MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
Annual Report
December 31, 1995
<PAGE>
January 15, 1996
Dear Matrix Shareholder:
In comparison to the past 70 years, 1995 was a banner year for the stock market.
Technology stocks were especially favored as reports of capital spending on
technology and purchases of personal computers continued to surpass almost all
forecasts. As the year progressed, prospects were brightened by movement in
Washington to pass legislation which would produce a balanced budget by the year
2002. For the year, the Standard and Poors 500 Index posted a 37.4% increase.
The Matrix Emerging Growth Fund realized outstanding performance in its
inaugural year. Launched on April 4, 1995, the Emerging Growth Fund realized a
total return of 29.8% for the period since inception. Strong performance from
the Fund's technology holdings significantly contributed to its successful first
year. We believe small cap issues remain undervalued relative to larger cap
stocks. Historically, emerging growth stocks have been prime beneficiaries of a
slow growth economy accompanied by low inflation and interest rates. This is the
environment that is currently in place. Another positive for emerging growth
stocks in 1996 will be their superior earnings growth prospects. While the S&P
500's profit growth is expected to decline into the 5-10% range from 1995's 30%
plus, we think that small cap earnings should be up 30-35%. This contrast should
appear quite attractive to investors.
The Matrix Growth Fund gained 7.6% in the first quarter of 1995, which was well
on pace with the average for growth fund returns. The total gain of 9.38% in the
second and third quarters, however, was below the 17% advance for growth funds
during these two quarters. Significant reduction of the Fund's exposure to
semiconductor and computer software stocks at the start of this period, and
exposure to basic industry and consumer-cyclical holdings were the key
contributors to this weak relative performance. The Matrix Growth Fund's best
quarter of relative performance was the fourth when a gain of 4.8% was about
double the advance of the average growth fund. After high expectations about
strength and duration of the business cycle had propelled certain market sectors
to unsustainable summer highs, new economic data indicated the economy was
decelerating and investor
<PAGE>
interest in "reliable growth" stocks increased. Falling interest rates
combined with good earnings achievement from Fund holdings produced excellent
relative performance for the Fund and this trend continues into the new year.
Looking ahead to 1996, we believe the S&P 500 averages will again show positive
action, though not as spectacular as 1995. Our positive outlook stems from an
environment of low inflation and moderate economic growth. Credible action by
Congress and the President to reduce the ongoing budget deficit will give
interest rates room for further decline. This is the key that we see driving the
equity markets in 1996 as lower rates make stock valuations relatively more
attractive. In addition, modestly higher earnings in 1996 are expected. The
combination of higher earnings and a willingness by investors to pay more for
these earnings should result in higher stock prices.
It is interesting to note the factors that lead to short-term volatility in
markets. Wall Street has become "hyper-sensitive" to quarterly earnings
announcements. As seen over the past year, companies that miss the estimated
earnings target provided by analysts are not well received in the marketplace.
What is troublesome, however, is how analysts continue to raise expectations to
unreasonable levels. As this continues, it becomes more difficult to meet
expectations, and subsequent earnings disappointments occur. This has been the
case for many high quality technology companies. Euphoric estimates proved to be
unrealistic and the stocks corrected in the market.
The Matrix Growth Fund and the Matrix Emerging Growth Fund continue to focus on
companies that offer exceptional long-term growth prospects. 1995 was a fine
year for the Matrix Family of Mutual Funds, and we appreciate your continued
investment as a valued shareholder.
Very truly yours,
Matrix Family of Mutual Funds
SENA WELLER ROHS WILLIAMS INC
<PAGE>
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE MATRIX EMERGING GROWTH FUND AND THE S&P 500 STOCK INDEX.
Average Annual Total Return
Since Inception (4/4/95) 42.09%
S&P 500 Stock Index Matrix Emerging Growth Fund
<S> <C> <C>
4/4/95 $10,000 10,000
6/30/9 $10,844 10,790
8/31/9 $11,243 11,860
10/31/9 $11,681 12,060
12/31/9 $12,419 12,980
Past performance is not predictive of future performance.
