<PAGE>
July 30, 1999
To: Shareholders of the Hilliard Lyons Growth Fund
The Hilliard Lyons Growth Fund reported strong results for the second
quarter of 1999. The Fund's total return was 6.92% which was comparable to the
increase in the Standard & Poor's 500 stock index (+7.6%), the benchmark we
use to track our performance. For the six month period, the Fund was up 6.7%,
lagging behind the index which had gained 12.38% for the first half of 1999.
In the 12 months ending June 30, the Fund was up 16.6% and has achieved
annualized returns of 23.9% and 23.2% for the past three and five year
periods. We are pleased to have exceeded one of our fundamental goals which is
to earn mid-teens returns and to do so with a disciplined style that is always
mindful that there is risk as well as riches for the common stock investor.
There is no organizational news to report on the Fund. Shareholders should
benefit, however, from additional analytical power and some structural
alterations in the research process initiated at the Hilliard Lyons Investment
Management Group, the Fund's advisor. These changes will help us penetrate
more deeply into the opportunities that interest us and to produce more of
them.
Markets at Mid-Year
We were pleased that investor interest broadened in the second quarter to
produce some good gains in long-laungishing stocks. As has been widely
reported, the last two years have produced an inordinate focus on large
companies which are the industry leaders and important to own in order to
match the performance of the Standard & Poor's Index. Stock prices of many
smaller, less visible companies had lagged despite the good results in their
business operations. Many such companies had outstanding stock price gains in
the second quarter, and the Hilliard Lyons Growth Fund was and continues to be
a beneficiary of this change in the market's point of view. There were several
developments in the market place which allowed us to eliminate or reduce
investments which had not developed as we had hoped. These changes left us
with a 20% cash position at the end of the quarter. At this writing, that
position has been whittled down to 14%, and we would expect to have more than
90% of the money employed in stocks in relatively short order. Despite the
long bull market, we are still finding good opportunities to employ our funds.
There was a mini inflation scare in the second quarter caused by a bulge in
oil prices which filtered through the reported index numbers. Also, in the
first and second quarters, tax refunds, extra spending power from refinanced
mortgages and the wealth effect of rising stock prices generated scary
statistics which reflected ebullient consumer behavior. These factors appear
to be dying down and a sharp rise in interest rates has, at least temporarily,
run out of gas. Financial stocks performed poorly against a backdrop of rising
inflationary expectations. Opportunities may well develop in this sector.
The Beauty Contest
Some months ago we were amused to see the written commentary of an
experienced money manager begin with the sentence "Well, everybody's in the
pool now." It's true. Investing in stocks is the national pastime. Naturally,
with so many people involved, all kinds of eccentricities and pockets of weird
behavior have developed. And it's not just individuals playing the funny
games. The pros love it too. We close this quarter's commentary with another
quote from our
Continued . . . . .
1
<PAGE>
favorite financial commentator, (long dead) John Maynard Keynes. Commenting on
markets in 1936 Lord Keynes wrote,
"Or, to change the metaphor slightly, professional investment may be
likened to those newspaper competitions in which the competitors have to
pick out the six prettiest faces from a hundred photographs, the prize
being awarded to the competitor whose choice most nearly corresponds to the
average preferences of the competitors as a whole; so that each competitor
has to pick, not those faces which he himself finds prettiest, but those
which he thinks likeliest to catch the fancy of the other competitors, all
of whom are looking at the problem from the same point of view. It is not a
case of choosing those which, to the best of one's judgement, are really
the prettiest, now even those which average opinion genuinely thinks the
prettiest. We have reached the third degree where we devote our
intelligences to anticipating what average opinion expects the average
opinion to be. And there are some, I believe, who practise the fourth,
fifth and higher degrees."
The Fund's asset value has tripled since its inception 7 1/2 years ago.
Perhaps not the breathless pace of the Internet, but hardly a shabby result.
We are pleased with the outstanding companies we hold, and, being substantial
shareholders ourselves, look forward with confidence to extending our record
of solid long term returns.
