[GRAPHIC OMITTED]
HILLIARD LYONS
SENBANC FUND
SENBANC
SEMI-ANNUAL REPORT
DECEMBER 31, 1999
J.J.B. HILLIARD, W.L. LYONS, INC.
HILLIARD LYONS CENTER
LOUISVILLE, KENTUCKY 40202
(502)588-8400
(800)444-1854
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Six months ended December 31, 1999
To: Shareholders of Senbanc Fund
Bank stock prices declined dramatically in the second half of 1999, coincident
with the inception of Senbanc Fund. The coincidence was not intentional, but
your fund did benefit from our investment process outlined in the prospectus.
Based upon the initial flow of funds, your portfolio manager decided that an
investment of three million dollars monthly would ensure a disciplined
investment approach over time. Each month, this dollar amount was invested
equally among the ten most undervalued bank stocks, as calculated by the
advisor's proprietary software. This investment process builds a portfolio more
heavily weighted to those bank stocks spending more time as one of the ten most
undervalued stocks in our universe of bank stocks.
At the end of November, almost fourteen million dollars had been invested among
21 bank stocks. There was no investment in December, to do so would have reduced
the cash component of your fund below 10%, a weighting that the portfolio
manager desired.
As bank stock prices on average declined, there was a distinct benefit to your
fund being weighted heavily toward cash in the earlier months. In addition,
disciplined investments in equal dollar amounts over an extended period lowered
the average cost per share below the initial cost of each stock for which there
were multiple purchases in your fund. At the end of December 1999, the stock
portion of your fund had declined in value by 10.5%. Because of the cash
component, the net asset value of your fund was down 7.93%* from July 8th, 1999
when Senbanc Fund began operations. Over the same period, the Standard & Poors
Index of bank stocks (.BIX)** declined 20.6%.
Interest rate changes, year-end tax loss selling, and Y2K fears all contributed
to the decline in bank stock prices. Bank stocks are value investments and out
of favor in an environment of momentum investing, but well run banks continue to
generate revenues and earnings at high levels of profitability.
We believe that the advisor's strategy of disciplined accumulation of what are
the most undervalued bank stocks, has enabled us to begin to build a strong
portfolio for your fund. Elsewhere in this report you will see a list of banks
owned as of December 31, 1999.
We look forward to the year 2000 providing a better environment for the
financial sector overall, and undervalued banks in particular, reaping rewards
from positions already established.
Yours very truly,
/S/JAMES M. ROGERS
President, Hilliard Lyons Research Trust
* Past performance is not predictive of future results. Investment return and
principal value may flucuate so that shares, when redeemed, may be worth
more or less than their original value.
** S&P bank index is an unmanaged index of 31 of the largest U.S. Banks.
THE INFORMATION CONTAINED IN THIS PIECE HAS BEEN TAKEN FROM SOURCES BELIEVED TO
BE RELIABLE, BUT THE ACCURACY OF THE INFORMATION IS NOT GUARANTEED. THE OPINIONS
AND FORECASTS EXPRESSED ARE THOSE OF HILLIARD LYONS RESEARCH ADVISORS AS OF
FEBRUARY 15, 2000, AND MAY NOT ACTUALLY COME TO PASS. THIS INFORMATION IS
SUBJECT TO CHANGE. NO PART OF THIS MATERIAL IS INTENDED AS AN INVESTMENT
RECOMMENDATION. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF HILLIARD
LYONS RESEARCH ADVISERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT, AS
STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON
MARKET AND OTHER CONDITIONS.
