September 29, 1997
Dear Shareholders:
The Academy Value Fund is pleased to present to you its annual report for fiscal
1997.
Your Fund's performance over the last twelve months has met our expectations
given the current market environment. The Fund was able to take advantage of the
positive environment for equities and generated a return to shareholders in
excess of 28% for the fiscal year. More importantly, during the negative months
for the Standard and Poor's 500 Index of December (-1.98%), February (-4.1%) and
August (-5.6%), the Fund was able to increase in value by 1.09%, 5.02% and
3.93%, respectively. This is consistent with our approach of placing a priority
on safety of principal in our efforts to generate returns for shareholders.
The last three years have been exceptional ones for the equity markets. The
economic environment characterized by low interest rates and low inflation have
produced higher valuations for financial assets. We hope that this current
environment will continue, but any upward movement in interest rates or
inflation should reduce the valuation levels currently given to equities. If
this occurs, your Fund is well-positioned to add additional quality companies at
attractive prices to the portfolio.
We appreciate the opportunity to have the Academy Value Fund as a part of your
investment program.
Sincerely,
Academy Capital Management, Inc.
<PAGE>
Academy Value Fund
Academy Value Fund
Value of $10,000 vs S & P 500 Index
<TABLE>
<CAPTION>
12/9/94 2/2/95 8/31/95 2/29/96 8/31/96 2/28/97 8/31/97
<S> <C> <C> <C> <C> <C> <C> <C>
Academy Value Fund 10,000 10,320 11,600 10,613 11,526 13,150 14,773
S & P 500 Index 10,000 10,967 12,814 14,774 15,212 18,642 21,380
</TABLE>
Average Annual Total Return
Ended August 31, 1997
1 Year ........................ 28.17%
Since Inception (12/9/94) ..... 15.37%
Past performance is not predictive of future performance.
<PAGE>
Academy Value Fund
<TABLE>
SCHEDULE OF INVESTMENTS at August 31, 1997
- -------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 85.8% Market Value
- -------------------------------------------------------------------------------------------------------
<S> <C>
Chemicals: 6.5%
5,150 Great Lakes Chemicals Corp........................................ $ 239,475
682 Millennium Chemicals, Inc......................................... 14,322
4,700 Sigma-Aldrich Corp................................................ 153,337
---------
407,134
---------
Computers and Information: 5.8%
15,500 Bell Microproducts, Inc.*......................................... 141,438
8,194 Silicon Graphics, Inc............................................. 224,823
---------
366,261
---------
Conglomerate: 1.6%
4,193 Hanson Trust - PLC (ADR).......................................... 100,632
---------
Consumer Services: 10.1%
8,000 CPI Corp.......................................................... 190,000
4,550 Deluxe Corp....................................................... 149,866
7,300 Franklin Covey Company............................................ 181,587
9,500 Sealright Company, Inc............................................ 111,625
---------
633,078
---------
Cosmetic and Personal Care Products: 1.5%
1,909 Block Drug Company, Inc., Class A................................. 90,677
---------
Financial Services: 4.4%
13,700 London Pacific Group, Ltd. (ADR).................................. 183,237
4,100 Union Corp.*...................................................... 94,556
---------
277,793
---------
Healthcare Providers: 4.3%
18,000 Novacare, Inc.*................................................... 271,125
---------
Industrial Products: 2.6%
6,550 Watts Industries, Inc., Class A................................... 159,656
---------
Insurance: 3.7%
9,900 Amvestors Financial Corp.......................................... 233,888
---------
</TABLE>
See accompanying Notes to Financial Statements.