/s/ Donald F. Kohler
DONALD F. KOHLER
Chairman
/s/ Samuel C. Harvey
SAMUEL C. HARVEY
President
2
<PAGE>
HILLIARD LYONS GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
(UNAUDITED)
June 30, 1999
COMMON STOCKS -- 83.0%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Company Cost Value
------- ------- ---- ------
BASIC INDUSTRY -- 4.0%
----------------------------------------------------------------------
<C> <S> <C> <C>
126,000 Sigma-Aldrich Corp.......................... $ 4,467,812 $ 4,339,125
----------- -----------
4,467,812 4,339,125
CAPITAL GOODS -- 7.7%
----------------------------------------------------------------------
162,000 Dover Corp. ................................ 3,907,898 5,670,000
21,000 General Electric Co. ....................... 415,030 2,373,000
6,000 Nordson Corp. .............................. 261,750 367,500
----------- -----------
4,584,678 8,410,500
CONSUMER DURABLE -- 7.3%
----------------------------------------------------------------------
123,000 Donaldson Inc. ............................. 1,723,497 3,013,500
91,000 Harley-Davidson Inc. ....................... 2,328,822 4,948,125
----------- -----------
4,052,319 7,961,625
CONSUMER NON-DURABLE -- 11.4%
----------------------------------------------------------------------
86,900* Bush Boake Allen Inc. ...................... 2,453,933 2,541,825
50,000 Gillette Co. ............................... 1,842,220 2,050,000
84,000 Estee Lauder Cos. Inc. LLA ................. 2,142,569 4,210,500
142,000 Mattel Inc. ................................ 4,136,020 3,754,125
----------- -----------
10,574,742 12,556,450
FINANCIAL -- 28.8%
----------------------------------------------------------------------
57,500 American International Group Inc. .......... 2,261,730 6,731,094
86* Berkshire Hathaway Inc. .................... 4,513,480 5,925,400
221,000 Cincinnati Financial Corp. ................. 4,930,565 8,301,313
72,500 Federal Home Loan Mortgage Corp. ........... 1,603,279 4,205,000
18,000 Fifth Third Bancorp ........................ 272,000 1,198,125
52,312 Synovus Financial Corp. .................... 294,615 1,039,701
50,000 Wachovia Corp. ............................. 3,586,468 4,278,125
----------- -----------
17,462,137 31,678,758
HEALTH CARE -- 6.6%
----------------------------------------------------------------------
26,500 Allergan Inc. .............................. 596,668 2,941,500
44,000 Johnson & Johnson........................... 1,360,355 4,312,000
----------- -----------
1,957,023 7,253,500
</TABLE>
See notes to financial statements.
3
<PAGE>
HILLIARD LYONS GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
(UNAUDITED)
June 30, 1999
<TABLE>
<CAPTION>
Market
Shares Company Cost Value
------- ------- ---- ------
RETAIL & SERVICES -- 13.7%
----------------------------------------------------------------------
<C> <S> <C> <C>
134,400 Brady WH Co. CL A ........................... 3,102,125 4,368,000
59,000 Gannett Inc. ................................ 2,760,857 4,211,125
86,000 G & K Services Inc. CL A .................... 2,875,470 4,504,250
68,000 Walgreen Co. ................................ 281,335 1,997,500
----------- -----------
9,019,787 15,080,875
TECHNOLOGY -- 3.5%
----------------------------------------------------------------------
89,500 Teleflex Inc ................................ 3,331,983 3,887,656
----------- -----------
3,331,983 3,887,656
Total Common Stocks.......................... $55,450,481 $91,168,489
</TABLE>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 17.5%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Purchase Maturity Market
Amount Description Yield Date Value
----------- ----------- -------- -------- ------------
<C> <S> <C> <C> <C>
$19,235,000 Federal Home Loan Bank........... 4.664% 07/01/99 $ 19,235,000
------------
Total U.S. Government Agency
Obligations
(Cost -- $19,235,000)............ 19,235,000
------------
TOTAL INVESTMENTS (Cost --
$74,685,481) (100.5%)........... $110,403,489
============
</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>
HILLIARD LYONS GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1999
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Common stocks (cost $55,450,481)................................ $ 91,168,488
U.S Government Agency Obligations at value (amortized cost
$19,235,000)................................................... 19,235,000
------------
