January 3, 1997
Securities and Exchange Commission
Attn: Filing Desk, Stop 1-4
450 Fifth Street, N.W.
Washington, DC 20549
Re: Professionally Managed Portfolios
File No. 811-5037
CIK No. 811030
Dear Sir or Madam:
On behalf of the above Registrant and pursuant to Rule 30b-2 under the
Investment Company Act of 1940, I enclose for filing via EDGAR, a copy of the
Semi-annual Report to shareholders of the Titan Financial Services Fund series
of the Registrant for the six month period ended October 31, 1996.
If you have any questions, please contact me at (602) 952-1100.
Sincerely yours,
/s/
Robert H. Wadsworth
<PAGE>
Titan Financial Services Fund
Semi-Annual Report
October 31, 1996
<PAGE>
November 20, 1996
Dear Fellow Shareholder,
The Titan Fund opened on May 22, 1996. This was the day that the Dow Jones
average reached a new high.
A correction was widely anticipated and indeed in July of 1996 a very
sharp drop of all the major indexes occurred with the Dow decreasing over 7.8%
and the Nasdaq 18.4%. In this period of time, we reached our lowest point, which
occurred on July 16, which was 4.4%.
From the time of our opening, in less than six months, our present net
asset value has increased from a level of $10 on May 22, 1996 to a level of
$11.62 as of November 20, 1996. This represents an appreciation of 16.2% in less
than a six month period. From inception to the close of our initial reporting
period October 31, 1996, the Fund's total return was 10.90%.
We are very proud of our initial performance, which has been particularly
good in a down market, when we outperformed all the major indexes including the
Dow, S&P, and Nasdaq. We think this period supports our view that the small and
medium-sized bank stocks are a relatively safe haven during a down market, while
appreciating significantly in the bull market which we are presently
experiencing. We have assiduously kept to our commitment to be at least 65%
invested in bank stocks and financial vehicles such as insurance companies and
brokerage firms. Indeed, we are presently over 75% invested in both banks and
financial vehicles.
We were able to anticipate the down movement which occurred in July and
used this opportunity to buy depressed stocks which presently represent some of
our most successful choices. We are presently in the process of accumulating
more cash to take advantage of the next correction, which we feel is imminent.
From time to time, we also purchase non-financial vehicles when we see an
opportunity, such as when we believe a stock of high quality is unfairly driven
down or is not performing on the financial markets consistent with its merits.
This has permitted us to pick up such stocks as Glaxo, Sara Lee, and Chiron,
which have performed well in our portfolio so far.
<PAGE>
We anticipate that the appreciation of bank stocks and particularly small
to medium-sized bank stocks will continue to outperform the market for the
foreseeable future (at least for the next year or two). We are very enthusiastic
about our early performance, which has met our initial goals.
One feature of our Fund that we think makes it unusual, is that we are
heavily invested in it ourselves. We participate in the Fund's gains or losses
along with our fellow investors.
We are looking forward to the next six months with the confidence that
comes from weathering a particularly difficult market during our early months of
existence. We also look forward to justifying your confidence in us, which we
will try to deserve.