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SENBANC FUND
SCHEDULE OF INVESTMENTS
(UNAUDITED)
DECEMBER 31,1999
COMMON STOCKS -- 75.3%
- --------------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION COST VALUE
------ ----------- ---- -------
FINANCIAL INSTITUTIONS -- 75.3%
--------------------------------------------------------------------
2,700 American Bancorp Ohio* .................. $ 46,062 $ 44,212
20,200 Andover Bancorp, Inc. ................... 669,388 565,600
24,000 Bank One Corp. .......................... 897,434 769,500
23,800 Cathay Bancorp, Inc. .................... 916,925 975,800
3,700 First Bancorp NC ........................ 71,225 61,050
13,500 First Commerce Bancshares, Inc. ......... 297,000 265,781
3,700 First Financial Bankshares, Inc. ........ 120,369 113,775
9,200 First of Long Island* ................... 305,387 270,250
8,400 First Union Corp. ....................... 301,329 275,625
46,700 Fulton Financial Corp. .................. 942,058 840,600
46,600 GBC Bankcorp ............................ 998,088 899,962
54,400 Granite State Bankshares, Inc.* ......... 1,278,487 1,081,200
5,300 Indiana United Bankcorp ................. 104,000 99,375
37,600 Merchant Bancshares, Inc. ............... 902,556 803,700
25,956 Mid-America Bancorp ..................... 628,550 739,746
31,200 National Bankcorp of Alaska, Inc. ....... 851,087 875,550
207,200 Republic First Banccorp, Inc. ........... 1,639,013 1,074,850
19,200 State Bancorp, Inc. ..................... 317,277 274,800
86,310 Sterling Bancorp Co. .................... 1,556,573 1,380,960
8,700 Summit Bancorp .......................... 301,760 266,438
17,800 UnionBanCal Corp. ....................... 654,666 701,988
----------- -----------
TOTAL COMMON STOCKS (COST-- $13,799,234) 13,799,234 12,380,762
SHORT-TERM INVESTMENTS -- 0.0%
- --------------------------------------------------------------------------------
477 Wilmington Prime Money Market Portfolio . 477 477
----------- -----------
PAR
- ----
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 24.4%
- --------------------------------------------------------------------------------
$4,015,000 Federal Home Loan Bank Discount Note,
1.40%, 01/03/2000 ....................... 4,014,688 4,014,688
----------- -----------
TOTAL INVESTMENTS -- (99.7%) ......... $17,814,399 $16,395,927
=========== ===========
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.
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SENBANC FUND
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
DECEMBER 31, 1999
ASSETS:
Investment in securities, at market value
(cost $17,814,399) ........................................... $16,395,927
Receivable from Investment Adviser .............................. 7,449
Receivable for:
Dividends and interest ....................................... 54,144
Capital shares sold .......................................... 59,269
Other assets .................................................... 15,621
-----------
Total Assets ............................................ 16,532,410
-----------
LIABILITIES:
Payables for:
Capital shares redeemed ...................................... 22,563
Accrued expenses ............................................. 67,932
-----------
Total Liabilities ....................................... 90,495
-----------
NET ASSETS ...................................................... $16,441,915
===========
NET ASSETS CONSISTED OF:
Paid-in capital ................................................. $17,861,316
Distributions in excess of net investment income ................ (929)
Net unrealized depreciation on investments ...................... (1,418,472)
-----------
NET ASSETS FOR 1,801,739 SHARES OUTSTANDING ..................... $16,441,915
===========
NET ASSET VALUE, OFFERING, AND REDEMPTION PRICE PER SHARE
($16,441,915/1,801,739 outstanding shares of
beneficial interest, $0.01 par value) ........................ $ 9.13
===========
Maximum offering price per share (100/97.75 of $9.13) ........... $ 9.34
===========
See notes to financial statements.
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SENBANC FUND
STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE PERIOD ENDED DECEMBER 31, 1999*
INCOME:
Dividends ................................................... $ 123,452
Interest .................................................... 137,374
-----------
Total Income ........................................... 260,826
-----------
EXPENSES:
Advisory fee ................................................ 42,284
12B-1 fee ................................................... 42,284
Accounting/Administrative fee ............................... 48,117
Transfer agent fee .......................................... 24,408
Custodian fee ............................................... 12,490
Professional fees ........................................... 22,794
Shareholder reports ......................................... 9,698
Registration fee ............................................ 15,478
Trustee's fees .............................................. 15,518
Miscellaneous ............................................... 12,780
-----------
Total expenses ......................................... 245,851
Expenses reimbursed and fees waived ............... (122,521)
-----------
Net expenses ........................................... 123,330
-----------
NET INVESTMENT INCOME ............................................ 137,496
-----------
UNREALIZED LOSS ON INVESTMENTS:
Net unrealized depreciation of investments .................. (1,418,472)
-----------
Net decrease in net assets resulting from operations ........ $(1,280,976)
===========
*For the period July 8, 1999 (Commencement of Operations) to December 31,1999.
