<PAGE> 1
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
April 15, 1997
Dear Shareholders:
The past 10 months have been difficult for The Perkins Opportunity Fund. After
several years of strong performance the Fund's NAV made a high of $23.81 on
5/24/96. At that point in time, the Fund was up 273% since its February 1993
inception. Subsequently, the NAV has declined to $12.58 on 3/31/97, a drop of
44% from the top, after distributions. This is a result of the extreme
under-performance of small aggressive growth stocks, which started during the
May-July 1996 market decline. While most indexes moved significantly higher into
March, led by large cap stocks, small company growth stocks have continued to
decline. As a result, these small company stocks have become more and more
undervalued on a fundamental basis relative to large company stocks. This cycle
will change at some point, that we can count on, and when it does, we believe
the Fund will again enjoy the kind of positive performance it has in the past.
The down cycle for small stocks has already lasted nearly a year and we are
seeing signs that a change may be at hand. These include the recent introduction
of new micro-cap funds by a number of large fund groups. We have also seen
studies by market analysts that show the level of small stock undervaluation is
currently at or beyond the levels of important turning points in the past.
For those shareholders who bought at higher prices, we also feel your
discomfort. This, however, is the reason we have said that the Fund is only
appropriate for long term investors. It is very difficult to time the market and
volatility is one thing that can always be counted on. The trade-off for higher
potential returns over the long term is putting up with volatility. This is even
more true for aggressive growth funds, which are more volatile than the market.
As bottom-up stock pickers, we have not changed our investment approach. We
continue to search for new opportunities and monitor our holdings as we always
have. The Fund owns shares in many unique companies which we feel have the
potential to be long-term winners. The table on the following page shows the
Fund's returns by quarter and since inception compared to several popular
indices.
<PAGE> 2
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
THE PERKINS S & P DOW JONES NASDAQ RUSSELL
OPPORTUNITY 500 INDUSTRIAL COMPOSITE 2000
CALENDAR PERIOD FUND INDEX INDEX INDEX INDEX
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First Quarter 1993 6.13% 4.33% 3.37% 4.00% 4.68%
Second Quarter 1993 4.90% .41% 3.08% 2.00% 1.81%
Third Quarter 1993 16.23% 2.67% 1.84% 8.36% 8.39%
Fourth Quarter 1993 7.82% 2.33% 6.31% 1.84% 2.23%
First Quarter 1994 .58% (3.83%) (2.51%) (4.29%) (2.78%)
Second Quarter 1994 (9.81%) .35% .39% (5.04%) (6.99%)
Third Quarter 1994 26.89% 4.98% 6.74% 8.26% 6.59%
Fourth Quarter 1994 (.22%) (.04%) .51% (1.61%) (2.25%)
First Quarter 1995 21.49% 9.77% 9.17% 8.68% 4.16%
Second Quarter 1995 17.76% 9.40% 10.30% 14.22% 8.77%
Third Quarter 1995 18.42% 8.06% 5.77% 11.79% 9.43%
Fourth Quarter 1995 .54% 5.99% 7.50% .82% 1.80%
First Quarter 1996 7.79% 5.39% 9.81% 4.68% 4.68%
Second Quarter 1996 11.25% 4.42% 1.76% 7.59% 4.79%
Third Quarter 1996 (11.82)% 3.13% 4.63% 3.54% (.07)%
Fourth Quarter 1996 (12.36)% 8.37% 10.75% 5.23% 4.68%
First Quarter 1997 (17.35)% 2.67% 2.14% (5.37)% (5.53)%
Annualized since 19.61% 17.56% 21.30% 16.03% 11.37%
2-18-93 inception
- -----------------------------------------------------------------------------------------------------------
</TABLE>
In closing, we thank you for your continued support.
Sincerely,
/s/ Richard W. Perkins /s/ Daniel S. Perkins /s/ Richard C. Perkins
Richard W. Perkins, C.F.A. Daniel S. Perkins, C.F.A. Richard C. Perkins, C.F.A.