</TABLE>
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE MATRIX GROWTH FUND AND THE S&P 500 STOCK INDEX.
Average Annual Total Return
One Five Since Inception
Year Year (1/1/89)
23.52% 12.58% 9.18%
S&P 500 Stock Index Matrix Growth Fund
<S> <C> <C>
1/1/89 $ 10,000 10,000
12/31/89 $ 13,167 13,609
12/31/90 $ 12,785 12,996
12/31/91 $ 16,679 17,438
12/31/92 $ 17,033 18,309
12/31/93 $ 19,761 20,004
12/31/94 $ 20,013 19,037
12/31/95 $ 27,524 25,514
Past performance is not predictive of future performance.
</TABLE>
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS at December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 100.4% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Basic Industries: 6.4%
<S> <C> <C>
5,000 Eastman Chemical Company................................................ $ 313,125
10,000 Inland Steel Industries................................................. 251,250
4,000 Willamette Industries, Inc.............................................. 225,000
-------
789,375
-------
Conglomerates: 3.2%
5,500 General Electric Company................................................ 396,000
-------
Consumer Cyclical: 13.8%
12,000 Circuit City Stores, Inc................................................ 331,500
10,000 Echlin, Inc............................................................. 365,000
13,671 Mattel, Inc............................................................. 420,383
13,000 McDonald's Corporation.................................................. 586,625
-------
1,703,508
---------
Consumer Non-Cyclical: 18.6%
12,000 Albertson's, Inc........................................................ 394,500
6,000 Colgate-Palmolive Company............................................... 421,500
12,000 Health Care & Retirement*............................................... 420,000
9,600 Schering-Plough......................................................... 525,600
11,250 U. S. Healthcare, Inc................................................... 523,125
-------
2,284,725
---------
Energy: 9.3%
2,000 British Petroleum....................................................... 204,250
13,000 Enron Corporation....................................................... 495,625
4,000 Mobil Corporation....................................................... 448,000
-------
1,147,875
---------
Financial: 10.6%
8,000 Advanta Corporation, Class A............................................ 306,000
8,000 American Express Company................................................ 331,000
20,000 Norwest Corporation..................................................... 660,000
-------
1,297,000
---------
<PAGE>
Matrix Growth Fund
PORTFOLIO OF INVESTMENTS at December 31, 1995, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Industrials: 11.4%
12,000 Allied Signal, Inc...................................................... $ 570,000
6,000 Owens Corning Fiberglass*............................................... 269,250
10,750 Thermo Electron Corporation*............................................ 559,000
-------
1,398,250
---------
Technology: 18.0%
5,600 Automatic Data Processing, Inc.......................................... 415,800
4,500 Computer Associates International, Inc.................................. 255,938
5,000 DSC Communications Corporation*......................................... 184,375
5,000 EMC Corp.-Massachusetts*................................................ 76,875
10,000 General Instrument Corporation*......................................... 233,750
13,000 Loral Corporation....................................................... 459,875
3,000 Motorola, Inc........................................................... 171,000
8,000 Stryker Corporation..................................................... 420,000
-------
2,217,613
---------
Utilities: 9.1%
6,500 Ameritech Corporation................................................... 383,500
10,000 Century Telephone Enterprises, Inc...................................... 317,500
12,000 Worldcom, Inc.*......................................................... 423,000
-------
1,124,000
---------
Total Common Stocks (cost $7,590,177)................................... 12,358,346
----------
MONEY MARKET FUND: 0.3%
- ------------------------------------------------------------------------------------------------------------------------------------
41,656 Riverfront U.S. Government Securities (cost $41,656).................... 41,656
------
Total Investment in Securities (cost $7,631,833+): 100.7%............... 12,400,002
Liabilities less Other Assets: (0.7)%................................... (92,511)
-------
Total Net Assets: 100.0%................................................ $12,307,491
===========
<FN>
* Indicates non-income producing security.
