U.S. Global Leaders Growth Fund
Semi-Annual Report
December 31, 1995
<PAGE>
February 15, 1996
Dear Fellow Long-Term Investor:
It is with special appreciation for you, our charter investors, and with great
expectations for the future, that I send you this initial report of the Fund.
U.S. Global Leaders Growth Fund is off to a good start. The total return for the
Fund in its first full quarter of operation ending December 31, 1995 was 6.73%
compared with a 6.02% return for the S&P 500 Index.
We believe the investment environment for sustainable growth companies with a
global reach is the brightest it has been in our more than thirty years of
investment experience. Inflation remains low in the U.S., and that should help
prevent the currently slowing economy from developing into a recession in the
near future. Of note for the global operations of the Fund's holdings, the world
economy grew by an estimated 3.7% in 1995. This was the fastest pace in seven
years. The strong growth of foreign countries, which have opened their borders
to trade and investment following the fall of communism, should continue.
The Fund is well positioned - perhaps uniquely so - because of investments in
companies which are able to exploit these enormous overseas opportunities.
Global marketing expertise linked to superior cost positioning gives these
companies unusual competitive muscle. Moreover, their shares currently sell at
only a modest price premium relative to their underlying earnings growth rates.
U.S. Global Leaders Growth Fund was featured in the January issue of Mutual Fund
Monthly published by Stolper & Company, a prominent investment advisory firm. It
is gratifying to have such early recognition from a respected source. I trust
you will find the enclosed reprint satisfying reading.
Thank you for your confidence, and best regards,
/s/ George M. Yeager
George M. Yeager
President
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<TABLE>
<CAPTION>
U.S. Global Leaders Growth Fund
PORTFOLIO OF INVESTMENTS
at December 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 99.6% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Business & Information Services: 9.0%
<S> <C>
30,000 Automatic Data Processing, Inc............... $ 222,750
4,100 Reuter Holding PLC-ADR....................... 226,012
-------
448,762
-------
Consumer Products: 15.7%
3,000 Colgate-Palmolive Co......................... 210,750
6,800 Gillette Co.................................. 354,450
2,700 Procter & Gamble Co.......................... 224,100
-------
789,300
-------
Entertainment & Lodging: 7.3%
5,800 Marriott International....................... 221,850
2,450 The Walt Disney Co........................... 144,550
-------
366,400
-------
Financial Services: 4.5%
5,000 State Street Boston Corp..................... 225,000
-------
Food & Beverage: 14.8%
1,900 Anheuser-Busch Cos., Inc..................... 127,063
3,200 Coca Cola Co................................. 237,600
2,600 International Flavors........................ 124,800
1,600 Kellogg Co................................... 123,600
2,500 W.M. Wrigley, Jr. Co......................... 131,250
-------
744,313
-------
Food Service: 6.3%
7,000 McDonald's Corp.............................. 315,875
-------
Health Products: 19.6%
5,500 Abbott Laboratories.......................... 229,625
3,400 Johnson & Johnson............................ 291,125
2,700 Merck & Co., Inc............................. 177,525
4,500 Pfizer, Inc.................................. 283,500
-------
981,775
-------
Insurance: 11.7%
2,500 American International Group................. 231,250
2,300 General RE Corp.............................. 356,500
-------
587,750
-------
Mass Merchandising: 6.5%
14,550 Wal-Mart Stores, Inc......................... 325,556
-------
<PAGE>
U.S. Global Leaders Growth Fund
PORTFOLIO OF INVESTMENTS
at December 31, 1995 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Specialty Retail: 4.2%
4,200 Tiffany & Co................................. $ 211,575
---------
Total Common Stocks (cost $4,786,751)........ 4,996,306
---------
Total Investment in Securities
(cost $4,786,751+): 99.6%.................... 4,996,306
Other Assets less Liabilities: 0.4%.......... 21,565
------
Total Net Assets: 100.0%............. $ 5,017,871
===========
<FN>
+ At December 31, 1995, the cost of securities for federal tax purposes was the
same as the basis for financial reporting. Unrealized appreciation and
depreciation of securities was as follows:
Gross unrealized appreciation................ $ 248,099
Gross unrealized depreciation................ (38,544)
-------
Net unrealized appreciation................ $ 209,555
=========
</FN>
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
U.S. Global Leaders Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
at December 31, 1995 (Unaudited)
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ASSETS
<S> <C>
Investments in securities, at value (identified cost
$4,786,751) (Note 2-A) ............................. $4,996,306
Cash................................................... 1,289,774
Receivables:
Expense reimbursement............................... 2,260
Dividends and interest ............................. 3,047
Other assets........................................... 2,993
-----
Total assets .................................... 6,294,380
---------
LIABILITIES
Payable for securities purchased....................... 1,267,115
Accrued expenses ...................................... 9,394
-----
Total liabilities................................ 1,276,509
---------
NET ASSETS .......................................... $5,017,871
==========
Netasset value, offering and redemption price per share
($5,017,871/470,500 shares outstanding; unlimited number
of shares authorized without par value)................. $10.66
======
SOURCE OF NET ASSETS
Paid-in capital ....................................... $4,808,707
Dividends in excess of net investment income........... (391)
Net unrealized appreciation of investments............. 209,555
-------
Net assets ......................................... $5,017,871
==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
U.S. Global Leaders Growth Fund
STATEMENT OF OPERATIONS - For the Period October 1, 1995* through December 31,
1995 (Unaudited)
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INVESTMENT INCOME
Income
<S> <C>
Dividends........................................... $ 13,462
--------
Expenses
Advisory fees (Note 3) ............................. 8,407
Administration fee (Note 3)......................... 6,835
Custodian and accounting fees....................... 3,544
Transfer agent fees................................. 3,739
Auditing fees....................................... 3,739
Trustees' fees...................................... 498
Legal fees.......................................... 809