President Vice President Vice President
Results shown are past performance which should not be regarded as an indication
of future returns. The value of the Fund's shares and their return will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. The Fund's average annual total return, after maximum
sales charge of 4.75%, for the period from inception on February 18, 1993
through March 31, 1997 was 18.21% and for the one year period ended on that date
was (32.31)%.
2
<PAGE> 3
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
PERKINS OPPORTUNITY FUND
Value of $10,000 vs. S&P 500 Index
Annual Average Total Return Periods
Ended March 31, 1997
<TABLE>
<CAPTION>
1 Year Inception (2/18/93)
<S> <C>
-32.31% 18.21%
</TABLE>
<TABLE>
<CAPTION>
Perkins S&P 500
Opportunity Fund Index
---------------- -------
<S> <C> <C>
2/17/93 10,000 10,000
3/31/93 10,108 10,491
6/30/93 10,603 10,534
9/30/93 12,324 10,813
12/31/93 13,288 11,067
3/31/94 13,365 10,643
6/30/94 12,053 10,681
9/30/94 15,294 11,213
12/31/94 15,260 11,208
3/31/95 18,540 12,299
6/30/95 21,833 13,472
9/30/95 25,856 14,541
12/31/95 25,996 15,415
3/31/96 28,020 16,245
6/30/96 31,173 16,963
9/30/96 27,488 17,495
12/31/96 24,090 18,959
3/31/97 19,911 19,466
</TABLE>
Results shown are past performance which should not be regarded as an indication
of future returns. The value of the Fund's shares and their return will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. The Fund's average annual return, before maximum sales
charge of 4.75%, from the period from inception on February 18,1993 through
March 31, 1997 was 19.61% and for the one year period ended on
that date was -28.94%.
<PAGE> 4
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS AT MARCH 31, 1997
<TABLE>
<CAPTION>
======================================================================================
Shares COMMON STOCKS: 86.3% Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES: 16.4%
87,500 Appliance Recycling Centers of America, Inc.(a) .. $ 240,625
37,000 Autobond Acceptance Corp. ........................ 171,125
50,000 CorVel Corp. ..................................... 1,250,000
40,000 Deluxe Corp.* .................................... 1,295,000
300,000 Educational Alternatives, Inc. ................... 1,143,750
437,500 Health Fitness Physical Therapy, Inc.(a) ......... 1,093,750
145,500 Health Risk Management, Inc. ..................... 1,509,563
125,000 Hooper Holmes, Inc.* ............................. 2,125,000
450,000 Integrated Security Systems, Inc.(a) ............. 928,125
90,000 Intranet Solutions, Inc. ......................... 416,250
100,000 Raytel Medical Corp. ............................. 1,050,000
275,000 Reality Interactive, Inc.(a) ..................... 189,062
100,000 Streicher Mobile Fueling, Inc. ................... 912,500
----------
12,324,750
----------
COMPUTER - LOCAL NETWORKS: 1.6%
40,000 Digi International, Inc. ......................... 285,000
119,000 Interphase Corp. ................................. 952,000
----------
1,237,000
----------
COMPUTER - MEMORY DEVICES: 2.3%
150,000 Ciprico, Inc. .................................... 1,706,250
----------
COMPUTER - PERIPHERAL EQUIPMENT: 3.1%
200,000 Check Technology Corp. ........................... 1,450,000
270,000 Digital Biometrics, Inc. ......................... 556,875
40,000 Overland Data, Inc. .............................. 200,000
100,000 RSI Systems, Inc. ................................ 112,500
----------
2,319,375
----------
COMPUTER SERVICES: 2.8%
200,000 En Pointe Technologies, Inc. ..................... 2,100,000
----------
COMPUTER - SOFTWARE: 5.5%
1,550,000 Delphi Information Systems, Inc. ................. 1,550,000
400,000 Fourth Shift Corp. ............................... 1,500,000
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE> 5
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS AT MARCH 31, 1997, CONTINUED
<TABLE>
<CAPTION>
==============================================================================
Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER - SOFTWARE, CONTINUED
168,750 IVI Publishing, Inc. ..................... $ 485,156
115,000 Onelink Communications, Inc. ............. 186,875
79,305 Liferate Systems, Inc. ................... 218,089
25,000 TRO Learning, Inc. ....................... 203,125
----------
4,143,245
----------
CONSUMER PRODUCTS - MISCELLANEOUS: 2.7%