Total investments.............................................. 110,403,488
Cash............................................................. 3,215
Receivables:
Dividends....................................................... 74,658
Capital shares sold............................................. 157,979
Prepaid expenses................................................. 11,091
------------
Total Assets................................................... $110,650,431
============
LIABILITIES:
Investments payable............................................. $ 408,100
Due to advisor -- Note C........................................ 209,064
Capital shares redeemed......................................... 85,164
Accrued expenses................................................ 123,754
------------
Total Liabilities.............................................. 826,082
------------
NET ASSETS:
Common stock ($.001 par value; 150,000,000 shares authorized and
3,120,040 shares issued and outstanding)........................ 3,120
Paid-in surplus.................................................. 72,659,533
Accumulated undistributed net realized gain on investments....... 1,326,611
Net unrealized appreciation on investments....................... 35,718,007
Accumulated undistributed net investment income -- Note B........ 117,078
------------
Total Capital (Net Assets)..................................... 109,824,349
------------
Total Liabilities and Capital.................................. $110,650,431
============
Net assets
Investor A shares............................................... $ 96,200,307
Investor B shares............................................... 13,624,042
------------
$109,824,349
============
Shares of capital stock
Investor A shares............................................... 2,730,112
Investor B shares............................................... 389,928
------------
3,120,040
Net asset value
Investor A shares -- redemption price per share................. $ 35.24
Investor B shares -- offering price per share*.................. $ 34.94
============
Maximum sales charge (Investor A)................................ 4.75%
Maximum offering price per share (100%/(100%-maximum sales
charge) of net asset
value adjusted to nearest cent) (Investor A).................... $ 37.00
============
</TABLE>
*Redemption price of Investor B shares varies based on length of time shares
are held.
See notes to financial statements.
5
<PAGE>
HILLIARD LYONS GROWTH FUND, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
For the six months ended June 30, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends........................................................ $ 439,523
Interest......................................................... 394,427
----------
Total investment income........................................ 833,950
EXPENSES:
Management fees -- Note C........................................ 438,653
12b-1 expenses (Investor A) -- Note C............................ 75,664
12b-1 expenses (Investor B) -- Note C............................ 60,582
Custodian fees................................................... 27,150
Audit fees....................................................... 19,600
Transfer agent fees (Investor A)................................. 35,240
Transfer agent fees (Investor B)................................. 24,900
Directors' fees.................................................. 16,135
Insurance expense................................................ 9,948
Legal fees....................................................... 7,835
Shareholder reports.............................................. 8,275
Filing fees...................................................... 11,195
Trade association................................................ 1,808
----------
736,985
----------
Waiver of management fees by Adviser -- Note C..................... ( 21,826)
Total expenses................................................. 715,159
----------
Net investment income........................................ 118,791
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments -- Note B....................... 1,340,117
Change in unrealized appreciation on investments................. 5,517,141
----------
Net gain on investments........................................ 6,857,258
----------
Net increase in net assets resulting from operations......... $6,976,049
==========
</TABLE>
See notes to financial statements.
