SEGALL BRYANT & HAMILL
Mid Cap Fund
[GRAPHIC]
Semi-Annual Report
October 31, 1999
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SEGALL BRYANT & HAMILL MID CAP FUND
December 13, 1999
Dear fellow Shareholder:
For the six months ending October 31, 1999, the Segall Bryant & Hamill Mid
Cap Fund's total return at NAV was (3.88) percent. This compares to the
performance of the S&P 400 Mid Cap Index of 1.87 percent.
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 select 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 renters, focusing on the long-term
intrinsic value of their businesses.
Unfortunately, over the past year the market has focused on the lowest
quality sector of the market and virtually ignored high quality growth
investments. During 1999, the average `high quality' stock (as defined by
Standards and Poor's as B+ rated or better) has returned a NEGATIVE 9.2% while
the "lowest quality" stocks have returned a POSITIVE 17.7%. As the year
progressed, this performance disparity has only increased. While we have made
adjustments to the Fund to reflect market realities, we continue to focus on
high quality growth stocks trading at reasonable valuations. Over time, these
types of stocks have outpaced the market with less risk. With the high valuation
levels of the market and the speculation in the IPO market, it is important to
focus on risk-adjusted returns and outlook for valuations going forward.
Our outlook for the economy continues to be modest growth in 2000. Although
interest rates have started to rise over the past six months 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 high ROI mid capitalization stocks has led us to invest in
very solid companies that operate in unique industry settings. This strategy
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.
Several of the technology companies that we highlighted our last update
have done extremely well, (Symbol Technologies and PE Biosystems), and we have
started to reduce our positions due to valuation levels. However, the market has
given us the opportunity in several areas to increase our exposure due to what
we believe are temporary issues. These areas include computer services, software
and the education market.
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SEGALL BRYANT & HAMILL MID CAP FUND
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/ David P. Kalis
David P. Kalis, CFA
The S&P 400 Mid Cap Index is comprised of stocks in the middle capitalization
range. Indexes do no incur expenses and are not available for investment.
Performance figures of the Fund and index represent past performance and are not
indicative of the future performance of the Fund or index. The Fund's average
annual total return from inception on April 1, 1999 through September 30, 1999
was (3.34)%. Share values will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original investment.
The information contained in this report is authorized for use when proceeded or
accompanied by a prospectus for the Fund. The Fund is distributed by First Fund
Distributors, Inc., Phoenix, AZ. Member NASD.
2
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SEGALL BRYANT & HAMILL MID CAP FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999
(UNAUDITED)
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Shares COMMON STOCKS: 95.94% Market Value
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ADVERTISING AGENCIES: 3.54%
8,000 The Interpublic Group of Companies, Inc............... $ 325,000
-----------
BANKS - MAJOR REGIONAL: 0.90%
4,000 North Fork Bancorporation, Inc........................ 82,750
-----------
BROADCAST MEDIA: 4.17%
7,000 Adelphia Communications Corporation*.................. 382,375
-----------
COMMERCIAL BANKS - EASTERN U.S.: 1.12%
4,200 Charter One Financial, Inc............................ 103,163
-----------
COMMERICAL SERVICES: 0.71%
5,000 The ServiceMaster Company............................. 65,313
-----------
COMPUTER SERVICES: 11.39%
15,500 Ceridian Corp.*....................................... 340,031
15,000 Concord EFS, Inc.*.................................. 405,938
3,000 Equifax Inc........................................... 81,000
3,700 Policy Management Systems Corporation*................ 70,994
