Hodges Fund
Designed
for Investors
Who Want Growth
Semi-Annual Report
For the Six Months Ended
September 30, 1995
<PAGE>
October 2, 1995
Dear Hodges Fund Shareholders:
For the quarter ending September 30, 1995, the Hodges Fund return was 10.32%.
For the six month period ending September 30, 1995, the total return was 17.88%.
For the twelve months ending in September the return was 29.95%. Our return,
since inception, is an annual compound growth rate of 14.32%. During the quarter
we took new positions in American Express, Children's Comprehensive Care, U.S.
Surgical, Circle K and Capital Southwest. We added to existing positions of
Mylan Labs, Calloway Nursery, Diagnostic Health Services, Surgical Care
Affiliates, Mail Boxes and Vulcan Materials.
As the market has moved up this past six months, we have become slightly more
defensive in the types of securities we are owning. If you have any questions
about our portfolio, or questions about our investment strategy, please feel
free to call me or one of my associates and we will get back to you promptly.
Sincerely,
DON W. HODGES
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS at September 30, 1995 (Unaudited)
- - ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 83.4% Market Value
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Building and Construction: 4.4%
4,700 Texas Industries, Inc................................................... $ 247,925
5,000 Vulcan Materials Company................................................ 265,000
-------
512,925
-------
Computers, Software and Electronics: 5.2%
10,000 Dallas Semiconductor Corp............................................... 205,000
10,000 Optical Data Systems, Inc.*............................................. 390,000
-------
595,000
-------
Construction Equipment: 0.8%
15,000 CMI Corp., Class A...................................................... 97,500
------
Consumer Products: 1.7%
15,000 Fossil Inc.............................................................. 196,875
-------
Electrical Products: 2.4%
15,000 Sterling Electronics.................................................... 279,375
-------
Entertainment: 2.5%
10,500 Gaylord Entertainment Company........................................... 284,813
-------
Financial: 1.9%
5,000 American Express Company................................................ 221,875
-------
Food: 6.3%
5,000 Hershey Foods Corp...................................................... 321,875
8,000 Wm. Wrigley, Jr., Company............................................... 404,000
-------
725,875
-------
Insurance: 6.3%
60,000 Nobel Insurance, Ltd.*.................................................. 727,500
-------
Medical Equipment: 4.6%
20,000 U.S. Surgical Corp...................................................... 535,000
-------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS at September 30, 1995 (Unaudited), Continued
- - ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Medical Related: 9.5%
140,000 Diagnostic Health Services.............................................. $ 630,000
20,000 Surgical Care Affiliates, Inc........................................... 465,000
-------
1,095,000
---------
Miscellaneous Services: 0.7%
22,500 Childrens Comp. Services................................................ 77,344
------
Personal Care Products: 3.9%
15,000 Helene Curtis Industries, Inc........................................... 451,875
-------
Pharmaceutical: 3.9%
3,000 Amgen, Inc.............................................................. 149,625
15,000 Mylan Laboratories...................................................... 300,000
-------
449,625
-------
Printing & Publishing: 3.3%
15,000 Thomas Nelson, Inc...................................................... 378,750
-------
Retail: 9.9%
104,750 Calloway's Nursery, Inc................................................. 121,117
5,000 Circle K Corp........................................................... 103,750
10,000 Home Depot, Inc. ....................................................... 398,750
2,000 Office Depot, Inc....................................................... 60,250
10,000 Wal-Mart Stores, Inc. .................................................. 248,750
10,000 Williams-Sonoma, Inc. .................................................. 207,500
-------
1,140,117
---------
Restaurants: 7.8%
20,000 Brinker International, Inc.*............................................ 297,500
19,000 Cracker Barrel Old Country Store, Inc................................... 382,375
10,000 Luby's Cafeterias, Inc.................................................. 215,000
-------
894,875
-------
Service Industries: 3.4%
30,000 Mail Boxes Etc.*........................................................ 397,500
-------
Stock Brokerage: 4.0%
10,000 Quick & Reilly Group.................................................... 458,750
-------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS at September 30, 1995 (Unaudited), Continued
- - ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Venture Capital: 0.9%
2,300 Captial Southwest Corp.................................................. $ 101,775
---------
Total Common Stocks (cost $8,595,532) .................................. 9,622,349
---------
CONVERTIBLE PREFERRED STOCKS: 3.8%
- - ------------------------------------------------------------------------------------------------------------------------------------
33,600 Capstead Mortgage Corporation (cost $423,634)........................... 436,800
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Principal Amount REPURCHASE AGREEMENTS: 10.9%
- - ------------------------------------------------------------------------------------------------------------------------------------
$1,255,515 Provident Bank Repurchase Agreement, 6.25%, dated 9/29/95,
due 10/2/95, collateralized by $1,275,000 U.S. Treasury Notes,
due 5/15/96 (proceeds $1,256,169) (cost $1,255,515)..................... 1,255,515
---------
Total Investment in Securities (cost $10,274,681+): 98.1%............... 11,314,664
Other Assets less Liabilities: 1.9%..................................... 216,603
-------
Total Net Assets: 100.0%................................................ $11,531,267
===========
<FN>
* Indicates non-income producing security.