+ Cost for federal income tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation............................... $ 4,998,969
Gross unrealized depreciation............................... (230,800)
--------
Net unrealized appreciation................... $ 4,768,169
</FN>
</TABLE>
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (identified cost $7,631,833) (Note 2-A,B) ......... $12,400,002
Receivables:
Expense reimbursement............................................................ 1,060
Fund shares purchased............................................................ 975
Dividends and interest........................................................... 15,283
Deferred organization costs (Note 2-E)................................................. 19,999
Other assets........................................................................... 23,731
------
Total assets .............................................................. 12,461,050
----------
LIABILITIES
Dividends payable...................................................................... 96,017
Accrued expenses ...................................................................... 57,542
------
Total liabilities.......................................................... 153,559
-------
NET ASSETS $12,307,491
===========
Net asset value and redemption price per share
($12,307,491/822,620 shares outstanding;
unlimited number of shares authorized without par value) ........................ $14.96
======
SOURCE OF NET ASSETS
Paid-in capital ....................................................................... $ 6,709,601
Dividends in excess of net investment income........................................... (1,870)
Undistributed net realized gain on investments......................................... 831,591
Net unrealized appreciation of investments............................................. 4,768,169
---------
Net assets ...................................................................... $12,307,491
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Year Ended December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Interest ........................................................................ $ 91,902
Dividends........................................................................ 254,738
-------
Total income .............................................................. 346,640
-------
Expenses
Advisory fees (Note 3) .......................................................... 141,358
Distribution costs (Notes 3 and 4)............................................... 39,266
Administration fees (Note 3)..................................................... 36,750
Custodian and accounting fees.................................................... 16,340
Transfer agent fees.............................................................. 7,282
Auditing fees.................................................................... 8,501
Legal fees....................................................................... 1,800
Reports to shareholders.......................................................... 3,500
Trustees' fees................................................................... 5,850
Registration fees................................................................ 4,380
Amortization of organization costs............................................... 5,001
Miscellaneous.................................................................... 2,890
-----
Total expenses............................................................. 272,918
Less, expenses reimbursed (Note 3)......................................... (1,060)
------
Net expenses............................................................... 271,858
-------
Net investment income ............................................. 74,782
------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions .......................................... 1,976,980
Net increase in unrealized appreciation of investments ................................ 1,298,304
---------
Net realized and unrealized gain on investments ........................... 3,275,284
---------
Net Increase in Net Assets Resulting from Operations ................ $ 3,350,066
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
December 31, December 31,
1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment income...................................................... $ 74,782 $ 51,062
Net realized gain from security transactions .............................. 1,976,980 359,982
Net change in unrealized appreciation of investments....................... 1,298,304 (1,332,964)
--------- ----------
Net increase (decrease) in net assets resulting from operations ..... 3,350,066 (921,920)
--------- --------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income ($0.104 and $0.050 per share, respectively) ......... (77,641) (56,285)
Net realized gain from securities transactions ($1.549 and $0.310 per
share, respectively)................................................. (1,156,403) (348,968)
---------- --------
Total dividends and distributions to shareholders ................... (1,234,044) (405,253)
---------- --------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets derived from net change in
outstanding shares (a) .............................................. (5,293,234) (2,251,105)
---------- ----------
Total decrease in net assets ........................................ (3,177,212) (3,578,278)
NET ASSETS
Beginning of year ......................................................... 15,484,703 19,062,981
---------- ----------
End of year (including undistributed net investment (loss) income of
($1,870) and $989, respectively)..................................... $12,307,491 $15,484,703
=========== ===========
<FN>
(a) A summary of capital shares transactions is as follows:
Year Ended Year Ended
December 31, 1995 December 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ...................................... 78,810 $ 1,124,139 195,732 $ 2,795,587
