-----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, R/gUD2+G9b69SqTKw3mbgxzCagX6e2lGdcjPTMSznY/UMXbIWufl/3PCHTXPOWTP rNUDUjRO7q91V8Oo70WN8g== /in/edgar/work/20000607/0000950147-00-000881/0000950147-00-000881.txt : 20000919 0000950147-00-000881.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950147-00-000881 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000607 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: 650962 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 0001.txt SEMI-ANNUAL RPT FOR THE PERIOD ENDED 3/31/00 CHASE INVESTMENT COUNSEL CORPORATION CHASE GROWTH FUND Semi-Annual Report Period Ended March 31, 2000 CHASE GROWTH FUND [PHOTO OF DERWOOD S. CHASE, JR.] May 15, 2000 Dear Fellow Shareholders: Let me start our semiannual review for the period ended March 31, 2000 by welcoming our new shareholders. At the end of April, 248 shareholders had $15.7 million invested in our Chase Growth Fund (NASDAQ: CHASX). We appreciate the trust each of you has placed in our management and we are working very hard to earn your continued confidence. For the 12 months ended March 31, 2000 our Fund enjoyed a (before and after tax) total return of 25.88% compared with 17.92% for the fully invested Standard & Poor's "500" Composite Stock Price Index (the S&P "500"). On average we were only 84.6% invested in equities during the year due to our concerns over the short term market outlook. By March 31, 15.4% was in cash equivalent reserves and 84.6% of our fund was invested in 41 stocks. Our heaviest industry concentrations were in Computer Hardware, Retail-Discounters & Specialty, Leisure Time, Telecommunications, and Financial Services. During the whole 12 months our ten best performing stocks were Nokia ADR +185%; Cisco Systems +182%; Intel +122%; EMC Corp. +97%; Lexmark International +89%; Home Depot +55%; Harley Davidson +38%; Wal-Mart +23%; Biogen +22% and Interpublic Group +21%. Several newer purchases bought during the last twelve months also performed well with Oracle +259%; Sun Microsystems +224%; Waters Corp. +83%, Amgen +80%, Circuit City Stores +57% and CDW Computer Centers +52%. Our investment process combines fundamental, quantitative, and technical research. We seek good quality companies that are leaders in their industries and enjoy above average, sustainable earnings growth with strong balance sheets. The Chase Growth Fund (CGF) portfolio includes a diversified group of companies that we believe represent relatively outstanding investment opportunities. As shown in the accompanying charts, we compare the characteristics of our fund's stocks to the S&P "500". Your CGF stocks have enjoyed more consistent and substantially higher five year average annual earnings per share growth rates of 26% vs. 12% for the S&P "500." They are significantly more profitable with a Return on Equity of 34% vs. 23%, and have stronger balance sheets with Debt to Total Capital of 21% vs. 33%. While they sell at a 67% premium to the S&P "500"'s price/earnings multiple based on year 2000 estimated reported earnings, their 5-year historical growth rates are 117% better. Though pricey, our stocks are selling at only 1.86 times their five year historical growth rates compared to 2.47 times for the S&P "500". Similarly they sell at 1.73 times their projected reinvestment rates compared to 1.96 times for the S&P "500". CHASE GROWTH FUND STOCKS VS. S&P 500 March 31, 2000 Chase Growth Fund Stocks S&P 500 ----------- ------- Last 5 Year Earnings Growth 26% 12% Return on Equity 34% 23% Reinvestment Rule 28% 15% Debt/Total Capital 21% 33% Weighted Avg. Cap. (Billion) 143.4 156.1 Weighted Avg. Beta (Volatility) 1.20 1.00 Price/Earnings Estimated 2000 48.3 28.9 Source: Chase Investment Counsel. This information is based on certain assumptions and historical data and is not a prediction of future results for the Fund or companies held in the Fund's portfolio. S&P 500 Earnings are based on reported figures after write-offs. 2 CHASE GROWTH FUND Recently our sound diversification, adherence to good quality growth stocks that meet our fundamental/technical process along with about 18% in cash equivalents has cushioned portfolio declines. For instance, between March 31st and May 12th your Chase Growth Fund was down -3.1% compared with declines of - -5.0% by the S&P "500"; -9.2% by the Russell 1000(R) Growth Index; and -12.2% by the Lipper Large Cap Growth Index. Many stocks have been in a bear market for over a year. As of mid-April 2000, 62% of the common stocks on the NYSE were down 30% or more from their 1998-2000 highs while 88% were down 30% or more on the NASDAQ. There have already been numerous Bear Market characteristics: daily new highs topped out in October 1997, the advance-decline ratio topped in April 1998, the Transportation and NYSE Financial Averages topped in May 1999, Utilities in June, the Value Line (geometric) and the NYSE Composite in July and the Dow "30" topped out