6
<PAGE>
HILLIARD LYONS GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the six For the year
months ended ended
June 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income............................ $ 118,791 $ 484,708
Net realized gain on investments................. 1,340,117 2,054,232
Net change in unrealized appreciation on
investments..................................... 5,517,141 7,796,808
------------ ------------
Net increase in net assets from operations..... 6,976,049 10,335,748
DISTRIBUTIONS TO INVESTOR A SHAREHOLDERS FROM:
Net investment income............................ (0) (449,910)
Net realized gain on investments................. (1,364,109) (1,803,844)
------------ ------------
Total distributions............................ (1,364,109) (2,253,754)
DISTRIBUTIONS TO INVESTOR B SHAREHOLDERS FROM*:
In excess of net investment income............... (0) ( 37,291)
Net realized gain on investments................. (179,778) (193,153)
------------ ------------
Total distributions............................ (179,778) (230,444)
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 42,966 and 74,534 shares issued in
reinvestment of dividends, respectively......... 1,509,397 2,422,891
Proceeds from 389,473 and 1,360,496 shares sold,
respectively.................................... 13,124,675 42,878,738
Cost of 243,401 and 432,675 shares repurchased,
respectively ................................... (8,343,617) (13,467,505)
------------ ------------
Net increase in net assets from capital share
transactions.................................. 6,290,455 31,834,124
------------ ------------
Total increase in net assets................. 11,722,617 39,685,674
NET ASSETS:
Beginning of period.............................. 98,101,732 58,416,058
------------ ------------
End of period (includes undistributed net
investment income of $117,078 and distributions
in excess of net investment income of $1,713,
respectively)................................... $109,824,349 $ 98,101,732
============ ============
</TABLE>
* For the period April 20, 1998 (commencement of Class B shares) through
December 31, 1998
See notes to financial statements.
7
<PAGE>
HILLIARD LYONS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A -- ORGANIZATION
Hilliard Lyons Growth Fund, Inc. (the "Fund") is a non-diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund was incorporated under the laws of the state of
Maryland and commenced operations on January 6, 1992. The following is a
summary of significant accounting policies followed by the Fund in preparation
of its financial statements.
The Fund issues two classes of shares. Investor A shares and Investor B
shares. The Investor A shares are subject to an initial sales charge imposed
at the time of purchase, in accordance with the Fund's prospectus. Redemptions
of Investor B shares made within 5 years of purchase are subject to a
contingent deferred sales charge in accordance with the Fund's prospectus.
Each Investor Class A and Class B share of the Fund represents identical
interests in the investment portfolio of such Fund and has the same rights,
except that (i) Class B shares bear the expense of higher distribution fees,
which is expected to cause Class B shares to have a higher expense ratio and
to pay lower dividends than Class A shares (ii) certain other class specific
expenses will be borne solely by the class to which such expenses are
attributable, and (iii) each class has exclusive voting rights with respect to
its own distribution arrangements.
NOTE B -- ACCOUNTING POLICIES
SECURITY VALUATION: Securities traded on a national securities exchange or
traded over-the-counter and quoted on the NASDAQ System are valued at last
sales prices. Securities so traded for which there were no sales and other
securities are valued at the mean of the most recent bid-asked quotations
except that bonds not traded on a securities exchange nor quoted on the NASDAQ
System will be valued at prices provided by a recognized pricing service
unless the Adviser believes that such price does not represent a fair value.
Each money market instrument having a maturity of 60 days or less from the
valuation date is valued on an amortized cost basis. Other securities and
assets will be valued at fair value, as determined in good faith by the
Adviser under procedures established by, and under the supervision and
responsibility of, the Fund's Board of Directors.
Normally, repurchase agreements are not subject to trading. U.S. Government
obligations pledged as collateral for repurchase agreements are held by the
Fund's custodian bank until maturity of the repurchase agreement. Provisions
of the agreement provide that the market value of the collateral is sufficient
in the event of default; however, in the event of default or bankruptcy by the
other party to the agreement, realization and/or retention of the collateral
may be subject to legal proceedings.
SHARE VALUATION: The net asset value per share of each class of shares of the
Fund is calculated daily by dividing the total value of the Fund's assets
attributable to that class less liabilities attributable to that class, by the
number of shares of that class outstanding. The maximum offering price per
share of Class A shares is equal to the net asset value per share plus a sales
load equal to 4.99% of the net asset value (or 4.75% of the offering price).
The offering price of Class B shares is equal to the net asset value per
share.
The redemption price per share of the Fund, including each class of shares, is
equal to the net asset value per share. However, Class B shares are subject to
a contingent deferred sales charge in accordance with the Fund's prospectus if
redeemed within five years from the date of purchase.