Shares issued in reinvestment of distribution..... 76,071 1,138,027 25,783 346,777
Shares redeemed .................................. (483,511) (7,555,400) (384,013) (5,393,469)
-------- ---------- -------- ----------
Net decrease ..................................... (328,630) $(5,293,234) (162,498) $(2,251,105)
======== =========== ======== ===========
</FN>
</TABLE>
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
for a capital share outstanding throughout each year
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ......................... $13.45 $14.51 $14.05 $14.01 $11.03
Income from investment operations:
Net investment income ................................ .10 .05 .06 .09 .15
Net realized and unrealized gain (loss)
on investments .................................... 3.06 (.75) 1.25 .60 3.62
---- ---- ---- --- ----
Total from investment operations............................ 3.16 (.70) 1.31 .69 3.77
---- ---- ---- --- ----
Less distributions:
Dividends from net investment income.................. (.10) (.05) (.06) (.09) (.14)
Distributions from net capital gains ................. (1.55) (.31) (.79) (.56) (.65)
----- ---- ---- ---- ----
Total distributions......................................... (1.65) (.36) (.85) (.65) (.79)
----- ---- ---- ---- ----
Net asset value, end of year................................ $14.96 $13.45 $14.51 $14.05 $14.01
====== ====== ====== ====== ======
Total return ............................................... 23.52% (4.82%) 9.32% 4.92% 34.21%
Ratios/supplemental data:
Net assets, end of period (millions)........................ $ 12.3 $ 15.5 $ 19.1 $ 19.0 $ 17.4
Ratio of expenses to average net assets:
Before expense reimbursement ......................... 1.76% 1.84% 1.67% 1.68% 1.75%
After expense reimbursement........................... 1.75% 1.84% 1.67% 1.50% 1.50%
Ratio of net investment income to average net assets:
Before expense reimbursement ......................... 0.47% 0.29% 0.40% 0.51% 0.92%
After expense reimbursement .......................... 0.48% 0.29% 0.40% 0.69% 1.17%
Portfolio turnover rate .................................... 27% 25% 30% 51% 70%
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS at December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 88.3% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Beverages: 2.5%
<S> <C> <C>
1,750 Canandaigua Wine Company, Class A....................................... $ 57,094
1,500 Hart Brewing, Inc....................................................... 22,875
2,000 Pete's Brewing Company.................................................. 28,000
------
107,969
-------
Chemicals: 1.6%
1,000 Cambrex Corporation*.................................................... 41,375
800 OM Group, Inc.*......................................................... 26,500
------
67,875
------
Communications: 8.8%
1,100 3 Com Corporation....................................................... 51,288
1,200 Bay Networks, Inc....................................................... 49,350
650 Cabletron Systems, Inc.................................................. 52,650
1,400 DSC Communications Corporation.......................................... 51,625
3,000 Harmonic Lightwaves..................................................... 33,000
800 Network General Corporation............................................. 26,700
1,200 Octel Communications Corporation........................................ 38,700
800 Qualcomm, Inc........................................................... 34,400
1,050 Tellabs, Inc............................................................ 38,850
------
376,563
-------
Computers & Information: 4.0%
1,375 Landmark Graphics Corporation........................................... 31,969
2,500 Sandisk Corporation..................................................... 37,500
1,450 Silicon Graphics, Inc................................................... 39,875
1,700 Stormedia, Inc.......................................................... 62,050
------
171,394
-------
Consumer Products: 1.7%
1,000 Gucci Group NV-NY Shrs.................................................. 38,875
1,000 Oakley, Inc............................................................. 34,000
------
72,875
------
Consumer Services: 0.8%
475 Central Parking Corporation*............................................ 13,656
1,000 Franklin Quest Company.................................................. 19,500
------
33,156
------
<PAGE>
Matrix Emerging Growth Fund
PORTFOLIO OF INVESTMENTS at December 31, 1995, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Energy: 2.0%
3,000 Falcon Drilling Company, Inc............................................ $ 45,000
700 Input/Output, Inc....................................................... 40,425
------
85,425
------
Financial Services: 10.9%
1,000 Advanta Corporation, Class A*........................................... 38,250
2,500 Amerin Corporation...................................................... 66,875
2,625 Litchfield Financial.................................................... 34,125
2,000 Meadowbrook Insurance................................................... 67,000
1,700 Medaphis Corporation.................................................... 62,900
900 Mid Ocean, Ltd.......................................................... 33,412
1,000 Mutual Risk Management*................................................. 45,750
1,500 Partner Re Holdings, Ltd.*.............................................. 41,250
2,500 PMT Services, Inc....................................................... 75,625
------
465,187
-------
Health Care Providers: 9.4%
2,500 Advocat, Inc............................................................ 27,813
1,200 American Oncology Resources............................................. 58,350
1,250 Genesis Health Ventures................................................. 45,625
1,600 Healthsouth Corporation................................................. 46,600
