The Perkins Opportunity Fund
A mutual fund seeking to provide
capital appreciation through a
continuing search for investment opportunities
Annual Report
to Shareholders for
the Year Ended
March 31, 1996
<PAGE>
The Perkins Opportunity Fund
May 1, 1996
Dear Shareholders:
We are pleased to report an excellent year for The Perkins Opportunity Fund. The
Net Asset Value per share increased from $13.03* on March 31, 1995 to $18.78* on
March 31, 1996, after paying dividends of $0.7925* per share. This represents a
total return of 51.29% for the year (before the maximum sales charge of 4.75%).
The following table shows the Fund's returns by quarter and since inception
compared to several popular indices:
<TABLE>
<CAPTION>
The Perkins S & P Dow Jones NASDAQ Russell
Opportunity 500 Industrial Composite 2000
Period Fund Index Index Index Index
<S> <C> <C> <C> <C> <C>
First Quarter 1993 6.13% 4.33% 3.37% 4.00% 4.68%
Second Quarter 1993 4.90% .41% 3.08% 2.00% 1.81%
Third Quarter 1993 16.23% 2.67% 1.84% 8.36% 8.39%
Fourth Quarter 1993 7.82% 2.33% 6.31% 1.84% 2.23%
First Quarter 1994 (.78%) (3.83%) (2.51%) (4.29%) (2.78%)
Second Quarter 1994 (9.81%) .35% .39% (5.04%) (6.99%)
Third Quarter 1994 26.89% 4.98% 6.74% 8.26% 6.59%
Fourth Quarter 1994 (.22%) (.04%) .51% (1.61%) (2.25%)
First Quarter 1995 21.49% 9.77% 9.17% 8.68% 4.16%
Second Quarter 1995 17.76% 9.40% 10.30% 14.22% 8.77%
Third Quarter 1995 18.42% 8.06% 5.77% 11.79% 9.43%
Fourth Quarter 1995 .54% 5.99% 7.50% .82% 1.80%
First Quarter 1996 7.79% 5.39% 9.81% 4.68% 4.68%
Year Ended 3-31-96 51.29% 32.04% 37.72% 34.78% 26.84%
Annualized since 41.36% 16.84% 21.58% 17.71% 14.00%
2-18-93 inception
</TABLE>
We are proud to announce that the Fund was ranked as the number six performing
capital appreciation mutual fund out of 155 funds tracked by Lipper for the year
ended March 31, 1996. Daily quotes for the Fund are now available in most
newspapers and the Fund is now listed on NASDAQ with the symbol POFDX.
As bottom-up stock pickers we have been able to select stocks that have, on
average, outperformed the popular indices. This has been accomplished through
careful research and the combination of fundamental analysis with technical
chart analysis. We see no reason that this trend should not continue as long as
we are in a healthy market environment.
*Per share value reflects 2-for-1 stock split. See Note 8
<PAGE>
The Perkins Opportunity Fund
The following is a summary of our thoughts on the market (which are
unchanged over the last several years):
We continue to believe that small-cap stocks should outperform
large-cap stocks on a relative basis over the next three to five years.
Both the stock and bond markets have experienced excellent returns over
the last 10 years and are unlikely to duplicate this performance over
the next 10 years on an overall basis. We believe the best returns will
be achieved through careful stock selection.
It is our belief that The Perkins Opportunity Fund is in an excellent position
to benefit from these future trends. As a capital appreciation oriented
portfolio, the Fund has the flexibility to invest aggressively in companies
where we see an opportunity for above average returns. As of March 31, 1996, the
Fund was 91% invested in 70 common stocks, 6 warrants and 2 convertible
preferreds.
The Fund is diversified among several industry groups and holds stocks which we
feel have good potential for above average returns, so currently we believe the
Fund's primary risk is to a broad market decline. We are constantly looking for
investment opportunities and are confident that we will continue to find them in
the future as we have in the past.
In closing, we thank you for your confidence and support.
Sincerely,
/s/ /s/ /s/
Richard W. Perkins, C.F.A. Daniel S. Perkins, C.F.A. Richard C. Perkins, C.F.A.