3
<PAGE>
Academy Value Fund
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at August 31, 1997, Continued
- -------------------------------------------------------------------------------------------------------
Shares Market Value
- -------------------------------------------------------------------------------------------------------
<S> <C>
Media: 2.5%
3,950 King World Productions, Inc....................................... $ 157,013
---------
Medical Products: 5.9%
10,200 Idexx Laboratories, Inc........................................... 191,888
10,100 Vital Signs, Inc.................................................. 176,750
---------
368,638
---------
Pharmaceuticals: 1.7%
28,000 Huntingdon Life Sciences Group, PLC (ADR)*........................ 108,500
---------
Restaurants: 3.9%
12,450 Luby's Cafeterias, Inc............................................ 245,109
---------
Retailers - Broadline: 6.7%
3,550 Dillard Department Stores, Inc., Class A.......................... 142,000
20,200 Kmart Corp.*...................................................... 280,275
---------
422,275
---------
Retailers - Specialty: 2.0%
10,400 Wolohan Lumber Company............................................ 126,100
---------
Semiconductors and Related: 1.9%
47,500 Micronics Computers, Inc.......................................... 121,719
---------
Telephone Systems: 2.9%
3,900 Telefonos de Mexico SA (ADR)...................................... 178,912
---------
Tobacco: 10.1%
18,637 Imperial Tobacco Group, PLC (ADR)................................. 230,633
13,800 UST, Inc.......................................................... 398,475
---------
629,108
---------
Transportation: 1.9%
8,200 Laidlaw, Inc. (ADR)............................................... 119,925
---------
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
Academy Value Fund
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at August 31, 1997, Continued
- -------------------------------------------------------------------------------------------------------
Shares Market Value
- -------------------------------------------------------------------------------------------------------
<S> <C>
Waste Management: 5.8%
20,141 Fluor Daniel/GTI, Inc............................................. $ 163,646
36,000 Gundle/SLT Environmental, Inc.*................................... 200,250
---------
363,896
---------
Total Common Stocks (cost $4,428,905)............................. 5,381,439
---------
Principal Amount REPURCHASE AGREEMENT: 14.2%
- -------------------------------------------------------------------------------------------------------
$890,000 Star Bank Repurchase Agreement, 4.90%, dated 8/29/1997,
due 9/2/1997, collateralized by $910,025 GNMA, due 2/20/2024
(proceeds $890,485) (cost $890,000)............................... 890,000
---------
Total Investments in Securities (cost $5,318,905+): 100.0% ....... 6,271,439
Liabilities in excess of Other Assets: 0.0%....................... (2,642)
----------
Total Net Assets: 100.0% ......................................... $6,268,797
==========
+ At August 31, 1997, the cost of securities for Federal tax purposes was the same as the basis for
financial reporting. Unrealized appreciation and depreciation of securities were as follows:
Net unrealized appreciation consists of:
Gross unrealized appreciation..................................... $1,047,838
Gross unrealized depreciation..................................... (95,304)
----------
Net unrealized appreciation............................. $ 952,534
==========
</TABLE>
*Non-income producing security.
See accompanying Notes to Financial Statements.
5
<PAGE>
Academy Value Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at August 31, 1997
- -------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $4,428,905) ........................... $5,381,439
Repurchase agreement (cost $890,000)............................................. 890,000
Cash............................................................................. 480
Receivables:
Due from Advisor........................................................... 661
Dividends and interest .................................................... 4,261
Fund shares sold........................................................... 3,368
Prepaid expenses and other assets................................................ 2,671
----------
Total assets ........................................................ 6,282,880
----------
LIABILITIES
Payables:
Administration fee......................................................... 2,046
Distribution fees.......................................................... 2,493
Accrued expenses ................................................................ 9,544
----------
Total liabilities.................................................... 14,083
----------
NET ASSETS ............................................................................ $6,268,797
==========
Net asset value, offering and redemption price per share
($6,268,797/430,579 shares outstanding;
unlimited number of shares authorized without par value) ........................ $14.56
======
COMPONENTS OF NET ASSETS
Paid-in capital.................................................................. $4,727,310
Accumulated net investment loss.................................................. (7,692)
Undistributed net realized gain on investments................................... 596,645
Net unrealized appreciation on investments....................................... 952,534
----------
Net assets .......................................................... $6,268,797
==========
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
Academy Value Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Year Ended August 31, 1997
- ------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Income
Dividends.................................................................. $ 68,052
Interest................................................................... 21,642
----------
Total income......................................................... 89,694
----------
Expenses
Advisory fees.............................................................. 51,052
Administration fee......................................................... 30,000
Custodian and accounting fees.............................................. 23,390
Audit fees................................................................. 18,020
Distribution fees.......................................................... 12,763
Registration fees.......................................................... 11,218
Transfer agent fees........................................................ 9,382
Miscellaneous fees......................................................... 5,193