at 11,723 on January 14, 2000. Finally, both the NASDAQ Composite and the S&P "500" topped out in March at 5,048 and 1,527, respectively. Supply/Demand Dynamics for equities are still favorable. As of May 10th year-to-date U.S. equity mutual fund net inflows were $122 billion, well ahead of YTD 1999 and 1998. Equities retired through corporate repurchases and cash acquisitions ($97 billion YTD 5/10/00) were $6 billion and $60 billion ahead of YTD 1999 and 1998, respectively, almost as much as the record $102 billion level of YTD new equity offerings. In summary, the net YTD Supply/Demand Dynamics (Source: Leuthold/Weeden Research) is a positive $117 billion about the same as last years $119 billion and well ahead of YTD 1998 and 1997. Most of these net cash flows are going into domestic equity funds that stay quite fully invested. Valuation is generally excessive by historical norms. On March 31, 2000 the S&P "500" Price/Reported Earnings Ratio stood at 29.3 times earnings. The average ratio from 1970 to present is 15.6 times earnings. At the same time, the S&P Industrial Price/Cash Flow Ratio was over 22 times compared with the average ratio from 1970 to present of about 8.8x. On March 31, market value of the NYSE as a percentage of nominal GDP stood at 120%. While down from the 138.5% (6/30/99) record high, it's still extremely high. For perspective, the old record high was 87% in August of 1929. Margin debt, a sign of speculation, exploded over 50% in the last six months to a record 2.9% of GDP. Although profits are booming, the stock market is a discounting mechanism and ironically rapid earnings growth is usually associated with poor stock market returns. Year over year earnings gains of 20% or more (like now) have resulted in subsequent annual gains on the S&P "500" of only 1.2%. It would be normal for a correction to depress at least a few sectors by 15% to 25% or more, as it has been doing since April 1998 even if the overall market achieves a soft landing. As long term investors, we recognize that timing the market is very difficult. One 35 year study showed that if you were out of the market just 5% of the time and missed the best 22 months, your 35 year gain would have been only about 14% as much as the S&P "500" on a buy and hold basis, even less than just holding T-Bills. We believe taking advantage of weakness in good quality growth stocks is a sounder long term investment strategy than buying so called "value" stocks of slow or no growth, cyclical and commodity oriented companies, many of which are interest sensitive and face rough competition from worldwide excess capacity. Many of those companies have little pricing power and, except the ones which have proprietary or patent protected products, they are more vulnerable to the deflationary impact on profit margins as information technology spreads. We screen 6,000 stocks and are watching our indicators closely for meaningful evidence of sector rotation and a change in leadership, perhaps toward the cheaper mid-cap growth stocks which have underperformed much of the 3 CHASE GROWTH FUND time since 1983 or some of the out-of-favor growth stocks. The short term mentality of many current traders often results in good stocks being heavily oversold for just modest disappointments. In selecting growth stocks, we adhere to significant valuation parameters as we seek growth at a reasonable price. 2000 is a Presidential election year. For perspective, the average of all such years involves an early year (May) low and then a rise which is much greater when the incumbent party wins. So far this year the market has been following the pattern of years when the incumbent party loses, but much more volatile. Decennial Cycle studies reveal that the DJIA began a decline during all the ninth or tenth years of the last 11 decades and that those declines were followed by rises that all began between the fourth and twelfth months of every tenth (or 0) year. As pointed out in a study by Growth Fund Research, Inc. the average starting date of all those DJIA declines was January 14th, which happens to be the exact date of this year's Dow peak of 11,723. The average of those eleven declines was -28.1% (down to 8,429 if that % happened this time) and lasted on average until September 3rd of the tenth years. Then the ensuing rises averaged 36% and lasted on average for 13.9 months. FUNDAMENTALS AND RATIOS As of 3/31/00 P/E TO FIVE-YEAR HISTORICAL GROWTH P/E TO PROJECTED REINVESTMENT RATE ---------------------------------- ---------------------------------- Chase Growth Russell 1000 Chase Growth Russell 1000 Fund Growth S&P 500 Fund Growth S&P 500 ---- ------ ------- ---- ------ ------- 1.86 1.88 2.47 1.73 1.90 1.96 We suspect that over the longer term the new economy paradigm, with the global spread of information technology and the importance of intellectual property, will prevail and higher than historical multiples will be justified, but