SEGALL BRYANT & HAMILL
----------------------
Mid Cap Fund
Annual Report
April 30, 1999
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SEGALL BRYANT & HAMILL MID CAP FUND
June 21, 1999
Dear fellow Shareholder:
Over the past few months, there have been a number of changes to the Fund.
As you know, in March, we converted the Fund from a Growth & Income approach to
one focusing primarily on mid capitalization stocks, (stocks with market
capitalizations of $300 million to $10 billion). This change resulted in the
capital gains distribution you received in April and in the addition of a number
of new stocks to the portfolio.
As we communicated to you in the past, we feel that the opportunity for
investing in the mid capitalization tier of the market is the most attractive it
has been in the past quarter century. We believe that we can find companies in
this area of the market that meet our high investment criteria and offer good
value. Although we are focusing on smaller companies, the criteria which we use
to pick them remains unchanged: consistently high return on invested capital
(ROI), double digit earnings growth and high levels of free cash flow. We
continue to be owners of stocks and not for a short-term stay, focusing instead
on the long term intrinsic value of their businesses.
Our outlook for the economy continues to call for modest growth in 1999.
Although interest rates have started to rise over the past month due to
increased fears of higher inflation, we do not foresee the Federal Reserve
moving to a protracted tightening stance. The probability of one or two
increases in rates is high, but should slow the economy to a reasonable level
and be positive for the markets.
Our focus on mid capitalization stocks has led us to invest in very solid
companies that operate in unique industry settings. Our high ROI focus leads us
to concentrate the Fund on the growth segments of the economy such as Health
Care, Technology and Finance. We will tend to be overweight in these sectors and
focus less on the more cyclical sectors of the market.
Two examples of companies that are core positions in the Fund are Symbol
Technologies and PE Biosystems (originally was The Perkin-Elmer Corporation).
Both of these companies are leaders in their respective industries, generate
high ROI's and should sustain double digit earnings growth over the next several
years. Symbol Technologies is the leader in integrated solutions based on bar
code scanning, mobile computing and wireless network systems. Over the past
several years, Symbol Technologies has transformed itself from a "bar code"
company to the #1 supplier of tracking and logistics hardware globally. Symbol
recently won a large contract with the US Post Office to supply over 300,000
carriers with hand-held terminals for instant tracking of package deliveries. PE
Biosystems is a world leader in the development, manufacture and marketing of
life science systems in such markets as pharmaceutical, biotechnology and
environmental testing. PE Biosystems provides the instrumentation that their
customers use to accelerate the drug discovery process and facilitate drug
development. The average drug company's research and development budget can top
$1.5 billion annually and an increasing amount of these dollars will be spent
understanding the molecular basis of disease. We believe PE Biosystems' market
position will allow it to grow revenue and earnings in excess of 20%.
We remain confident that our selection process will lead to above-average
results over time. By focusing on mid cap growth companies with reasonable
valuations, we believe that our shareholders will benefit from both the
depressed valuation levels of this sector of the market and owning high quality
growth companies.
We appreciate your continued support.