1,400 Integrated Health Service*.............................................. 35,000
2,000 Multicare Companies, Inc................................................ 48,000
2,500 Ornda Healthcorp........................................................ 58,125
1,000 Phycor, Inc............................................................. 50,563
1,025 Vencor, Inc............................................................. 33,313
------
403,389
-------
Industrial & Commercial Services: 3.8%
2,000 Accustaff, Inc.......................................................... 88,000
2,000 M.A.I.D., PLC-ADR....................................................... 29,000
1,500 Norrell Corporation*.................................................... 44,063
------
161,063
-------
Industrial Technology: 2.5%
2,500 Carbide/Graphite Group.................................................. 35,938
2,000 Computational Systems, Inc.............................................. 31,000
1,500 Elsag Bailey Process.................................................... 40,312
------
107,250
-------
<PAGE>
Matrix Emerging Growth Fund
PORTFOLIO OF INVESTMENTS at December 31, 1995, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Manufactured Housing: 1.0%
2,000 Palm Harbor Homes, Inc.................................................. $ 43,500
--------
Media Broadcasting: 1.0%
650 Lin Television Corporation.............................................. 19,337
800 Young Broadcasting...................................................... 22,600
------
41,937
------
Medical - Adv. Devices: 1.5%
1,500 Guidant Corporation*.................................................... 63,375
------
Pharmaceuticals: 5.3%
750 Biogen, Inc............................................................. 46,125
1,500 Clintrials Research..................................................... 30,375
900 Elan Corporation, PLC - ADR............................................. 43,763
1,000 Express Scripts, Inc.................................................... 51,000
1,139 Watson Pharmaceutical, Inc.............................................. 55,811
------
227,074
-------
Restaurants: 1.8%
2,000 Logan's Roadhouse, Inc.................................................. 34,500
1,250 Outback Steakhouse, Inc................................................. 44,844
------
79,344
------
Retailers - Specialty: 3.7%
3,000 BT Office Products International........................................ 48,000
2,400 General Nutrition Company............................................... 55,200
2,375 OfficeMax, Inc.......................................................... 53,141
------
156,341
-------
Semiconductor & Related: 3.4%
1,250 AVX Corporation*........................................................ 33,125
1,000 BE Semiconductor Industries............................................. 13,000
1,200 Integrated Silicon Solution............................................. 20,081
1,000 SDL, Inc................................................................ 24,000
3,100 Telcom Semiconductor, Inc............................................... 22,475
1,500 Tower Semiconductor, Ltd................................................ 33,187
------
145,868
-------
<PAGE>
Matrix Emerging Growth Fund
PORTFOLIO OF INVESTMENTS at December 31, 1995, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Software & Processing: 18.1%
1,250 Advent Software, Inc.................................................... $ 22,187
4,000 Applix, Inc............................................................. 109,000
1,000 Arbor Software Corporation.............................................. 47,250
1,050 Cadence Design Systems, Inc............................................. 44,100
1,000 Checkfree Corporation................................................... 21,500
1,200 HNC Software............................................................ 57,300
1,350 Hyperion Software Corporation........................................... 28,687
1,500 Informix Corporation.................................................... 45,000
1,500 Logic Works, Inc........................................................ 18,750
1,600 Maxis, Inc.............................................................. 60,800
2,150 Objective Systems Integrator............................................ 117,712
1,300 Oracle Corporation...................................................... 55,087
750 Parametric Technology Corporation....................................... 49,875
1,000 Scopus Technology, Inc.................................................. 25,250
1,100 Uunet, Inc.............................................................. 69,300
------
771,798
-------
Telephone Systems: 2.7%
2,000 Brightpoint, Inc........................................................ 28,250
5,000 Equalnet Holding Corporation............................................ 36,250
1,500 Worldcom, Inc........................................................... 52,875
------
117,375
-------
Transportation Equipment & Services: 1.8%
1,000 Fritz Companies......................................................... 41,500
1,500 Wabash National Corporation*............................................ 33,375
------
74,875
------
Total Common Stocks (cost $2,992,120)................................... 3,773,633
---------
<PAGE>
Matrix Emerging Growth Fund
PORTFOLIO OF INVESTMENTS at December 31, 1995, Continued
- -----------------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
$507,900 Provident Bank Repurchase Agreement, 5.35%, dated 12/29/95,
due 1/2/96, collateralized by $510,000 U.S. Treasury Notes,
due 8/15/96 (proceeds $508,202) (cost $507,900)......................... $ 507,900
---------
Total Investment in Securities (cost $3,500,020+): 100.2%............... 4,281,533
Liabilities less Other Assets: (0.2%)................................... (7,906)
------
Total Net Assets: 100.0%................................................ $ 4,273,627
===========
<FN>
* Indicates income producing security.