we don't think that paradigm has repealed the excesses of human nature. For the near term, we believe this is a period for caution, substantial emphasis on capital preservation, and very careful stock selection. We manage $1 billion for 84 clients in twenty states. The Chase Growth Fund is managed by the same senior portfolio managers, David Scott and myself, that manage our large separate accounts. As a smaller fund it has much more flexibility in buying and selling large and mid-cap stocks without a significant market impact. Moreover, as a newer fund the portfolio does not have as large accumulated capital gain tax liabilities on gains that new shareholders did not enjoy. We are tax sensitive and we expect most established capital gains will be net long term. There were no net taxable capital gains or taxable income for 1999. As the largest CGF shareholder I assure you that we will be working very hard to find, analyze and invest in relatively attractive stocks. The officers and employees of Chase Investment Counsel Corp., most of whom are fellow shareholders, appreciate your confidence and we look forward to a long investment relationship together. 4 CHASE GROWTH FUND TOP 10 HOLDINGS 1. EMC Corp. 6. Nokia, ADR 2. Microsoft 7. Oracle 3. General Electric 8. Lexmark International 4. Home Depot 9. Colgate-Palmolive 5. Cisco Systems 10. Wal-Mart Stores, Inc. /s/ Derwood S. Chase, Jr. Derwood S. Chase, Jr., President Chase Investment Counsel Corporation Performance Figures of the fund and indexes referenced represent past performance and are not indicative of future performance of the fund or the indexes. Share value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original investment. Indexes do not incur expenses and are not available for investment. Updated quarterly performance info may be obtained by visiting the Fund's web site at www.chaseinv.com/cgf.html 5 CHASE GROWTH FUND PORTFOLIO OF INVESTMENTS AT MARCH 31, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- Shares COMMON STOCKS: 84.57% Market Value - -------------------------------------------------------------------------------- ADVERTISING: 2.65% 8,800 The Interpublic Group of Companies, Inc............... $ 415,800 ----------- APPLIANCES: 1.37% 6,500 Maytag Corporation.................................... 215,313 ----------- BIOTECHNOLOGY: 3.80% 3,900 Amgen Inc.*........................................... 239,363 5,100 Biogen Inc.*.......................................... 356,363 ----------- 595,726 ----------- BUILDING: 3.73% 9,056 The Home Depot, Inc................................... 584,112 ----------- BUSINESS SERVICES: 0.94% 3,700 Expeditors International of Washington, Inc........... 147,075 ----------- CHEMICALS - SPECIALTY: 1.40% 3,600 Avery Dennison Corporation............................ 219,825 ----------- COMPUTER - SEMICONDUCTORS: 2.02% 2,400 Intel Corporation..................................... 316,650 ----------- COMPUTER HARDWARE: 4.15% 5,200 EMC Corporation*...................................... 650,000 ----------- COMPUTER NETWORKING: 3.65% 7,400 Cisco Systems, Inc.*.................................. 572,113 ----------- COMPUTER PERIPHERAL: 3.24% 4,800 Lexmark International Group, Inc.*.................... 507,600 ----------- COMPUTER SOFTWARE AND SERVICES: 11.32% 2,100 Adobe Systems Incorporated............................ 233,756 6,150 Microsoft Corporation*................................ 653,437 6,800 Oracle Corporation*................................... 530,825 3,800 Sun Microsystems, Inc.*............................... 356,071 ----------- 1,774,089 ----------- 6 CHASE GROWTH FUND PORTFOLIO OF INVESTMENTS AT MARCH 31, 2000 (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- CONGLOMERATES: 2.10% 6,600 Tyco International Ltd................................ $ 329,175 ----------- DRUGS: 2.72% 4,000 Bristol-Myers Squibb Company.......................... 231,000 2,000 Warner-Lambert Company*............................... 195,000 ----------- 426,000 ----------- ELECTRICAL EQUIPMENT: 3.76% 3,800 General Electric Company.............................. 589,713 ----------- ELECTRONICS: 0.76% 2,100 CTS Corporation....................................... 119,700 ----------- FINANCE / BANKS: 1.50% 2,700 The Chase Manhattan Bank.............................. 235,406 ----------- FINANCIAL SERVICES: 4.06% 2,400 American Express Company.............................. 357,450 4,700 Citigroup Inc......................................... 278,768 ----------- 636,218 ----------- FOOD: 1.07% 4,700 Sysco Corporation..................................... 167,731 ----------- HOUSEHOLD PRODUCTS: 2.99% 8,300 Colgate-Palmolive Company............................. 467,913 ----------- INSURANCE - LIFE / HEALTH: 0.55% 2,730 Protective Life Corporation........................... 