Very truly yours,
/s/
Gilbert R. Giordano
President
Titan Investment Advisors, LLC
<PAGE>
Titan Financial Services Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS at October 31, 1996 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 84.7% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Banks: 36.0%
<S> <C> <C>
5,000 American Bancorp Nevada................................................. $ 83,750
1,000 Australian & New Zealand Bank........................................... 29,375
1,000 Bank of Montreal........................................................ 30,375
1,700 Bankamerica Corp........................................................ 155,550
1,400 Barnett Banks, Inc...................................................... 53,375
2,000 Comstock Bank, Carson City, Nevada...................................... 20,000
1,700 Corestates Financial Corp............................................... 82,662
1,700 First America Bank...................................................... 92,437
2,700 First Southern Bancorp, Inc............................................. 35,269
2,300 Fleet Financial Group, Inc.............................................. 114,713
2,000 FNB Corp................................................................ 47,250
3,200 Keycorp................................................................. 149,200
3,000 Magna Group, Inc........................................................ 84,000
4,000 PNC Bank Corp........................................................... 145,000
3,000 Poncebank............................................................... 69,000
1,000 Royal Bank Canada Montreal.............................................. 33,000
7,400 Sterling Bancorp........................................................ 95,275
1,000 Suntrust Banks, Inc..................................................... 46,625
2,000 Trans Financial, Inc.................................................... 39,500
3,000 U.S. Bancorp............................................................ 120,000
4,000 US Bancorp, Inc......................................................... 156,000
2,000 Vectra Banking Corp..................................................... 31,000
1,000 Westernbank Puerto Rico................................................. 18,750
------
1,732,106
---------
Brokerage Services: 4.1%
900 Alex Brown, Inc......................................................... 51,075
4,000 Bear Stearns Companies, Inc............................................. 94,500
1,000 A.G. Edwards, Inc....................................................... 29,875
1,000 Raymond James Financial, Inc............................................ 24,375
------
199,825
-------
Computers: 2.2%
1,000 Applied Materials, Inc.................................................. 26,437
700 Hewlett-Packard Co...................................................... 30,888
2,000 Micron Technology, Inc.................................................. 50,750
------
108,075
-------
See accompanying "Notes to Financial Statements."
<PAGE>
Titan Financial Services Fund
PORTFOLIO OF INVESTMENTS at October 31, 1996 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Services: 4.3%
1,000 American Express Co..................................................... $ 47,000
3,100 John Hancock Bank & Thrift Opportunity.................................. 83,700
5,000 Pilgrim American Bank & Thrift Fund..................................... 75,625
------
206,325
-------
Food & Beverage: 0.7%
1,000 Sara Lee Corp........................................................... 35,500
------
Insurance: 8.5%
3,200 Aetna, Inc.............................................................. 214,000
1,000 American Financial Group, Inc........................................... 35,875
1,200 Travelers Group, Inc.................................................... 65,100
5,000 USF&G Corp.............................................................. 95,000
------
409,975
-------
Pharmaceuticals: 2.3%
2,000 Chiron Corp., Delaware.................................................. 45,750
2,000 Glaxo Wellcome, PLC, ADR................................................ 63,000
------
108,750
-------
Restaurants: 2.1%
5,000 Wendy's International, Inc.............................................. 103,125
-------
Thrift & Savings / Savings Banks: 22.9%
5,000 Branford Savings Bank Connecticut....................................... 16,875
1,000 Cal Fed Bancorp, Inc.................................................... 23,250
5,700 Dime Bancorp, Inc....................................................... 84,788
1,000 Fed One Bancorp, Inc.................................................... 16,000
1,000 First Colorado Bancorp, Inc............................................. 15,625
5,000 First Essex Bancorp, Inc................................................ 58,750
2,000 First Palm Beach Bancorp, Inc........................................... 46,000
4,000 FirstFed Financial Bancshares........................................... 88,000
2,000 Glendale Federal Bank, Federal Savings Bank............................. 36,750
5,000 Greater New York Savings Bank........................................... 60,625
2,000 Long Island Bancorp, Inc................................................ 59,500
1,000 Pennfed Financial Services, Inc......................................... 19,500
5,000 People's Bank Bridgeport, Connecticut................................... 128,750
See accompanying "Notes to Financial Statements."