6,000 SunGard Data Systems Inc.*............................ 146,625
-----------
1,044,588
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CONSUMER PRODUCTS - MISCELLANEOUS: 7.09%
7,500 AptarGroup, Inc....................................... 201,563
4,000 Blyth Industries, Inc.*............................... 100,250
14,000 Rayovac Corporation*.................................. 348,250
-----------
650,063
-----------
DIVERSIFIED MANUFACTURING: 7.13%
11,000 Applied Power Inc..................................... 319,688
15,000 Littlefuse, Inc.*..................................... 333,750
-----------
653,438
-----------
ELECTRONIC - INSTRUMENTS: 3.53%
5,000 PE Corporation - PE Biosystems Group ................. 324,375
-----------
3
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SEGALL BRYANT & HAMILL MID CAP FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999
(UNAUDITED), CONTINUED
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Shares Market Value
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ELECTRONICS: 3.62%
10,081 Molex Incorporated.................................... $ 332,673
-----------
ELECTRONICS - SEMICONDUCTORS: 4.57%
6,000 Linear Technology Corporation......................... 419,625
-----------
FINANCIAL GUARANTEE INSURANCE: 4.17%
6,400 MGIC Investment Corporation........................... 382,400
-----------
HEALTHCARE - MEDICAL SUPPLY
& PRODUCTS: 3.63%
14,000 Sybron International Corporation*..................... 333,375
-----------
HEALTHCARE - SERVICES: 3.47%
11,000 IMS Health Incorporated............................... 319,000
-----------
IDENTIFICATION SYSTEMS / DEVICES: 3.68%
8,500 Symbol Technologies, Inc.............................. 337,875
-----------
LIFE / HEALTH INSURANCE: 3.55%
9,000 Protective Life Corporation........................... 325,688
-----------
MANUFACTURING - DIVERSE: 2.55%
7,000 Graco Inc............................................ 234,500
-----------
MEDICAL INSTRUMENTS: 6.01%
9,000 Biomet, Inc........................................... 271,125
14,000 Ventana Medical Systems, Inc.*........................ 280,875
-----------
552,000
-----------
OFFICE SUPPLIES AND FORMS: 3.40%
5,000 Avery Dennison Corporation............................ 312,500
-----------
OIL - EXPLORATION & PRODUCTION: 2.65%
5,000 Stone Energy Corporation*............................. 243,125
-----------
4
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SEGALL BRYANT & HAMILL MID CAP FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999
(UNAUDITED), CONTINUED
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Shares Market Value
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OIL & GAS / REFINE & MARKET: 2.29%
10,000 Santa Fe International Corporation.................... $ 210,625
-----------
PUBLISHING - NEWSPAPERS: 3.92%
6,000 Tribune Company....................................... 360,000
-----------
RETAIL - DISCOUNT: 4.89%
6,000 BJ's Wholesale Club, Inc.*............................ 184,875
10,000 Dollar General Corporation............................ 263,750
-----------
448,625
-----------
SERVICES - COMMERCIAL: 2.29%
10,000 DeVry Inc.*........................................... 210,625
-----------
TELEPHONE: 1.67%
3,800 CenturyTel, Inc....................................... 153,663
-----------
Total Common Stocks (Cost $8,095,588)................. 8,807,361
-----------
Principal
Amount SHORT-TERM INVESTMENTS: 4.10%
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$376,220 Firstar Stellar Treasury Fund (Cost $376,220)......... 376,219
-----------
Total Investments in Securities
(Cost $8,471,808+): 100.04%...................... 9,183,580
Liabilities in excess of Other Assets: (0.04)%........ (3,322)
-----------
Total Net Assets: 100.00%............................. $ 9,180,258
===========
* Non-income producing security.
+ At October 31, 1999, the cost of securities for Federal tax purposes was
the same as the basis for financial reporting.
Gross unrealized appreciation and depreciation of securities on a tax basis were
as follows:
Gross unrealized appreciation...................... $ 1,140,564
Gross unrealized depreciation...................... (428,792)
-----------
Net unrealized appreciation................... $ 711,772
===========
See Notes to Financial Statements.