86,678 ----------- INSURANCE - PROPERTY /CASUALTY: 1.82% 2,600 American International Group, Inc..................... 284,700 ----------- LEISURE TIME: 4.85% 13,700 Carnival Corporation, Class A......................... 339,931 5,300 Harley-Davidson, Inc.................................. 420,687 ----------- 760,618 ----------- 7 CHASE GROWTH FUND PORTFOLIO OF INVESTMENTS AT MARCH 31, 2000 (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- MEDICAL SUPPLIES: 1.21% 3,800 Allergan, Inc......................................... $ 190,000 ----------- PAPER / FOREST PRODUCTS: 1.82% 5,100 Kimberly-Clark Corporation............................ 285,600 ----------- RETAIL - DISCOUNT: 4.57% 7,000 BJ's Wholesale Club, Inc.*............................ 270,375 8,000 Wal-Mart Stores, Inc.................................. 444,000 ----------- 714,375 ----------- RETAIL - SPECIALTY: 4.83% 3,200 CDW Computer Centers, Inc.*........................... 270,200 5,100 Circuit City Stores, Inc.............................. 310,463 3,500 Tandy Corporation..................................... 177,624 ----------- 758,287 ----------- TECHNOLOGY / MISCELLANEOUS: 1.02% 1,700 Waters Corporation.................................... 161,925 ----------- TELECOM EQUIPMENT: 3.47% 2,500 Nokia Corporation, ADR, Class A....................... 543,125 ----------- TELECOM SERVICES: 3.20% 2,900 Bell Atlantic Corporation............................. 177,263 3,800 BellSouth Corporation................................. 178,600 3,421 SBC Communications Inc................................ 143,682 ----------- 499,545 ----------- Total Common Stocks (Cost $9,236,563): 84.57%......... 13,255,012 ----------- Principal Amount SHORT-TERM INVESTMENTS: 16.96% - -------------------------------------------------------------------------------- $2,659,483 Firstar Stellar Treasury Fund (Cost $2,659,483)....... 2,659,483 ----------- See Notes to Financial Statements. 8 CHASE GROWTH FUND PORTFOLIO OF INVESTMENTS AT MARCH 31, 2000 (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Market Value - -------------------------------------------------------------------------------- Total Investments in Securities (Cost $11,896,046): 101.53%......................... $15,914,495 Other Assets in Excess of Liabilities: (1.53%)........ (240,077) ----------- Net Assets: 100.00%................................... $15,674,418 =========== * Non-income producing security. + Gross unrealized appreciation and depreciation of securities is as follows: Gross unrealized appreciation......................... $ 4,299,084 Gross unrealized depreciation......................... (280,635) ----------- Net unrealized appreciation......................... $ 4,018,449 =========== 9 CHASE GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS Investments in securities, at value (identified cost $11,896,046) .............................. $ 15,914,495 Receivables Dividends and interest ..................................... 15,338 Prepaid expenses ............................................. 5,158 ------------ Total assets ............................................... 15,934,991 ------------ LIABILITIES Payables Due to advisor ............................................. 9,949 Administration fees ........................................ 2,516 Securities purchased ....................................... 242,858 Accrued expenses ............................................. 5,250 ------------ Total liabilities .......................................... 260,573 ------------ NET ASSETS ..................................................... $ 15,674,418 ============ NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ($15,674,418 / 897,517 shares outstanding; unlimited number of shares authorized, par value $0.01).............. $ 17.46 ============ COMPONENTS OF NET ASSETS Paid-in capital .............................................. $ 11,544,271 Net investment loss .......................................... (11,508) Accumulated net realized gain on investments ................. 123,206 Net unrealized appreciation on investments ................... 4,018,449 ------------ Net assets ................................................. $ 15,674,418 ============ See Notes to Financial Statements. 10 CHASE GROWTH FUND STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME Income Dividends ............................................... $ 23,272 Interest ................................................ 53,015 ----------- Total income ........................................ 76,287 ----------- Expenses Advisory fees (Note 3) .................................. 60,341 Administration fees (Note 3) ............................ 17,506 Professional fees ....................................... 12,792 Fund accounting fees .................................... 7,379 Transfer agent fees ..................................... 4,857 Other ................................................... 3,296 Custody fees ............................................ 2,758 Registration fees ....................................... 