N-30D 1 sb_hmcf-a.txt SEGALL BRYANT & HAMILL MID CAP FUND Annual Report April 30, 2002 May 30, 2002 Dear Fellow Shareholder: For the one-year period ending April 30, 2002, the Segall Bryant & Hamill Mid Cap Fund's total return at NAV was -3.99 percent. This compares to the performance of the Russell Mid Cap Index of -.70 percent. Recently, Morningstar listed the Fund with a 4-Star rating in the Mid Cap Growth Category among 443 funds as of 4/30/02. This ranking reflects the superior risk-adjusted performance over the past three years. Over the three-year period ending April 30, 2002, the Fund returned 5.73 percent annually vs. the Russell Mid Cap Index, which returned 4.93 percent annually. As we communicated to you in the past, we feel that the opportunity for investing in the mid capitalization tier of the market continues to be attractive. The past three years has seen a dramatic shift out of large capitalization companies and into mid capitalization companies. For the three- year period ending April 30, 2002, the S&P 500 Index (a proxy for the large cap market) has a negative 19.00 percent return while the Russell Mid Cap Index has a positive 10.00 percent return. While the valuation gap between the two market tiers has narrowed, there is still plenty of value to be found in mid cap stocks. We believe that we can find companies in this area of the market that meet our 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. Over the past year, there has been a dramatic shift in the investment landscape. Several issues are worth mentioning. First, the Federal Reserve's aggressive easing to stimulate the economy is starting to take hold. The recovery is underway, but sporadic. Companies have been aggressively cutting costs to get their operating structures in-line with the current business environment. As the economy recovers, these companies will have significant earnings leverage, which in turn, should lead to strong earnings growth. This strong earnings growth should fuel a recovery in capital spending and lead the economy out of the recession. The Fund's performance over the past year is a combination of several factors. In late 2000, the Fund was positioned to take advantage of potential aggressive Fed easing and a rebound in the economy by the third quarter of 2001. Due to the events of September 11th, the rebound in the economy was delayed, but is now back on track. The Fund's increased exposure in several sectors of the market will continue to benefit from a rebounding economy and include semiconductors, industrials, media companies and retailers. These 'high quality' cyclical companies tend anticipate a recovery in the economy well in advance and outperform even as near-term fundamentals deteriorate. Also, our focus on finding truly unique companies with consistent earning growth decreased the Fund's overall volatility during a very uncertain period. Our outlook for the economy is for accelerating growth during the balance of 2002. As of mid 2001, the economy had slipped into recession territory and the events of September 11th accelerated this slowdown. The aggressive easing that the Fed has undertaken and the recent fiscal stimulus packages should result in stronger economic growth as we exit 2002. The Fund is currently positioned for such a recovery. 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. However, we have selectively increased our exposure to companies that will benefit from accelerating economic growth. 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 attractive valuation levels of this sector of the market and owning high quality growth companies. /s/David P. Kalis David P. Kalis, CFA Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Sector allocations are subject to change at any time and are not recommendations to buy or sell any security. Please refer to the growth of $10,000 chart for further performance information. For each fund with at least a three-year history, Morningstar calculates a Morningstar RatingTM metric each month by subtracting the return on a 90-day U.S. Treasury Bill from the fund's load-adjusted return for the same period, and then adjusting this excess return for risk. The top 10% of funds in each broad asset class receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten- year (if applicable) Morningstar Rating metrics. As the Segall Bryant & Hamill Mid Cap Fund does not have 5 years of performance history, the Overall Morningstar Rating and the 3-Year Morningstar Rating are the same. (c) 2002 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. 