Legal fees................................................................. 5,011
Reports to shareholders.................................................... 3,909
Trustees' fees............................................................. 3,860
Insurance fees............................................................. 1,099
----------
Total expenses....................................................... 174,897
Less: expenses waived/reimbursed..................................... (72,794)
----------
Net expenses......................................................... 102,103
----------
Net investment loss ........................................... (12,409)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions............................... 621,063
Net change in unrealized appreciation on investments....................... 691,891
----------
Net realized and unrealized gain on investments...................... 1,312,954
----------
Net Increase in Net Assets Resulting from Operations .......... $1,300,545
==========
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
Academy Value Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
Year Year
Ended Ended
August 31, August 31,
1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment (loss) income...................................................... $ (12,409) $ 7,790
Net realized gain (loss) from security transactions............................... 621,063 (7,792)
Net change in unrealized appreciation on investments.............................. 691,891 37,441
---------- ----------
Net increase in net assets resulting from operations ....................... 1,300,545 37,439
---------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income............................................................. -0- (11,401)
Net realized gain from security transactions...................................... -0- (48,747)
---------- ----------
Total dividends and distributions to shareholders .......................... -0- (60,148)
---------- ----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding shares (a)...... 306,917 1,451,616
---------- ----------
Total increase in net assets ............................................... 1,607,462 1,428,907
NET ASSETS
Beginning of year................................................................. 4,661,335 3,232,428
---------- ----------
End of year (including undistributed net investment (loss) income
of ($7,692) and $4,717, respectively)....................................... $6,268,797 $4,661,335
========== ==========
(a) A summary of capital shares transactions is as follows:
Year Year
Ended Ended
August 31, 1997 August 31, 1996
------------------------ ------------------------
Shares Value Shares Value
-------- ---------- --------- ----------
Shares sold.................................... 84,279 $1,109,926 231,315 $2,554,500
Shares issued in reinvestment of distribution.. -0- -0- 5,756 60,148
Shares redeemed................................ (63,999) (803,009) (105,548) (1,163,032)
------ --------- ------- ----------
Net increase................................... 20,280 $ 306,917 131,523 $1,451,616
====== ========= ======= ==========
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
Academy Value Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------
Year Ended August 31, December 9, 1994*
--------------------------- -------------------
through
1997 1996 August 31,1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period.................... $11.36 $11.60 $10.00
------ ------ ------
Income from investment operations:
Net investment (loss) income...................... (0.03) 0.01 0.03
Net realized and unrealized gain (loss)
on investments.................................. 3.23 (0.10) 1.57
------ ------ ------
Total from investment operations........................ 3.20 (0.09) 1.60
------ ------ ------
Less distributions:
From net investment income........................ -0- (0.03) -0-
From net capital gains............................ -0- (0.12) -0-
------ ------ ------
Total distributions..................................... -0- (0.15) -0-
------ ------ ------
Net asset value, end of period.......................... $14.56 $11.36 $11.60
====== ====== ======
Total return............................................ 28.17% (0.64)% 22.68%+
Ratios/supplemental data:
Net assets, end of period (millions).................... $ 6.3 $ 4.7 $ 3.2
Ratio of expenses to average net assets:
Before expense reimbursement and waived fee....... 3.42% 3.39% 5.20%+
After expense reimbursement and waived fee........ 2.00% 2.00% 2.00%+
Ratio of net investment income (loss) to
average net assets:
Before expense reimbursement and waived fee....... (1.67)% (1.20)% (2.62)%+
After expense reimbursement and waived fee........ (0.24)% 0.18% 0.64%+
Portfolio turnover rate................................. 49.72% 27.71% 13.26%
Average commission rate paid per share++................. $0.0488 $0.0536 -
</TABLE>
*Commencement of operations.
+Annualized.
++For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate paid per share for security trades on
which commissions are charged. This amount may vary from period to period and
fund to fund depending on the mix of trades executed in various markets where
trading practices and commission rate structures may differ.
See accompanying Notes to Financial Statements.
9
<PAGE>
Academy Value Fund
NOTES TO FINANCIAL STATEMENTS at August 31, 1997
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Academy Value Fund (the "Fund") is a series of shares of beneficial
interest of Professionally Managed Portfolios (the "Trust"), which is registered
under the Investment Company Act of 1940 (the "1940 Act") as a diversified,
open-end management investment 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. 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 have been no sales and other
over-the-counter securities are valued at the last reported bid
price. Securities for which market quotations are not readily
available are valued at their respective fair values as determined
in good faith by the Board of Trustees. Short-term investments are
stated at cost, which when combined with accrued interest,
approximates market value.
B. Federal Income Taxes. The Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no federal income tax provision is
required.
C. Security Transactions, Investment Income and Distributions. As is
common in the industry, security transactions are accounted for on
the trade date. The cost of securities owned on realized
transactions are relieved on a first-in, first-out basis. 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 amounts of assets and liabilities at the date of the
financial statements. Actual results could differ from those
estimates.