President Vice President Vice President
COMPARISON OF $10,000 INVESTMENT IN THE PERKINS OPPORTUNITY FUND AND THE S&P
500 INDEX
Annual Average Total Return
Periods Ended March 31,1996
1 Year Inception(2/18/93)
43.95% 39.16%
Date Perkins Opportunity Fund S&P 500
2/18/93 10,000 10,000
3/31/93 10,613 10,006
9/30/93 12,940 10,815
3/31/94 14,033 10,643
9/30/94 16,059 11,213
3/31/95 19,467 12,303
9/30/95 27,149 14,544
3/31/96 29,421 16,245
Results shown are past performance which should not be regarded as an
indication of future returns. The value of the Fund's shares and their return
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. The Fund's average annual total return, after
maximum sales charge of 4.75%, from the period from inception on February 18,
1993 through March 31, 1996 was 41.36% and for the one year period ended on that
date was 51.29%.
<PAGE>
The Perkins Opportunity Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS at March 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 88.0% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Business Services - Miscellaneous: 10.1%
<S> <C> <C>
60,000 AlphaNet Solutions, Inc.*............................................... $ 600,000
55,000 Ameridata Technologies, Inc.*........................................... 625,625
45,000 Appliance Recycling Centers of America, Inc.*........................... 185,625
300,000 Automobile Protection Corp.*............................................ 1,162,500
85,000 Cohr, Inc.*............................................................. 1,381,250
50,000 CorVel Corp.*........................................................... 1,750,000
170,000 Health Fitness Physical Therapy, Inc.*.................................. 446,250
125,000 Health Risk Management, Inc.*........................................... 2,187,500
129,000 Integrated Security Systems, Inc.*...................................... 290,250
115,000 Marketlink, Inc.*....................................................... 273,125
40,000 Raytel Medical Corp.*................................................... 400,000
-------
9,302,125
---------
Computer - Local Networks: 5.9%
250,000 Ancor Communications, Inc.*............................................. 1,687,500
100,000 Digital Systems International, Inc.*.................................... 1,531,250
110,000 Interphase Corp.*....................................................... 1,512,500
3,500 Network Peripherals, Inc.*.............................................. 51,187
12,000 Security Dynamics Technologies, Inc.*................................... 636,000
-------
5,418,437
---------
Computer - Memory Devices: 6.4%
150,000 Ciprico, Inc.*.......................................................... 3,037,500
25,000 Hutchinson Technology, Inc.*............................................ 1,006,250
75,000 Iomega Corp.*........................................................... 1,921,875
---------
5,965,625
---------
Computer - Peripheral Equipment: 7.9%
350,000 AMPEX, Inc., Class A*................................................... 2,143,750
130,000 Check Technology Corp.*................................................. 1,527,500
75,000 ENCAD, Inc.*............................................................ 1,781,250
25,000 Helisys, Inc.*.......................................................... 146,875
37,000 Percon, Inc.*........................................................... 592,000
100,000 RSI Systems, Inc.*...................................................... 925,000
50,000 VideoLabs, Inc.*........................................................ 137,500
-------
7,253,875
---------
<PAGE>
The Perkins Opportunity Fund
PORTFOLIO OF INVESTMENTS at March 31, 1996, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Computer - Software: 5.2%
150,000 Delphi Information Systems, Inc.*....................................... $ 168,750
400,000 Fourth Shift Corp.*..................................................... 1,900,000
150,000 IVI Publishing, Inc.*................................................... 2,062,500
65,000 LifeRate Systems, Inc.*................................................. 625,625
-------
4,756,875
---------
Consumer Products - Miscellaneous: 5.2%
23,000 Alliance Entertainment Corp.*........................................... 215,625
25,000 Gateway 2000, Inc.*..................................................... 696,875
69,700 Metromedia International Group, Inc.*................................... 940,950
230,000 Minnesota Brewing Co.*.................................................. 1,035,000
45,000 Polaris Industries, Inc................................................. 1,383,750
275,000 Ringer Corporation*..................................................... 515,625
-------
4,787,825
---------
Electrical Products - Miscellaneous: 5.7%
55,000 Ametek, Inc............................................................. 969,375
87,500 Destron Fearing Corp.*.................................................. 370,508
335,000 Micro Component Technology, Inc.*....................................... 1,423,750
90,000 Richey Electronics, Inc.*............................................... 956,250
75,000 Sheldahl, Inc.*......................................................... 1,443,750
---------
5,163,633
---------
