Crescent Fund
1999 Avenue of the Stars, Ste.1950
Los Angeles, CA 90067
Notice of Special Meeting
To the Shareholders of Crescent Fund, a portfolio of Professionally
Managed Portfolios, for a Special Meeting of the Fund to be held February 29,
1996:
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Crescent Fund (the "Fund"), a separate series of Professionally
Managed Portfolios (the "Trust"), will be held February 29, 1996 at 10:00 a.m.,
Pacific Time, at the offices of the Fund set forth above. At the Meeting, you
and the other shareholders of the Fund will be asked to consider and vote:
1. To approve or disapprove a new investment advisory agreement between
the Fund and First Pacific Advisors, Inc., ("FPA") pursuant to which
FPA will act as adviser with respect to the assets of the Fund, to
become effective upon FPA's planned employment of Mr. Steven Romick,
currently Chairman, Chief Financial Officer and co-owner of Crescent
Management ("Crescent"), the Adviser to the Fund.
2. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
Shareholders of record at the close of business on January 31, 1996 are
entitled to notice of, and to vote at, the Meeting. Your attention is called to
the accompanying Proxy Statement. Regardless of whether you plan to attend the
Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so
that a quorum will be present and a maximum number of shares may be voted. If
you are present at the Meeting, you may change your vote, if desired, at that
time.
By Order of the Board of Trustees
Robin Berger
Secretary
February 12, 1996
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Crescent Fund
1999 Avenue of the Stars, Ste.1950
Los Angeles, CA 90067
PROXY STATEMENT
To the Shareholders of Crescent Fund, a portfolio of Professionally
Managed Portfolios, for a Special Meeting of the Fund to be held February 29,
1996:
This Proxy Statement is furnished by Crescent Fund (the "Fund") to its
shareholders and on behalf of the Board of Trustees of Professionally Managed
Portfolios (the "Trust") of which the Fund is a portfolio, in connection with
the Fund's solicitation of voting instructions for use at a Special Meeting of
Shareholders(the "Meeting") to be held on February 29, 1996, at 10:00 a.m.,
Pacific Time, at the offices of the Fund listed above for the purposes set forth
below and in the accompanying Notice of Special Meeting. The approximate mailing
date of this Proxy Statement is February 15, 1996. At the Meeting the
shareholders of the Fund will be asked:
(1) To approve or disapprove a new investment advisory
agreement between the Fund and First Pacific Advisors,
Inc. ("FPA") pursuant to which FPA will act as adviser
with respect to the assets of the Fund, to become
effective upon FPA's planned employment of Mr. Steven
Romick, currently Chairman, Chief Financial Officer and co-owner of
Crescent Management, the Fund's current investment adviser (the
"Adviser"); and
(2) To transact such other business as may properly come
before the Meeting or any adjournments thereof.
The Fund will request broker-dealer firms, custodians, nominees and
fiduciaries to forward proxy materials to the beneficial owners of shares of the
Fund held of record by such persons. The Adviser may reimburse such
broker-dealer firms, custodians, nominees and fiduciaries for their reasonable
expenses incurred in connection with such proxy solicitation. In addition to the
solicitation of proxies by mail, officers and employees of the Fund or the
Trust, without additional compensation, may solicit proxies in person or by
telephone. The costs associated with this solicitation and the Meeting will be
borne by the Adviser and not by the Fund or the Trust.
Shareholders of the Fund at the close of business on January 31, 1996
will be entitled to be present and vote at the Meeting. As of that date, there
were 1,673,906.265 shares of the Fund
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outstanding and entitled to vote, representing total net assets
of approximately $21,169,891.73.
To the knowledge of the Fund's management, as of January 31, 1996 the
officers and trustees of the Trust and the Adviser own, as a group, less than 1%
of the shares of the Fund. Principals of the Adviser, however, have the ability
to direct the voting of shares in the Crescent Multi-Advisor Fund, L.P., which
constitute 14.31% of the Fund's outstanding shares as of the record date, and it
is expected that such shares will be voted in favor of the proposal. Except for
shares held by this partnership, to the knowledge of Fund management, the
officers and trustees of the Trust and Adviser own less than 1% of the shares of
the Fund.
To the knowledge of the Fund's management, as of January 31, 1996, the
only other persons owning beneficially more than 5% of the outstanding shares of
the Fund were as follows:
D.I. Sofro, Trustee, D. Sofro Trust 14.31%
Maple Group, A. Kallis, Gen Partner 6.22%
The Fund is a portfolio or "series" of Professionally Managed
Portfolios (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts. The Trust is registered, as an open-end
management investment company under the Investment Company Act of 1940. The
Fund's investment adviser is Crescent Management, 1999 Avenue of the Stars, Ste.
