[GRAPHICS OMITTED]
HILLIQRD LYONS
SENBANC
FUND
SENBANC
ANNUAL REPORT
JUNE 30, 2000
J.J.B. HILLIARD, W.L. LYONS, INC.
HILLIARD LYONS CENTER
LOUISVILLE, KENTUCKY 40202
(502)588-8400
(800)444-1854
<PAGE>
Year ended June 30, 2000
To: Shareholders of Senbanc Fund
Your Fund has done well among its peers, in an unusual investment environment.
Since its inception one year ago, Senbanc Fund's area of concentration, banks,
has been a decidedly unpopular industry segment, and its value style of
investing has been eclipsed by the domination of momentum investing. But our
comfort level is high. In the early months of your Fund's existence, it was
heavily weighted toward cash because of our declared intent to take a
disciplined approach to investing. We did not know then that bank stock prices
would decline along an unremittingly steep gradient through mid-March this year,
but our method of investing equal dollar amounts each has worked to your
advantage. Investing every dollar in the first month might have proven more
rewarding, had bank stock prices begun a continuous upward move immediately
thereafter.
The general market has been selective in segments most favored by buyers, and
more so in the handful of stocks whose meteoric rise has thus far been
sustained. Your Fund has avoided at least some of the volatility prevalent in
the market these past twelve months, and our cash position is a conservative
16%. By June, just over seventeen million dollars was invested among 27 bank
stocks, and this stock portion of your fund had declined by 15.3%. Because of
the cash component, the net asset value of your fund was down 12.2%* from July
8, 1999 when Senbanc Fund began operations. Over the same period, the Nasdaq
Bank Index (BANK) was down 19.9%, and the Standard & Poors Bank Index (.BIX) was
down 28.5%**.
Compared with bank stocks in general Senbanc Fund's disciplined approach to
building a portfolio of undervalued bank stocks has benefited our shareholders.
The Fund's approach has limited exposure to downside risk, and since bank stock
prices hit their lows on March 13, 2000, the Fund has participated in a modest
recovery.
Senbanc Fund comparisons: We compare Senbanc Fund performance with three
separate groups:
Major Indices: S&P 500 Index (.SPX)
Bank Indices: Nasdaq Bank Index (Bank)
S&P Bank Index (.BIX)
Bank Funds: John Hancock Regional Bank Fund (FRBAX)
Pilgrim Bank and Thrift Fund (PBTAX)
SIFE Trust Fund (SIFEX)
Banc Stock Group Fund (BANCX)
Rydex Banking Fund (RYKAX)
Fidelity Select Banking Portfolio (FSRBX)
Senbanc Fund is a managed fund, and therefore more comparable to other managed
bank funds. We believe the six bank funds named above is a complete list of bank
funds invested exclusively in bank and thrift stocks.
For the period July 8, 1999, (Funds' inception) through June 30, 2000, Senbanc
Fund outperformed the two unmanaged bank indexes, and outperformed the median of
percentage change for the managed bank funds.
1
<PAGE>
We attribute the positive relative performance of Senbanc Fund to its portfolio
of undervalued banks having an overall limited downside movement compared with
the general bank stock population, and to generally higher cash levels in the
portfolio in a period of generally declining bank stock prices.
We are not satisfied with strong relative performance if it means poor
performance on an absolute basis; we take small comfort from a general
acceptance that rising interest rates have negatively impacted bank stock prices
throughout the short life of the Fund. We expect well-run banks in our portfolio
to expand interest rate margins, and to improve earnings per share at the
double-digit rates of the last four quarters. We expect this buildup in value to
protect our investment in these banks while we patiently wait for that measured
value to be recognized with valuations for our portfolio substantially above the
current median price/earnings ratio of 9.7 times.
We expect the benefits of value investing to be recognized again, and we expect
the exceptional values represented by bank stocks generally to be re-appraised
by investors. Your Fund should benefit from either event, in addition to
continued growth in the intrinsic value of positions held.