NOTE 3 - COMMITMENTS AND RELATED PARTY TRANSACTIONS
For the year ended August 31, 1997, Academy Capital Management, Inc. (the
"Advisor") provided the Fund with investment management services under an
Investment Advisory Agreement. The Advisor furnished all investment advice,
office space, facilities and most of the personnel needed by the Fund. As
compensation for its services, the Advisor was entitled to a monthly fee at the
annual rate of 1.00% based upon the average daily net assets of the Fund. For
the year ended August 31, 1997, the Fund incurred $51,052 in Advisory fees.
10
<PAGE>
Academy Value Fund
NOTES TO FINANCIAL STATEMENTS at August 31, 1997, Continued
- --------------------------------------------------------------------------------
The Fund is responsible for its own operating expenses. The Advisor has
agreed to reduce its fees payable to it by the Fund to the extent necessary to
limit the Fund's aggregate annual operating expenses to 2.00% of average daily
net assets. 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 provided the Fund is able to effect such reimbursement
and remain in compliance with applicable limitations. For the year ended August
31, 1997, the Advisor waived fees of $51,052 and reimbursed the Fund in the
amount of $21,742. The Fund may reimburse the Advisor pursuant to this agreement
in later years in which operating expenses for the Fund are less than the
applicable percentage limitation set forth previously for any such year. As of
August 31, 1997, the cumulative expense reimbursement and waiver from the
Advisor to the Fund are $68,747 and $104,863, respectively.
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 daily net assets
$50 to $100 million - 0.15% of average daily net assets
$100 to $150 million - 0.10% of average daily net assets
Over $150 million - 0.05% of average daily 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.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator and the Distributor.
NOTE 4 - DISTRIBUTION PLAN
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 Advisor as Distribution Coordinator at an annual rate of up to 0.25% of the
average daily net assets of the Fund. The fee is paid to the Advisor as
reimbursement for, or in anticipation of, expenses incurred for
distribution-related activity. During the year ended August 31, 1997, the Fund
paid fees of $12,763 to the Advisor.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
For the year ended August 31, 1997, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $2,371,056 and
$2,353,489, respectively.
11
<PAGE>
Academy Value Fund
NOTES TO FINANCIAL STATEMENTS at August 31, 1997, Continued
- --------------------------------------------------------------------------------
NOTE 6 - REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with government securities
dealers recognized by the Federal Reserve Board, with member banks of the
Federal Reserve System or with such other brokers or dealers that meet the
credit guidelines established by the Board of Trustees. The Fund will always
receive and maintain, as collateral, securities whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount invested
by the Fund in each agreement, and the Fund will make payment for such
securities only upon physical delivery or upon evidence of book entry transfer
to the account of the custodian. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked to market on a
daily basis to ensure the adequacy of the collateral.
If the seller defaults and the value of the collateral declines, or if
bankruptcy proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
12
<PAGE>
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 of
Academy Value Fund (the "Fund"), a series of Professionally Managed Portfolios,
including the schedule of investments, as of August 31, 1997, and the related
statements of operations for the year then ended and the statement of changes in
net assets and financial highlights for each of the two years in the period 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
audits. The financial highlights of the Fund for the period December 9, 1994
through August 31, 1995 were audited by other auditors whose report dated
October 10, 1995, expressed an unqualified opinion on those financial
highlights.
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
August 31, 1997, 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 1997 and 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, 1997, the results of
its operations for the year then ended and changes in its net assets and the
financial highlights for each of the two years in the period then ended, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Los Angeles, California
October 3, 1997
<PAGE>
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<PAGE>
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<PAGE>
Advisor
Academy Capital Management, Inc.
500 North Valley Mills Drive
Suite 208
Waco, Texas 76710
(817) 751-0555
Distributor ACADEMY
First Fund Distributors, Inc. VALUE FUND
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.
P.O. Box 5536
Hauppauge, New York 11788-0132
Independent Auditors
Ernst & Young, LLP
515 South Flower Street
Los Angeles, California 90071
Legal Counsel
Paul, Hastings, Janofsky & Walker
345 California Street, 29th Floor
San Francisco, California 94104
Annual Report
This report is intended for
shareholders of the Fund and may not be August 31, 1997
used as sales literature unless
preceded or accompanied by a current
prospectus.
Past performance results shown in this
report should not be considered a
representation of future performance.
Share price and returns will fluctuate
so that shares, when redeemed, may be
worth more or less than their original
cost. Statements and other information
herein are dated and are subject to
change.