1950, Los Angeles, CA 90067. The Fund's principal underwriter is First Fund
Distributors, Inc., and its administrator is Southampton Investment Management
Company, Inc. both with offices at 4455 East Camelback, Suite 261E, Phoenix,
Arizona 85018.
The persons named in the accompanying proxy will vote in each case as
directed in the proxy, but in the absence of such direction, they intend to vote
FOR the proposal and may vote in their discretion with respect to other matters
not now known to the Board of Trustees that may be presented to the Meeting.
APPROVAL OR DISAPPROVAL OF INVESTMENT
ADVISORY AGREEMENT BETWEEN
THE FUND AND FIRST PACIFIC ADVISORS, INC.
Background
General. The Meeting has been called for the purpose of
considering a new advisory agreement for the Fund as a result of
a proposed transaction (the "Proposed Transaction") whereby First
Pacific Advisors, Inc., ("FPA"), will become investment adviser
to the Fund upon the employment by FPA of Mr. Steven Romick,
currently Chairman, Chief Financial Officer and co-owner of
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Crescent Management, (the "Adviser"), which has served as investment adviser to
the Fund since its inception on June 2, 1993. Shareholders are being asked to
approve a new advisory agreement (the "New Advisory Agreement") embodying the
same terms and fees with FPA as exist under the current investment advisory
agreement with the Adviser. The Trust's Board of Trustees at an in-person
meeting held on January 19, 1996 approved the New Advisory Agreement, subject to
approval by the shareholders of the Fund, to become effective on the date of
such approval.
Existing Advisory Agreement
The Adviser currently serves as adviser for the Portfolio under an
investment advisory agreement (the "Existing Advisory Agreement") dated June 2,
1993. The Board of Trustees of the Fund, including a majority of the
"non-interested" Trustees, most recently approved continuation of the Existing
Advisory Agreement on May 19, 1995. Under the Existing Advisory Agreement, the
Adviser is entitled to receive from the Fund a monthly advisory fee based upon
the average daily net assets of the Fund at the annual rate of 1.00%. During the
fiscal year ended March 31, 1995, the Fund paid investment advisory fees of
$132,616 to the Adviser.
New Advisory Agreement
Except for different effective and termination dates, the terms of the
New Advisory Agreement with FPA are identical in all respects to the terms of
the Existing Advisory Agreement. A form of the New Advisory Agreement is
attached to this Proxy Statement as Exhibit A, and the description set forth in
this Proxy Statement of the New Advisory Agreement is qualified in its entirety
by reference to Exhibit A.
Under the New Advisory Agreement, FPA will provide certain investment
advisory services to the Fund, including deciding what securities will be
purchased and sold by the Portfolio, when such purchases and sales are to be
made, and arranging for such purchases and sales, all in accordance with the
provisions of the Investment Company Act of 1940, as amended (the "Investment
Company Act") and any rules thereunder, the governing documents of the Trust,
the fundamental policies of the Fund, as reflected in its registration
statement, and any policies and determinations of the Board of Trustees of the
Trust.
As compensation for its services to the Fund under the New Advisory
Agreement, FPA will be entitled to receive from the Fund fees calculated at the
same rate as those charged under the Existing Advisory Agreement described
above. The New Advisory Agreement will continue in effect for two years from its
effective date, and will continue in effect thereafter for successive annual
periods, provided its continuance is
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specifically approved at least annually by (1) a majority vote, cast in person
at a meeting called for that purpose, of the Trust's Board of Trustees or (2) a
vote of the holders of a majority of the outstanding voting securities (as
defined in the Investment Company Act and the rules thereunder) of the Fund, and
(3) in either event by a majority of the Trustees who are not parties to the New
Advisory Agreement or interested persons of the Trust or of any such party. The
New Advisory Agreement provides that it may be terminated at any time, without
penalty, by either party upon 60 days' written notice, provided that such
termination by the Fund shall be directed or approved by a vote of the Trustees
of the Trust, or by a vote of holders of a majority of the shares of the Fund.
FPA will provide, at its expense, personnel to serve as officers of the
Fund who are affiliated persons of the Adviser, and office space, facilities and
equipment for carrying out its duties under the New Advisory Agreement. All
other expenses incurred in the operation of the Fund will be borne by the Fund.
Expenses incurred by the Fund include brokerage commissions on portfolio
transactions, fees and expenses of trustees not affiliated with FPA, taxes,
transfer agent fees, dividend disbursement and reinvestment and custodian fees,
auditing and legal fees, the cost of printing and mailing reports and proxy
materials to shareholders, expense of trade association memberships, and fees of
the Fund's Administrator.
