-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HmJZmktx96kk1xaLoF+C7WwwKwvGObd6VJgfR6fk7b6FshNEYg4NIBRSp5G7w+S/ 4sGnM6K2/BTUl6XN1czpFg== 0000950147-00-000020.txt : 20000107 0000950147-00-000020.hdr.sgml : 20000107 ACCESSION NUMBER: 0000950147-00-000020 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 20000106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVISORS SERIES TRUST CENTRAL INDEX KEY: 0001027596 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07959 FILM NUMBER: 502621 BUSINESS ADDRESS: STREET 1: 2020 E FINANCIAL WAY SUITE 100 CITY: GLENDORA STATE: CA ZIP: 91741 BUSINESS PHONE: 8188521033 MAIL ADDRESS: STREET 1: 2020 E FINANCIAL WAY STREET 2: SUITE 100 CITY: GLENDORA STATE: CA ZIP: 91741 N-30D 1 SEMI-ANNUAL REPORT FOR PERIOD ENDING 10-31-99 SEGALL BRYANT & HAMILL Mid Cap Fund [GRAPHIC] Semi-Annual Report October 31, 1999 SEGALL BRYANT & HAMILL MID CAP FUND December 13, 1999 Dear fellow Shareholder: For the six months ending October 31, 1999, the Segall Bryant & Hamill Mid Cap Fund's total return at NAV was (3.88) percent. This compares to the performance of the S&P 400 Mid Cap Index of 1.87 percent. As we communicated to you in the past, we feel that the opportunity for investing in the mid capitalization tier of the market is the most attractive it has been in the past quarter century. We believe that we can find companies in this area of the market that meet our high investment criteria and offer good value. Although we are focusing on smaller companies, the criteria which we use to select them remains unchanged- consistently high return on invested capital (ROI), double digit earnings growth and high levels of free cash flow. We continue to be owners of stocks and not renters, focusing on the long-term intrinsic value of their businesses. Unfortunately, over the past year the market has focused on the lowest quality sector of the market and virtually ignored high quality growth investments. During 1999, the average `high quality' stock (as defined by Standards and Poor's as B+ rated or better) has returned a NEGATIVE 9.2% while the "lowest quality" stocks have returned a POSITIVE 17.7%. As the year progressed, this performance disparity has only increased. While we have made adjustments to the Fund to reflect market realities, we continue to focus on high quality growth stocks trading at reasonable valuations. Over time, these types of stocks have outpaced the market with less risk. With the high valuation levels of the market and the speculation in the IPO market, it is important to focus on risk-adjusted returns and outlook for valuations going forward. Our outlook for the economy continues to be modest growth in 2000. Although interest rates have started to rise over the past six months due to increased fears of higher inflation, we do not foresee the Federal Reserve moving to a protracted tightening stance. The probability of one or two increases in rates is high, but should slow the economy to a reasonable level and be positive for the markets. Our focus on high ROI mid capitalization stocks has led us to invest in very solid companies that operate in unique industry settings. This strategy leads us to concentrate the Fund on the growth segments of the economy such as Health Care, Technology and Finance. We will tend to be overweight in these sectors and focus less on the more cyclical sectors of the market. Several of the technology companies that we highlighted our last update have done extremely well, (Symbol Technologies and PE Biosystems), and we have started to reduce our positions due to valuation levels. However, the market has given us the opportunity in several areas to increase our exposure due to what we believe are temporary issues. These areas include computer services, software and the education market. SEGALL BRYANT & HAMILL MID CAP FUND We remain confident that our selection process will lead to above-average results over time. By focusing on mid cap growth companies with reasonable valuations, we believe that our shareholders will benefit from both the depressed valuation levels of this sector of the market and owning high quality growth companies. We appreciate your continued support. /s/ David P. Kalis David P. Kalis, CFA The S&P 400 Mid Cap Index is comprised of stocks in the middle capitalization range. Indexes do no incur expenses and are not available for investment. Performance figures of the Fund and index represent past performance and are not indicative of the future performance of the Fund or index. The Fund's average annual total return from inception on April 1, 1999 through September 30, 1999 was (3.34)%. Share values will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original investment. The information contained in this report is authorized for use when proceeded or accompanied by a prospectus for the Fund. The Fund is distributed by First Fund Distributors, Inc., Phoenix, AZ. Member NASD. 2 SEGALL BRYANT & HAMILL MID CAP FUND SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- Shares COMMON STOCKS: 95.94% Market Value - -------------------------------------------------------------------------------- ADVERTISING AGENCIES: 3.54% 8,000 The Interpublic Group of Companies, Inc............... $ 325,000 ----------- BANKS - MAJOR REGIONAL: 0.90% 4,000 North Fork Bancorporation, Inc........................ 82,750 ----------- BROADCAST MEDIA: 4.17% 7,000 Adelphia Communications Corporation*.................. 