Reports to shareholders............................. 622
Miscellaneous....................................... 498
---
Total expenses................................... 28,691
Less, expenses reimbursed (Note 3)............... (16,249)
-------
Net expenses..................................... 12,442
------
Net investment income ......................... 1,020
-----
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain from security transactions .......... -0-
Net unrealized appreciation of investments ............ 209,555
-------
Net realized and unrealized gain on investments .... 209,555
-------
Net Increase in Net Assets Resulting from
Operations ...................................... $ 210,575
=========
<FN>
*Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
U.S. Global Leaders Growth Fund
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
October 1, 1995*
through
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
<S> <C>
Net investment income.................................. $ 1,020
Net realized gain on security transactions ............ -0-
Net unrealized appreciation of investments............. 209,555
-------
Net increase in net assets resulting from
operations ......................................... 210,575
-------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income ($.003 per share)................ (1,411)
------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a).............................. 4,808,707
---------
Total increase in net assets ....................... 5,017,871
NET ASSETS
Beginning of period ................................... -0-
-
End of period (including dividends in excess of
net investment income of $391)........................ $5,017,871
==========
<FN>
(a) A summary of capital shares transactions is as follows:
October 1, 1995*
through
December 31, 1995
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Shares Value
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Shares sold ................................ 470,368 $4,807,296
Shares issued in reinvestment of
distributions......................... 132 1,411
Shares redeemed............................. (0) (0)
-- --
Net increase ............................... 470,500 $4,808,707
======= ==========
*Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
U.S. Global Leaders Growth Fund
FINANCIAL HIGHLIGHTS - For a capital share outstanding throughout the period (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
October 1, 1995*
through
December 31, 1995
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<S> <C>
Net asset value, beginning of period ................... $10.00
------
Income from investment operations:
Net investment income ............................... .01
Net realized and unrealized gain on investments ..... .66
---
Total from investment operations........................ .67
---
Less distributions:
Dividends from net investment income................. (.01)
----
Net asset value, end of period ......................... $10.66
======
Total return ........................................... 29.01%+
Ratios/supplemental data:
Net assets, end of period (millions).................... $ 5.0
Ratio of expenses to average net assets:
Before expense reimbursement ........................ 3.41%+
After expense reimbursement.......................... 1.48%+
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement ........................ (1.81)%+
After expense reimbursement ......................... 0.12%+
Portfolio turnover rate ................................ 0.00%
<FN>
*Commencement of operations.
+Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
U.S. Global Leaders Growth Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The U.S. Global Leaders Growth Fund (the "Fund") is a non-diversified
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 an open-end management investment company. The Fund began
operations on October 1, 1995.
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.
U.S. Government securities with less than 60 days remaining to
maturity when acquired by the Fund are valued on an amortized cost
basis. U.S. Government securities with more than 60 days remaining to
maturity are valued at the current market value (using the mean
between the bid and asked price) until the 60th day prior to
maturity, and are then valued at amortized cost based upon the value
on such date unless the Board determines during such 60 day period
that this amortized cost basis does not represent fair 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.
<PAGE>
U.S. Global Leaders Growth Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
For the period ended December 31, 1995, Yeager, Wood & Marshall, Inc.(the
"Advisor") provided the Fund with investment management services under an
Investment Advisory Agreement. The Advisor furnished all investment advice,
office space, facilities, and most personnel needed by the Fund. As compensation
for its services, the Advisor was entitled to a monthly fee at the annualized
rate of 1.00% based upon the average daily net assets of the Fund. For the
period ended December 31, 1995, the Fund incurred $8,407 in advisory fees.
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 the most stringent limits
prescribed by any state in which the Fund's shares are offered for sale. Any
such reductions made by the Advisor in its fees or payments or reimbursement of
expenses which are the Fund's obligation are subject to reimbursement by the
Fund within the following three years provided the Fund is able to effect such
reimbursement and remain in compliance with applicable expense limitations.
Southampton Investment Management Company (the "Administrative Manager")
acts as the Fund's Administrative Manager under a Management Agreement. The
Administrative 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, the Administrative
Manager receives an annual fee equal to the greater of 0.25% of the Fund's
average daily net assets or $30,000.
First Fund Distributor, 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 Administrative Manager.
Certain officers and Trustees of the Fund are also officers and/or
directors of the Administrative Manager.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments, for
the period ended December 31, 1995 were $4,786,751 and $0, respectively.
<PAGE>
ADVISOR
Yeager, Wood & Marshall, Incorporated
630 Fifth Avenue
New York, New York 10111
(212) 765-5350
DISTRIBUTOR
First Fund Distributors, Inc.
4455 E. Camelback Road, Suite 261E
Phoenix, Arizona 85018
CUSTODIAN
Star Bank
P.O. Box 1118
Cincinnati, Ohio 45201-1118
TRANSFER AND
DIVIDEND
DISBURSING AGENT
Rodney Square Management Corporation
P.O. Box 8987
Wilmington, Delaware 19899-9752
(800) 282-2340
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 the U.S. Global Leaders Growth
Fund and may not be used as sales literature unless preceded or accompanied by a
current prospectus.