5
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SEGALL BRYANT & HAMILL MID CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
AT OCTOBER 31, 1999 (UNAUDITED)
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ASSETS
Investments in securities, at value
(identified cost $8,471,808) ........................ $ 9,183,580
Receivables
Due from advisor .................................... 3,502
Dividends and interest .............................. 2,856
Fund shares purchased ............................... 300
Prepaid expenses ......................................... 4,550
-----------
Total assets .................................. 9,194,788
-----------
LIABILITIES
Other Payables ........................................... 13,174
Accrued expenses ......................................... 1,356
-----------
Total liabilities ............................. 14,530
-----------
NET ASSETS ..................................................... $ 9,180,258
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($9,180,258 / 726,958 shares outstanding; unlimited number
of shares authorized, par value $0.01) ....................... $ 12.63
===========
COMPONENTS OF NET ASSETS
Paid-in capital .......................................... $ 8,309,413
Accumulated net investment loss .......................... (31,932)
Accumulated net realized gain on investments ............. 191,005
Net unrealized appreciation on investments ............... 711,772
-----------
Net assets .......................................... $ 9,180,258
===========
See Notes to Financial Statements.
6
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SEGALL BRYANT & HAMILL MID CAP FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1999 (UNAUDITED)
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INVESTMENT INCOME
Income
Dividends ............................................ $ 28,185
Interest ............................................. 6,911
---------
Total income ................................... 35,096
---------
Expenses
Advisory fees (Note 3) ............................... 35,816
Professional fees .................................... 22,921
Administration fees (Note 3) ......................... 14,959
12b-1 fees (Note 6) .................................. 11,939
Fund accounting fees ................................. 8,976
Registration fees .................................... 7,828
Transfer agent fees .................................. 6,483
Custody fees ......................................... 3,591
Reports to shareholders .............................. 2,493
Other ................................................ 2,221
Trustee fees ......................................... 1,263
---------
Total expenses ................................. 118,490
Less: advisory fee waiver and absorption
(Note 3) ................................. (51,462)
---------
Net expenses ................................... 67,028
---------
NET INVESTMENT LOSS ............................ (31,932)
---------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from security transactions .............. (211,993)
Net change in unrealized depreciation on investments ...... (196,761)
---------
Net realized and unrealized loss on investments ...... (408,754)
---------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS .......................... $(440,686)
=========
* Commencement of operations.
See Notes to Financial Statements.
7
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SEGALL BRYANT & HAMILL MID CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
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May 1, 1999 April 1, 1999*
through through
Oct. 31, 1999** April 30, 1999
--------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment loss.......................... $ (31,932) $ (1,476)
Net realized (loss) gain on security
transactions ............................. (211,993) 463,426
Net change in unrealized (depreciation)
appreciation on investments............... (196,761) 908,533
---------- ----------
NET (DECREASE) INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............. (440,686) 1,370,483
---------- ----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net
change in outstanding shares (a).......... 1,187,981 454,433
---------- ----------
TOTAL INCREASE IN NET ASSETS ................ 747,295 1,824,916
---------- ----------
NET ASSETS
Beginning of period............................. 8,432,963 6,608,047
---------- ----------
END OF PERIOD .................................. $9,180,258 $8,432,963
========== ==========
(a) A summary of capital shares transactions is as follows:
May 1, 1999 through April 1, 1999* through
October 31, 1999 ** April 30, 1999
-------------------- ----------------------
Shares Value Shares Value
------ ----- ------ -----
Shares sold ............... 172,840 $ 2,291,079 41,509 $ 534,032
Shares redeemed ........... (153,770) (1,103,098) (6,259) (79,599)
------ ----------- ------ ---------
Net increase .............. 19,070 $ 1,187,981 35,250 $ 454,433
====== =========== ====== =========
* Commencement of operations.
** Unaudited.
See Notes to Financial Statements.