382,375 ----------- COMMERCIAL BANKS - EASTERN U.S.: 1.12% 4,200 Charter One Financial, Inc............................ 103,163 ----------- COMMERICAL SERVICES: 0.71% 5,000 The ServiceMaster Company............................. 65,313 ----------- COMPUTER SERVICES: 11.39% 15,500 Ceridian Corp.*....................................... 340,031 15,000 Concord EFS, Inc.*.................................. 405,938 3,000 Equifax Inc........................................... 81,000 3,700 Policy Management Systems Corporation*................ 70,994 6,000 SunGard Data Systems Inc.*............................ 146,625 ----------- 1,044,588 ----------- CONSUMER PRODUCTS - MISCELLANEOUS: 7.09% 7,500 AptarGroup, Inc....................................... 201,563 4,000 Blyth Industries, Inc.*............................... 100,250 14,000 Rayovac Corporation*.................................. 348,250 ----------- 650,063 ----------- DIVERSIFIED MANUFACTURING: 7.13% 11,000 Applied Power Inc..................................... 319,688 15,000 Littlefuse, Inc.*..................................... 333,750 ----------- 653,438 ----------- ELECTRONIC - INSTRUMENTS: 3.53% 5,000 PE Corporation - PE Biosystems Group ................. 324,375 ----------- 3 SEGALL BRYANT & HAMILL MID CAP FUND SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999 (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- ELECTRONICS: 3.62% 10,081 Molex Incorporated.................................... $ 332,673 ----------- ELECTRONICS - SEMICONDUCTORS: 4.57% 6,000 Linear Technology Corporation......................... 419,625 ----------- FINANCIAL GUARANTEE INSURANCE: 4.17% 6,400 MGIC Investment Corporation........................... 382,400 ----------- HEALTHCARE - MEDICAL SUPPLY & PRODUCTS: 3.63% 14,000 Sybron International Corporation*..................... 333,375 ----------- HEALTHCARE - SERVICES: 3.47% 11,000 IMS Health Incorporated............................... 319,000 ----------- IDENTIFICATION SYSTEMS / DEVICES: 3.68% 8,500 Symbol Technologies, Inc.............................. 337,875 ----------- LIFE / HEALTH INSURANCE: 3.55% 9,000 Protective Life Corporation........................... 325,688 ----------- MANUFACTURING - DIVERSE: 2.55% 7,000 Graco Inc............................................ 234,500 ----------- MEDICAL INSTRUMENTS: 6.01% 9,000 Biomet, Inc........................................... 271,125 14,000 Ventana Medical Systems, Inc.*........................ 280,875 ----------- 552,000 ----------- OFFICE SUPPLIES AND FORMS: 3.40% 5,000 Avery Dennison Corporation............................ 312,500 ----------- OIL - EXPLORATION & PRODUCTION: 2.65% 5,000 Stone Energy Corporation*............................. 243,125 ----------- 4 SEGALL BRYANT & HAMILL MID CAP FUND SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1999 (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- OIL & GAS / REFINE & MARKET: 2.29% 10,000 Santa Fe International Corporation.................... $ 210,625 ----------- PUBLISHING - NEWSPAPERS: 3.92% 6,000 Tribune Company....................................... 360,000 ----------- RETAIL - DISCOUNT: 4.89% 6,000 BJ's Wholesale Club, Inc.*............................ 184,875 10,000 Dollar General Corporation............................ 263,750 ----------- 448,625 ----------- SERVICES - COMMERCIAL: 2.29% 10,000 DeVry Inc.*........................................... 210,625 ----------- TELEPHONE: 1.67% 3,800 CenturyTel, Inc....................................... 153,663 ----------- Total Common Stocks (Cost $8,095,588)................. 8,807,361 ----------- Principal Amount SHORT-TERM INVESTMENTS: 4.10% - -------------------------------------------------------------------------------- $376,220 Firstar Stellar Treasury Fund (Cost $376,220)......... 376,219 ----------- Total Investments in Securities (Cost $8,471,808+): 100.04%...................... 9,183,580 Liabilities in excess of Other Assets: (0.04)%........ (3,322) ----------- Total Net Assets: 100.00%............................. $ 9,180,258 =========== * Non-income producing security. + At October 31, 1999, the cost of securities for Federal tax purposes was the same as the basis for financial reporting. Gross unrealized appreciation and depreciation of securities on a tax basis were as follows: Gross unrealized appreciation...................... $ 1,140,564 Gross unrealized depreciation...................... (428,792) ----------- Net unrealized appreciation................... $ 711,772 =========== See Notes to Financial Statements. 