and absorption (Note 3) ....................... (64,463) (62,085) -------- --------- Net expenses ................................. 2,576 8,873 -------- --------- Net investment income ..................... 1,555 19,487 -------- --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) from security transactions ..................................... 15,833 (118,484) Net change in unrealized appreciation (depreciation)on investments ..................... 7,101 (306,808) -------- --------- Net realized and unrealized gain (loss) on investments ........................... 22,934 (425,292) -------- --------- Net Increase (Decrease) in Net Assets Resulting from Operations ...................... $ 24,489 $(405,805) ======== ========= See Notes to Financial Statements. 12 CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD OCTOBER 1, 1999* THROUGH FEBRUARY 29, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- SMALL CAP LARGE CAP VALUE FUND VALUE FUND - -------------------------------------------------------------------------------- NET INCREASE IN ASSETS FROM OPERATIONS Net investment income .......................... $ 1,555 $ 19,487 Net realized gain (loss) from security transactions .................................. 15,833 (118,484) Net change in unrealized appreciation (depreciation) on investments ................. 7,101 (306,808) --------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... 24,489 (405,805) --------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......................... (1,213) (2,242) --------- ----------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares (a) .......... 798,897 8,040,797 --------- ----------- TOTAL INCREASE IN NET ASSETS ................... 822,173 7,632,750 --------- ----------- NET ASSETS Beginning of period ............................... 0 0 --------- ----------- END OF PERIOD ..................................... $ 822,173 $ 7,632,750 ========= =========== (a) A summary of capital shares transactions is as follows: October 1, 1999* to October 1, 1999* to February 29, 2000# February 29, 2000# ------------------------ ------------------------ Shares Paid in Capital Shares Paid in Capital ------ --------------- ------ --------------- Shares sold ............. 104,795 $ 1,063,277 795,769 $ 8,043,669 Shares issued in reinvestment of distributions .......... 120 1,213 224 2,242 Shares redeemed ......... (26,828) (265,593) (523) (5,114) -------- ----------- -------- ----------- Net increase ............ 78,087 $ 798,897 795,469 $ 8,040,797 ======== =========== ======== =========== - ---------- * Commencement of operations. # Unaudited. See Notes to Financial Statements. 13 FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD - -------------------------------------------------------------------------------- SMALL CAP LARGE CAP VALUE FUND VALUE FUND - --------------------------------------------------------------------------------
October 1, 1999* October 1, 1999* to to February 29, 2000# February 29, 2000# ------------------ ------------------ Net asset value, beginning of period ............ $10.00 $10.00 ------ ------ Income from investment operations: Net investment income ........................ 0.02 0.02 Net realized and unrealized gain on investments .............................. 0.53 (0.40) ------ ------ Total from investment operations ................ 0.55 (0.38) ------ ------ Less distributions: From net investment income ................... (0.02) (0.02) ------ ------ Net asset value, end of period .................. $10.53 $ 9.60 ====== ====== Total return .................................... 5.57%+ (3.72%)+ Ratios/supplemental data: Net assets, end of period (thousands) ........... $ 822 $7,635 Ratio of expenses to average net assets: Before expense reimbursement ................. 30.75%** 3.90%** After expense reimbursement .................. 1.10%** 0.75%** Ratio of net investment income to average net assets After expense reimbursement .................. 0.66%** 1.65%** Portfolio turnover rate ......................... 30.24% 64.92%
- ---------- * Commencement of operations. ** Annualized. + Not Annualized. # Unaudited. See Notes to Financial Statements. 14 CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS AT FEBRUARY 29, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1 - ORGANIZATION The Chartwell Large Cap Value Fund and Chartwell Small Cap Value Fund (the "Funds") are each a series of shares of beneficial interest of Advisors Series Trust (the "Trust"), which is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. Each Fund's investment objective is growth of capital, with a secondary objective to provide current income. The Funds began operations on October 1, 1999. 