<PAGE> 1
ACADEMY VALUE FUND
October 16, 1996
Dear Shareholders:
Fiscal 1996 has been an eventful year for the Academy Value Fund. Four of your
Fund's securities had their fundamental value realized by being purchased by
other companies. Two of these transactions have closed while two are still
pending. These acquisitions, at a premium to your Fund's investment, provide
evidence of our value discipline of investing in companies at a price level
below their intrinsic value. Over time, we believe that this process should lead
to superior returns.
The next year will continue to be challenging for the financial markets. The
extreme valuation levels of the market and widespread economic speculation have
led to increased market volatility, both positive and negative. However,
volatile markets can provide buying opportunities for patient investors. Your
Fund has been able to add new positions to the portfolio over the last few
months. Also, the continued uncertainties regarding the strength of the economy
as well as election year politics add to the market's speculative bent. Market
overreactions to economic data and political promises are probable.
The challenge for the Academy Value Fund remains to search for and invest in
securities at a discount to their intrinsic value. In this manner we expect to
achieve our ultimate goal of maximizing value for our shareholders.
Sincerely,
Academy Capital Management
<PAGE> 2
ACADEMY VALUE FUND
<TABLE>
<CAPTION>
S&P
Date Fund Index
---- ---- -----
<S> <C> <C>
12/09/94 10,000 10,000
02/28/95 10,320 10,967
08/31/95 11,600 12,813
02/29/96 10,613 14,773
08/31/96 11,526 15,211
</TABLE>
Past performance is not predictive of future performance.
<PAGE> 3
ACADEMY VALUE FUND
PORTFOLIO OF INVESTMENTS AT AUGUST 31, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Shares COMMON STOCKS: 83.8% Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
CHEMICALS: 1.1%
1,000 Sigma-Aldrich Corporation........................ $ 52,750
----------
COMPUTERS & INFORMATION: 3.0%
14,600 Bell Microproducts*.............................. 114,975
1,144 Silicon Graphics, Inc............................ 26,598
----------
141,573
----------
CONGLOMERATE: 2.1%
7,800 Hanson Trust - PLC............................... 98,475
----------
CONSUMER SERVICES: 14.0%
8,000 CPI Corporation.................................. 147,000
4,550 Deluxe Corporation............................... 174,037
9,950 Ennis Business Forms............................. 106,963
6,300 Franklin Quest Company*.......................... 114,975
9,500 Sealright Company, Inc........................... 111,625
----------
654,600
----------
COSMETIC & PERSONAL CARE PRODUCTS: 1.8%
1,854 Block Drugs, Class A............................. 82,503
----------
FINANCIAL SERVICES: 4.6%
8,450 London Pacific Group, Ltd........................ 118,300
4,100 Union Corporation*............................... 94,812
----------
213,112
----------
FOOD: 1.4%
6,100 Michael Foods, Inc............................... 66,338
----------
HEALTHCARE PROVIDERS: 6.2%
15,700 Community Psychology Centers*.................... 125,600
18,000 Novacare, Inc.*.................................. 162,000
----------
287,600
----------
INDUSTRIAL PRODUCTS: 2.6%
6,550 Watts Industries, Inc., Class A.................. 121,994
----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
ACADEMY VALUE FUND
PORTFOLIO OF INVESTMENTS AT AUGUST 31, 1996 CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Shares Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE: 8.3%
9,900 Amvestors Financial Corporation.................. $ 144,787
3,350 First Colony Corporation......................... 117,669
4,100 Security - Connecticut Corporation............... 124,025
----------
386,481
----------
MEDICAL SUPPLIES: 2.3%
9,900 Sullivan Dental Products, Inc.................... 103,950
----------
PHARMACEUTICALS: 2.8%
19,100 Huntingdon International - PLC, ADR*............. 131,313
----------
RETAILERS - BROADLINE: 11.7%
24,300 Bon-Ton Stores, Inc.*............................ 142,762
3,550 Dillard Department Stores, Class A............... 120,700
4,700 Family Dollar Stores............................. 79,900
20,200 K-mart Corporation*.............................. 202,000
----------
545,362
----------
RETAILERS - DRUG BASED: 2.4%
8,800 Fay's, Inc....................................... 110,000
----------
RETAILERS - SPECIALTY: 4.1%
6,650 Gibson Greeting, Inc.*........................... 86,450
10,400 Wolohan Lumber Company........................... 105,300
----------
191,750
----------
SEMICONDUCTORS & RELATED: 1.3%
27,800 Micronics Computers, Inc......................... 59,075
----------
SHOES: 1.8%
7,800 K-Swiss, Inc., Class A........................... 84,825
----------
TELEPHONE SYSTEMS: 2.8%