<PAGE>
Titan Financial Services Fund
PORTFOLIO OF INVESTMENTS at October 31, 1996 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Thrift & Savings / Savings Banks, continued
3,000 Peoples Bancshares, Inc................................................. $ 33,375
15,000 Poughkeepsie Savings Bank FSB........................................... 77,812
3,000 RCSB Financial, Inc..................................................... 87,000
3,000 Reliance Bancorp, Inc................................................... 54,000
1,000 Roosevelt Financial Group, Inc.......................................... 17,375
2,000 T.R. Financial Corp..................................................... 60,750
1,000 Warren Bancorp, Inc..................................................... 13,000
3,000 Webster Financial Corp., Waterbury, Connecticut......................... 103,500
-------
1,101,225
---------
Transportation: 1.2%
1,000 Southwest Airlines Co................................................... 22,500
2,000 USAir Group, Inc........................................................ 34,750
------
57,250
------
Waste Management: 0.4%
700 Browning Ferris Industries, Inc......................................... 18,375
------
Total Common Stocks (cost $3,645,294)................................... 4,080,531
---------
PREFERRED STOCKS: 0.7%
- ------------------------------------------------------------------------------------------------------------------------------------
1,000 Texas Regional Bancshares, Class A Vtg.................................. 32,250
------
Total Preferred Stocks (cost $28,675)................................... 32,250
------
Principal Amount U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS: 5.5%
- ------------------------------------------------------------------------------------------------------------------------------------
$200,000 Federal National Mortgage Association, 7.25%, due 9/23/2005............. 199,489
350,000 U.S. Treasury Strips, 0.0%, 5/15/2021................................... 65,642
------
Total U.S. Government and Government Agency Obligations
(cost $260,479)......................................................... 265,131
-------
See accompanying "Notes to Financial Statements."
<PAGE>
Titan Financial Services Fund
PORTFOLIO OF INVESTMENTS at October 31, 1996 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value
Principal Amount REPURCHASE AGREEMENT: 7.5%
- ------------------------------------------------------------------------------------------------------------------------------------
$362,000 Star Bank Repurchase Agreement, 5.00%, dated 10/31/96, due 11/1/96,
collateralized by $390,000 GNMA, 6.5%, due 1/20/2024 (value of
collateral is $391,340) (proceeds $362,050) (cost $362,000)............. $ 362,000
---------
Total Investments in Securities (cost $4,296,448+): 98.4% .............. 4,739,912
Other Assets less Liabilities: 1.6%..................................... 78,172
------
Total Net Assets: 100.0% ............................................... $4,818,084
==========
<FN>
+ At October 31, 1996, the cost of investments for federal income tax purposes
was the same. Unrealized appreciation and depreciation of securities were as
follows:
Gross unrealized appreciation........................................... $ 469,766
Gross unrealized depreciation........................................... (38,122)
-------
Net unrealized appreciation................................... $ 431,644
=========
SHORT OPTIONS at October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Contracts Subject
to Call Common Stocks / Expiration Date / Exercise Price
- ------------------------------------------------------------------------------------------------------------------------------------
10 Aetna, Inc. / January / 70.00........................................... $ 1,625
10 Aetna, Inc. / January / 65.00........................................... 3,813
10 Applied Material / January / 27.50...................................... 1,875
7 Bankamerica Corp. / January / 90.00..................................... 3,631
10 Bankamerica Corp. / January / 85.00..................................... 8,625
10 Fleet Financial Group, Inc. / January / 45.00........................... 5,438
10 Glaxo Wellcome, PLC, ADR / January / 30.00.............................. 2,281
10 Keycorp / March / 45.00................................................. 3,687
10 Micron Technology / January / 30.00..................................... 1,656
10 Micron Technology / January / 25.00..................................... 3,625
10 USAir Group, Inc. / January / 17.50..................................... 1,375
10 USF&G Corp. / January / 17.50........................................... 2,250
10 Wendy's International, Inc. / December / 20.00.......................... 1,188
10 Wendy's International, Inc. / January / 22.50........................... 500
---
Total Short Options (cost $29,749)...................................... $ 41,569
========
</FN>
</TABLE>
See accompanying "Notes to Financial Statements."