40,000 Department 56, Inc. ...................... 695,000
100,000 Lamaur Corp. ............................. 362,500
300,000 Minnesota Brewing Co.(a) ................. 1,012,500
----------
2,070,000
----------
ELECTRICAL PRODUCTS - MISCELLANEOUS: 7.8%
62,800 Ametek, Inc.* ............................ 1,326,650
550,000 Destron Fearing Corp. .................... 1,168,750
410,000 Micro Component Technology, Inc.(a) ...... 1,076,250
60,000 Microtest, Inc. .......................... 270,000
100,000 Sheldahl, Inc. ........................... 2,062,500
----------
5,904,150
----------
FINANCIAL SERVICES - MISCELLANEOUS: 3.2%
60,000 TCF Financial Corp.* ..................... 2,377,500
----------
LEISURE - GAMING: 3.9%
250,000 Acres Gaming, Inc. ....................... 1,187,500
126,000 American Wagering, Inc. .................. 976,500
150,000 Innovative Gaming Corporation of America . 750,000
----------
2,914,000
----------
MEDICAL - BIOMED/GENETICS: 0.8%
100,000 Somatogen, Inc. .......................... 612,500
----------
MEDICAL - ETHICAL DRUGS: 2.1%
290,000 Orphan Medical, Inc. ..................... 1,595,000
----------
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE> 6
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS AT MARCH 31, 1997, CONTINUED
<TABLE>
<CAPTION>
===================================================================================
Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL - PRODUCTS: 18.0%
200,000 ATS Medical, Inc. ................................ $ 1,350,000
200,000 Barringer Technologies, Inc. ..................... 1,850,000
130,000 CardioThoracic Systems, Inc. ..................... 2,762,500
600,000 Everest Medical Corp.(a) ......................... 1,425,000
500,000 InnerDyne Medical, Inc. .......................... 1,187,500
100,000 Ion Laser Technology, Inc. ....................... 825,000
150,000 LecTec Corp. ..................................... 900,000
125,000 Optical Sensors, Inc. ............................ 937,500
300,000 Spectranetics Corp. .............................. 768,750
245,000 SpectraScience, Inc.(a) .......................... 888,125
30,000 Zygo Corp. ....................................... 682,500
-----------
13,576,875
-----------
RETAIL - MISCELLANEOUS/DIVERSIFIED: 5.4%
150,000 Funco, Inc. ...................................... 2,100,000
200,000 Moovies, Inc. .................................... 1,100,000
100,000 Skymall, Inc. .................................... 850,000
-----------
4,050,000
-----------
RETAIL - RESTAURANTS: 4.9%
100,000 Daka International, Inc. ......................... 637,500
100,000 Famous Dave's of America, Inc. ................... 912,500
300,000 Michigan Brewery, Inc.(a) ........................ 600,000
235,000 Roadhouse Grill, Inc. ............................ 1,204,375
150,000 Woodroast Systems, Inc. .......................... 300,000
-----------
3,654,375
-----------
TELECOMMUNICATIONS - EQUIPMENT AND SERVICES: 5.8%
50,000 Intervoice, Inc. ................................. 537,500
100,000 Mosaix, Inc. ..................................... 1,275,000
100,000 Norstan, Inc. .................................... 1,550,000
300,000 Racotek, Inc. .................................... 975,000
-----------
4,337,500
-----------
Total Common Stocks (cost $88,348,704) ........... 64,922,520
-----------
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE> 7
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS AT MARCH 31, 1997, CONTINUED
<TABLE>
<CAPTION>
===============================================================================================
Shares PREFERRED STOCK - CONVERTIBLE: 1.0% Market Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL - PRODUCTS
62,500 Diametrics Medical, Inc.** (cost $1,000,000) ............... $ 717,937
----------
PREFERRED STOCK - NON-CONVERTIBLES: 1.6%
- -----------------------------------------------------------------------------------------------
COMPUTER - SOFTWARE
500,000 Insignia Systems** (cost $1,062,500) ....................... 1,175,500
----------
CORPORATE BONDS - CONVERTIBLE: 0.8%
- -----------------------------------------------------------------------------------------------
COMPUTER - SOFTWARE
731,250 IVI Publishing, Inc., 9.0%, 11/22/1999** (cost $731,250) ... 600,671
----------
WARRANTS: 0.6%
- -----------------------------------------------------------------------------------------------
BUSINESS SERVICES - MISCELLANEOUS: 0.0%