+ Cost for federal income tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation................................ $ 978,205
Gross unrealized depreciation................................ (196,692)
--------
Net unrealized appreciation................... $ 781,513
=========
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (identified cost $3,500,020) (Note 2-A,B) ......... $ 4,281,533
Cash .................................................................................. 43
Receivables:
Expense reimbursement............................................................ 32,234
Fund shares sold................................................................. 5,485
Dividends and interest........................................................... 359
Deferred organization costs (Note 2-E)................................................. 25,813
Prepaid expenses....................................................................... 2,762
-----
Total assets .............................................................. 4,348,229
---------
LIABILITIES
Payable for investments purchased...................................................... 38,695
Accrued expenses ...................................................................... 35,907
------
Total liabilities.......................................................... 74,602
------
NET ASSETS $ 4,273,627
===========
Net asset value and redemption price per share
($4,273,627/329,168 shares outstanding;
unlimited number of shares authorized without par value) ........................ $12.98
======
SOURCE OF NET ASSETS
Paid-in capital ....................................................................... $ 3,489,215
Accumulated net investment loss........................................................ (9,756)
Undistributed net realized gain on investments......................................... 12,655
Net unrealized appreciation of investments............................................. 781,513
-------
Net assets ...................................................................... $ 4,273,627
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Period April 4, 1995* to December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Interest ........................................................................ $ 33,766
Dividends........................................................................ 1,506
-----
Total income .............................................................. 35,272
------
Expenses
Advisory fees (Note 3) .......................................................... 20,219
Distribution costs (Notes 3 and 4)............................................... 5,617
Administration fees (Note 3)..................................................... 22,356
Custodian and accounting fees.................................................... 6,090
Transfer agent fees.............................................................. 2,704
Auditing fees.................................................................... 8,943
Legal fees....................................................................... 870
Reports to shareholders.......................................................... 909
Trustees' fees................................................................... 3,696
Deferred organization costs...................................................... 4,209
Miscellaneous.................................................................... 1,649
-----
Total expenses............................................................. 77,262
Less fees waived and expenses reimbursed (Note 3).......................... (32,234)
-------
Net expenses............................................................... 45,028
------
Net investment loss ............................................... (9,756)
------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions .......................................... 12,655
Net increase in unrealized appreciation of investments ................................ 781,513
-------
Net realized and unrealized gain on investments ........................... 794,168
-------
Net Increase in Net Assets Resulting from Operations ................ $ 784,412
=========
<FN>
*Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
April 4, 1995
INCREASE IN NET ASSETS FROM to
OPERATIONS December 31. 1995
<S> <C>
Net investment loss.................................................................... $ (9,756)
Net realized gain from security transactions .......................................... 12,655
Net increase in unrealized appreciation of investments................................. 781,513
-------
Net increase in net assets resulting from operations ............................ 784,412
-------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding shares (a) .......... 3,489,215
---------
Total increase in net assets .................................................... 4,273,627
NET ASSETS
Beginning of period ................................................................... -0-
-
End of period (including accumulated net investment loss of $9,756).................... $4,273,627
==========
<FN>
(a) A summary of capital shares transactions is as follows: April 4, 1995*
to