3,900 Telefonos de Mexico SA, ADR...................... 128,213
----------
TOBACCO: 4.0%
6,200 UST, Inc......................................... 186,000
----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
ACADEMY VALUE FUND
PORTFOLIO OF INVESTMENTS AT AUGUST 31, 1996, CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Shares Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES: 1.5%
5,400 Destec Energy, Inc.*............................. $ 71,550
----------
WASTE MANAGEMENT: 4.0%
4,641 Fluor Daniel GTI, Inc............................ 34,807
11,200 Gundle/SLT Environmental, Inc.*.................. 73,500
8,200 Laidlaw Inc., Class B............................ 78,925
----------
187,232
----------
Total Common Stocks (cost $3,644,756)............ 3,904,696
----------
Principal
Amount U.S. GOVERNMENT OBLIGATIONS: 10.8%
- -------------------------------------------------------------------------------
$500,000 U.S. Treasury Note, 6.125%, due 12/31/96 (cost
$501,328)........................................ 502,031
----------
REPURCHASE AGREEMENTS: 4.0%
- -------------------------------------------------------------------------------
187,000 Star Bank Repurchase Agreement, 4.75%, dated
8/30/96, due 9/3/96, collateralized by $205,000
GNMA, due 1/20/24 (total value of collateral is
$204,500) (proceeds $187,099) (cost $187,000).... 187,000
----------
Total Investments in Securities (cost
$4,333,084+): 98.5% ............................. 4,593,727
Other Assets Less Liabilities: 1.5%.............. 67,608
----------
TOTAL NET ASSETS: 100.0% ........................ $4,661,335
==========
</TABLE>
+ Cost for federal income tax purpose is the same for book.
<TABLE>
<S> <C>
Net unrealized appreciation consists of:
Gross unrealized appreciation.................... $ 509,861
Gross unrealized depreciation.................... (249,218)
----------
Net unrealized appreciation............... $ 260,643
==========
</TABLE>
*Non-income producing securities.
See accompanying notes to financial statements.
5
<PAGE> 6
ACADEMY VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES AT AUGUST 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (identified cost
$4,333,084) (Note 2-A)..................................... $4,593,727
Cash....................................................... 972
Receivables:
Investments sold....................................... 52,691
Fund shares sold....................................... 2,852
Dividends and interest ................................ 15,119
From Advisor........................................... 8,584
Prepaid expenses........................................... 784
----------
Total assets ...................................... 4,674,729
----------
LIABILITIES
Accrued expenses .......................................... 3,394
Payable for Fund shares redeemed........................... 10,000
----------
Total liabilities.................................. 13,394
----------
NET ASSETS .................................................... $4,661,335
==========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE
($4,661,335/410,299 shares outstanding;
unlimited number of shares authorized without par
value)................................................. $ 11.36
==========
COMPONENTS OF NET ASSETS
Paid-in capital ........................................... $4,420,393
Undistributed net investment income........................ 4,717
Excess tax distribution on net realized gain............... (24,418)
Net unrealized appreciation of investments................. 260,643
----------
Net assets ............................................ $4,661,335
==========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
ACADEMY VALUE FUND
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED AUGUST 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................................... $ 29,786
Dividends.............................................. 62,316
Other.................................................. 45
----------
Total income....................................... 92,147
----------
Expenses:
Advisory fees (Note 3)................................. 42,121
Administrative fee (Note 3)............................ 30,082
12b-1 expenses (Note 4)................................ 10,472
Custodian and accounting fees.......................... 15,961
Transfer agent fees.................................... 6,518
Auditing fees.......................................... 15,033
Legal fees............................................. 2,664
Reports to shareholders................................ 1,795
Trustees fees.......................................... 3,563
Registration fees...................................... 9,786
Miscellaneous.......................................... 4,748
----------
Total expenses..................................... 142,743