62,500 Health Fitness/Physical Therapy, Inc., Exp. 4/4/1999**(a) .. 0
----------
COMPUTER - SOFTWARE: 0.0%
1,400,000 Delphi Information Systems, Inc., Exp. 4/17/1999 ........... 0
275,000 Reality Interactive, Inc., Exp. 4/10/2000(a) ............... 17,188
----------
17,188
----------
LEISURE - GAMING: 0.0%
25,000 Canterbury Park Holding Corp., Exp. 11/18/1998 ............. 7,812
----------
MEDICAL - PRODUCTS: 0.1%
100,000 Barringer Technologies, Inc., Exp. 11/12/1999 .............. 100,000
62,500 Diametrics Medical, Inc., Exp. 1/27/2000** ................. 0
1,000 Work Recovery, Inc., Class B, Exp. 6/8/1997 ................ 0
----------
100,000
----------
RETAIL - RESTAURANTS: 0.5%
125,000 Famous Dave's of America, Inc., Exp. 10/22/2000(a) ......... 292,969
300,000 Michigan Brewery, Inc., Class A, Exp. 6/13/2000(a) ......... 75,000
----------
367,969
----------
Total Warrants (cost $55,000) .............................. 492,969
----------
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE> 8
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS AT MARCH 31, 1997, CONTINUED
<TABLE>
<CAPTION>
========================================================================================================
Principal Amount REPURCHASE AGREEMENT: 9.2% Market Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
$6,971,225 Provident Bank Repurchase Agreement, 5.9%, dated 3/31/1997,
due 4/1/1997, collateralized by $3,020,000 U.S. Treasury Note,
due 5/31/1998 and $4,085,000 U.S. Treasury Note, due 5/15/2000
(proceeds $6,972,352) (cost $6,971,225)............................ $ 6,971,225
------------
Total Investment in Securities (cost $98,168,679++): 99.5%......... 74,880,822
Other Assets less Liabilities: 0.5%................................ 393,516
------------
TOTAL NET ASSETS: 100.0%........................................... $ 75,274,338
============
</TABLE>
*Income producing security.
**Restricted security.
(a)Affiliated company (see Note 9).
++At March 31, 1997, the cost of securities for Federal tax purposes was
$98,446,459. Unrealized appreciation and depreciation were as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation ........................ $ 2,904,867
Gross unrealized depreciation ........................ (26,470,504)
------------
Net unrealized depreciation ................ $(23,565,637)
============
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE> 9
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 1997
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (identified cost $98,168,679) (Note 2-A) $ 74,880,822
Receivables:
Investment securities sold ........................................... 387,487
Fund shares sold ..................................................... 181,793
Dividends and interest ............................................... 24,583
Deferred organization costs (Note 2-D) ..................................... 7,889
Prepaid expenses ........................................................... 62,071
-------------
Total assets ................................................... 75,544,645
-------------
LIABILITIES
Payables:
Advisory fees ........................................................ 70,852
Distribution fees .................................................... 47,385
Fund shares redeemed ................................................. 77,814
Accrued expenses ........................................................... 74,256
-------------
Total liabilities .............................................. 270,307
-------------
NET ASSETS ..................................................................... $ 75,274,338
=============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($75,274,338/5,983,843 shares outstanding;
unlimited number of shares authorized without par value) ............. $12.58
======
COMPUTATION OF OFFERING PRICE PER SHARE
(Net asset value $12.58/.9525) ....................................... $13.21
======
COMPONENTS OF NET ASSETS
Paid-in capital ............................................................ $ 103,648,843
Accumulated net realized loss on investments ............................... (5,086,648)
Net unrealized depreciation on investments ................................. (23,287,857)
-------------
Net assets ........................................................... $ 75,274,338
=============
</TABLE>
See accompanying Notes to Financial Statements.
