<PAGE> 1
TRENT EQUITY FUND
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996
Dear Shareholder:
Trent Equity Fund has had a superb 1996 year to date. Through April 25, 1996,
the Fund is up 13.37% versus 6.68% for the S&P 500 with dividends reinvested.
Through the first calendar quarter 1996 the Fund was up 9.69% versus 5.37% for
the S&P 500 with dividends reinvested. The Fund's focus on companies with
strong franchises that dominate their markets appears to be paying off.
While Trent Equity Fund is measured against the S&P 500 Index, at times it will
not perform like this benchmark. The S&P Index is constructed so that its
industry weightings, such as automobiles or energy reflect the overall economy.
The investment approach of the Trent Equity Fund is to pick individual companies
that we believe have strong earnings growth, but are currently undervalued in
the market. During the four year period 1992-1995, the economy has been very
strong. Stock prices of cyclical companies performed particularly well because
of unusually strong earnings comparisons: during that period S&P 500 earnings
growth compounded 18% annually versus a long term historical average of 7%. We
believe that the S&P earnings growth should slow to the long term historical
average of 7%. The market should turn to the kinds of superior growth companies
that are in Trent Equity Fund and we believe that the Fund's significant
outperformance during the first calendar quarter is the beginning of that trend.
During the six month period ended February 29, 1996, the Fund was down .93%
versus a gain of 15.30% for the S&P 500 with dividends reinvested. Performance
was much better in the last two months of the semi-annual period than in the
first four months. The main culprit of lackluster performance in the last
quarter of calendar 1995 was a drop in the retail stocks in the Fund due to a
weak holiday season retail environment. Retail stocks are now beginning to
rebound from their lows.
ACTIVITY IN CURRENT HOLDINGS
The most significant gains for the six month period ended February 29, 1996 were
Harley Davidson, up 29%, UST, Inc., up 30%, American Express, up 14% and
Nabisco, up 23%. Stocks most down were Michaels Stores, the arts and crafts
chain, and Family Dollar Stores, the "small box" value retailer, both down 25%;
and Natural Wonders, a retail gift store chain, down 15%. All three stocks are
retail chains, which suffered from the weak holiday season.
1
<PAGE> 2
NEW HOLDINGS
During the semi-annual period ended February 29, 1996 the Fund added Abbott
Laboratories, Century Telephone Enterprises, Ciba-Geigy, Duracell International
and Newell Company. Abbott Laboratories is a large healthcare products company
well diversified in pharmaceuticals, diagnostic testing, hospital and laboratory
instruments, intravenous solutions and nutritional formulas. Century Telephone
Enterprises is a Monroe, Louisiana-based, rural telephone company that generates
two-thirds of its operating income from wired local telephone and one-third from
cellular communications. We believe that, because of its rural nature, Century
will not be as exposed to the increased competition that will come from the
recent telecommunications legislation. Ciba-Geigy is a Switzerland-based
pharmaceutical, agricultural chemical and eyecare company that has recently
announced a merger with another Switzerland-based pharmaceutical and chemical
company, Sandoz. The merged company will be called Novartis and will be
disposing of its industrial chemical division. We believe investors will
continue to move Ciba-Geigy's price up as the new company, Novartis, will be
more concentrated in health care -- a category that generally enjoys a higher
price-earnings ratio than does commodity industrial chemicals -- than has been
the old Ciba-Geigy. Duracell International is the leading alkaline battery
company in the world with a 45% market share. Alkaline batteries have 30% of the
world battery market and the alkaline market share should grow dramatically. As
a result, we think Duracell's annual unit volume growth should continue to be in
double digits. Newell Company is a Freeport, Illinois-based household products
company whose four divisions are hardware, housewares, home furnishings and
office products. The company has $2.5 billion in revenues. Newell grows profits
by making acquisitions and then dramatically increasing the profit margins of
acquired companies.
SIGNIFICANT REALIZED GAINS AND LOSSES
Best gains realized during the six month period were in Claire's Stores,
Sigma-Aldrich and Multimedia. Claire's Stores' stock price responded well to
very positive same stores sales comparisons. Sigma-Aldrich's chemical products
business bounced back from a weak 1994. Multimedia was acquired for cash by
Gannett, the largest domestic newspaper chain. Losses were taken in Frederick's
of Hollywood, Dress Barn, Pittencrieff Communications and Cone Mills.