/s/ Ralph M. Segall /s/ David P. Kalis
Ralph M. Segall, CFA David P. Kalis, CFA
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SEGALL BRYANT & HAMILL MID CAP FUND
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SCHEDULE OF INVESTMENTS AT APRIL 30, 1999
Shares COMMON STOCKS: 97.83% Market Value
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ADVERTISING AGENCIES: 3.22%
3,500 The Interpublic Group of Companies, Inc.................. $271,469
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COMMERCIAL BANKS - EASTERN U.S.: 5.74%
9,000 Charter One Financial, Inc............................... 281,250
9,000 North Fork Bancorporation, Inc........................... 202,500
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483,750
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COMMERICAL SERVICES: 3.38%
15,000 The ServiceMaster Company................................ 285,000
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COMPUTER SERVICES: 13.70%
9,000 Ceridian Corp.*.......................................... 329,625
8,000 Equifax Inc.............................................. 287,500
9,000 Policy Management Systems Corporation*................... 282,937
8,000 SunGard Data Systems Inc.*............................... 255,500
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1,155,562
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CONSUMER PRODUCTS - MISCELLANEOUS: 9.22%
10,000 AptarGroup, Inc.......................................... 280,000
10,000 Blyth Industries, Inc.*.................................. 227,500
10,000 Rayovac Corporation*..................................... 270,000
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777,500
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DENTAL SUPPLIES AND EQUIPMENT: 7.04%
10,000 DENTSPLY International Inc............................... 261,875
12,000 Sybron International Corporation*........................ 332,250
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594,125
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DIVERSIFIED MANUFACTURING: 6.92%
10,200 Applied Power Inc........................................ 321,937
13,000 Littlefuse, Inc.*........................................ 261,625
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583,562
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ELECTRIC - INTEGRATED: 2.24%
5,400 New Century Energies, Inc.............................. 189,000
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ELECTRONICS: 2.15%
6,281 Molex Incorporated....................................... 181,364
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2
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SEGALL BRYANT & HAMILL MID CAP FUND
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SCHEDULE OF INVESTMENTS AT APRIL 30, 1999, CONTINUED
Shares Market Value
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FINANCIAL GUARANTEE INSURANCE: 3.68%
6,400 MGIC Investment Corporation..............................$ 310,800
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IDENTIFICATION SYSTEMS / DEVICES: 3.40%
6,000 Symbol Technologies, Inc................................. 286,500
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INSTRUMENTS - SCIENTIFIC: 3.85%
3,000 The Perkin-Elmer Corporation............................. 324,375
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INVESTMENT MANAGEMENT: 0.72%
4,000 Security Capital Group Incorporated - Class B*........... 60,500
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LIFE / HEALTH INSURANCE: 6.74%
6,000 Hartford Life, Inc., Class A............................. 313,875
6,500 Protective Life Corporation.............................. 254,719
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568,594
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MEDICAL - BIOMEDICAL GENETICS: 2.48%
2,200 Biogen, Inc.*............................................ 209,138
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MEDICAL INSTRUMENTS: 4.65%
6,000 Biomet, Inc.............................................. 246,000
6,000 Ventana Medical Systems, Inc.*........................... 146,250
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392,250
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MEDICAL PRODUCTS: 2.85%
17,000 Respironics, Inc.*....................................... 240,125
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OFFICE SUPPLIES AND FORMS: 5.78%
4,700 Avery Dennison Corporation............................... 320,775
6,100 New England Business Service, Inc........................ 166,606
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487,381
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3
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SEGALL BRYANT & HAMILL MID CAP FUND
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SCHEDULE OF INVESTMENTS AT APRIL 30, 1999, CONTINUED
Shares Market Value
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PUBLISHING - NEWSPAPERS: 2.97%
3,000 Tribune Company........................................ 250,313
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RETAIL - DISCOUNT: 7.10%
12,000 BJ's Wholesale Club, Inc.*............................. $ 318,750
8,000 Dollar General Corporation............................. 280,500
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599,250
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Total common stocks (cost $7,342,025).................. $ 8,250,558
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Principal
Amount SHORT-TERM INVESTMENTS: 8.65%
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$729,257 Firstar Treasury Fund.................................. 729,257
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Total Investments in Securities (cost $8,071,282+):
106.48%.............................................. 8,979,815
Liabilities in excess of Other Assets: (6.48%)......... (546,852)
TOTAL NET ASSETS: 100.0% .............................. $ 8,432,963
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* Non-incoming producing security.
+ At April 30, 1999, the cost of securities for Federal tax purposes was
approximately the same as the basis for financial reporting. Gross unrealized
appreciation and depreciation of securities were as follows:
Gross unrealized appreciation.......................... $ 1,129,643
Gross unrealized depreciation.......................... (221,110)
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Net unrealized appreciation...................... $ 908,533
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See Notes to Financial Statements.