9
<PAGE> 10
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED MARCH 31, 1997
================================================================================
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest ........................................................... $ 639,313
Dividends .......................................................... 107,356
------------
Total income ................................................... 746,669
------------
Expenses
Advisory fees (Note 4) ............................................. 1,152,114
Administration fee (Note 4) ........................................ 246,706
Distribution costs (Note 5) ........................................ 230,559
Transfer agent fees ................................................ 183,800
Shareholder servicing fees (Note 6) ................................ 133,335
Custodian and accounting fees ...................................... 91,367
Registration fees .................................................. 37,253
Reports to shareholders ............................................ 33,799
Audit fees ......................................................... 22,001
Miscellaneous fees ................................................. 19,578
Legal fees ......................................................... 15,351
Trustees' fees ..................................................... 9,000
Amortization of deferred organization costs (Note 2-D) ............. 8,651
Insurance fees ..................................................... 4,460
------------
Total expenses ................................................ 2,187,974
------------
NET INVESTMENT LOSS ..................................... (1,441,305)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss from security transactions ................... (145,477)
Net change in unrealized depreciation on investments ........... (38,322,304)
------------
Net realized and unrealized loss on investments .......... (38,467,781)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(39,909,086)
============
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE> 11
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
==================================================================================================================
Year Ended Year Ended
March 31, March 31,
1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss ........................................................ $ (1,441,305) $ (600,653)
Net realized (loss) gain from security transactions ........................ (145,477) 3,872,910
Net change in unrealized depreciation on investments ....................... (38,322,304) 13,678,855
------------ -----------
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...... (39,909,086) 16,951,112
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain from security transactions ............................... (6,511,345) (2,443,963)
------------ -----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding shares (a) 29,413,017 65,289,955
------------ -----------
TOTAL (DECREASE) INCREASE IN NET ASSETS .............................. (17,007,414) 79,797,104
NET ASSETS:
Beginning of year .......................................................... 92,281,752 12,484,648
------------ -----------
END OF YEAR (including accumulated net investment loss of $1,441,305
and $0, respectively) .................................................... $ 75,274,338 $92,281,752
============ ===========
</TABLE>
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1997 March 31, 1996
---------- ------------ ---------- ------------
Shares Value Shares Value
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold ...................................... 7,051,945 $91,519,504 4,854,066* $81,019,266
Shares issued in reinvestment of distributions.... 374,001 6,141,789 136,058* 2,238,230
Shares redeemed .................................. (3,899,033) (68,248,276) (1,034,312)* (17,967,541)
---------- ----------- ---------- -----------
Net increase ..................................... 3,526,913 $29,413,017 3,955,812* $65,289,955
========== =========== ========== ===========
</TABLE>
*Per share value reflects 2-for-1 stock split. See Note 8.
See accompanying Notes to Financial Statements.
11
<PAGE> 12
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
==============================================================================================================================
Feb. 18, 1993*
Year Ended March 31, through
-------------------------------------------------- March 31,
1997 1996++ 1995++ 1994++ 1993++
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .............. $18.78 $13.03 $10.37 $ 7.96 $ 7.50
Income from investment operations:
Net investment loss ......................... (.24) (.12) (.13) (.13) (.01)
Net realized and unrealized gain (loss)
on investments ............................ (4.98) 6.66 3.79 2.70 .47
------ ------ ------ ------ -------
Total from investment operations .................. (5.22) 6.54 3.66 2.57 .46
------ ------ ------ ------ -------
Less:
Distributions from net capital gains ........ (.98) (.79) (1.00) (.16) -0-
------ ------ ------ ------ -------
Net asset value, end of period .................... $12.58 $18.78 $13.03 $10.37 $ 7.96
====== ====== ====== ====== ======
Total return ...................................... (28.94)% 51.29% 38.72% 32.22% 28.37%+
Ratios/supplemental data:
Net assets, end of period (millions) .............. $75.3 $92.3 $12.5 $ 3.3 $ 1.0
Ratio of expenses to average net assets:
Before expense reimbursement ................ 1.90% 1.97% 3.08% 5.14% 13.15%+
After expense reimbursement ................. 1.90% 1.97% 2.63% 2.49% 2.42%+
Ratio of net investment loss to average net assets:
Before expense reimbursement ................ (1.25%) (1.16%) (2.76%) (4.93%) (12.38%)+
After expense reimbursement ................. (1.25%) (1.16%) (2.31%) (2.28%) (1.65%)+
Portfolio turnover rate ........................... 86.88% 92.45% 124.86% 90.63% 15.15%
Average commission rate paid per share+++ .......... $.0608 -- -- -- --
</TABLE>
*Commencement of operations.