8
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SEGALL BRYANT & HAMILL MID CAP FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
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May 1, 1999 April 1, 1999*
through through
Oct. 31, 1999** April 30, 1999
--------------- --------------
Net asset value, beginning of period.............. $13.14 $12.49#
------ ------
Income from investment operations:
Net investment loss............................ (0.04) --
Net realized and unrealized (loss) gain
on investments.............................. (0.47) 0.65
------ ------
Total from investment operations.................. (0.51) 0.65
------ ------
Net asset value, end of period.................... $12.63 $13.14
====== ======
Total return...................................... (3.88)%++ 5.20%++
Ratios/supplemental data:
Net assets, end of period (thousands)............. $9,180 $8,433
Ratio of expenses to average net assets:
Before expense reimbursement................... 2.45%+ 7.35%+
After expense reimbursement.................... 1.40%+ 1.34%+
Ratio of net investment income to average
net assets:
After expense reimbursement.................... (0.66%)+ (0.23%)+
Portfolio turnover rate........................... 48.71% 18.02%
* Commencement of operations.
# See Note 5 to Financial Statements.
+ Annualized.
++ Not Annualized.
** Unaudited.
See Notes to Financial Statements.
9
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SEGALL BRYANT & HAMILL MID CAP FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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NOTE 1 - ORGANIZATION
The Segall Bryant & Hamill Mid Cap 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 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 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 value 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 are recorded on the ex-dividend date.
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 six months ended October 31, 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
10
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SEGALL BRYANT & HAMILL MID CAP FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
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the annual rate of 0.75% based upon the average daily net assets of the Fund.
For the six months ended October 31, 1999, the Fund incurred $35,816 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 the Fund's 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 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' subsequent review and
ratification of the reimbursed amounts. Such reimbursement may not be paid prior
to the Fund's payment of current ordinary operating expenses. For the year ended
October 31, 1999, the Advisor reduced its fees and absorbed Fund expenses in the
amount of $51,462; no amounts were reimbursed to the Advisor. Cumulative
expenses subject to recapture pursuant to the aforementioned conditions amount
to $89,844 at October 31, 1999.
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 - SECURITIES TRANSACTIONS
For the six months ended October 31, 1999 the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, were
$5,461,618 and $4,496,019, respectively.
11
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SEGALL BRYANT & HAMILL MID CAP FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
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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
----
Exchange Price Per Share ............................ $13.86
------
Unrealized Appreciation.............................. $962,558
NOTE 6 - DISTRIBUTION COSTS
The Fund has adopted a Distribution Plan (the "Plan") in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that the Fund may pay a fee to
the Distributor, at an annual rate of up to 0.25% of the average daily net
assets of the Fund. The fee is paid to the Distributor as reimbursement for, or
in anticipation of, expenses incurred for distribution-related activity. During
the period ended October 31, 1999, the Fund paid the Distributor in the amount
of $11,939.
12
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SEGALL BRYANT & HAMILL MID CAP FUND
CHANGE IN INDEPENDENT ACCOUNTANT
On August 27, 1999, McGladrey & Pullen, LLP ("McGladrey") resigned as
independent auditors of the Fund pursuant to an agreement by
PricewaterhouseCoopers LLP ("PwC") to acquire McGladrey's investment company
practice. The McGladrey partners and professionals serving the Fund at the time
of the acquisition joined PwC.
The reports of McGladrey on the financial statements of the Fund during the
prior fiscal year contained no adverse opinion or disclaimer of opinion, and
were not qualified or modified as to uncertainty, audit scope or accounting
principles.
In connection with its audit for the period from April 1, 1999 (commencement of
operations) through April 30, 1999, there were no disagreements with McGladrey
on any matter of accounting principle or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of McGladrey would have caused it to make reference to the
subject matter of disagreement in connection with its report.
On September 10, 1999, the Fund, with the approval of its Board of Trustees and
its Audit Committee, engaged PwC as its independent auditors.
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ADVISOR
Segall Bryant & Hamill
10 South Wacker Drive, Suite 2150
Chicago, Illinois 60606
==========
DISTRIBUTOR
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, Arizona 85018
==========
CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street, M/L 6118
Cincinnati, Ohio 45202
==========
TRANSFER AGENT
American Data Services
150 Motor Parkway, Suite 109
Hauppauge, New York 11788
877-829-8413
==========
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, California 94104