Less: expenses waived/reimbursed (Note 3).......... (58,386)
----------
Net expenses....................................... 84,357
----------
NET INVESTMENT INCOME ......................... 7,790
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on securities transactions........... (7,792)
Net change in unrealized appreciation of investments... 37,441
----------
Net realized and unrealized gain on investments.... 29,649
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... $ 37,439
==========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 8
ACADEMY VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Year December 9,
Ended 1994* to
August 31, August 31,
1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM
OPERATIONS:
Net investment income ...................................................... $ 7,790 $ 8,328
Net realized gain (loss) on securities transactions ........................ (7,792) 32,121
Net change in unrealized appreciation of investments ....................... 37,441 223,202
----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................... 37,439 263,651
----------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ($0.029 per share) .............................. (11,401) --
From net realized gain from securities transactions ($0.124 per share) ..... (48,747) --
----------- ----------
TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS ...................... (60,148) --
----------- ----------
CAPITAL SHARE TRANSACTIONS:
Net increase in net assets derived from net change in outstanding shares (a) 1,451,616 2,968,777
----------- ----------
TOTAL INCREASE IN NET ASSETS ........................................... 1,428,907 3,232,428
NET ASSETS:
Beginning of period ........................................................ 3,232,428 -0-
----------- ----------
END OF PERIOD (including undistributed net investment income of $4,717 and
$8,328, respectively) .................................................. $ 4,661,335 $3,232,428
=========== ==========
</TABLE>
(a) A summary of capital shares transactions is as follows:
<TABLE>
<CAPTION>
Year December 9, 1994*
Ended to
August 31, 1996 August 31, 1995
--------------------------- ---------------------------
Shares Value Shares Value
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold ................. 231,315 $ 2,554,500 298,356 $ 3,190,381
Shares issued on reinvestment
of distribution ......... 5,756 60,148 -0- -0-
Shares redeemed ............. (105,548) (1,163,032) (19,580) (221,604)
-------- ----------- -------- -----------
Net increase ................ 131,523 $ 1,451,616 278,776 $ 2,968,777
======== =========== ======== ===========
</TABLE>
*Commencement of operations.
See accompanying notes to financial statements.
8
<PAGE> 9
ACADEMY VALUE FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Year December 9, 1994*
ended through
August 31, 1996 August 31,1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period ......................... $ 11.60 $ 10.00
Income from Investment Operations:
Net investment income .................................... .01 .03
Net realized and unrealized gain (loss) on investments ... (.10) 1.57
-------- --------
Total from investment operations ............................. (.09) 1.60
-------- --------
Less Distributions:
Dividends from net investment income ..................... (.03) --
Distributions from net capital gains ..................... (.12) --
-------- --------
Total Distributions .......................................... (.15) --
-------- --------
Net Asset Value, End of Period ............................... $ 11.36 $ 11.60
======== ========
Total Return ................................................. (0.64)% 22.68%+
Ratios/Supplemental Data:
Net assets, end of period (millions) ......................... $ 4.7 $ 3.2
Ratio of expenses to average net assets:
Before expense reimbursement and waived fee .............. 3.39% 5.20%+
After expense reimbursement and waived fee ............... 2.00% 2.00%+
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement ............................. (1.20)% (2.62)%+
After expense reimbursement .............................. 0.18% 0.64%+
Portfolio turnover rate ...................................... 27.71% 13.26%
Average commission rate paid per share ....................... $ 0.0536 --
</TABLE>
*Commencement of operations.
+Annualized.
See accompanying notes to financial statements.
9
<PAGE> 10
ACADEMY VALUE FUND
NOTES TO FINANCIAL STATEMENTS AT AUGUST 31, 1996
NOTE 1 - ORGANIZATION
The Academy Value 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 December 9, 1994. The investment objective of the
Fund is growth of capital. The Fund seeks to achieve its objective by investing
primarily in common stocks.