FEDERAL INCOME TAXES: It is the policy of the Fund to qualify under the
Internal Revenue Code as a regulated investment company and to distribute all
of its taxable income to shareholders, thereby relieving the Fund of federal
income tax liability.
8
<PAGE>
DIVIDEND POLICY: It is the policy of the Fund to make distributions annually
of its net investment income and its net realized capital gains, if any, at
the end of the year in which earned or at the beginning of the next year.
Dividends and capital gain distributions will normally be reinvested in
additional shares at net asset value without a sales charge, unless otherwise
elected at purchase.
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. Estimates also affect the reported
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates.
ALLOCATIONS BETWEEN CLASSES: Investment income earned, realized capital gains
and losses and unrealized appreciation and depreciation for the Fund are
allocated daily to each Class of shares based upon its proportionate share of
total net assets of the Fund. Class specific expenses are charged daily to the
Class incurring the expense. Common expenses which are not attributable to a
specific Class are allocated daily to each Class of shares based upon its
proportionate share of total net assets of the Fund.
OTHER: The accounts of the Fund are kept on the accrual basis of accounting.
Security transactions are recorded on the trade date. Realized gains or losses
from sales of securities are determined on the specific identified cost basis.
Dividend income is recognized on the ex-dividend date.
NOTE C -- INVESTMENT ADVISORY AGREEMENT
The investment adviser, Hilliard Lyons Investment Advisors (the "Adviser") is
a division of J. J. B. Hilliard, W. L. Lyons, Inc. which owns 43,438 Class A
shares and 32 Class B shares of the Fund. Under the Investment Advisory
Agreement, the Adviser receives a fee, accrued daily and paid quarterly, at an
annual rate of .80% of the Fund's average daily net assets. The Adviser has
voluntarily agreed to reduce the fee payable to it under the Advisory
Agreement and, if necessary, reimburse the Fund on a quarterly basis, by the
amount by which the Fund's total annualized operating expenses (exclusive of
taxes, interest, brokerage commissions and extraordinary expenses but
including the Adviser's compensation) for the fiscal year ending December 31,
1999 exceed 1.30% of average daily net assets for Class A share investors and
2.05% for Class B share investors. For the six months ended June 30, 1999,
(for Class B share investors) the waiver of the management fee amounted to
$21,826.
The Fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Plan"). Under the Plan, the
Fund reimburses the Distributor quarterly at an annualized rate of up to .25%
for Class A share investors and 1.00% for Class B share investors of the
Fund's average daily net assets for distribution expenses actually incurred
provided the expenses for which reimbursement is made are primarily intended
to result in the sale of Fund shares and are approved by the Fund's Board of
Directors. Expenses for which the Distributor may be reimbursed under the Plan
include, but are not limited to, payments to investment brokers of the
Distributor and to authorized dealers for distribution of shares of the Fund
and for promotion of the maintenance of holdings by established stockholders
and stockholder servicing. J. J. B. Hilliard, W. L. Lyons, Inc., the
Distributor, received sales charges of approximately $413,288 during the six
months ended June 30, 1999. The Hilliard Lyons Profit Sharing Plan, as
directed by each participant, owns 493,223 shares of the Fund as of June 30,
1999.
No compensation is paid by the Fund to officers and directors of the Fund who
are affiliated with the Adviser or Hilliard-Lyons, Inc. The Fund pays each
unaffiliated director an annual retainer of $5,000 and a fee of $750 for each
Board or Committee meeting attended and certain expenses the directors incur
in attending meetings.
9
<PAGE>
NOTE D -- PORTFOLIO TRANSACTIONS
For the six months ended June 30, 1999, purchases and proceeds from sale of
investment securities (excluding short-term securities) were $10,102,407 and
$8,543,225, respectively.
The cost of investments for Federal income tax purposes and financial
reporting is the same. At June 30, 1999, the gross unrealized appreciation and
depreciation on investments was $36,228,589 and $510,582, respectively,
resulting in net unrealized appreciation of $35,718,007.