4
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SEGALL BRYANT & HAMILL MID CAP FUND
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STATEMENT OF ASSETS AND LIABILITIES AT APRIL 30, 1999
ASSETS
Investments in securities, at value (identified
cost $8,071,282) ........................................ $8,979,815
Receivables
Due from Advisor .................................... 3,617
Dividends and interest .............................. 5,950
Prepaid expenses .......................................... 7,598
Other Assets .............................................. 17,022
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Total assets ..................................... 9,014,002
LIABILITIES
Payables
Administration fees ................................. 2,466
Investment securities purchased ..................... 570,332
Accrued expenses .......................................... 8,241
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Total liabilities ................................ 581,039
NET ASSETS ...................................................... $8,432,963
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Net asset value, offering and redemption price per share
($8,432,963/641,586 shares outstanding; unlimited
number of shares authorized, par value $0.01) ............. $ 13.14
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COMPONENTS OF NET ASSETS
Paid-in capital ........................................... $7,061,004
Accumulated net realized gain on investments .............. 463,426
Net unrealized appreciation on investments ................ 908,533
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Net assets ................................................ $8,432,963
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See Notes to Financial Statements.
5
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SEGALL BRYANT & HAMILL MID CAP FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD APRIL 1, 1999* THROUGH APRIL 30, 1999
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INVESTMENT INCOME
Income
Dividends ................................................ $ 5,562
Interest ................................................. 1,479
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Total income ....................................... 7,041
Expenses
Organization fees ........................................ 30,000
Advisory fees (Note 3) ................................... 4,765
Professional fees ........................................ 2,959
Administration fees (Note 3) ............................. 2,466
Fund accounting fees ..................................... 1,480
Registration fees ........................................ 1,290
12b-1 fees ............................................... 1,210
Transfer agent fees ...................................... 1,069
Custody fees ............................................. 592
Other .................................................... 410
Reports to shareholders .................................. 411
Trustee fees ............................................. 247
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Total expenses ......................................... 46,899
Less, advisory fee waiver and absorption (Note 3) ..... (38,382)
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Net expenses ........................................... 8,517
Net investment loss ................................ (1,476)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions ................... 463,426
Net change in unrealized appreciation on investments ........... (54,025)
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Net realized and unrealized gain on investments .......... 409,401
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Net Increase in Net Assets Resulting from Operations .. $ 407,925
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* Commencement of operations.
See Notes to Financial Statements.
6
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SEGALL BRYANT & HAMILL MID CAP FUND
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STATEMENT OF CHANGES IN NET ASSETS
April 1, 1999*
through
April 30, 1999
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INCREASE IN NET ASSETS FROM
OPERATIONS:
Net investment loss ......................................... $ (1,476)
Net realized gain on security transactions .................. 463,426
Net change in unrealized appreciation on investments ........ (54,025)
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Net increase in net assets resulting from operations .... 407,925
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in
outstanding shares (a) .................................... 8,025,038
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Total increase in net assets ................................ 8,432,963
NET ASSETS
Beginning of period ............................................ --
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End of period .................................................. $ 8,432,963
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(a) A summary of capital shares transactions is as follows:
April 1, 1999*
through
April 30, 1999
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Shares Value
------------------------
Shares sold .......................................... 41,509 $ 534,032
Shares issued in reorganization (Note 5).............. 606,336 7,570,605
Shares redeemed....................................... (6,259) (79,599)
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Net increase.......................................... 641,586 $8,025,038
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*Commencement of operations.
See Notes to Financial Statements.