<PAGE>
Titan Financial Services Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at October 31, 1996 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (identified cost $4,296,448) (Note 2-A) ........... $4,739,912
Cash................................................................................... 326
Receivables:
Securities sold.................................................................. 81,900
Fund shares sold................................................................. 108,588
Dividends and interest .......................................................... 6,058
Prepaid expenses....................................................................... 2,832
-----
Total assets .............................................................. 4,939,616
---------
LIABILITIES
Short options written, at value (proceeds $29,749)..................................... 41,569
Payables:
Advisor.......................................................................... 2,166
Distributor (Note 4)............................................................. 953
Securities purchased............................................................. 71,638
Other accrued expenses and liabilities................................................. 5,206
-----
Total liabilities.......................................................... 121,532
-------
NET ASSETS $4,818,084
==========
Net asset value, offering price and redemption price per share
($4,818,084/434,463 shares outstanding;
unlimited number of shares authorized without par value) ........................ $11.09
======
SOURCE OF NET ASSETS
Paid-in capital ....................................................................... $4,396,373
Undistributed net investment income.................................................... 17,066
Accumulated net realized loss on investment transactions............................... (26,999)
Net unrealized appreciation of investments............................................. 431,644
-------
Net assets ...................................................................... $4,818,084
==========
</TABLE>
See accompanying "Notes to Financial Statements."
<PAGE>
Titan Financial Services Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Period May 22, 1996* through October 31, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
<S> <C>
Dividends........................................................................ $ 36,233
Interest......................................................................... 18,126
Other............................................................................ 4,020
-----
Total income............................................................... 58,379
------
Expenses:
Advisory fees (Note 3)........................................................... 16,525
Administration fee (Note 3)...................................................... 13,315
Distribution costs (Note 4)...................................................... 4,155
Custodian and accounting fees.................................................... 5,653
Transfer agent fees.............................................................. 3,212
Auditing fees.................................................................... 5,326
Trustees' fees................................................................... 1,332
Legal fees....................................................................... 729
Reports to shareholders.......................................................... 1,332
Miscellaneous.................................................................... 1,352
-----
Total expenses............................................................. 52,931
Less: expense reimbursements (Note 3)...................................... (11,618)
-------
Net expenses............................................................... 41,313
------
Net investment income ............................................... 17,066
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from securities transactions................................... (36,363)
Net realized gain on options written............................................. 9,364
Net change in unrealized appreciation of investments............................. 431,644
-------
Net realized and unrealized gain on investments............................ 404,645
-------
Net Increase in Net Assets Resulting from Operations ................ $ 421,711
=========
<FN>
*Commencement of operations.
</FN>
</TABLE>
See accompanying "Notes to Financial Statements."
<PAGE>
Titan Financial Services Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
May 22, 1996*
through
October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
<S> <C>
Net investment income...................................................................... $17,066
Net realized loss on securities transactions............................................... (36,363)
Net realized gain on options written....................................................... 9,364
Net change in unrealized appreciation of investments....................................... 431,644
-------
Net increase in net assets resulting from operations ................................ 421,711
-------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding shares (a)............... 4,396,373
---------
Total increase in net assets ........................................................ 4,818,084
NET ASSETS
Beginning of period........................................................................ -0-
-
End of period (including undistributed net investment income of $17,066)................... $4,818,084
==========
<FN>
(a) A summary of capital shares transactions is as follows:
May 22, 1996*
through
October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold................................................................. 434,475 $4,396,505
Shares redeemed............................................................. (12) (132)
--- ----
Net increase................................................................ 434,463 $4,396,373
======= ==========
*Commencement of operations.
</FN>
</TABLE>
See accompanying "Notes to Financial Statements."
<PAGE>
Titan Financial Services Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
May 22, 1996*
through
October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period....................................................... $10.00
Income from Investment Operations:
Net investment income................................................................ .04
Net realized and unrealized gain on investments...................................... 1.05
----
Total from investment operations........................................................... 1.09
----
Net Asset Value, End of Period............................................................. $11.09
======
Total Return............................................................................... 26.07%+
Ratios/Supplemental Data:
Net assets, end of period (millions)....................................................... $ 4.8
Ratio of expenses to average net assets:
Before expense reimbursement......................................................... 3.19%+
After expense reimbursement.......................................................... 2.50%+
Ratio of net investment income to average net assets:
Before expense reimbursement......................................................... 0.33%+
After expense reimbursement.......................................................... 1.03%+
Portfolio turnover rate.................................................................... 25.42%
Average commission rate paid............................................................... $ 0.0213++
<FN>
*Commencement of operations.