Frederick's and Dress Barn both have suffered from the weak environment in
women's apparel that has persisted for three years. Pittencrieff Communications,
an Abilene, Texas-based dispatch radio company, suffered from protracted delays
in the evolution of Motorola's dispatch radio digital technology. Cone Mills'
weak household fabrics business has more than offset strong denim sales.
We are very pleased with the Fund's excellent performance during the first
quarter of calendar year 1996. We thank you for being an investor in Trent
Equity Fund and we are looking forward to what we believe will be a strong year.
TRENT CAPITAL MANAGEMENT, INC.
2
<PAGE> 3
TRENT EQUITY FUND
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS AT FEBRUARY 29, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------------
Shares COMMON STOCKS: 97.0% Market Value
- -------------------------------------------------------------------------------------
<S> <C> <C>
CHEMICALS: 4.3%
2,800 Ciba-Geigy.................................... $ 123,900
----------
FINANCIAL SERVICES: 11.5%
7,200 American Express Company...................... 331,200
----------
FOOD PROCESSING: 6.4%
5,200 Nabisco Holdings Corporation, Class A......... 182,650
----------
HOUSEHOLD PRODUCTS: 22.6%
2,800 Duracell International........................ 144,550
23,000 Ekco Group, Inc............................... 140,875
3,400 First Brands Corporation...................... 90,950
6,000 Libbey, Inc................................... 135,000
5,000 Newell Company................................ 138,750
----------
650,125
----------
MEDIA AND ENTERTAINMENT: 11.1%
3,400 Dow Jones & Company........................... 132,600
10,250 Saga Communications, Inc. (a)................. 187,063
----------
319,663
----------
PHARMACEUTICALS: 4.7%
3,200 Abbott Laboratories........................... 133,600
----------
RECREATION: 7.7%
6,200 Harley Davidson, Inc.......................... 222,425
----------
RETAIL AND CATALOG: 10.9%
6,200 Family Dollar Stores.......................... 85,250
8,800 Michaels Stores, Inc. (a)..................... 106,700
44,500 Natural Wonders, Inc. (a)..................... 122,375
----------
314,325
----------
TELECOMMUNICATIONS: 5.8%
5,000 Century Telephone Enterprises................. 168,125
----------
</TABLE>
3
<PAGE> 4
TRENT EQUITY FUND
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS AT FEBRUARY 29, 1996 (UNAUDITED), CONTINUED
- ------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOBACCO: 12.0%
3,200 American Brands, Inc............................................ $ 145,200
5,600 UST, Inc........................................................ 198,800
----------
344,000
----------
Total Common Stocks (cost $2,748,899)........................... 2,790,013
----------
<CAPTION>
Principal Amount SHORT-TERM INVESTMENTS: 2.5%
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUTUAL FUNDS: 2.5%
$70,500 Riverfront U.S. Government Securities, 4.71%, due 3/1/96
(cost $70,500).................................................. 70,500
----------
Total Investments (cost $2,819,399): 99.5% ..................... 2,860,513
Other Assets Less Liabilities: 0.5%............................. 14,587
----------
TOTAL NET ASSETS: 100.0% ....................................... $2,875,100
==========
</TABLE>
(a) Non-income producing security.
See accompanying notes to financial statements.