The New Advisory Agreement includes a provision for a reduction in the
fee paid to FPA in the amount by which certain defined operating expenses of the
Fund (including such advisory fee) for any fiscal year exceed the limits set by
applicable regulations in states where the Fund's shares are registered or
qualified for sale. Operating expenses, as defined in the New Advisory
Agreement, exclude (i) interest, (ii) taxes, (iii) expenditures for brokerage
services, (iv) any extraordinary expenses and (v) sales charges and any
distribution fees.
The New Advisory Agreement provides that FPA shall have no liability to
the Fund or any shareholders of the Fund for any act or omission in the course
of or in connection with rendering services under the Agreement, including any
error of judgment, mistake of law or any loss arising out of any investment,
except for liability resulting from willful misfeasance, bad faith, gross
negligence or reckless disregard on the part of FPA of its duties under the New
Advisory Agreement ("Disabling Conduct"), and except to the extent specified in
Section 36(b) of the Investment Company Act with respect to loss resulting from
the breach of fiduciary duty with respect to receipt of compensation for
services. The New Advisory Agreement provides that the Fund shall indemnify FPA
and its employees, officers and directors from any liability arising from the
Fund's conduct under the New
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Advisory Agreement, except for Disabling Conduct, to the extent permitted by the
Fund's governing documents and applicable law.
Background of the Transaction
The Adviser has been in the investment advisory business since 1990,
and currently provides investment advisory services to individual and
institutional accounts with a value in excess of $90,000,000. The Adviser was
founded and is co-owned by Mr. Steven Romick and Mr. Matthew Kallis. Messrs.
Romick and Kallis recently determined not to continue the business of the
Adviser and it is contemplated that in the near future, the Adviser will cease
business operations. As a consequence of the decision not to continue the
Advisor's business, Mr. Romick and FPA reached an agreement where by FPA would
employ Mr. Romick and FPA also agreed to become investment adviser to the Fund
under the New Agreement. It is contemplated that Mr. Romick will continue to be
responsible for management of the Fund's portfolio. No payment or other
compensation was provided to the Adviser or Messrs. Romick or Kallis in
consideration of FPA's agreement to become investment adviser to the Fund.
Information about FPA
FPA, together with its predecessors, has been in the investment
advisory business since 1954. Presently, FPA manages assets of approximately
$4.0 billion for five investment companies, including one closed-end investment
company, and more than 50 institutional accounts. FPA is an indirect wholly
owned subsidiary of United Asset Management Corporation ("UAM"), a New York
Stock Exchange listed holding company principally engaged, through affiliated
firms, in providing institutional investment management and acquiring
institutional investment management firms.
FPA's principal executive officers are shown below. The address of
each, as it relates to his duties at FPA, is 11400 West Olympic Boulevard, Los
Angeles, CA 90064.
George H. Michaelis Chairman, Chief Executive Officer
and Chief Investment Officer
Christopher Linden President
William M. Sams Executive Vice President
Julio J. dePuzo, Jr. Executive Vice President,
Chief Financial Officer,
Treasurer and Chief
Administrative Officer
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Trustees' Considerations
The Board of Trustees of the Trust believe that the terms of the New Advisory
Agreement are fair to, and in the best interest of, the Fund and its
shareholders. The Board of Trustees, including all of the non-interested
Trustees, recommend approval by the shareholders of the New Agreement between
FPA and the Fund. In making this recommendation, the Trustees carefully
evaluated the experience of FPA in providing investment advisory services to
investment companies, the quality of services FPA is expected to provide to the
Fund, and have given careful consideration to all factors deemed to be relevant
to the Fund, including, but not limited to: (1) the desire of FPA to retain the
services of Mr. Romick and provide continuity of managment for the Fund; (2) the
performance of the Fund since commencement of operations; (3) the nature and
quality of the services expected to be rendered to the Fund by FPA; (4) that the
compensation payable to FPA by the Fund under the proposed New Advisory
Agreement will be at the same rate as the compensation now payable by the Fund
to the Adviser under the Existing Advisory Agreement; (5) that the terms of the
Existing Advisory Agreement will be unchanged under the New Advisory Agreement
except for different effective and termination dates; (6) the history,
reputation, qualification and background of FPA, as well as the qualifications
of their senior personnel and the firm's financial condition; (7) the Fund's
investment performance record; (8) the benefits expected to be realized as a
result of the Fund's association with FPA, including the resources of FPA that
would be available to the Fund; and (9) other factors deemed relevant.
The Adviser has advised the Board of Trustees that it expects that
there will be no diminution in the scope and quality of advisory services
provided to the Fund as a result of the New Agreement. Accordingly, the Board of
Trustees believes that the Fund should receive investment advisory services
under the New Advisory Agreement equal or superior to those it currently
receives under the Existing Advisory Agreement, at the same fee levels.