5 SEGALL BRYANT & HAMILL MID CAP FUND STATEMENT OF ASSETS AND LIABILITIES AT OCTOBER 31, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS Investments in securities, at value (identified cost $8,471,808) ........................ $ 9,183,580 Receivables Due from advisor .................................... 3,502 Dividends and interest .............................. 2,856 Fund shares purchased ............................... 300 Prepaid expenses ......................................... 4,550 ----------- Total assets .................................. 9,194,788 ----------- LIABILITIES Other Payables ........................................... 13,174 Accrued expenses ......................................... 1,356 ----------- Total liabilities ............................. 14,530 ----------- NET ASSETS ..................................................... $ 9,180,258 =========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ($9,180,258 / 726,958 shares outstanding; unlimited number of shares authorized, par value $0.01) ....................... $ 12.63 =========== COMPONENTS OF NET ASSETS Paid-in capital .......................................... $ 8,309,413 Accumulated net investment loss .......................... (31,932) Accumulated net realized gain on investments ............. 191,005 Net unrealized appreciation on investments ............... 711,772 ----------- Net assets .......................................... $ 9,180,258 =========== See Notes to Financial Statements. 6 SEGALL BRYANT & HAMILL MID CAP FUND STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED OCTOBER 31, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME Income Dividends ............................................ $ 28,185 Interest ............................................. 6,911 --------- Total income ................................... 35,096 --------- Expenses Advisory fees (Note 3) ............................... 35,816 Professional fees .................................... 22,921 Administration fees (Note 3) ......................... 14,959 12b-1 fees (Note 6) .................................. 11,939 Fund accounting fees ................................. 8,976 Registration fees .................................... 7,828 Transfer agent fees .................................. 6,483 Custody fees ......................................... 3,591 Reports to shareholders .............................. 2,493 Other ................................................ 2,221 Trustee fees ......................................... 1,263 --------- Total expenses ................................. 118,490 Less: advisory fee waiver and absorption (Note 3) ................................. (51,462) --------- Net expenses ................................... 67,028 --------- NET INVESTMENT LOSS ............................ (31,932) --------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS Net realized loss from security transactions .............. (211,993) Net change in unrealized depreciation on investments ...... (196,761) --------- Net realized and unrealized loss on investments ...... (408,754) --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .......................... $(440,686) ========= * Commencement of operations. See Notes to Financial Statements. 7 SEGALL BRYANT & HAMILL MID CAP FUND STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- May 1, 1999 April 1, 1999* through through Oct. 31, 1999** April 30, 1999 --------------- -------------- INCREASE IN NET ASSETS FROM OPERATIONS: Net investment loss.......................... $ (31,932) $ (1,476) Net realized (loss) gain on security transactions ............................. (211,993) 463,426 Net change in unrealized (depreciation) appreciation on investments............... (196,761) 908,533 ---------- ---------- NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. (440,686) 1,370,483 ---------- ---------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares (a).......... 1,187,981 454,433 ---------- ---------- TOTAL INCREASE IN NET ASSETS ................ 747,295 1,824,916 ---------- ---------- NET ASSETS Beginning of period............................. 8,432,963 6,608,047 ---------- ---------- END OF PERIOD .................................. $9,180,258 $8,432,963 ========== ========== (a) A summary of capital shares transactions is as follows: May 1, 1999 through April 1, 1999* through October 31, 1999 ** April 30, 1999 -------------------- ---------------------- Shares Value Shares Value ------ ----- ------ ----- Shares sold ............... 172,840 $ 2,291,079 41,509 $ 534,032 Shares redeemed ........... (153,770) (1,103,098) (6,259) (79,599) ------ ----------- ------ --------- Net increase .............. 19,070 $ 1,187,981 35,250 $ 454,433 ====== =========== ====== ========= * Commencement of operations. ** Unaudited. See Notes to Financial Statements. 