07/02 SEGALL BRYANT & HAMILL MID CAP FUND COMPARISON OF THE CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THE SEGALL BRYANT & HAMILL MID CAP FUND VERSUS THE LIPPER MID CAP CORE FUND INDEX AND THE RUSSELL MID CAP INDEX. Segall Bryant & Hamill Lipper Mid Cap Russell Mid Date Mid Cap Fund Core Fund Index Cap Index ---- ------------ --------------- --------- 4/1/1999 $10,000 $10,000 $10,000 4/30/1999 $10,520 $10,574 $10,690 7/31/1999 $10,376 $11,063 $10,733 10/31/1999 $10,112 $11,079 $10,566 1/31/2000 $10,551 $13,323 $11,434 4/30/2000 $12,091 $14,370 $12,401 7/31/2000 $12,764 $14,473 $12,291 10/31/2000 $13,530 $14,915 $13,071 1/31/2001 $13,717 $14,730 $13,006 4/30/2001 $12,953 $13,895 $12,436 7/31/2001 $12,826 $13,813 $12,190 10/31/2001 $11,074 $12,105 $10,716 1/31/2002 $12,314 $13,453 $12,009 4/30/2002 $12,437 $13,879 $12,350 Since Average Annual Total Return Inception as of April 30, 2002 1 year 3 year (4/1/99) ----------------------------------- ------ ------ --------- Segall Bryant & Hamill Mid Cap Fund -3.99% 5.73% 7.33% Lipper Mid Cap Core Fund Index -0.12% 9.49% 11.21% Russell Mid Cap Index -0.70% 4.93% 7.24% Past performance is no guarantee of future results. Share value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than the original investment. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of fund shares. Indices do not incur expenses and are not available for investment. The Russell Mid Cap Index measures the performance of the 800 smallest companies contained within the largest 1,000 companies of the Russell 3,000 Index, an Index which represents approximately 98% of the investable U.S. equity market. The Lipper Mid Cap Core Fund Index is comprised of funds that invest at least 75% of their equity assets in companies with market capitalizations (on a 3 year weighted basis) of less than 300% of the dollar-weighted median market capitalization of the S&P Mid Cap 400 Index. The funds in this index have a similar investment objective as the Segall Bryant & Hamill Mid Cap Fund. Average annual total return represents the average change in account value over the periods indicated. SCHEDULE OF INVESTMENTS AT APRIL 30, 2002 Shares COMMON STOCKS: 93.93% Market Value ------------------------------------------------------------------------------- ADVERTISING: 3.79% 5,525 Catalina Marketing Corp. $ 193,872 9,250 The Interpublic Group of Companies, Inc. 285,640 ----------- 479,512 ----------- BANKS: 7.55% 3,900 Comerica Inc. 245,115 6,950 North Fork Bancorporation, Inc. 268,409 10,300 SouthTrust Corp. 274,804 3,100 Zions Bancorp. 167,648 ----------- 955,976 ----------- BROADCASTING-MEDIA: 2.05% 6,500 Univision Communications, Inc. - Class A* 259,740 ----------- CHEMICALS: 1.95% 8,100 Engelhard Corp. 246,402 ----------- COMPUTER SERVICES: 8.13% 5,700 Adobe Systems, Inc. 227,772 3,800 Affiliated Computer Services, Inc. - Class A* 205,466 4,226 Concord EFS, Inc.* 137,725 8,100 Convergys Corp.* 224,127 7,850 SunGard Data Systems Inc.* 233,616 ----------- 1,028,706 ----------- CONSUMER PRODUCTS: 3.53% 9,350 Pactiv Corp. 193,264 15,900 Rayovac Corp.* 252,969 ----------- 446,233 ----------- ELECTRONICS: 4.79% 9,825 Altera Corp. 202,002 5,150 Linear Technology Corp. 200,129 5,300 National Instruments Corp.* 203,679 ----------- 605,810 ----------- FINANCIAL: 6.25% 5,675 Ambac Financial Group, Inc. 356,731 4,900 Eaton Vance Corp. 178,997 3,575 MGIC Investment Corp. 255,112 ----------- 790,840 ----------- FOOD: 2.59% 9,100 Performance Food Group Co.* 328,146 ----------- HEALTHCARE: 7.01% 10,700 Biomet, Inc. 302,061 7,925 MedImmune, Inc.