Financial Services - Miscellaneous: 1.7%
145,000 Provident American Corp.*............................................... 906,250
42,000 Realco, Inc.*........................................................... 257,250
92,200 Warner Insurance Services, Inc.*........................................ 391,850
-------
1,555,350
---------
Leisure - Gaming: 4.2%
65,000 Acres Gaming, Inc.*..................................................... 300,625
185,000 Innovative Gaming Corporation of America*............................... 1,688,125
60,000 Lotto World, Inc.*...................................................... 270,000
150,000 Stratosphere Corp.*..................................................... 1,603,125
---------
3,861,875
---------
Medical - Biomed/Genetics: 3.8%
300,000 Incstar Corp.*.......................................................... 1,725,000
100,000 Somatogen, Inc.*........................................................ 1,762,500
---------
3,487,500
---------
<PAGE>
The Perkins Opportunity Fund
PORTFOLIO OF INVESTMENTS at March 31, 1996, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Medical - Ethical Drugs: 4.3%
75,000 Chronimed, Inc.*........................................................ $ 1,509,375
60,000 Duramed Pharmaceuticals, Inc.*.......................................... 1,215,000
154,000 Orphan Medical, Inc.*................................................... 1,289,750
---------
4,014,125
---------
Medical - Instruments: 3.2%
600,000 Imatron, Inc.*.......................................................... 2,062,500
25,000 St. Jude Medical, Inc.*................................................. 932,813
-------
2,995,313
---------
Medical - Products: 12.0%
210,000 Angeion Corp.*.......................................................... 2,336,250
175,000 ATS Medical, Inc.*...................................................... 1,859,375
200,000 Diametrics Medical, Inc.*............................................... 1,200,000
425,000 Everest Medical Corp.*.................................................. 1,221,875
310,000 InnerDyne, Inc.*........................................................ 1,046,250
400,000 Spectranetics Corp.*.................................................... 1,075,000
138,100 SpectraScience, Inc.*................................................... 1,139,325
90,000 Staar Surgical Co.*..................................................... 1,260,000
---------
11,138,075
----------
Retail - Miscellaneous/Diversified: 4.7%
319,000 Pet Food Warehouse, Inc.*............................................... 1,236,125
100,000 Rainforest Cafe, Inc.*.................................................. 3,150,000
---------
4,386,125
---------
Telecommunications - Equipment and Services: 6.4%
75,000 Intervoice, Inc.*....................................................... 2,146,875
55,000 Norstan, Inc.*.......................................................... 1,474,687
150,000 Racotek, Inc.*.......................................................... 693,750
140,000 Rural Cellular Corp., Class A*.......................................... 1,610,000
---------
5,925,312
---------
Transportation - Airline: 1.3%
130,000 Airways Corp.*.......................................................... 1,202,500
---------
Total Common Stocks (cost $66,510,886).................................. 81,214,570
----------
<PAGE>
The Perkins Opportunity Fund
RESTRICTED SECURITIES: 2.7%
Business Services - Miscellaneous: 0.0%
62,500 Health Fitness/Physical Therapy, Inc., Warrants, 4/4/1999 Ex @4.00*..... $ 0
---
Computer - Software: 0.6%
100,000 LifeRate Systems, Inc.*................................................. 575,000
-------
Consumer Products - Miscellaneous: 0.1%
30,000 Eagle Pacific Industries, Inc.+, 7% Convertible Preferred, $2.00........ 73,848
------
Electrical - Miscellaneous: 1.4%
350,000 Destron Fearing Corp.*.................................................. 1,313,165
Medical - Products: 0.6%
100,000 SpectraScience, Inc. Convertible Preferred, Series A*................... 517,500
33,333 SpectraScience, Inc. Warrants, 3/31/1998 Ex @ 5.00*..................... 0
10,000 Work Recovery, Inc., Class B, Warrants, 6/8/1997 Ex @ 1.80*............. 0
-
517,500
-------
Total Restricted Securities (cost $2,130,000)........................... 2,479,513
---------
WARRANTS: 0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Leisure - Gaming: 0.0%
25,000 Canterbury Park Holding Corp., Warrants, 8/18/1998 Ex @ 4.58*........... 6,250
-----
Medical Products: 0.0%
20,000 ATS Medical, Inc., Warrants, 2/2/1997 Ex1/4@ 6.75*...................... 25,000
------
Total Warrants (cost $50,000)........................................... 31,250
------
<PAGE>
The Perkins Opportunity Fund
Principal Amount REPURCHASE AGREEMENT: 9.6%
$8,823,197 Provident Bank Repurchase Agreement, 5.0%, dated 3/29/1996,
due 4/1/1996, collateralized by $12,460,941 FHLMC,
due 11/15/2022 (proceeds $8,826,873) (cost $8,823,197).................. $ 8,823,197
-----------
Total Investment in Securities (cost $77,514,083++): 100.3%.............. 92,548,530
Liabilities in excess of Other Assets: (0.3)%........................... (266,778)
--------
Total Net Assets: 100.0%................................................ $92,281,752
===========
<FN>
*Indicates non-income producing security.