NOTE E -- CAPITAL TRANSACTIONS
<TABLE>
<CAPTION>
For the six For the year
months ended ended
June 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued.................. $9,163,851 $33,687,452
Dividends reinvested......................... 1,331,705 2,196,708
Shares redeemed.............................. (7,636,380) (13,188,919)
---------- -----------
Change in net assets from Investor A share
transactions................................ $2,859,176 $22,695,241
========== ===========
*Investor B shares:
Proceeds from shares issued.................. $3,960,824 $ 9,191,286
Dividends reinvested......................... 177,692 226,183
Shares redeemed.............................. ( 707,237) ( 278,586)
---------- -----------
Change in net assets from Investor B share
transactions................................ $3,431,279 $ 9,138,883
========== ===========
SHARE TRANSACTIONS:
Investor A shares:
Issued....................................... 271,820 1,070,524
Reinvested................................... 37,876 67,549
Redeemed..................................... ( 222,410) ( 423,897)
---------- -----------
Change in Investor A shares.................. 87,286 714,176
========== ===========
*Investor B shares:
Issued....................................... 117,653 289,972
Reinvested................................... 5,090 6,985
Redeemed..................................... ( 20,991) ( 8,778)
---------- -----------
Change in Investor B shares.................. 101,752 288,179
========== ===========
</TABLE>
*For the period April 20, 1998 (commencement of Class B shares) through
December 31, 1998
10
<PAGE>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share of capital stock
outstanding throughout each 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>
Investor B Investor A
----------------------------- ------------------------------------------------------------
For the
For the six six
months Period from months
ended April 20, ended
June 30, 1998* To June 30,
1999 December 31, 1999 For the Year Ended December 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 1997 1996 1995
----------- ------------ ----------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period..... $33.33 $32.63 $33.49 $30.29 $22.95 $20.20 $15.98
------- ------ ------- ------- ------- ------- -------
Net investment income.... (0.06) (0.02) 0.05 0.20 0.12 0.11 0.15
Net realized and
unrealized gain on
investments............. 2.17 1.57 2.20 3.89 9.13 3.92 4.82
------- ------ ------- ------- ------- ------- -------
Total from investment
operations.............. 2.11 1.55 2.25 4.09 9.25 4.03 4.97
------- ------ ------- ------- ------- ------- -------
Less dividends from:
Net investment income... (0.00) (0.00) (0.00) (0.18) (0.12) (0.11) (0.15)
Realized gains........... (0.50) (0.71) (0.50) (0.71) (1.79) (1.17) (0.60)
In excess of net
investment income....... (0.00) (0.14) (0.00) (0.00) (0.00) (0.00) (0.00)
Total distributions ..... (0.50) (0.85) (0.50) (0.89) (1.91) (1.28) (0.75)
------- ------ ------- ------- ------- ------- -------
Net asset value:
End of period .......... $34.94 $33.33 $35.24 $33.49 $30.29 $22.95 $20.20
======= ====== ======= ======= ======= ======= =======
Total Investment Return
(Excludes sales charge). 6.33% 4.82%*** 6.73% 13.58% 40.41% 19.98% 31.10%
<CAPTION>
1994
-----------
<S> <C>
Net asset value:
Beginning of period..... $15.69
-----------
Net investment income.... 0.12
Net realized and
unrealized gain on
investments............. 0.29
-----------
Total from investment
operations.............. 0.41
-----------
Less dividends from:
Net investment income... (0.12)
Realized gains........... (0.00)
In excess of net
investment income....... (0.00)
Total distributions ..... (0.12)
-----------
Net asset value:
End of period .......... $15.98
===========
Total Investment Return
(Excludes sales charge). 2.60%
SIGNIFICANT RATIOS AND SUPPLEMENTAL DATA
Ratio of operating
expenses to average net
assets.................. 2.05%(f)** 2.05%(e)** 1.30%** 1.25%(e) 1.30%(d) 1.58%(c) 1.75%(b)
Ratio of net investment
income to average net
assets.................. (.43%)(f)** (.23%)(e)** .31%** .64%(e) .49%(d) .52%(c) .82%(b)
Portfolio turnover
rate (g)................ 9.78% 18.15% 9.78% 18.15% 22.20% 18.79% 27.50%
Net assets,
end of period
(000s omitted).......... $13,624 $9,604 $96,200 $88,498 $58,416 $35,628 $28,259
SIGNIFICANT RATIOS AND SUPPLEMENTAL DATA
Ratio of operating
expenses to average net
assets.................. 1.75%(a)
Ratio of net investment
income to average net
assets.................. .68%(a)
Portfolio turnover
rate (g)................ 20.10%
Net assets,
end of period
(000s omitted).......... $20,476
</TABLE>
11
<PAGE>
(a) Net of voluntary management fee waiver by the Adviser. If the Fund had
paid the full management fee, the annualized ratios of expenses and net
investment income to average net assets would have been 1.94% and 0.50%,
respectively, for the year ended December 31, 1994.