* 264,695 5,030 Millipore Corp.* 200,948 3,625 Respironics, Inc.* 118,864 ----------- 886,568 ----------- INSURANCE: 3.60% 7,900 AFLAC, Inc. 236,210 3,230 Everest Re Group, Ltd.# 219,317 ----------- 455,527 ----------- MANUFACTURING: 13.06% 4,600 Danaher Corp. 329,268 7,725 Flowserve Corp.* 266,513 6,150 Gentex Corp.* 194,709 4,350 Graco, Inc. 194,706 7,600 Littelfuse, Inc.* 204,516 5,350 Mettler-Toledo International, Inc.* 205,707 5,600 Roper Industries, Inc. 257,544 ----------- 1,652,963 ----------- OFFICE SUPPLIES: 2.32% 4,575 Avery Dennison Corp. 293,029 ----------- PERSONAL CARE: 2.14% 7,475 The Estee Lauder Companies, Inc. - Class A 270,221 ----------- PETROLEUM: 4.73% 9,400 Global Santa Fe Corp. 329,846 6,350 Stone Energy Corporation* 269,240 ----------- 599,086 ----------- PUBLISHING: 2.30% 5,730 Scholastic Corp.* 290,683 ----------- RETAIL: 3.92% 5,500 BJ's Wholesale Club, Inc.* 245,465 7,225 Family Dollar Stores, Inc. 249,985 ----------- 495,450 ----------- SERVICES: 7.78% 5,125 Cintas Corp. 265,321 6,650 Ecolab, Inc. 292,002 2,475 Laboratory Corporation of America Holdings* 245,520 6,900 Robert Half International, Inc.* 181,194 ----------- 984,037 ----------- TECHNOLOGY: 3.81% 6,525 Intuit, Inc.* 255,650 26,837 Symbol Technologies, Inc. 227,041 ----------- 482,691 ----------- TRANSPORTATION: 2.63% 10,575 C.H. Robinson Worldwide, Inc. 332,795 ----------- Total Common Stocks (Cost $10,904,847) 11,884,415 ----------- SHORT-TERM INVESTMENTS: 7.02% 888,887 Federated Cash Trust Money Market (Cost $888,887) 888,887 ----------- Total Investments in Securities (Cost $11,793,734): 100.95% 12,773,302 Liabilities in Excess of Other Assets: (0.95%) (120,499) ----------- Net Assets: 100.00% $12,652,803 ----------- ----------- * Non-income producing security. # U.S. exchange traded security of a foreign issuer. See accompanying Notes to Financial Statements. STATEMENT OF ASSETS AND LIABILITIES AT APRIL 30, 2002 ASSETS Investments in securities, at value (identified cost $11,793,734) $12,773,302 Receivables Fund shares sold 7,552 Dividends 3,424 Due from Advisor 3,703 Prepaid expenses 5,630 ----------- Total assets 12,793,611 ----------- LIABILITIES Payables Securities purchased 97,013 Distribution fees 342 Administration fees 2,466 Accrued expenses 40,987 ----------- Total liabilities 140,808 ----------- NET ASSETS $12,652,803 ----------- ----------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE [$12,652,803 / 1,042,612 shares outstanding; unlimited number of shares (par value $0.01) authorized] $12.14 ------ ------ COMPONENTS OF NET ASSETS Paid-in capital $12,310,950 Accumulated net realized loss on investments (637,715) Net unrealized appreciation on investments 979,568 ----------- Net assets $12,652,803 ----------- ----------- See accompanying Notes to Financial Statements. STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2002 INVESTMENT INCOME Income Dividend income $ 78,947 --------- Expenses Advisory fees (Note 3) 89,058 Administration fees (Note 3) 29,999 Distribution fees (Note 4) 29,686 Professional fees 23,613 Fund accounting fees 22,977 Transfer agent fees 19,580 Reports to shareholders 13,501 Registration fees 7,985 Custody fees 7,701 Trustee fees 5,224 Insurance fees 1,287 Miscellaneous fees 3,201 --------- Total expenses 253,812 Less: advisory fee waiver (Note 3) (88,021) --------- Net expenses 165,791 --------- NET INVESTMENT LOSS (86,844) --------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS Net realized loss from security transactions (608,042) Net change in unrealized appreciation on investments 179,480 --------- Net realized and unrealized loss on investments (428,562) --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(515,406) --------- --------- See accompanying Notes to Financial Statements. STATEMENTS OF CHANGES IN NET ASSETS Year Ended Year Ended April 30, 2002 April 30, 2001 -------------- -------------- (DECREASE) / INCREASE IN NET ASSETS FROM: OPERATIONS Net investment loss $ (86,844) $ (79,453) Net realized (loss) / gain on security transactions (608,042) 