Recommendation and Required Vote
At the Meeting, Shareholders of the Fund will vote on the proposed New
Advisory Agreement. The Board of Trustees of the Fund recommend that the
shareholders approve the New Advisory Agreement. The affirmative vote of the
holders of a majority of the outstanding shares of each of the Fund is required
to approve the New Advisory Agreement. "Majority" for this purpose under the
Investment Company Act means the lesser of (i) 67% of the shares represented at
the meeting if more than 50% of such outstanding shares are represented, or (ii)
more than 50% of such outstanding shares. Abstentions will count as votes
present at
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the Meeting. Broker non-votes, however, will not count as votes
present.
THE BOARD OF TRUSTEES OF THE FUND RECOMMEND THAT SHAREHOLDERS APPROVE
THE NEW ADVISORY AGREEMENT WITH FPA.
Additional Information on the Fund and the Adviser
Mr. Steven J. Paggioli, President and Trustee of the Trust, Mr.
Robert H. Wadsworth, Vice President of the Trust, and Mr. Eric
Banhazl, Treasurer of the Trust are co-owners of Southampton
Investment Management Company, is the administrator of the Fund.
Under its administration agreement, the Fund pays ICAC a fee at
the following annual rates based on the average net assets of the
Fund:
average net assets fee or fee rate
Under $15 million $30,000
$15 to $50 million 0.20%
$50 to $100 million 0.15%
$100 milion to $150 million 0.15%
Over $150 million 0.05%
No other officer or Trustee of the Trust has had any direct or indirect interest
in any transaction with the Fund, FPA or the Adviser. In addition, no officer or
Trustee has had such an interest in any proposed transaction with any of the
above entities. No officer or Trustee of the Trust holds any position with the
Adviser or has any direct or indirect interest in FPA or its affiliates.
GENERAL INFORMATION
Other Matters to Come Before the Meeting
The Fund's management knows of no matters to be presented at the
Meeting other than those described in this Proxy Statement. If other business
should properly come before the Meeting, the proxy holders will vote thereon in
accordance with their best judgment.
Shareholder Proposals
The Meeting is a special meeting of shareholders. The Fund is not
required to, nor does either intend to, hold regular annual meetings of its
shareholders. If such a meeting is called, any shareholder who wishes to submit
a proposal for consideration at the meeting should submit the proposal promptly
to the Fund.
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Reports to Shareholders
The Fund will furnish, without charge,a copy of the most recent Annual Report to
Shareholders of the Fund, and the most recent Semi-Annual Report succeeding such
annual report on request. Requests for such reports should be directed to the
Fund at (800) 424-2295 or by calling (818) 852-1033 OR (212) 633-9700.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Robin Berger
Secretary
February 12, 1996
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PROXY
CRESCENT FUND
A SERIES OF PROFESSIONALLY MANAGED PORTFOLIOS
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 29, 1996
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Steven Romick, Eric Banhazl
and George Sapp, and each of them, as proxies of the undersigned, each with the
power to appoint his substitute, for the Special Meeting of Shareholders of
Crescent Fund (the "Fund"), a separate series of Professionally Managed
Portfolios (the "Trust"), to be held on February 29, 1996 at the offices of the
Fund, 1999 Avenue of the Start, Suite 950, Los Angeles, CA 90067 10:00 a.m., or
at any and all adjournments thereof (the "Meeting"), to vote, as designated
below, all shares of the Fund, held by the undersigned at the close of business
on January 31, 1996. Capitalized terms used without definition have the meanings
given to them in the accompanying Proxy Statement.
A SIGNED PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL LISTED
BELOW UNLESS YOU HAVE SPECIFIED OTHERWISE. PLEASE SIGN, DATE AND RETURN THIS
PROXY PROMPTLY. YOU MAY VOTE ONLY IF YOU HELD SHARES IN THE FUND AT THE CLOSE OF
BUSINESS ON JANUARY 31, 1996. YOUR SIGNATURE AUTHORIZES THE PROXIES TO VOTE IN
THEIR DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING, INCLUDING WITHOUT LIMITATION ALL MATTERS INCIDENT TO THE CONDUCT OF THE
MEETING.
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1. Approval of the New Advisory Agreement between the First
Pacific Advisors, Inc.and the Fund:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Dated: ______________, 1996
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Signature
-----------------------------------
Title (if applicable)
-----------------------------------
Signature (if held jointly)
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Title (if applicable)
Please sign exactly as name or names appear on your shareholder account
statement. When signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full title. If shares are
held jointly, each shareholder should sign.
A1-2