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 generally accepted accounting principles. A. SECURITY VALUATION: The Funds' investments are carried at fair value. Securities that are primarily traded on a national securities exchange shall be valued at the last sale price on the exchange on which they are primarily traded on the day of valuation or, if there has been no sale on such day, at the mean between the bid and asked prices. Securities primarily traded in the NASDAQ National Market System for which market quotations are readily available shall be valued at the last sale price on the day of valuation, or if there has been no sale on such day, at the mean between the bid and asked prices. Over-the-counter ("OTC") securities which are not traded in the NASDAQ National Market System shall be valued at the most recent trade price. Securities for which market quotations are not readily available, if any, are valued following procedures approved by the Board of Trustees. Short-term investments are valued at amortized cost, which approximates market value. B. FEDERAL INCOME TAXES: It is the Funds' policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security transactions are accounted for on the trade date. Dividend income and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Distributions which exceed net realized gains for financial reporting purposes but not for tax purposes are reported as distributions in 15 CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- excess of net realized gains and are primarily due to differing treatments for wash sales and realized losses subsequent to October 31 on sale of securities. Realized gains and losses on securities sold are determined on the basis of identified cost. Discounts and premiums on securities purchased are amortized over the life of the respective securities. D. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets during the reporting period. Actual results could differ from those estimates. NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES For the period ended February 29, 2000, Chartwell Investment Partners (the "Advisor") provided the Funds with investment management services under an Investment Advisory Agreement. The Advisor furnished all investment advice, office space, facilities, and provides most of the personnel needed by each Fund. As compensation for its services, the Advisor is entitled to a monthly fee at the annual rate of 0.50% based upon the average daily net assets of the Chartwell Large Cap Value Fund and 0.80% based upon the daily net assets of the Chartwell Small Cap Value Fund. For the period ended February 29, 2000, the Chartwell Large Cap Value Fund and the Chartwell Small Cap Value Fund incurred $5,796 and $1,851, respectively, in Advisory Fees. The Funds are responsible for their own operating expenses. The Advisor has agreed to reduce fees payable to it by each Fund and to pay each Fund's operating expenses to the extent necessary to limit each Fund's aggregate annual operating expenses to 0.75% of average net assets (the "expense cap") for the Chartwell Large Cap Value Fund and 1.10% of average net assets (the "expense cap") for the Chartwell Small Cap Value Fund. Any such reductions made by the Advisor in its fees or payment of expenses which are a Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so requested by the Advisor, in subsequent fiscal years if the aggregate amount actually paid by the Fund toward the operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the applicable limitation on the Fund's expenses. The Advisor is permitted to be reimbursed only for fee reductions and expense payments made in the previous three fiscal years, but is permitted to look back five years and four years, respectively, during the initial six years and seventh year of the Fund's operations. Any such reimbursement is also contingent upon Board of Trustees review and approval at the time the reimbursed is made. 16 CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Such reimbursement may not be paid prior to a Fund's payment of current ordinary operating expenses. For the period ended February 29, 2000, the Advisor reduced its fees and absorbed Fund expenses in the amount of $37,085 for the Chartwell Large Cap Value Fund and $69,463 for the Chartwell Small Cap Value Fund; no amounts were reimbursed to the Advisor. Investment Company Administration, L.L.C. (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 Fund's custodian, transfer agent and accountants; coordinates the preparation and payment of Fund expenses and reviews each Fund's expense accruals. For its services, the Administrator receives a monthly fee at the following annual rate: Fund asset level Fee rate - ---------------- -------- Less than $15 million $30,000 $15 million to less than $50 million 0.20% of average daily net assets $50 million to less than $100 million 0.15% of average daily net assets $100 million to less than $150 million 0.10% of average daily net assets More than $150 million 0.05% of average daily net assets First Fund Distributors, Inc. (the "Distributor") acts as the Funds' principal underwriter in a continuous public offering of the Fund's shares. The Distributor is an affiliate of the Administrator. Certain officers of the Fund are also officers and/or directors of the Administrator and the Distributor. NOTE 4 - PURCHASES AND SALES OF SECURITIES For the period ended February 29, 2000, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, for the Chartwell Large Cap Value Fund were $9,896,099 and $2,130,495, respectively. For the period ended February 29, 2000, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, for the Chartwell Small Cap Value Fund were $718,044 and $162,958, respectively. 17 This report is intended for shareholders of the Fund and may not be used as sales literature unless preceded or accompanied by a current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Share price and returns will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are dated and are subject to change. -----END PRIVACY-ENHANCED MESSAGE-----