+Affiliated company.
++Cost for federal income tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation .......................................... $17,858,745
Gross unrealized depreciation .......................................... (2,824,298)
----------
Net unrealized appreciation .................................. $15,034,447
===========
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
The Perkins Opportunity Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at March 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (identified cost $77,514,083) (Note 2-A) .......... $92,548,530
Receivables:
Capital stock sold............................................................... 388,101
Dividends and interest........................................................... 3,676
Investment securities sold ...................................................... 203,750
Deferred organization costs (Note 2-D)................................................. 16,540
Prepaid expenses....................................................................... 1,434
-----
Total assets .............................................................. 93,162,031
----------
LIABILITIES
Payables:
Advisor.......................................................................... 75,210
Manager.......................................................................... 17,160
Investment securities purchased........................................................ 532,731
Fund shares repurchased.......................................................... 90,588
Dividends........................................................................ 2,732
Distribution costs............................................................... 93,524
Accrued expenses ...................................................................... 68,334
------
Total liabilities ......................................................... 880,279
-------
NET ASSETS ................................................................................. $92,281,752
===========
Net asset value and redemption price per share
($92,281,752/4,913,834* shares outstanding;
unlimited number of shares authorized without par value) ........................ $18.78*
======
Computation of offering price per share
(Net asset value $18.78*/.9525) ................................................. $19.72*
======
SOURCE OF NET ASSETS
Paid-in capital ....................................................................... $75,677,131
Undistributed net realized gain on investments ........................................ 1,570,174
Net unrealized appreciation of investments ............................................ 15,034,447
----------
Net assets ...................................................................... $92,281,752
===========
<FN>
*Per share value and shares reflect 2-for-1 stock split. See Note 8.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
The Perkins Opportunity Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Year Ended March 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Dividends ....................................................................... $ 55,106
Interest......................................................................... 360,764
-------
415,870
-------
Expenses
Distribution costs (Notes 4 and 5) .............................................. 76,418
Management fee (Note 4) ......................................................... 123,567
Advisory fee (Note 4) ........................................................... 516,259
Custodian and accounting fees ................................................... 44,874
Shareholder servicing fees (Note 6).............................................. 76,000
Transfer agent fees ............................................................. 55,748
Auditing fees ................................................................... 13,973
Legal fees...................................................................... 8,395
Shareholder reports ............................................................. 19,064
Trustees' fees .................................................................. 5,009
Registration fees................................................................ 51,248
Insurance ....................................................................... 2,850
Amortization of deferred organization expenses (Note 2-D)........................ 3,460
Miscellaneous ................................................................... 19,658
------
Total expenses ............................................................ 1,016,523
---------
Net investment loss ................................................. (600,653)
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions .................................... 3,872,910
Net increase in unrealized appreciation of investments .......................... 13,678,855
----------
Net realized and unrealized gain on investments ........................... 17,551,765
----------
Net Increase in Net Assets Resulting from Operations ................ $16,951,112
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
The Perkins Opportunity Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
March 31, March 31,
1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment loss ........................................................... $ (600,653) $ (115,672)
Net realized gain from security transactions .................................. 3,872,910 1,115,327