4
<PAGE> 5
TRENT EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES AT FEBRUARY 29, 1996 (UNAUDITED)
- ----------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at value (identified cost $2,819,399) ..................... $2,860,513
Receivables:
Dividends and interest ........................................... 4,131
Expense reimbursement due from investment adviser................. 6,169
Prepaid expenses........................................................ 6,411
Deferred organization expenses.......................................... 8,619
----------
Total assets ............................................... 2,885,843
----------
LIABILITIES
Accrued expenses ....................................................... 10,743
----------
Total liabilities........................................... 10,743
----------
NET ASSETS (applicable to 315,724 shares outstanding; unlimited shares of
no par value beneficial interest authorized)............................ $2,875,100
==========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION VALUE PER SHARE
($2,875,100/315,724 shares) ............................................ $9.11
==========
NET ASSETS
At February 29, 1996, net assets consisted of:
Paid-in capital ........................................................ $3,139,652
Accumulated net investment loss......................................... (5,159)
Accumulated net realized loss on investment transactions................ (300,507)
Net unrealized appreciation of investments.............................. 41,114
----------
Net assets ....................................................... $2,875,100
==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
TRENT EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Income:
Dividends................................................................ $ 21,292
Interest................................................................. 2,291
---------
Total income....................................................... 23,583
---------
Expenses:
Investment advisory fee.................................................. 20,566
Administrative fee....................................................... 9,012
Audit fees............................................................... 7,199
Accounting, pricing and recordkeeping.................................... 5,466
Amortization of organization costs....................................... 3,902
Custodian fees........................................................... 3,241
Legal fees............................................................... 540
Shareholder servicing costs.............................................. 3,241
Printing................................................................. 644
Trustees fees............................................................ 1,496
Registration and filing fees............................................. 1,134
Other expenses........................................................... 2,794
--------
Total expenses..................................................... 59,235
Less: expense reimbursements....................................... (30,493)
--------
Net expenses....................................................... 28,742
--------
NET INVESTMENT LOSS ......................................... (5,159)
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from security transactions............................. (217,409)
Net change in unrealized appreciation of investments..................... 173,583
--------
Net realized and unrealized loss on investments.................... (43,826)
--------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ $ (48,985)
==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 7
TRENT EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
February 29, August 31,
1996* 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss........................................................... $ (5,159) $ (5,209)
Net realized (loss) gain on securities transactions........................... (217,409) 176,864
Net change in unrealized appreciation of securities........................... 173,583 114,544
---------- ----------
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ (48,985) 286,199
---------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain on investments.............................................. (301,203) (642,188)
---------- ----------
TOTAL DIVIDENDS AND DISTRIBUTIONS ...................................... (301,203) (642,188)
---------- ----------
CAPITAL SHARE TRANSACTIONS
Shares sold .................................................................. 104,538 274,615
Shares issued in reinvestment of distributions................................ 280,983 618,038
Shares redeemed............................................................... (966,168) (633,949)
---------- ----------
NET (DECREASE) INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS .......... (580,647) 258,704
---------- ----------
TOTAL DECREASE IN NET ASSETS ................................................. (930,835) (97,285)
NET ASSETS:
Beginning of period........................................................... 3,805,935 3,903,220
---------- ----------
END OF PERIOD ................................................................ $2,875,100 $3,805,935
========== ==========
CHANGE IN SHARES OUTSTANDING:
Shares sold .................................................................. 10,861 27,358
Shares issued in connection with payment of dividends......................... 32,409 73,141
Shares redeemed............................................................... (99,344) (68,033)
---------- ----------
NET (DECREASE) INCREASE ...................................................... (56,074) 32,466
========== ==========
</TABLE>
*Unaudited.
See accompanying notes to financial statements.
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<PAGE> 8
TRENT EQUITY FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------------------------------------------------
September 2,
Six Months Year Year 1992*
Ended Ended Ended through
February 29, August 31, August 31, August 31,
1996** 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................... $10.24 $11.50 $11.66 $10.00
Income from Investment Operations:
Net investment income (loss)............................. (.02) .00 (.07) (.08)
Net realized and unrealized (loss) gain on investments... (.12) .67 .15 1.76
------ ------ ------ ------
Total from investment operations............................... (.14) .67 .08 1.68
------ ------ ------ ------
Less Distributions:
Dividends (from net investment income)................... -- -- -- (.01)
Distributions (from capital gains)....................... (.99) (1.93) (.24) (.01)
------ ------ ------ ------
Total Distributions............................................ (.99) (1.93) (.24) (.02)
------ ------ ------ ------
Net Asset Value, End of Period................................. $ 9.11 $10.24 $11.50 $11.66
====== ====== ====== ======
Total Return................................................... (1.85%)+ 9.38% 0.64% 16.91%+
Ratios/Supplemental Data:
Net assets, end of period (millions)........................... $ 2.9 $ 3.8 $ 3.9 $ 4.7
Ratio of expenses to average net assets:
Before expense reimbursement............................. 3.81%+ 3.65% 3.16% 3.33%+++
After expense reimbursement.............................. 1.85%+ 1.85% 1.85% 2.54%+++
Ratio of net investment loss to average net assets:
Before expense reimbursement............................. (2.29%)+ (2.00)% (1.68)% (1.84)%+++
After expense reimbursement.............................. (0.33%)+ (0.15)% (0.36)% (1.05)%+++
Portfolio turnover............................................. 26.95% 46.52% 149.25% 315.38%
</TABLE>
*Commencement of operations.