+ Cost for federal income tax purposes is the same.
</FN>
Net unrealized appreciation consists of:
Gross unrealized appreciation.................................. $ 1,536,113
Gross unrealized depreciation.................................. (496,130)
--------
Net unrealized appreciation........................... $ 1,039,983
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at September 30, 1995 (Unaudited)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (identified cost $10,274,681) (Note 2-A) .......... $11,314,664
Receivables:
Dividends and interest .......................................................... 2,462
Investments sold................................................................. 114,750
Capital shares sold ............................................................. 106,899
Other ........................................................................... 21,076
Prepaid expenses....................................................................... 3,878
-----
Total assets .............................................................. 11,563,729
----------
LIABILITIES
Payables:
Distribution Plan................................................................ 14,484
Advisor ......................................................................... 7,965
Manager.......................................................................... 2,465
Accrued expenses ...................................................................... 7,548
-----
Total liabilities.......................................................... 32,462
------
NET ASSETS ................................................................................. $11,531,267
===========
Net asset value and redemption price per share
($11,531,267/849,263 shares outstanding;
unlimited number of shares authorized without par value) ........................ $13.58
======
Computation of offering price per share
(Net asset value $13.58/.975).................................................... $13.93
======
SOURCE OF NET ASSETS
Paid-in capital ....................................................................... $ 9,240,281
Accumulated net investment loss ....................................................... (34,044)
Undistributed net realized gain on investments .............................................. 1,285,047
Net unrealized appreciation of investments............................................. 1,039,983
---------
Net assets ...................................................................... $11,531,267
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - for the Six Months Ended September 30, 1995 (Unaudited)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Income
Interest ........................................................................ $ 15,102
Dividends........................................................................ 61,198
------
Total investment income ................................................... 76,300
------
Expenses
Advisory fees (Note 3) .......................................................... 44,236
Distribution costs (Notes 3 and 4) .............................................. 26,021
Manager's fee (Note 3) ...................................................................... 15,041
Auditing fees ................................................................... 5,956
Legal fees ...................................................................... 363
Custodian and accounting fees.................................................... 5,827
Trustees' fees .................................................................. 1,504
Registration fees ............................................................... 1,203
Transfer agent fees.............................................................. 4,359
Reports to shareholders.......................................................... 2,693
Insurance ....................................................................... 1,254
Miscellaneous.................................................................... 1,887
-----
Total expenses............................................................. 110,344
-------
Net investment loss ............................................... (34,044)
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on security transactions ............................................ 1,299,196
Net increase in unrealized appreciation of investments ................................ 709,11
------
Net realized and unrealized gain on investments ........................... 2,008,311
---------
Net Increase in Net Assets Resulting from Operations ................ $ 1,974,267
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- - ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
September March 31,
30,1995* 1995
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss........................................................ $ (34,044) $ (63,105)
Net realized gain on security transactions ................................ 1,299,196 264,968
Net increase in unrealized appreciation of investments..................... 709,115 611,872
------- -------
Net increase in net assets resulting from operations 1,974,267 813,735
--------- -------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income...................................................... -0- -0-
Net realized gain from securities transactions ($0.34 and $0.26 per
share, respectively)................................................. (279,392) (209,299)
-------- --------
Total dividends and distributions ................................. (279,392) (209,299)
-------- --------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding
shares (a) .......................................................... 540,209 229,249
------- -------
Total increase in net assets ........................................ 2,235,084 833,685
NET ASSETS
Beginning of period........................................................ 9,296,183 8,462,498
--------- ---------
End of period ............................................................ $11,531,267 $9,296,183
=========== ==========
<FN>
(a) A summary of capital shares transactions is as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1995* March 31, 1995
Shares Value Shares Value
<S> <C> <C> <C> <C>
Shares sold ...................................... 53,334 $662,620 70,668 $ 757,390
Shares issued in connection with payment of
dividend ................................... 23,011 276,913 20,190 208,765
Shares redeemed .................................. (32,044) (399,324) (69,612) (736,906)
------- -------- ------- --------
Net increase ..................................... 44,301 $540,209 21,246 $ 229,249
====== ======== ====== =========
<FN>
*Unaudited.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
for a capital share outstanding throughout each period
- - ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Year Oct. 9, 1992*
Ended Ended Ended through
September March 31, March 31, March 31,
30, 1995** 1995 1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .......................... $11.55 $10.80 $11.78 $10.25
Income from investment operations:
Net investment income (loss) ............................ (.04) (.08) (.03) .02
Net realized and unrealized gain on investments ......... 2.41 1.09 .07 1.51
---- ---- --- ----
Total from investment operations............................... 2.37 1.01 .04 1.53
---- ---- --- ----
Less distributions:
Dividends from net investment income..................... -0- -0- (.01) -0-
Distributions from net capital gains .................... (.34) (.26) (1.01) -0-
---- ---- ----- -
Total distributions............................................ (.34) (.26) (1.02) -0-
---- ---- ----- -
Net asset value, end of period ................................ $13.58 $11.55 $10.80 $11.78
====== ====== ====== ======
Total return .................................................. 46.13%+ 9.60% 0.22% 25.59%+
Ratios/supplemental data:
Net assets, end of period (millions)........................... $11.5 $9.3 $8.5 $6.9
Ratio of expenses to average net assets:
Before expense reimbursement ............................ 2.12%+ 2.31% 2.63% 2.17%+
After expense reimbursement.............................. 2.12%+ 2.31% 2.07% 2.17%+
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement ............................ (0.65%)+ (0.75%) (0.84%) 0.41%+
After expense reimbursement ............................. (0.65%)+ (0.75%) (0.29%) 0.41%+
Portfolio turnover rate ....................................... 57.17% 73.65% 192.03% 26.23%
<FN>
*Commencement of operations.