+Annualized.
++Per share data has been restated to give a 2-for-1 stock split to shareholders
of record as of the close on June 3, 1996.
+++For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate 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.
12
<PAGE> 13
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
NOTES TO FINANCIAL STATEMENTS AT MARCH 31, 1997
================================================================================
NOTE 1 - ORGANIZATION
The Perkins Opportunity Fund (the "Fund") is a 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's primary
investment objective is capital appreciation. The Fund began operations on
February 18, 1993.
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 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, 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. Interest income is recognized on an accrual
basis. Income and capital gains distributions to shareholders are
determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Those
differences are primarily due to differing treatments for net
operating losses.
D. Deferred Organization Costs. The Fund has incurred expenses of
$20,000 in connection with the organization of the Fund. These costs
have been deferred and are being amortized on a straight line basis
through the period ending February 17, 1998.
E. 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, as well as the reported amounts of revenues
and expenses during the period. Actual results could differ from
those estimates.
13
<PAGE> 14
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
================================================================================
NOTE 3 - RESTRICTED SECURITIES
On March 31, 1997, the Fund held restricted securities (i.e., securities
which may not be publicly sold without registration under the Securities Act or
without an exemption under that Act). These securities are valued at fair value
as determined by the Board of Trustees, giving consideration to credit quality,
dividend rate, if any, projected earnings and marketability of the securities of
comparable issuers. On March 31, 1997, and on the date of acquisition, there
were no market quotations available for unrestricted securities of the same
class. Dates of acquisition and cost of restricted securities are as follows:
<TABLE>
<CAPTION>
Per Unit Value
Acquisition Date at 3-31-97 Cost
------------------ -------------- ----------
<S> <C> <C> <C>
Diametrics Medical, Inc. January 29, 1997 $11.49 $1,000,000
Diametrics Medical, Inc. Warrants January 29, 1997 0 0
Health Fitness/Physical Therapy, Inc. Warrants April 4, 1995 0 0
Insignia Systems, Inc. January 16, 1997 2.35 1,062,500
IVI Publishing, Inc. November 22, 1996 82.14 731,250
Work Recovery, Inc. June 3, 1993 0 0
----------
Total restricted securities (fair value of $2,494,108 or 3.31% of net assets at March 31, 1997) $2,793,750
==========
</TABLE>
NOTE 4 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the year ended March 31, 1997, Perkins 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.
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 $12 million - $30,000
$12 to $50 million - 0.25% of average net assets
$50 to $100 million - 0.20% of average net assets
$100 to $200 million - 0.15% of average net assets
Over $200 million - 0.10% of average net assets
14
<PAGE> 15
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
================================================================================
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 Distributor.
NOTE 5 - 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 may 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 6 - SHAREHOLDER SERVICES FEE
The Fund has entered into a Shareholder Services Agreement with the
Advisor, under which the Fund pays servicing fees at an annual rate of up to
0.25% of the Fund's average daily net assets. Payments to the Advisor under the
Shareholder Servicing Agreement may reimburse the Advisor for payments it makes
to selected brokers, dealers and administrators which have entered into Service
Agreements with the Advisor for services provided to shareholders of the Fund.
The services provided by such intermediaries are primarily designed to assist
shareholders of the Fund and include the furnishing of office space and
equipment, telephone facilities, personnel and assistance to the Fund in
servicing such shareholders. Services provided by such intermediaries also
include the provision of support services to the Fund and include establishing
and maintaining shareholders' accounts and records processing purchase and
redemption transactions, answering routine client inquiries regarding the Fund,
and providing such other personal services to shareholders as the Fund may
reasonably request.