**Unaudited.
+Annualized.
++Excludes taxes and tax reimbursements of 2.84% of average net assets on an
annualized basis.
See accompanying notes to financial statements.
8
<PAGE> 9
TRENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS AT FEBRUARY 29, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trent Equity Fund (the "Fund") is a series of shares of beneficial
interest of Professionally Managed Portfolios, which is registered under the
Investment Company Act of 1940 as a diversified, open-end management company.
The Fund began operations on September 2, 1992.
A. Security Valuation: The Fund's investments are carried at market
value. Securities listed on an exchange or quoted on a national market
system are valued at the last sale price. Other securities are valued
at the last quoted bid price. Securities for which market quotations
are not readily available, if any, are valued at an independent
pricing service or determined 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 for the Fund's tax year ended July 31, 1996.
C. Securities Transactions, Investment Income and Other: Security
transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Income
distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles.
NOTE 2 - COMMITMENTS AND RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Trent Capital Management
("TCM") provides the Fund with a continuous program of supervision of the Fund's
assets, including the composition of its portfolio, and furnishes advice and
recommendations with respect to investments, investment policies, and the
purchase and sale of securities. As compensation for its services, TCM receives
a fee at the annual rate of 1.15% of the Fund's average daily net assets. TCM
has voluntarily limited the Fund's expenses to the annual level of 1.85% of
average daily net assets. Total reimbursed expenses from TCM for the period
ended February 29, 1996 was $30,493. At February 29, 1996, the expense
reimbursement due from TCM was $26,734. An employee of the Investment Advisor
also serves on the board of the Fund.
Investment Company Administration Corporation (the "Administrator")
receives a monthly fee at an annual rate of 0.25% of the Fund's average daily
net assets, subject to an annual minimum fee of $30,000, for providing certain
administrative services to the Fund. Certain employees of the Administrator also
serve on the board of the Fund.
NOTE 3 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization and
the registration of its shares have been assumed by the Fund.
9
<PAGE> 10
TRENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS AT FEBRUARY 29, 1996 (UNAUDITED), CONTINUED
- -------------------------------------------------------------------------------
The organization expenses have been capitalized and are being amortized
over a period of sixty months. Investors purchasing shares of the Fund bear such
expenses only as they are amortized against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during the
amortization period, the redemption proceeds will be reduced by a pro rata
portion of any unamortized organization expenses in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares of
the Fund outstanding at the time of redemption.
NOTE 4 - INVESTMENT TRANSACTIONS
Purchases and sales of securities other than short-term investments
aggregated $862,128 and $1,790,189, respectively, for the period ended February
29, 1996.
The gross unrealized appreciation and depreciation of portfolio securities
at February 29, 1996 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................... $ 426,194
Unrealized depreciation......................... (385,080)
---------
Net unrealized appreciation............ $ 41,114
=========
</TABLE>
As of February 29, 1996, aggregate cost for federal income tax purposes was
equal to aggregate cost for book purposes.
10
<PAGE> 11
ADVISOR
Trent Capital Management, Inc.
2002 Pisgah Church Road
Suite 140
Greensboro, North Carolina 27455
(910) 282-9302
DISTRIBUTOR
First Fund Distributors, Inc.
4455 East Camelback Road
Suite 261E
Phoenix, Arizona 85018
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
TRANSFER AGENT
Rodney Square Management Corporation
1105 North Market Street
Wilmington, Delaware 19890
AUDITORS
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, Pennsylvania 19102
LEGAL COUNSEL
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
This report is intended for shareholders of
Trent Equity Fund and may not be used
as sales literature unless preceded or
accompanied by a current prospectus.
TRENT
EQUITY
FUND
SEMI-ANNUAL REPORT
FOR THE PERIOD ENDED
FEBRUARY 29, 1996
12