Yours very truly,
/s/ Signature
JAMES M. ROGERS
President, Hilliard Lyons Research Trust
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SENBANC FUND GROWTH OF $10,000 INVESTMENT
Senbanc Fund Nasdaq Bank S&P Bank Index S&P 500 Index
$9,775 $10,000 $10,000 $10,000
$8,582 $ 8,010 $ 7,150 $10,660
ANNUAL RETURNS
Since Inception*
Senbanc Fund (N.A.V.) (12.2)%
Senbanc Fund (Load) (14.18)%
Nasdaq Bank Index** (19.9)%
S&P Bank Index** (28.5)%
S&P 500 Index 6.6%
* Past performance is no guarantee of future results. The fund may have
invested in stocks that have experienced significant gains; there is no
guarantee that these gains will continue. As a non-diversified Fund, a
greater percentage of the Fund's portfolio may be invested in one company's
securities than the portfolio of a diversified fund. Because of this, the
Fund may experience greater volatility in investment performance. Stock
prices of portfolio companies will fluctuate so shares, when redeemed, may be
worth less than original cost. The return cited includes a maximum sales
charge of 2.25%. Share price and return will vary and you may have a gain or
loss when you sell your shares.
** The Nasdaq Bank Index is an unmanaged index of unlisted banks. The S&P Bank
Index is an unmanaged index of 31 of the largest U.S. Banks. The S&P 500
Index is an unmanaged stock market index. The index returns assume
reinvestment of all dividends but do not include any expenses associated with
operating a mutual fund.
2
<PAGE>
SENBANC FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
<TABLE>
<CAPTION>
COMMON STOCK -- 86.3%
-----------------------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION COST VALUE
------ ----------- ---------- --------
<S> <C> <C> <C>
SAVINGS, CREDIT & OTHER FINANCIAL INSTITUTIONS -- 86.3%
----------------------------------------------------------------------------
28,100 ABC Bancorp .............................. $ 301,843 $ 270,462
15,800 Alabama National Bancorporation .......... 323,550 313,037
12,000 American Bancorp Ohio .................... 161,687 147,000
20,200 Andover Bancorp, Inc. .................... 669,388 582,012
15,500 Area Bancshares Corp. .................... 310,000 345,844
33,300 Bank One Corp. ........................... 1,187,454 884,531
23,800 Cathay Bancorp, Inc. ..................... 916,925 1,103,725
3,700 First Bancorp NC ......................... 71,225 51,337
10,000 First Charter Corp. ...................... 150,000 157,500
3,700 First Financial Bankshares, Inc. ......... 120,369 101,750
9,200 First of Long Island ..................... 305,387 313,375
17,500 First Union Corp. ........................ 589,662 434,219
49,035 Fulton Financial Corp. ................... 942,058 867,307
46,600 GBC Bancorp .............................. 998,088 1,363,050
69,400 Granite State Bankshares, Inc. ........... 1,583,482 1,049,675
5,300 Indiana United Bancorp ................... 104,000 86,125
41,800 Merchant Bancshares, Inc. ................ 968,888 825,550
25,956 Mid-America Bancorp ...................... 628,550 648,900
19,200 NBT Bancorp Inc .......................... 308,423 205,200
14,800 Regions Financial Corp. .................. 300,925 294,150
264,700 Republic First Bancorp, Inc.* ............ 1,996,826 1,224,237
20,736 State Bancorp, Inc. ...................... 317,277 261,792
104,910 Sterling Bancorp Co. ..................... 1,878,820 1,652,333
8,700 Summit Bancorp ........................... 301,760 214,238
55,500 U.S. Bancorp, Inc. ....................... 290,154 197,719
17,800 UnionBanCal Corp. ........................ 654,666 330,413
57,590 United Security Bancorporation* .......... 620,889 554,304
----------- -----------
TOTAL COMMON STOCK (COST $17,002,296) .... 17,002,296 14,479,785
----------- -----------
SHORT-TERM INVESTMENTS -- 0.0%
-----------------------------------------------------------------------------------------
2,099 Wilmington U.S. Government Portfolio ..... 2,099 2,099
2,099 Wilmington Prime Money Market Portfolio .. 2,099 2,099
----------- -----------
TOTAL SHORT-TERM INVESTMENTS (COST $4,198) 4,198 4,198
----------- -----------
</TABLE>
See notes to financial statements.