**Unaudited.
+Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS at September 30, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Hodges Fund (the "Fund") is a series of shares of beneficial interest of
Professionally Managed Portfolios (the "Trust"), which is registered under the
Investment Company Act of 1940 (the "1940 Act") as a diversified, open-end
management company. The Fund began operations on October 9, 1992.
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. Investments in securities traded on a national
securities exchange or included in the NASDAQ National Market System are valued
at the last reported sale price at the close of regular trading on the last
business day of the period; securities traded on an exchange or NASDAQ for which
there has been no sale and other over-the-counter securities are valued at the
last reported bid price. Securities for which quotations are not readily
available are valued at their respective fair values as determined in good faith
by the Board of Trustees. Short-term investments are stated at cost, which when
combined with accrued interest, approximates market value. U.S. Government
securities with less than 60 days remaining to maturity when acquired by the
Fund are valued on an amortized cost basis. U.S. Government securities with more
than 60 days remaining to maturity are valued at the current market value (using
the mean between the bid and asked price) until the 60th day prior to maturity,
and are then valued at amortized cost based upon the value on such date unless
the Board determines during such 60 day period that this amortized cost basis
does not represent fair value.
B. Federal Income Taxes. The Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no federal
income tax provision is required.
C. Security Transactions, Dividends and Distributions. As is common in the
industry, security transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
For the period ended September 30, 1995, Hodges Capital Management,
Incorporated (the "Advisor") provided the Fund with investment management
services under an Investment Advisory Agreement. The Advisor furnished all
investment advice, office space and certain administrative services, and
provides most of the personnel needed by the Fund. As compensation for its
services, the Advisor was entitled to a monthly fee at the annual rate of 0.85%
based upon the average daily net assets of the Fund.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
- - --------------------------------------------------------------------------------
The Fund is responsible for its own operating expenses. The Advisor has
agreed to reduce fees payable to it by the Fund to the extent necessary to limit
the Fund's aggregate annual operating expenses to the most stringent limits
prescribed by any state in which the Fund's shares are offered for sale.
Currently, the most stringent limits prescribed are 2.50% of the first $30
million of net assets and reduced amounts thereafter.
Southampton Investment Management Company (the "Manager") acts as the
Fund's Manager under an Investment Management Agreement. The Manager 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 Fund expenses and reviews the Fund's expense
accruals. For its services, the Manager receives an annual fee equal to the
greater of 0.25% of the Fund's average daily net assets or $30,000.
First Dallas Securities, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. For
the period ended September 30, 1995, the Distributor received as commissions
$2,755 from the Fund in connection with its distribution of shares.
Certain officers and Trustees of the Fund are also officers and/or
directors of the Manager.
NOTE 4 - 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 will pay a fee to
the Distributor at an annual rate of up to 0.50% 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 September 30, 1995, the Fund paid fees of $26,021 to the
Distributor.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
For the period ended September 30, 1995, the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, were
$5,521,522 and $6,484,083, respectively.
<PAGE>
Advisor Hodges Capital Management, Inc.
2905 Maple Avenue Dallas, Texas
75201 (800) 388-8512
--
Distributor First Dallas Securities, Inc.
2905 Maple Avenue Dallas, Texas 75201
--
Custodian and Transfer Agent The Provident Bank
One East Fourth Street Cincinnati, Ohio 45250-0967
--
Auditors Tait, Weller & Baker
2 Penn Center Plaza Philadelphia, Pennsylvania 19102
--
Legal Counsel Heller, Ehrman, White & McAuliffe
333 Bush Street San Francisco, California
94104
This report is intended for the
shareholders of the Hodges Fund and
should not be used as sales
literature unless accompanied or
preceded by the Fund's current
prospectus.