(b) Net of voluntary management fee waiver by the Adviser. If the Fund had
paid the full management fee, the annualized ratios of expenses and net
investment income to average net assets would have been 1.85% and 0.71%,
respectively, for the year ended December 31, 1995.
(c) Net of voluntary management fee waiver by the Adviser. If the Fund had
paid the full management fee, the annualized ratios of expenses and net
investment income to average net assets would have been 1.64% and 0.45%,
respectively, for the year ended December 31, 1996.
(d) Net of voluntary management fee waiver by the Adviser. If the Fund had
paid the full management fee, the annualized ratios of expenses and net
investment income to average net assets would have been 1.40% and 0.39%,
respectively, for the year ended December 31, 1997.
(e) Net of voluntary expense reimbursement and management fee waiver by the
Adviser for B shares investors and net of voluntary management fee waiver
by A share investors. If the Fund had borne all expenses that were assumed
by the Adviser and had paid the full management fee, the annualized ratios
of expenses and net investment income to average net assets would have
been 1.27% and .62% for A shares and 3.09% and (1.27%) for B shares,
respectively, for the year ended December 31, 1998.
(f) Net of voluntary management fee waiver by the Advisor for B share
investors. If the Fund had paid the full management fee, the annualized
ratios of expenses and net investment income to average net assets for B
share investors would have been 2.43% and (0.80%), respectively, for the
six months ended June 30, 1999.
(g) Portfolio turnover rate is calculated on the basis of the portfolios as a
whole without distinguishing between the classes of shares issued.
* Commencement of B shares
** Annualized
*** Not annualized
12
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[HILLIARD LYONS GROWTH FUND LOGO APPEARS HERE]
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Semi-Annual Report
June 30, 1999
J.J.B. Hilliard, W.L. Lyons, Inc.
Hilliard Lyons Center
Louisville, Kentucky 40202
(502) 588-8400
(800) 444-1854
----------------------------------
DIRECTORS
William A. Blodgett, Jr.
Donald F. Kohler
Stewart E. Conner
John C. Owens
OFFICERS
Donald F. Kohler -- Chairman
Samuel C. Harvey -- President
Joseph C. Curry, Jr. -- Treasurer and Secretary
Dianna P. Wengler -- Asst. Secretary
DISTRIBUTOR
Provident Distributors, Inc.
Four Falls Corporate Center, 6th Floor
West Conshohocken, Pennsylvania
19428-2961
(610) 260-6533
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02266
AUDITORS
Ernst & Young LLP
400 West Market Street
Louisville, Kentucky 40202
LEGAL COUNSEL
Brown, Todd & Heyburn PLLC
3200 Providian Center
Louisville, Kentucky 40202
This report is intended for the information of shareholders of the Hilliard
Lyons Growth Fund, Inc., but it may also be used as sales literature when pre-
ceded or accompanied by the current prospectus, which gives details about
charges, expenses, investment objectives and operating policies of the Fund.
SEMI-ANNUAL REPORT
June 30, 1999
599973