1,508,267 Net change in unrealized appreciation / (depreciation) on investments 179,480 (700,183) ----------- ----------- Net (decrease) / increase in net assets resulting from operations (515,406) 728,631 ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net realized gain on security transactions (533,525) (1,625,209) ----------- ----------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Net increase in net assets derived from net change in outstanding shares (a) 2,248,971 2,159,078 ----------- ----------- TOTAL INCREASE IN NET ASSETS 1,200,040 1,262,500 ----------- ----------- NET ASSETS Beginning of year 11,452,763 10,190,263 ----------- ----------- END OF YEAR $12,652,803 $11,452,763 ----------- ----------- ----------- -----------
(a) A summary of share transactions is as follows: Year Ended Year Ended April 30, 2002 April 30, 2001 ------------------- ------------------- Shares Value Shares Value ------ ----- ------ ----- Shares sold 427,039 $5,125,666 137,186 $1,916,695 Shares issued in reinvestment of distributions 43,496 514,998 106,692 1,496,889 Shares redeemed (293,786) (3,391,693) (87,145) (1,254,506) -------- ---------- ------- ---------- Net increase 176,749 $2,248,971 156,733 $2,159,078 -------- ---------- ------- ---------- -------- ---------- ------- ----------
See accompanying Notes to Financial Statements. FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD April 1, 1999* Year Ended April 30, through 2002 2001 2000 April 30, 1999 ---- ---- ---- -------------- Net asset value, beginning of period $13.23 $14.37 $13.14 $12.49 ------ ------ ------ ------ Income from investment operations: Net investment loss (0.08) (0.09) (0.11) -- Net realized and unrealized (loss) / gain on investments (0.46) 1.25 1.99 0.65 ------ ------ ------ ------ Total from investment operations (0.54) 1.16 1.88 0.65 ------ ------ ------ ------ Less distributions: Dividends from net realized gain (0.55) (2.30) (0.65) -- ------ ------ ------ ------ Net asset value, end of period $12.14 $13.23 $14.37 $13.14 ------ ------ ------ ------ ------ ------ ------ ------ Total return (3.99%) 7.13% 14.93% 5.20%++ Ratios/supplemental data: Net assets, end of period (thousands) $12,653 $11,453 $10,190 $8,433 Ratio of expenses to average net assets: Before expense reimbursement 2.14% 2.17% 2.51% 7.35%+ After expense reimbursement 1.40% 1.40% 1.40% 1.34%+ Ratio of net investment loss to average net assets: After expense reimbursement (0.73%) (0.72%) (0.78%) (0.23%)+ Portfolio turnover rate 63.38% 89.84% 114.39% 18.02%
* Commencement of operations. + Annualized. ++ Not Annualized. See accompanying Notes to Financial Statements. NOTES TO FINANCIAL HIGHLIGHTS AT APRIL 30, 2002 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 by investing in medium-capitalization ("mid-cap") companies 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 accounting principles generally accepted in the United States of America. 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 valued 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. Realized gains and losses on securities sold are determined on the basis of identified cost. Dividend income and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions to shareholders from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations which differs from accounting principles generally accepted in the United States of America. To the extent these book/tax differences are permanent such amounts are reclassified within the capital accounts based on their Federal tax treatment. D. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 year ended April 30, 2002, Segall Bryant & Hamill (the "Advisor") provided the Fund with investment management services under an Investment Advisory Agreement. The Advisor furnished all investment advice, office space, facilities, and provides most of the personnel needed by the Fund. As compensation for its services, the Advisor is entitled to a monthly fee at the annual rate of 0.75% based upon the average daily net assets of the Fund. For the year ended April 30, 2002, the Fund incurred $89,058 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 Fund operating expenses to the extent necessary to limit the Fund's aggregate annual operating expenses to 1.40% of average net assets (the "expense cap"). Any such reduction 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 Fund 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 review and approval at the time the reimbursement is made. Such reimbursement may not be paid prior to the Fund's payment of current ordinary operating expenses. For the year ended April 30, 2002, the Advisor reduced its fees in the amount of $88,021; no amounts were reimbursed to the Advisor. Cumulative expenses subject to recapture pursuant to the aforementioned conditions amounted to $317,471 at April 30, 2002. Accumulative expenses subject to recapture expire as follows: Year Amount ---- ------ 2004 $ 38,382 2005 $106,079 2006 $ 84,989 2007 $ 88,021 U.S. Bancorp Fund Services, LLC, formerly Investment Company Administration, LLC, (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 Quasar Distributors, LLC (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 of the Administrator. NOTE 4 - DISTRIBUTION COSTS The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 (the "Plan"). The Plan permits the Fund to pay for distribution and related expenses at an annual rate of up to 0.25% of the Fund's average daily net assets annually. The expenses covered by the Plan may include the cost of preparing and distributing prospectuses and other sales material, advertising and public relations expenses, payments to financial intermediaries and compensation of personnel involved in selling shares of the Fund. Payments made pursuant to the Plan will represent compensation for distribution and service activities, not reimbursements for specific expenses incurred. Pursuant to a distribution coordination agreement adopted under the Plan, distribution fees are paid to the Advisor as "Distribution Coordinator". For the year ended April 30, 2002, the Fund paid the Distribution Coordinator $29,686. NOTE 5 - PURCHASES AND SALES OF SECURITIES For the year ended April 30, 2002, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were $8,668,934 and $7,147,833 respectively. NOTE 6 - INCOME TAXES AND DISTRIBUTIONS Net investment income and net realized gains differ for financial statement and tax purposes due to differing treatments of wash sale losses deferred and losses realized subsequent to October 31 on the sale of securities. As of April 30, 2002, the components of net assets on a tax basis were as follows: Cost of investments $11,902,266 Gross tax unrealized appreciation 1,467,595 Gross tax unrealized depreciation (596,559) ----------- Net tax unrealized appreciation $ 871,036 ----------- ----------- Capital loss carryforward expiring in 2010 $ (409,189) ----------- ----------- At April 30, 2002, the Fund had deferred capital losses occurring subsequent to October 31, 2001 of ($119,994). For tax purposes, such losses will be reflected in the year ending April 30, 2003. The tax composition of dividends during the year ended April 30, 2002, was as follows: Long term capital gains $533,525 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Trustees and Shareholders of Segall Bryant & Hamill Mid Cap Fund In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Segall Bryant & Hamill Mid Cap Fund, a series of Advisor Series Trust (the "Fund") at April 30, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2002 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for the period from April 1, 1999 through April 30, 1999 were audited by other independent accountants whose report dated May 28, 1999 expressed an unqualified opinion on those financial statements. PricewaterhouseCoopers LLP New York, New York June 28, 2002 INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED) The business and affairs of the Fund are managed under the direction of the Fund's Board of Trustees. Information pertaining to the Trustees and Officers of the Fund is set forth below. Unless noted