+Annualized.
++For fiscal years beginning after September 1, 1995, a fund is required to
disclose average commission rate per share for security trades on which
commissions are charged.
</FN>
</TABLE>
See accompanying "Notes to Financial Statements."
<PAGE>
Titan Financial Services Fund
NOTES TO FINANCIAL STATEMENTS at October 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Titan Financial Services Fund (the "Fund") is a diversified 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 May 22, 1996. The investment
objective of the Fund is capital appreciation. Its secondary objective is
moderate income.
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.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Titan Investment Advisers, LLC (the "Advisor") provides the Fund with
investment management services under an Investment Advisory Agreement. The
Advisor furnishes all investment advice, office space, facilities, and provides
most of the personnel needed by the Fund. As compensation for its services, the
Advisor is entitled to a monthly fee at the annual rate of 1.00% based upon the
average daily net assets of the Fund.
The Fund is responsible for its own operating expenses. The Advisor has
agreed to reduce fees payable to it by the Fund to the extent necessary to limit
the Fund's aggregate annual operating expenses to 2.50% of average net assets
annually. Any such reductions made by the Advisor in its fees or payments may be
subject to reimbursement by the Fund in the next succeeding fiscal year if the
Fund is able to effect such reimbursement and remain in compliance with any
expense limitations in effect. For the period ended October 31, 1996, the
Advisor has reimbursed the Fund in the amount of $11,618.
<PAGE>
Titan Financial Services Fund
NOTES TO FINANCIAL STATEMENTS, Continued
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.
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 Distributor at an annual rate of up to 0.25% of the average daily net assets
of the Fund. The fee is paid to the Distributor as reimbursement for, or in
anticipation of, expenses incurred for distribution-related activity.
NOTE 5 - PURCHASES AND SALES OF SECURITES
For the period ended October 31, 1996, the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, were
$4,631,630 and $679,159, respectively.
Short options transactions during the period ended October 31, 1996 are
summarized as follows:
<TABLE>
<S> <C>
Options outstanding, beginning of period......................................... $ -0-
Options purchased................................................................ (12,000)
Options written.................................................................. (62,914)
Buybacks of options written...................................................... 9,813
Purchased options expired........................................................ 12,000
Written options expired.......................................................... 23,352
Options outstanding at October 31, 1996.......................................... (29,749)
Unrealized depreciation at October 31, 1996...................................... (11,820)
-------
Market value of options at October 31, 1996...................................... $ (41,569)
=========
Average fair market value of options for the period ended October 31, 1996....... $ (27,464)
=========
</TABLE>
<PAGE>
Advisor
Titan Investment Advisers, LLC
9672 Pennsylvania Avenue
Upper Marlboro, Maryland 20772
888-44-TITAN
Account Inquiries 1-800-385-7003
Distributor
First Fund Distributors, Inc.
4455 E. Camelback Rd., Suite 261E
Phoenix, AZ 85018
Custodian
Star Bank, N.A.
425 Walnut St.
Cincinnati, OH 45202
Shareholder Service and Transfer Agent
American Data Services, Inc.
24 West Carver St.
Huntington, NY 11743
(800) 385-7003
Independent Auditors
Tait, Weller & Baker
2 Penn Center Plaza
Philadelphia, PA 19102
Counsel to the Fund
Kirkpatrick & Lockhart
1800 M Street NW
Washington, DC 20036
This report is intended for shareholders of
Titan Financial Services Fund and may not
be used as sales literature unless preceded
or accompanied by a current prospectus.