3
<PAGE>
SENBANC FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
MARKET
PRINCIPAL DESCRIPTION COST VALUE
--------- ----------- ----------- --------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 14.3%
-----------------------------------------------------------------------------------------
2,395,000 Federal Home Loan Bank Discount Note,
6.57%, 07/03/00 ........................ $ 2,394,126 $ 2,394,126
----------- -----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 2,394,126 2,394,126
----------- -----------
TOTAL INVESTMENTS -- 100.6% ............ 19,400,620 16,878,109
----------- -----------
LIABILITIES IN EXCESS OF ASSETS -- (0.6%) -- (104,706)
----------- -----------
NET ASSETS -- 100.0% ................... $19,400,620 $16,773,403
=========== ===========
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the total net assets of the Fund.
*Non-income producing security.
See notes to financial statements.
4
<PAGE>
SENBANC FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at market value
(cost $19,400,620) ............................................... $16,878,109
Receivable for:
Dividends and interest ........................................... 64,570
Capital shares sold .............................................. 45,712
Other assets ........................................................ 14,525
-----------
Total Assets ................................................ 17,002,916
-----------
LIABILITIES:
Payables for:
Capital shares redeemed .......................................... 106,706
Due to Advisor ................................................... 15,119
Accrued expenses ................................................. 107,688
-----------
Total Liabilities ........................................... 229,513
-----------
NET ASSETS .......................................................... $16,773,403
===========
NET ASSETS CONSIST OF:
Paid-in capital ..................................................... $19,152,322
Net realized gains on investments ................................... 143,592
Net unrealized depreciation on investments .......................... (2,522,511)
-----------
NET ASSETS FOR 1,946,416 SHARES OUTSTANDING ......................... $16,773,403
===========
NET ASSET VALUE, OFFERING, AND REDEMPTION PRICE PER SHARE
($16,773,403/1,946,416 outstanding shares of
beneficial interest, $0.01 par value, unlimited shares authorized) $ 8.62
===========
Maximum offering price per share (100/97.75 of $8.62) ............... $ 8.82
===========
</TABLE>
See notes to financial statements.
5
<PAGE>
SENBANC FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD JULY 8, 1999* THROUGH JUNE 30, 2000
INCOME:
Dividends .......................................... $ 357,532
Interest ........................................... 219,410
-----------
Total Income .................................. 576,942
-----------
EXPENSES:
Advisory fee ....................................... 92,880
12b-1 fee .......................................... 22,633
Accounting/Administrative fee ...................... 98,115
Transfer agent fee ................................. 46,546
Custodian fee ...................................... 23,684
Professional fees .................................. 38,468
Shareholder reports ................................ 20,026
Registration fee ................................... 19,975
Trustee's fees ..................................... 26,272
Miscellaneous ...................................... 37,073
-----------
Total expenses ................................ 425,672
Expenses reimbursed and fees waived ...... (154,771)
-----------
Net expenses .................................. 270,901
-----------
NET INVESTMENT INCOME ................................... 306,041
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ................... 143,592
Net unrealized depreciation of investments ......... (2,522,511)
-----------
Net realized and unrealized loss on investments .... (2,378,919)
-----------
Net decrease in net assets resulting from operations $(2,072,878)
===========
*Commencement of operations.
See Notes to Financial Statements.