Net increase in unrealized appreciation of investments ........................ 13,678,855 1,034,485
---------- ---------
Net increase in net assets resulting from operations .................... 16,951,112 2,034,140
---------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain from security transactions ($.79 and $1.00 per share,
respectively) ........................................................... (2,443,963) (427,036)
---------- --------
CAPITAL SHARE TRANSACTIONS:
Net increase in net assets derived from net change in outstanding shares (a)... 65,289,955 7,624,217
---------- ---------
Total increase in net assets ............................................ 79,797,104 9,231,321
NET ASSETS:
Beginning of year.............................................................. 12,484,648 3,253,327
---------- ---------
End of year ................................................................... $92,281,752 $12,484,648
=========== ===========
<FN>
(a) A summary of capital share transactions is as follows:
Year Ended Year Ended
March 31, 1996 March 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ...................................... 4,854,066* $81,019,266 633,800* $7,553,877
Shares reissued in connection with payment of
dividends .................................. 136,058* 2,238,230 38,110* 381,629
Shares redeemed .................................. (1,034,312*) (17,967,541) (27,792*) (311,289)
---------- ----------- ------- --------
Net increase ..................................... 3,955,812* $65,289,955 644,118* $7,624,217
========= =========== ======= ==========
*Per share value and shares reflect 2-for-1 stock split. See Note 8.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
The Perkins Opportunity Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period*
- ------------------------------------------------------------------------------------------------------------------------------------
Year Year Year Feb. 18, 1993**
Ended Ended Ended through
March 31, March 31, March 31, March 31,
1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........................... $13.03 $10.37 $ 7.96 $ 7.50
Income from investment operations:
Net investment loss ...................................... (.12) (.13) (.13) (.01)
Net realized and unrealized gain on investments........... 6.66 3.79 2.70 .47
---- ---- ---- ---
Total from investment operations................................ 6.54 3.66 2.57 .46
---- ---- ---- ---
Less distributions:
Dividends from net investment income...................... -0- -0- -0- -0-
Distributions from net capital gains ..................... (.79) (1.00) (.16) -0-
---- ----- ---- -
Total distributions............................................. (.79) (1.00) (.16) -0-
---- ----- ---- -
Net asset value, end of period ................................. $18.78 $13.03 $10.37 $ 7.96
====== ====== ====== ======
Total return ................................................... 51.29% 38.72% 32.22% 28.37%+
Ratios/supplemental data:
Net assets, end of period (millions)............................ $ 92.3 $ 12.5 $ 3.3 $ 1.0
Ratio of expenses to average net assets:
Before expense reimbursement ............................. 1.97% 3.08% 5.14% 13.15%+
After expense reimbursement............................... 1.97% 2.63% 2.49% 2.42%+
Ratio of net investment (loss) income to average net assets:
Before expense reimbursement ............................. (1.16%) (2.76%) (4.93%) (12.38%)+
After expense reimbursement .............................. (1.16%) (2.31%) (2.28%) (1.65%)+
Portfolio turnover rate ........................................ 92.45% 124.86% 90.63% 15.15%
<FN>
*Per share value reflects 2-for-1 stock split. See Note 8.
**Commencement of operations.
+Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
The Perkins Opportunity Fund
NOTES TO FINANCIAL STATEMENTS at March 31, 1996
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Perkins Opportunity 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's primary investment
objective is capital appreciation. The Fund seeks to achieve its objective by
investing in securities with attractive capital appreciation potential, but
there are no assurances that this objective will be achieved. The value of the
Fund's investment portfolio will fluctuate with market conditions and an
investor's shares, when redeemed, may be worth more or less than their original
cost. The Fund began operations on February 18, 1993.
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.
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, Investment Income 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. Interest income is recognized
on an accrual basis. Income and capital gains distributions to
shareholders are determined in accordance with income tax
regulations which may differ from Generally Accepted Accounting
Principles. Those differences are primarily due to differing
treatments for net operating losses.
D. Deferred Organization Costs. The Fund has incurred expenses of $20,000
in connection with the organization of the Fund. These costs have been deferred
and are being amortized on a straight line basis through the period ending
February 17, 1998.
E. Accounting Estimates. In preparing financial statements in conformity
with generally accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and
<PAGE>
The Perkins Opportunity Fund
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the period. Actual
results could differ from those estimates.