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold.......................................................... 357,416 $3,775,373
Shares redeemed ..................................................... (28,248) (286,158)
------- --------
Net increase ........................................................ 329,168 $3,489,215
======= ==========
* Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
for a capital share outstanding throughout the period
- ------------------------------------------------------------------------------------------------------------------------------------
April 4, 1995*
through
December 31,1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period................................... $10.00
Income from investment operations:
Net investment loss.............................................. (.03)
Net realized and unrealized gain on investments.................. 3.01
----
Total from investment operations....................................... 2.98
----
Less distributions:
Dividends from net investment income............................. -0-
Distributions from net capital gains............................. -0-
-
Total distributions.................................................... -0-
-
Net asset value, end of period......................................... $12.98
======
Total return........................................................... 42.09%+
Ratios/supplemental data:
Net assets, end of period (millions)................................... $ 4.3
Ratio of expenses to average net assets:
Before expense reimbursement..................................... 3.43%+
After expense reimbursement...................................... 2.00%+
Ratio of net investment loss to average net assets:
Before expense reimbursement..................................... (1.87%)+
After expense reimbursement...................................... (0.43%)+
Portfolio turnover rate................................................ 9.95%
<FN>
*Commencement of operations.
+Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Matrix Growth Fund
Matrix Emerging Growth Fund
NOTES TO FINANCIAL STATEMENTS at December 31, 1995
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Matrix Growth Fund and the Matrix Emerging Growth Fund (the "Funds")
are each one of 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 Funds began operations on May 14, 1986 and April 4, 1995,
respectively. Prior to January 1, 1995, Matrix Growth Fund was a series of
shares in the Gateway Trust, a family of four no-load diversified mutual funds
registered under the 1940 Act.
In December, 1994, the shareholders of Matrix Growth Fund, a series of
Gateway Trust, approved a plan of reorganization whereby the Matrix Growth Fund
transferred all of its assets and liabilities into the Matrix Growth Fund series
of the Trust in exchange for shares of beneficial interest in the Trust. The
Gateway Trust series then distributed the Trust's shares to its shareholders on
a share-for-share basis. No changes in the carrying values of assets and
liabilities for financial reporting or income tax purposes occurred as a result
of this reorganization.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. 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. Repurchase Agreements. The Funds require the custodian to hold
sufficient collateral to secure repurchase agreements. To reduce the
chance of loss in the event that the Funds are delayed from securing
its collateral, the Funds enter into repurchase agreements only with
banks that have more than $1 billion in assets and are creditworthy
according to Sena Weller Rohs Williams, Inc.
C. Federal Income Taxes. The Funds intend 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.
D. 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. Capital gains
and losses are calculated on an identified cost basis for
financial statement and federal income tax purposes. Discounts and
premiums on securities purchased are amortized over the
life of the respective securities. Expenses that cannot be directly
associated with a specific Fund are allocated under
policies
<PAGE>
Matrix Growth Fund
Matrix Emerging Growth Fund
NOTES TO FINANCIAL STATEMENTS at December 31, 1995, Continued
- --------------------------------------------------------------------------------
set by the board of trustees. Income and capital gain distributions to
shareholders are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
E. Deferred Organization Costs. The costs incurred by the Funds with
respect to adopting its current management and trust agreement and
initial organization for Emerging Growth have been deferred and are
being amortized using the straight-line method over a period of five
years from January 1, 1995 for Growth and April 4, 1995 (commencement
of operations) for Emerging Growth.
F. Estimates and Assumptions. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
For the year ended December 31, 1995, Sena Weller Rohs Williams, Inc. (the
"Advisor") provided the Funds 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 Funds. As compensation for its services, the Advisor was
entitled to a monthly fee at the annual rate of 0.90% based upon the average
daily net assets of the Funds up to $50 million per Fund, 0.70% of the next $50
million and 0.60% of all such assets over $100 million.