6
<PAGE>
SENBANC FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 8, 1999*
THROUGH
JUNE 30, 2000
------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........................................................... $ 306,041
Net realized gain on investments ................................................ 143,592
Net unrealized depreciation of investments ...................................... (2,522,511)
-----------
Net decrease in net assets resulting from operations ....................... (2,072,878)
-----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income ........................................................... (306,041)
-----------
Total Distributions ........................................................ (306,041)
-----------
FROM SHARE TRANSACTIONS(a):
Receipt from shares sold ........................................................ 20,521,985
Shares reinvested ............................................................... 282,122
Shares redeemed ................................................................. (1,651,785)
-----------
Net increase in net assets from Fund share transactions .................... 19,152,322
-----------
TOTAL INCREASE IN NET ASSETS ......................................................... 16,773,403
-----------
NET ASSETS:
Beginning of period ............................................................. --
End of period ................................................................... $16,773,403
===========
SHARES
-----------
(a)CAPITAL SHARE TRANSACTIONS:
Shares sold ..................................................................... 2,099,150
Shares reinvested ............................................................... 31,890
Shares redeemed ................................................................. (184,624)
-----------
Net increase in shares ..................................................... 1,946,416
===========
<FN>
*Commencement of operations
</FN>
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
SENBANC FUND
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share of capital stock
outstanding throughout the period and other performance information derived from
the financial statements. It should be read in conjunction with the financial
statements and notes thereto.
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 8, 1999*
THROUGH
JUNE 30, 2000
------------------
<S> <C>
Net asset value:
Beginning of period ................................................ $ 10.00
-------
Net investment income ................................................. 0.16
Net realized and unrealized loss on investments ....................... (1.38)
-------
Total from investment operations ...................................... (1.22)
-------
Less dividends from:
Net investment income ................................................. (0.16)
-------
Total distributions ................................................... (0.16)
-------
Net asset value:
End of period ...................................................... $ 8.62
=======
Total Investment Return (excludes sales charge) ....................... (12.20%)**
SIGNIFICANT RATIOS ANDSUPPLEMENTAL DATA
Ratio of operating expenses to average net assets, including waivers .. 1.75%***
Ratio of operating expenses to average net assets, excluding waivers .. 2.75%***
Ratio of net investment income to average net assets, including waivers 1.98%***
Ratio of net investment income to average net assets, excluding waivers 0.98%***
Portfolio turnover rate ............................................... 12.93%**
Net assets, end of period (000s omitted) .............................. $16,773
<FN>
* Commencement of Operations
** Not Annualized
*** Annualized
</FN>
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
SENBANC FUND
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUND
Senbanc Fund (the "Fund") is a series of Hilliard Lyons Research Trust (the
"Trust"), a non-diversified, open-ended management investment company organized
as a Delaware business trust. The Trust may issue an unlimited number of shares
in one or more series or classes as the Board of Trustees may authorize.
Currently, the Fund is the only series authorized and outstanding. The Fund
commenced operations on July 8, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the Fund.
SECURITY VALUATION: The Fund's securities, except short-term investments with
remaining maturities of 60 days or less, are valued at their market value as
determined by their last sale price in the principal market in which these
securities are normally traded. Lacking any sales, the security will be valued
at the mean between the closing bid and ask price. Short-term investments with
remaining maturities of 60 days or less are valued at amortized cost, which
approximates market value, unless the Trust's Board of Trustees determines that
this does not represent fair value. The value of all other securities is
determined in good faith pursuant to procedures adopted by the Board of
Trustees.
FEDERAL INCOME TAXES: The Fund intends to qualify for treatment as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), and to distribute all of its taxable
income to its shareholders. Therefore, no federal income tax provision has been
provided.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions of net investment income and net
realized gains will be made annually. Additional distributions may be made to
the extent necessary. The amounts of dividends from net investment income and of
distributions from net realized gains are determined in accordance with Federal
income tax regulations, which may differ from accounting principles generally
accepted in the United States.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
OTHER: Investment security transactions are accounted for on a trade date basis.
The Fund uses the specific cost identification method for determining realized
gain or loss on investments for both financial and Federal income tax reporting
purposes. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on an accrual basis.