8 SEGALL BRYANT & HAMILL MID CAP FUND FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD - -------------------------------------------------------------------------------- May 1, 1999 April 1, 1999* through through Oct. 31, 1999** April 30, 1999 --------------- -------------- Net asset value, beginning of period.............. $13.14 $12.49# ------ ------ Income from investment operations: Net investment loss............................ (0.04) -- Net realized and unrealized (loss) gain on investments.............................. (0.47) 0.65 ------ ------ Total from investment operations.................. (0.51) 0.65 ------ ------ Net asset value, end of period.................... $12.63 $13.14 ====== ====== Total return...................................... (3.88)%++ 5.20%++ Ratios/supplemental data: Net assets, end of period (thousands)............. $9,180 $8,433 Ratio of expenses to average net assets: Before expense reimbursement................... 2.45%+ 7.35%+ After expense reimbursement.................... 1.40%+ 1.34%+ Ratio of net investment income to average net assets: After expense reimbursement.................... (0.66%)+ (0.23%)+ Portfolio turnover rate........................... 48.71% 18.02% * Commencement of operations. # See Note 5 to Financial Statements. + Annualized. ++ Not Annualized. ** Unaudited. See Notes to Financial Statements. 9 SEGALL BRYANT & HAMILL MID CAP FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1 - ORGANIZATION The Segall Bryant & Hamill Mid Cap Fund (the "Fund") is a series of shares of beneficial interest of Advisors Series Trust (the "Trust"), which is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund began operations on April 1, 1999. The Fund's objective is to seek growth of capital with income as a secondary objective. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with generally accepted accounting principles. A. SECURITY VALUATION: The Fund's investments are carried at fair value. Securities that are primarily traded on a national securities exchange shall be valued at the last sale price on the exchange on which they are primarily traded on the day of valuation or, if there has been no sale on such day, at the mean between the bid and asked prices. Securities primarily traded in the NASDAQ National Market System for which market quotations are readily available shall be value at the last sale price on the day of valuation, or if there has been no sale on such day, at the mean between the bid and asked prices. Over-the-counter ("OTC") securities which are not traded in the NASDAQ National Market System shall be valued at the most recent trade price. Securities for which market quotations are not readily available, if any, are valued following procedures approved by the Board of Trustees. Short-term investments are valued at amortized cost, which approximates market value. B. FEDERAL INCOME TAXES: It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security transactions are accounted for on the trade date. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Realized gains and losses on securities sold are determined on the basis of identified cost. Discounts and premiums on securities purchased are amortized over the life of the respective securities. D. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets during the reporting period. Actual results could differ from those estimates. NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES For the six months ended October 31, 1999, Segall Bryant & Hamill (the "Advisor") provided the Fund with investment management services under an Investment Advisory Agreement. The Advisor furnished all investment advice, office space, facilities, and provides most of the personnel needed by the Fund. As compensation for its services, the Advisor is entitled to a monthly fee at 10 SEGALL BRYANT & HAMILL MID CAP FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- the annual rate of 0.75% based upon the average daily net assets of the Fund. For the six months ended October 31, 1999, the Fund incurred $35,816 in Advisory Fees. The Fund is responsible for its own operating expenses. The Advisor has agreed to reduce fees payable to it by the Fund and to pay the Fund's operating expenses to the extent necessary to limit the Fund's aggregate annual operating expenses to 1.40% of average net assets (the "expense cap"). Any such reductions made by the Advisor in its fees or payment of expenses which are the Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so requested by the Advisor, in subsequent fiscal years if the aggregate amount actually paid by the Fund toward the operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the applicable limitation on the Fund's expenses. The Advisor is permitted to be reimbursed only for fee reductions and expense payments made in the previous three fiscal years, but is permitted to look back five years and four years, respectively, during the initial six years