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: 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.
C. Securities Transactions, Dividends and Distributions: As is common in
the industry, security transactions are accounted for on the trade date.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
D. Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of assets
and liabilities at the date of the financial statements. Actual results
could differ from those estimates.
E. Cash and Cash Equivalents. These are funds held at the custodian
available for immediate withdrawal. The Fund's management has a policy
of reviewing the credit standing of each custodian and broker with which
it conducts business.
NOTE 3 - COMMITMENTS AND RELATED PARTY TRANSACTIONS
For the year ended August 31, 1996, Academy Capital Management, Inc. (the
"Advisor") provided the Fund with investment management services under an
Investment Advisory Agreement. The Advisor furnishes 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
receives a monthly fee at the annual rate of 1.00% based upon the average daily
net assets of the Fund. For the year ended August 31, 1996, the Fund incurred
$42,121 in Advisory Fees.
10
<PAGE> 11
ACADEMY VALUE FUND
NOTES TO FINANCIAL STATEMENTS AT AUGUST 31, 1996, CONTINUED
The Fund is responsible for its own operating expenses. The Advisor has
agreed to reduce fees payable to it by the Fund to the extent necessary to limit
the Fund's aggregate annual operating expenses to 2.00% of total net assets. As
a result, the Advisor waived its fee and reimbursed the Fund for expenses in
excess of the limit in the amount of $16,265 for the year ended August 31, 1996.
The Fund will reimburse the Advisor pursuant to this agreement in later years in
which operating expenses for the portfolio are less than the applicable
percentage limitation set forth previously for any such year.
Investment Company Administration Corporation (the "Administrator") acts as
the Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Fund's
expense accruals. For its services, the Administrator receives a monthly fee at
the following annual rate: Under $15 million - $30,000, $15 to $50 million -
0.20% of average net assets, $50 to $100 million - 0.15% of average net assets,
$100 to $150 million - 0.10% of average net assets, over $150 million - 0.05% of
average net assets.
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 Administrator and receives no compensation
for its services.
Certain officers and trustees of the Fund are also officers and/or directors
of the Administrator and the Distributor.
NOTE 4 - DISTRIBUTION COSTS
The Fund has adopted a Distribution Plan (the"Plan") in accordance with Rule
12b-1 under the 1940 Act. The Plan provides that the Fund will pay a fee to the
distribution coordinator appointed by the Board at an annual rate of up to 0.25%
of the average daily net assets of the Fund. The Fund incurred $10,472 in
distribution expenses to the Advisor for the period ended August 31, 1996.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
For the year ended August 31, 1996, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $2,566,256 and
$1,018,532, respectively.
11
<PAGE> 12
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of
The Academy Value Fund and
Board of Trustees of
Professionally Managed Portfolios
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Academy Value Fund (a series of
Professionally Managed Portfolios) as of August 31, 1996, and the related
statements of operations and changes in net assets and the financial highlights
for the year then ended. 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
audit. The financial statements and financial highlights of the Fund for the
fiscal year ended August 31, 1995 were audited by other auditors whose report
dated October 10, 1995, expressed an unqualified opinion on those financial
statements and financial highlights.
We conducted our audit 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
August 31, 1996, 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 audit provides a reasonable basis for our opinion.
In our opinion, the 1996 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Academy Value Fund as of August 31, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Los Angeles, California
October 5, 1996
<PAGE> 13
ADVISOR
Academy Capital Management
500 North Valley Mills Drive
Suite 208
Waco, Texas 76710
(817) 751-0555
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
American Data Services, Inc.
24 West Carver Street
2nd Floor
Huntington, New York 11743
INDEPENDENT AUDITORS
Ernst & Young, LLP
515 South Flower Street
Los Angeles, California 90071
LEGAL COUNSEL
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
This report is intended for shareholders of
Academy Value Fund and may not be
used as sales literature unless preceded
or accompanied by a current prospectus.
ACADEMY
VALUE FUND
ANNUAL REPORT
AUGUST 31, 1996