9
<PAGE>
3. PORTFOLIO TRANSACTIONS
During the period ended June 30, 2000, purchases and sales of investment
securities (excluding short-term investments) aggregated as follows:
Purchases ................................. $18,388,177
Sales ..................................... 1,529,474
The cost of investments for Federal income tax purposes and financial reporting
is the same. At June 30, 2000, the gross unrealized appreciation and
depreciation of investments was $623,444 and $3,145,955, respectively, resulting
in net unrealized depreciation of $2,522,511.
4. INVESTMENT ADVISORY FEE AND OTHER SERVICES
Hilliard Lyons Research Advisors (the "Advisor"), a division of J.J.B. Hilliard,
W.L. Lyons, Inc., provides management and investment advisory services to the
Fund pursuant to an investment advisory agreement with the Trust. For its
services, the Advisor is paid a monthly fee at the annual rate of 0.60% of the
Fund's average daily net assets. The Advisor intends to waive its advisory fee
until the Fund reaches $20 million in net assets. In addition, the Advisor has
agreed to waive its advisory fee and reimburse fund expenses in order to limit
the total annual operating expenses of the Fund to 1.75% of average daily net
assets. During the period ended June 30, 2000, the Advisor waived its fee in the
amount of $77,761.
PFPC Inc. ("PFPC") serves as administrator, accounting agent and transfer agent
to the Trust pursuant to separate agreements with the Trust. During the period
ended June 30, 2000, PFPC waived fees in the amount of $68,768.
PFPC Trust Company serves as Custodian of the assets of the Fund pursuant to a
Custody Agreement with the Trust. During the period ended June 30, 2000, PFPC
Trust Company waived fees in the amount of $8,242.
Provident Distributors, Inc. ("PDI") manages the Fund's distribution efforts.
The Board of Trustees has adopted a distribution plan pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, to allow the Fund to
reimburse PDI for certain expenses incurred in connection with distribution
activities. The Trustees have authorized a payment of up to 0.60% of the Fund's
average daily net assets annually to reimburse PDI for such expenses.
Certain Trustees and officers of the Trust are also officers or directors of the
Advisor. Trustees and officers of the Trust who are "interested persons" of the
Trust receive no compensation from the Trust.
10
<PAGE>
SENBANC FUND
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees
Hilliard Lyons Research Trust - Senbanc Fund
We have audited the accompanying statement of assets and liabilities, including
the Schedule of Investments, of Hilliard Lyons Research Trust - Senbanc Fund
(the "Fund") as of June 30, 2000, and the related statement of operations,
statement of changes in net assets, and financial highlights for the period July
8, 1999 (Commencement of Operations) through June 30, 2000. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. 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 June 30, 2000, by correspondence with the Fund's 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
Hilliard Lyons Research Trust - Senbanc Fund at June 30, 2000, and the results
of its operations, the changes in its net assets and its financial highlights
for the period July 8, 1999 (Commencement of Operations) through June 30, 2000,
in conformity with accounting principles generally accepted in the United
States.
/s/ SIGNATURE
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
August 4, 2000
11
<PAGE>
TRUSTEES
William W. Crawford, Jr. W. Patrick Mulloy
Robert L. Decker James W. Stuckert
OFFICERS
James W. Stuckert -- CHAIRMAN
James M. Rogers -- PRESIDENT
Alan F. Morel -- VICE PRESIDENT
Joseph C. Curry, Jr. -- TREASURER
Jeannie Oster -- SECRETARY
Ann F. Cody -- ASST. SECRETARY
Pat A. Colletti -- ASST. SECRETARY
DISTRIBUTOR
Provident Distributors, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
TRANSFER AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
PFPC Trust Company
The Eastwick Center
8800 Tinicum Blvd.
Philadelphia, PA 19153
AUDITORS
Ernst & Young LLP
LEGAL COUNSEL
Vedder, Price, Kaufman & Kammholz
This report is intended for the information of shareholders of the Senbanc
Fund, but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the Fund.
ANNUAL REPORT
JUNE 30, 2000