NOTE 3 - RESTRICTED SECURITIES
On March 31, 1996, the Fund held restricted securities (i.e., securities
which may not be publicly sold without registration under the Securities Act or
without an exemption under that Act). These securities are valued at fair value
as determined by the Board of Trustees, giving consideration to credit quality,
dividend rate, if any, projected earnings and marketability of the securities of
comparable issuers. On March 31, 1996 and on the dates of acquisition, there
were no market quotations available for unrestricted securities of the same
class. Dates of acquisition and cost of restricted securities are as follows:
<TABLE>
Acquisition Date Cost
<S> <C> <C>
Destron Fearing Corp. September 8, 1995 $1,120,000
Eagle Pacific Industries, 7% Cv. Pfd., $2.00 December 17, 1993 60,000
Health Fitness/Physical Therapy, Inc. April 4, 1995 0
LifeRate Systems, Inc. July 14, 1995 650,000
Spectra Science Convertible Preferred September 19, 1995 300,000
Work Recovery, Inc., Warrants June 3, 1993 0
-- ---- -
Total restricted securities (fair value of $2,479,513 was 2.7% of net assets at March 31, 1996) $2,130,000
========== === === ==== ==========
</TABLE>
NOTE 4 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
For the year ended March 31, 1996, Perkins Capital Management, Inc. (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 1.00% based upon the average
daily net assets of the Fund.
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, exclusive of interest on
borrowings, to the most stringent limits prescribed by any state in which the
Fund's shares are offered for sale. Currently, the expense limit is 2.50% on the
first $30 million of net assets and reduced amounts thereafter. The Fund did not
exceed the expense limit during the year ended March 31, 1996.
Investment Company Administration Corporation (the "Manager") acts as the
Fund's Administrative 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 to the Fund, the Manager
receives an annual
<PAGE>
The Perkins Opportunity Fund
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
fee based upon average net assets of the Fund as follows: the greater of $30,000
or 0.20% for the first $50 million, 0.15% for the next $50 million, 0.10% for
the next $100 million, and 0.10% thereafter.
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 Manager.
Certain officers and Trustees of the Fund are also officers and/or
directors of the Manager and Distributor.
NOTE 5 - 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
year ended March 31, 1996, the Fund paid fees of $76,418 to the Distributor.
NOTE 6 - SHAREHOLDER SERVICES FEE
The Fund has entered into a Shareholder Service Agreement with the
Distributor, under which the Fund pays servicing fees at an annual rate of up to
0.25% of the Fund's average daily net assets. Payments to the Distributor under
the Shareholder Servicing Agreement may reimburse the Distributor for payments
it makes to selected brokers, dealers and administrators which have entered into
Service Agreements with the Distributor for services provided to shareholders of
the Fund. The services provided by such intermediaries are primarily designed to
assist shareholders of the Fund and include the furnishing of office space and
equipment, telephone facilities, personnel and assistance to the Fund in
servicing such shareholders. Services provided by such intermediaries also
include the provision of support services to the Fund and include establishing
and maintaining shareholders' accounts and records, processing purchase and
redemption transactions, answering routine client inquires regarding the Fund,
and providing such other personal services to shareholders as the Fund may
reasonably request.
NOTE 7 - PURCHASES AND SALES OF SECURITIES
For the year ended March 31, 1996, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $97,907,001 and
$42,312,297, respectively.
NOTE 8 - SUBSEQUENT EVENT
On May 14, 1996, the Board of Trustees authorized a 2-for-1 stock split,
payable to shareholders of record on June 3, 1996.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF
PERKINS OPPORTUNITY FUND and
THE BOARD OF TRUSTEES OF
PROFESSIONALLY MANAGED PORTFOLIOS
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Perkins Opportunity Fund (a series of
Professionally Managed Portfolios, Inc.) as of March 31, 1996, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the three years in the period then ended and for the
period February 18, 1993 (commencement of operations) to March 31, 1993. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1996, by correspondence with the custodian and brokers. Where brokers did
not reply to our confirmation request, we carried out other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Perkins Opportunity Fund as of March 31, 1996, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the three years
in the period then ended and for the period from February 18, 1993 (commencement
of operations) to March 31, 1993, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 26, 1996 (except for Note 8, for which the date is May 14, 1996)
<PAGE>
Advisor
Perkins Capital Management, Inc.
730 East Lake Street
Wayzata, MN 55391-1769
(888) PERKOPP
(612) 473-8367
o
Distributor
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
o
Custodian
The Provident Bank
One East Fourth Street
Cincinnati, OH 45250-0967
o
Transfer Agent and Shareholder Services
Rodney Square Management Corporation
1105 North Market Street
Wilmington, DE 19890-0001
(800)280-4779
o
Auditors
Tait, Weller & Baker
2 Penn Center Plaza
Philadelphia, PA 19102
o
Legal Counsel
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, CA 94104
This report is intended for shareholders of
The Perkins Opportunity Fund and may not
be used as sales literature unless preceded
or accompanied by a current prospectus.