7
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SEGALL BRYANT & HAMILL MID CAP FUND
FINANCIAL HIGHLIGHTS
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FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
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April 1, 1999*
through
April 30, 1999
--------------
Net asset value, beginning of period............................. $12.49**
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Income from investment operations:
Net investment income............................................ --
Net realized and unrealized gain on investments............ 0.65
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Total from investment operations................................. 0.65
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Net asset value, end of period................................... $13.14
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Total return..................................................... 5.20%++
Ratios/supplemental data:
Net assets, end of period (thousands)............................ $8,433
Ratio of expenses to average net assets:
Before expense reimbursement............................... 7.35%+
After expense reimbursement................................ 1.34%+
Ratio of net investment loss to average net assets:
After expense reimbursement................................ (0.23%)+
Portfolio turnover rate.......................................... 18.02%
*Commencement of operations.
**See Note 5 to Financial Statements.
+Annualized.
++Not Annualized.
See Notes to Financial Statements.
8
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SEGALL BRYANT & HAMILL MID CAP FUND
NOTES TO FINANCIAL STATEMENTS
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Segall Bryant & Hamill Mid Cap Fund (the "Fund") is a series of shares
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 began operations on April 1, 1999. The Fund's objective is to seek
growth of capital with income as a secondary objective.
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 listed on an exchange or quoted on a National Market System
are valued at the last sale price. Other securities are valued at the
mean between the last bid and asked prices. 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 are recorded on the ex-dividend date.
Realized gains and losses on securities sold are determined on the
basis of identified cost.
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 April 30, 1999, Segall Bryant & Hamill (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 0.75% based upon the average daily net assets of the Fund. For
the period ended April 30, 1999, the Fund incurred $4,765 in Advisory Fees.
9
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SEGALL BRYANT & HAMILL MID CAP FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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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 1.40% 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 1.40% of average net
assets annually. 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 period ended
April 30, 1999, the Advisor reduced its fees and absorbed Fund expenses in the
amount of $38,382; 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 annual rate of 0.20% of average daily net assets, subject to a
minimum fee of $30,000 annually.
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 - SECURITIES TRANSACTIONS
For the period ended April 30, 1999 the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $1,994,882 and
$1,396,123, respectively.
NOTE 5 - Reorganization
On April 1, 1999 the Fund issued shares in exchange for shares of the
Segall Bryant & Hamill Growth and Income Fund in a reorganization. The following
is a summary of shares issued, net assets on the date of reorganization, net
asset value per share and unrealized appreciation on that date:
Shares.............................................. 606,336
Net Assets.......................................... $7,570,605
Net Asset Value Per Share........................... $12.49
Final Distribution Per Share Paid April 14, 1999.... 1.37
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Exchange Price Per Share............................ $13.86
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Unrealized Appreciation............................. $962,558
10
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SEGALL BRYANT & HAMILL MID CAP FUND
INDEPENDENT AUDITOR'S REPORT
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The Board of Trustees and Shareholders
Segall Bryant & Hamill Mid Cap Fund
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments of the Segall Bryant & Hamill Mid Cap
Fund, series of Advisors Series Trust, as of April 30, 1999, and the related
statement of operations, changes in net assets and the financial highlights for
the period indicated in the accompanying financial statements. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with the generally accepted auditing
standards. 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1999, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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
Segall Bryant & Hamill Mid Cap Fund, series of Advisors Series Trust, as of
April 30, 1999, the results of its operations, the changes in its net assets and
the financial highlights for the period indicated, in conformity with generally
accepted accounting principles.
/s/ McGladrey & Pullen, LLP
McGLADREY & PULLEN, LLP
New York, New York
May 28, 1999
11
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ADVISOR
Segall Bryant & Hamill
10 South Wacker Drive, Suite 2150
Chicago, Illinois 60606
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DISTRIBUTOR
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, Arizona 85018
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CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
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TRANSFER AGENT
American Data Services
150 Motor Parkway, Suite 109
Hauppauge, New York 11788
877-829-8413
==========
AUDITOR
McGladrey & Pullen, LLP
555 Fifth Avenue, 8th Floor
New York, New York 10017
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LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, California 94104