NOTE 7 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, excluding
short-term securities, for the year ended March 31, 1997, were $110,873,253 and
$88,314,884, respectively.
NOTE 8 - CAPITAL STOCK TRANSACTIONS
On May 14, 1996, the Board of Trustees authorized a 2-for-1 stock split,
payable to shareholders of record on June 3, 1996.
NOTE 9 - INVESTMENTS IN AFFILIATES
Affiliated companies, as defined in Section 2(a)(3) of the Investment
Company Act of 1940, are companies 5% or more of whose outstanding voting shares
are held by the Fund. During the year ended March 31, 1997, the Fund had the
following transactions with affiliated companies:
15
<PAGE> 16
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
================================================================================
<TABLE>
<CAPTION>
Shares Held
--------------------------------------------------------- Value Realized
March 31, Shares Shares March 31, March 31, Dividend Gain/
1996 Purchased Sold 1997 1997 Income (Loss)
---- --------- ---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Appliance Recycling
Centers of America, Inc.: 45,000 42,500 - 87,500 240,625 - -
Everest Medical Corp.: 425,000 175,000 - 600,000 1,425,000 - -
Health Fitness Physical
Therapy, Inc.: 170,000 267,500 - 437,500 1,093,750 - -
Health Fitness Physical
Therapy, Inc. - Warrants: 62,500 - - 62,500 - - -
Integrated Security
Systems, Inc.: 129,000 321,000 - 450,000 928,125 - -
Michigan Brewery, Inc.: - 300,000 - 300,000 600,000 - -
Michigan Brewery, Inc.
- Warrants: - 300,000 - 300,000 75,000 - -
Micro Component
Technology, Inc.: 335,000 75,000 - 410,000 1,076,250 - -
Minnesota Brewing Co.: 230,000 70,000 - 300,000 1,012,500 - -
Reality Interactive, Inc.: - 275,000 - 275,000 189,062 - -
Reality Interactive, Inc.
- Warrants: - 275,000 - 275,000 17,188 - -
SpectraScience, Inc.: 238,100 33,333 26,433 245,000 888,125 - 26,613
</TABLE>
16
<PAGE> 17
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
================================================================================
TO THE SHAREHOLDERS OF
PERKINS OPPORTUNITY FUND and
THE BOARD OF TRUSTEES OF
PROFESSIONALLY MANAGED PORTFOLIOS
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Perkins Opportunity Fund (a series of
Professionally Managed Portfolios, Inc.) as of March 31, 1997, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the four years in the period then ended and for the
period February 18, 1993 (commencement of operations) to March 31, 1993. 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.
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 March
31, 1997, by correspondence with the custodian and brokers. Where brokers did
not reply to our confirmation request, we carried out other appropriate auditing
procedures. 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 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Perkins Opportunity Fund as of March 31, 1997, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the four years in
the period then ended and for the period from February 18, 1993 (commencement of
operations) to March 31, 1993, in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
May 27, 1997
17
<PAGE> 18
ADVISOR
Perkins Capital Management, Inc.
730 East Lake Street
Wayzata, MN 55391-1769
(888) PERKOPP
(612) 473-8367
DISTRIBUTOR
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45201-1118
TRANSFER AGENT AND SHAREHOLDER SERVICES
Rodney Square Management Corporation
1105 North Market Street, 19th Floor
Wilmington, DE 19890-0001
(800)280-4779
AUDITORS
Tait, Weller & Baker
Two Penn Center Plaza, Suite 700
Philadelphia, PA 19102
LEGAL COUNSEL
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, CA 94104
This report is intended for shareholders of the Fund and may not be 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.
THE PERKINS
[PCM LOGO] OPPORTUNITY
FUND
A mutual fund seeking to provide
capital appreciation through a
continuing search for investment opportunities
ANNUAL REPORT
TO SHAREHOLDERS FOR
THE YEAR ENDED
MARCH 31, 1997