See notes to financial statements.
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SENBANC FUND
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
FOR THE PERIOD ENDED DECEMBER 31, 1999*
FROM OPERATIONS:
Net investment income ....................................... $ 137,496
Net unrealized depreciation on investments .................. (1,418,472)
-----------
Net decrease in net assets resulting from operations ... (1,280,976)
-----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income ....................................... (138,425)
-----------
Total Distributions .................................... (138,425)
-----------
FROM SHARE TRANSACTIONS:
Receipt from shares sold .................................... 18,024,154
Shares reinvested ........................................... 127,079
Shares redeemed ............................................. (289,917)
-----------
Net increase in net assets from Fund share transactions 17,861,316
-----------
TOTAL INCREASE IN NET ASSETS ..................................... 16,441,915
-----------
NET ASSETS:
Beginning of period ......................................... --
End of period ............................................... $16,441,915
===========
*From July 8, 1999 (Commencement of Operations) to December 31, 1999.
See Notes to Financial Statements.
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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.
FOR THE PERIOD
JULY 8, 1999*
THROUGH
DECEMBER 31, 1999
(UNAUDITED)
-----------------
Net asset value:
Beginning of period ...................................... $ 10.00
-------
Net investment income ....................................... 0.07
Net unrealized loss on investments .......................... (0.86)
-------
Total from investment operations ............................ (0.79)
-------
Less dividends from:
Net investment income ....................................... (0.08)
-------
Total distributions ......................................... (0.08)
-------
Net asset value:
End of period ............................................ $ 9.13
======
Total Investment Return (Excludes sales charge) ........ (7.93%)
SIGNIFICANT RATIOS AND SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets(1) ....... 1.75%**
Ratio of net investment income to average net assets ...... 1.95%**
Portfolio turnover rate ................................... 0.00%
Net assets, end of period (000s omitted) ................... $16,442
* Commencement of Operations
** Annualized
(1) Net of voluntary waivers and reimbursements. Without waivers and
reimbursements, the ratio of expenses to average net assets would have been
3.48% for the period ended December 31, 1999.
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SENBANC FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. DISCRIPTION 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 generally accepted accounting
principles.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: 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 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.
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3. PORTFOLIO TRANSACTIONS
During the period ended December 31, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated as follows:
Purchases ..................... $13,799,234
Sales ......................... 0
The cost of investments for Federal income tax purposes and financial reporting
is the same. At December 31, 1999, the gross unrealized appreciation and
depreciation of investments was $241,855 and $1,660,327 respectively, resulting
in net unrealized depreciation of $1,418,472.
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 December 31, 1999, the Advisor waived its fee in
the amount of $42,284 and reimbursed the Fund in the amount of $18,969.
PFPC Inc. ("PFPC") serves as administrator, accounting services agent and
transfer agent to the Trust pursuant to separate agreements with the Trust.
During the period ended December 31, 1999, PFPC waived fees in the amount of
$61,268.
Provident Distributors, Inc. ("PDI") manages the Funds' 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 each 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.
5. SHARE TRANSACTIONS
At December 31, 1999, there was an unlimited number of shares of beneficial
interest, $0.01 par value, authorized. The following table summarizes the
activity in shares of the Fund.
Shares sold ....................... 1,818,370
Shares reinvested ................. 13,904
Shares redeemed ................... (30,535)
---------
Change in Shares .................. 1,801,739
=========
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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.
Four Falls Corporate Center, 6th Floor
West Conshohocken, Pennsylvania
19428-2961
(610) 260-6533
TRANSFER AGENT
PFPC Inc
400 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
PFPC Trust Company
200 Stevens Lane
Lester, PA 19113
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.
SEMI-ANNUAL REPORT
DECEMBER 31, 1999