The Advisor has agreed to reduce fees payable to it by the Funds and
reimburse other expenses to the extent necessary to limit the Funds' aggregate
annual operating expenses, excluding brokerage commissions and other portfolio
transaction expenses, interest, taxes, capital expenditures and extraordinary
expenses, to 1.75% and 2.00%, respectively, of average daily net assets through
December 31, 1996. As a result, the Advisor will reimburse the Funds for
expenses in excess of the limit in the amounts of $1,060 and $32,234,
respectively. The Funds' Statements of Assets and Liabilities include
receivables of $1,060 and $32,234 for expense reimbursements and payables of
$10,451 and $17,163 for investment advisory fees as of December 31, 1995.
At December 31, 1995, the Advisor controlled, but did not own, 64% and 96%
of the outstanding shares of the Funds.
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 Funds;
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.
<PAGE>
Matrix Growth Fund
Matrix Emerging Growth Fund
NOTES TO FINANCIAL STATEMENTS at December 31, 1995, Continued
- --------------------------------------------------------------------------------
Reynolds DeWitt Securities Company (the "Distributor") acts as the Funds'
principal underwriter in a continuous public offering of the Funds' shares. The
Distributor is a division of the Advisor.
Certain officers and Trustees of the Funds are also officers and/or
directors of the Manager.
NOTE 4 - DISTRIBUTION COSTS
The Funds have adopted a Distribution Plan (The "Plan") in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that the Funds will pay a fee
to the Distributor at an annual rate of up to 0.25% of the average daily net
assets of the Funds. The fee is paid to the Distributor as reimbursement for, or
in anticipation of, expenses incurred for distribution-related activity. The
Funds' Statements of Assets and Liabilities include payables of $39,265 and
$5,615 to the Distributor for 12b-1 fees at December 31, 1995.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1995, the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, were
$3,815,974 and $8,851,791, respectively, for the Matrix Growth Fund and
$3,218,586 and $239,117, respectively, for the Matrix Emerging Growth Fund.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF
MATRIX GROWTH FUND,
MATRIX EMERGING GROWTH 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 Matrix Growth Fund (a series of
Professionally Managed Portfolios) as of December 31, 1995, and the related
statement of operations, the statement of changes in net assets, and the
financial highlights for the year then ended. We have audited the accompanying
statement of assets and liabilities, including the portfolio of investments, of
Matrix Emerging Growth Fund (a series of Professionally Managed Portfolios) as
of December 31, 1995 and the related statement of operations, the statement of
changes in net assets, and the financial highlights for the period from April 4,
1995 (commencement of operations) to December 31, 1995. 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. The statement of
changes in net assets for the year ended December 31, 1994 and the financial
highlights for the four years ended December 31, 1994 for Matrix Growth Fund
were audited by other auditors whose report dated January 23, 1995 expressed an
unqualified opinion on those statements.
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
December 31, 1995, by correspondence with the custodian. 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
Matrix Growth Fund as of December 31, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for the year then ended,
and the financial position of Matrix Emerging Growth Fund as of December 31,
1995, the results of its operations, the changes in its net assets and the
financial highlights for the period from April 4, 1995 (commencement of
operations) to December 31, 1995, in conformity with generally accepted
accounting principles.
Joseph Decosimo and Company, PLL
Cincinnati, Ohio
February 12, 1996
<PAGE>
Advisor
Sena Weller Rohs Williams, Inc.
300 Main Street
Cincinnati, Ohio 45202
(513) 621-2875
(800) 877-3344
--
Distributor
Reynolds DeWitt Securities Company
a division of Sena Weller Rohs Williams, Inc.
300 Main Street
Cincinnati, Ohio 45202
(513) 621-2875
(800) 877-3344
--
Custodian
Star Bank
P.O. Box 1118
Cincinnati, Ohio 45201-1118
--
Transfer Agent
American Data Services, Inc.
24 West Carver Street, 2nd Floor
Huntington, New York 11743
--
Auditors
Joseph Decosimo and Company, PLL
Atrium Two - Suite 2727
221 East Fourth Street
Cincinnati, Ohio 45202
--
Legal Counsel
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
This report is intended for the shareholders of the
Matrix Growth Fund and the Matrix Emerging
Growth Fund and should not be used as sales
literature unless accompanied or preceded
by the Funds' current prospectus.