and seventh year of the Fund's operations. Any such reimbursement is also contingent upon Board of Trustees' subsequent review and ratification of the reimbursed amounts. Such reimbursement may not be paid prior to the Fund's payment of current ordinary operating expenses. For the year ended October 31, 1999, the Advisor reduced its fees and absorbed Fund expenses in the amount of $51,462; no amounts were reimbursed to the Advisor. Cumulative expenses subject to recapture pursuant to the aforementioned conditions amount to $89,844 at October 31, 1999. Investment Company Administration, L.L.C. (the "Administrator") acts as the Fund's Administrator under an Administration Agreement. The Administrator prepares various federal and state regulatory filings, reports and returns for the Fund; prepares reports and materials to be supplied to the trustees; monitors the activities of the Fund's custodian, transfer agent and accountants; coordinates the preparation and payment of the Fund's expenses and reviews the Fund's expense accruals. For its services, the Administrator receives a monthly fee at the following annual rate: Fund asset level Fee rate ---------------- -------- Less than $15 million $30,000 $15 million to less than $50 million 0.20% of average daily net assets $50 million to less than $100 million 0.15% of average daily net assets $100 million to less than $150 million 0.10% of average daily net assets More than $150 million 0.05% of average daily net assets First Fund Distributors, Inc. (the "Distributor") acts as the Fund's principal underwriter in a continuous public offering of the Fund's shares. The Distributor is an affiliate of the Administrator. Certain officers of the Fund are also officers and/or directors of the Administrator and the Distributor. NOTE 4 - SECURITIES TRANSACTIONS For the six months ended October 31, 1999 the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were $5,461,618 and $4,496,019, respectively. 11 SEGALL BRYANT & HAMILL MID CAP FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED - -------------------------------------------------------------------------------- NOTE 5 - REORGANIZATION On April 1, 1999 the Fund issued shares in exchange for shares of the Segall Bryant & Hamill Growth and Income Fund in a reorganization. The following is a summary of shares issued, net assets on the date of reorganization, net asset value per share and unrealized appreciation on that date: Shares............................................... 606,336 Net Assets........................................... $7,570,605 Net Asset Value Per Share ........................... $12.49 Final Distribution Per Share Paid April 14, 1999 ... 1.37 ---- Exchange Price Per Share ............................ $13.86 ------ Unrealized Appreciation.............................. $962,558 NOTE 6 - DISTRIBUTION COSTS The Fund has adopted a Distribution Plan (the "Plan") in accordance with Rule 12b-1 under the 1940 Act. The Plan provides that the Fund may pay a fee to the Distributor, at an annual rate of up to 0.25% of the average daily net assets of the Fund. The fee is paid to the Distributor as reimbursement for, or in anticipation of, expenses incurred for distribution-related activity. During the period ended October 31, 1999, the Fund paid the Distributor in the amount of $11,939. 12 SEGALL BRYANT & HAMILL MID CAP FUND CHANGE IN INDEPENDENT ACCOUNTANT On August 27, 1999, McGladrey & Pullen, LLP ("McGladrey") resigned as independent auditors of the Fund pursuant to an agreement by PricewaterhouseCoopers LLP ("PwC") to acquire McGladrey's investment company practice. The McGladrey partners and professionals serving the Fund at the time of the acquisition joined PwC. The reports of McGladrey on the financial statements of the Fund during the prior fiscal year contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. In connection with its audit for the period from April 1, 1999 (commencement of operations) through April 30, 1999, there were no disagreements with McGladrey on any matter of accounting principle or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of McGladrey would have caused it to make reference to the subject matter of disagreement in connection with its report. On September 10, 1999, the Fund, with the approval of its Board of Trustees and its Audit Committee, engaged PwC as its independent auditors. ADVISOR Segall Bryant & Hamill 10 South Wacker Drive, Suite 2150 Chicago, Illinois 60606 ========== DISTRIBUTOR First Fund Distributors, Inc. 4455 East Camelback Road, Suite 261E Phoenix, Arizona 85018 ========== CUSTODIAN Firstar Bank, N.A. 425 Walnut Street, M/L 6118 Cincinnati, Ohio 45202 ========== TRANSFER AGENT American Data Services 150 Motor Parkway, Suite 109 Hauppauge, New York 11788 877-829-8413 ========== LEGAL COUNSEL Paul, Hastings, Janofsky & Walker LLP 345 California Street, 29th Floor San Francisco, California 94104 -----END PRIVACY-ENHANCED MESSAGE-----