2,507 Reports to shareholders ................................. 1,504 Trustee fees ............................................ 1,362 ----------- Total expenses ...................................... 114,302 Less: advisory fee waiver and absorption (Note 3).... (26,507) ----------- Net expenses ........................................ 87,795 ----------- NET INVESTMENT LOSS ............................. (11,508) ----------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain from security transactions .............. 453,063 Net change in unrealized appreciation on investments ...... 2,488,989 ----------- Net realized and unrealized gain on investments ......... 2,942,052 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 2,930,544 =========== See Notes to Financial Statements. 11 CHASE GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year Ended March 31, 2000# September 30, 1999 --------------- ------------------ INCREASE IN NET ASSETS FROM OPERATIONS Net investment loss ......................................... $ (11,508) $ (39,492) Net realized gain / (loss) on security transactions ......... 453,063 (93,150) Net change in unrealized appreciation on investments ........ 2,488,989 1,276,797 ------------ ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...... 2,930,544 1,144,155 ------------ ----------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares (a) ................................. 3,604,280 3,985,457 ------------ ----------- TOTAL INCREASE IN NET ASSETS ............................. 6,534,824 5,129,612 ------------ ----------- NET ASSETS Beginning of period .......................................... 9,139,594 4,009,982 ------------ ----------- END OF PERIOD ................................................ $ 15,674,418 $ 9,139,594 ============ =========== (a) A summary of capital shares transactions is as follows: Six Months Year Ended Ended March 31, 2000# September 30, 1999 -------------------------- -------------------------- Shares Paid in Capital Shares Paid in Capital ------ --------------- ------ --------------- Shares sold ........................ 236,253 $ 3,728,643 347,038 $ 4,725,105 Shares issued on reinvestments of distributions .................. 0 0 0 0 Shares redeemed .................... (7,739) (124,363) (53,379) (739,648) -------- ----------- -------- ----------- Net increase ....................... 228,514 $ 3,604,280 293,659 $ 3,985,457 ======== =========== ======== ===========
# Unaudited. See Notes to Financial Statements. 12 CHASE GROWTH FUND FINANCIAL HIGHLIGHTS PER SHARE OPERATING PERFORMANCE (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) - --------------------------------------------------------------------------------
Six Months Year December 2, 1997* Ended Ended through March 31, 2000# September 30, 1999 September 30, 1998 --------------- ------------------ ------------------ Net asset value, beginning of period ...... $ 13.66 $10.68 $10.00 ------- ------ ------ Income from investment operations: Net investment loss ..................... (0.01) (0.05) (0.01) Net realized and unrealized (loss) gain on investments ................... 3.81 3.03 0.70 ------- ------ ------ Total from investment operations .......... 3.80 2.98 0.69 ------- ------ ------ Less distributions: From net investment income .............. 0.00 0.00 (0.01) ------- ------ ------ Total distributions ....................... 0.00 0.00 (0.01) ------- ------ ------ Net asset value, end of period ............ $ 17.46 $13.66 $10.68 ======= ====== ====== TOTAL RETURN .............................. 27.82%++ 27.90% 6.91%++ Ratios/supplemental data: Net assets, end of period (thousands) ..... $15,674 $9,140 $4,010 Ratio of expenses to average net assets: Before expense reimbursement ............ 1.90%+ 2.37% 3.98%+ After expense reimbursement ............. 1.46%+ 1.48% 1.47%+ Ratio of net investment loss to average net assets after expense reimbursement ....... (0.19%)+ (0.59%) (0.17%)+ Portfolio turnover rate ................... 31.35% 61.83% 54.49%
* Commencement of operations. + Annualized. ++ Not Annualized # Unaudited. See Notes to Financial Statements. 13 CHASE GROWTH FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1 - ORGANIZATION The Chase Growth Fund (the "Fund") is a series of shares of beneficial interest of Advisors Series Trust (the "Trust"), which is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund's investment objective is growth of capital, and intends to achieve its objective by investing in equity securities with above average growth rates as defined in the prospectus. The Fund began operations on December 2, 1997. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with generally accepted accounting principles. A. SECURITY VALUATION: The Fund's investments are carried at fair value. Securities that are primarily traded on a national securities exchange shall be valued at the last sale price on the exchange on which they are primarily traded on the day of valuation or, if there has been no sale on such day, at the mean between the bid and asked prices. Securities primarily traded in the NASDAQ National Market System for which market quotations are readily available shall be valued at the last sale price on the day of valuation, or if there has been no sale on such day, at the mean between the bid and asked prices. Over-the-counter ("OTC") securities which are not traded in the NASDAQ National Market System shall be valued at the most recent trade price. Securities for which market quotations are not readily available, if any, are valued following procedures approved by the Board of Trustees. Short-term investments are valued at amortized cost, which approximates market value. B. FEDERAL INCOME TAXES: It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security transactions are accounted for on the trade date. 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 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. 14 CHASE GROWTH FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES For the six months ended March 31, 2000, Chase Investment Counsel Corp. (the "Advisor") provided the Fund with investment management services under an Investment Advisory Agreement. The Advisor furnished all investment advice, office space, facilities, and provides most of the personnel needed by the Fund. As compensation for its services, the Advisor is entitled to a monthly fee at the annual rate of 1.00% based upon the average daily net assets of the Fund. For the six months ended March 31, 2000, the Fund incurred $60,341 in Advisory Fees. The Fund is responsible for its own operating expenses. The Advisor has agreed to reduce fees payable to it by the Fund and to pay Fund operating expenses to the extent necessary to limit the Fund's aggregate annual operating expenses to 1.48% of average net assets (the "expense cap"). Any such reductions made by the Advisor in its fees or payment of expenses which are the Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so requested by the Advisor, in subsequent fiscal years if the aggregate amount actually paid by the Fund toward the operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the applicable limitation on Fund expenses. The Advisor is permitted to be reimbursed only for fee reductions and expense payments made in the previous three fiscal years, but is permitted to look back five years and four years, respectively, during the initial six years and seventh year of the Fund's operations. Any such reimbursement is also contingent upon Board of Trustees review and approval at the time the reimbursement is made. Such reimbursement may not be paid prior to the Fund's payment of current ordinary operating expenses. For the six months ended March 31, 2000, the Advisor reduced its fees and absorbed Fund expenses in the amount of $26,507; no amounts were reimbursed to the Advisor. Investment Company Administration, L.L.C. (the "Administrator") acts as the Fund's Administrator under an Administration Agreement. The Administrator prepares various federal and state regulatory filings, reports and returns for the Fund; prepares reports and materials to be supplied to the Trustees; monitors the activities of the Fund's custodian, transfer agent and accountants; coordinates the preparation and payment of the Fund's expenses and reviews the Fund's expense accruals. For its services, the Administrator receives a monthly fee at the following annual rate: Fund asset level Fee rate - ---------------- -------- Less than $15 million $30,000 $15 million to less than $50 million 0.20% of average daily net assets $50 million to less than $100 million 0.15% of average daily net assets $100 million to less than $150 million 0.10% of average daily net assets More than $150 million 0.05% of average daily net assets First Fund Distributors, Inc. (the "Distributor") acts as the Fund's principal underwriter in a continuous public offering of the Fund's shares. The Distributor is an affiliate of the Administrator. Certain officers of the Fund are also officers and/or directors of the Administrator and the Distributor. NOTE 4 - PURCHASES AND SALES OF SECURITIES For the six months ended March 31, 2000, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were $5,987,566 and $3,078,416, respectively. ADVISOR Chase Investment Counsel Corp. 300 Preston Avenue, Suite 403 Charlottesville, Virginia 22902-5091 ---------- DISTRIBUTOR First Fund Distributors, Inc. 4455 E. Camelback Road, Suite 261-E Phoenix, Arizona 85018 ---------- CUSTODIAN Firstar Institutional Custody Services 425 Walnut Street Cincinnati, Ohio 45202 ---------- TRANSFER AGENT American Data Services, Inc. P.O. Box 5536 Hauppauge, New York 11788-0132 ---------- LEGAL COUNSEL Paul, Hastings, Janofsky & Walker, LLP 345 California Street San Francisco, California 94104 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-----