otherwise, each person has held the position listed for a minimum of five years. The SAI includes additional information about the Fund's officers and trustees and is available, without charge, upon request by calling 1-877-829-8413. INDEPENDENT TRUSTEES -------------------- # of Funds Other Term of in Director- Office and Principal complex ships Position Length of Occupation overseen Held Name, Age Held with Time During Past by by and Address the Trust Served Five Years Trustee Trustee ----------- --------- ---------- ----------- -------- ------- Walter E. Auch Trustee Indefinite Management Sixteen Salomon Smith (Born 1921) Term Consultant Barney Funds,, 2020 E. Financial Way Bayan Strategic Glendora, CA 91741 Since Realty Trust, 1997 Legend Properties, Pimco Advisors LLP, and Senele Group James Clayburn Trustee Indefinite Dean Emeritus, John Sixteen Trust for LaForce Term E. Anderson Graduate Investment (Born 1927) School of Management, Managers 2020 E. Financial Way Since University of Glendora, CA 91741 March California, 2002 Los Angeles Donald E. O'Connor Trustee Indefinite Financial Consultant; Sixteen The Forward (Born 1936) Term formerly Executive Vice Funds 2020 E. Financial Way President and Chief Glendora, CA 91741 Since Operating officer of ICI 1997 Mutual Insurance Company (until January, 1997); Vice President, Operations, Investment Company Institute (until July, 1993). George J. Rebhan Trustee Indefinite Retired; formerly Sixteen Trust for (Born 1934) Term President, Hotchkis Investment 2020 E. Financial Way and Wiley Funds Managers, Glendora, CA 91741 Since (mutual funds) E*Trade March from 1985 Funds 2002 to 1993. # of Funds in Other Term of complex Director- Office and Principal overseen ships Position Length of Occupation by Held Name, Age Held with Time During Past Trustee by Trustee and Address the Trust Served Five Years or Officer or Officer ----------- --------- ---------- ----------- ---------- ---------- George T. Wofford III Trustee Indefinite Senior Vice President, Sixteen Not Applicable (Born 1939) Term Information Services, 2020 E. Financial Way Federal Home Loan Bank Glendora, CA 91741 Since of San Francisco. 1997 INTERESTED TRUSTEES AND OFFICERS -------------------------------- Eric M. Banhazl Trustee, Indefinite Senior Vice President, Sixteen None (Born 1957) President Term U.S. Bancorp Fund 2020 E. & Services, LLC, the Financial Way Treasurer Since Fund's administrator Glendora, CA 1997 (since July, 2001); 91741 Treasurer, Investec Funds; formerly, Executive Vice President, Investment Company Administration, LLC (ICA) (The Fund's former administrator). Chad E. Fickett Secretary Indefinite Compliance Sixteen None (Born 1973) Term Administrator, 615 E. U.S. Bancorp Fund Michigan Street Services, LLC since Milwaukee, WI Since July 2000. 53202 March 2002
ADDITIONAL TAX INFORMATION (UNAUDITED) Under section 852(b)(3)(c) of the Internal Revenue Code, the Fund hereby designates $533,525 as a long-term capital gain dividend for the fiscal year ended April 30, 2002. ADVISOR Segall, Bryant & Hamill 10 South Wacker Drive, Suite 2150 Chicago, Illinois 60606 DISTRIBUTOR Quasar Distributors, LLC 615 East Michigan Street, 2nd Floor Milwaukee, Wisconsin 53202 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street Cincinnati, Ohio 45202 TRANSFER AGENT Orbitex Data Services 14707 California Street, Suite 5 Omaha, Nebraska 68154 877-829-8413 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers, LLP 1177 Avenue of the Americas New York, New York 10036 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker, LLP 55 Second Street, 24th Floor San Francisco, California 94105 This report is intended for the shareholders of the Fund and may not be used as sales literature unless preceded or accompanied by a current prospectus. For a current prospectus please call 1-877-829-8413. Past performance results shown in this report should not be considered a representation of future performance. Share price and returns will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are dated and are subject to change.