May 6, 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 Trent Equity Fund series of the
Registrant for the six month period ended February 28, 1997.
If you have any questions, please contact me at (602) 952-1100.
Sincerely yours,
/s/
Robert H. Wadsworth
<PAGE>
<PAGE>
TRENT EQUITY FUND
Semi-Annual Report
For the Six Months Ended
February 28, 1997
<PAGE>
TRENT EQUITY FUND
Semi-Annual Report
For the Six Months Ended
February 28, 1997
Dear Shareholder:
For the calendar year 1996, the Trent Equity Fund gained 20.40% versus 22.94%
for the S&P 500 with dividends reinvested. The Fund had a strong performance in
1996 because the market reacted particularly well for larger capitalization
companies that are dominant in their markets, which are the types of companies
the Fund holds. For the semi-annual period ended February 28, 1997, Trent Equity
Fund was up 8.30% versus a gain for the S&P 500 of 22.53%. Even though the
market outperformed the Fund during this period, we believe the stocks in the
Fund are excellent values and are positioned to perform well in the long-term.
The Fund's annual returns for the one and five year periods and inception on
September 2, 1992 through February 28, 1997 were 17.23%, 5.68% and 11.96%,
respectively.
ACTIVITY IN CURRENT HOLDINGS
The most significant gains during the six months ended February 28, 1997 were in
the following positions: Gillette, Federal Home Loan, Family Dollar Stores,
Nabisco, Newell, Coca-Cola, Thomson, American Express, and Abbott Labs. The
stocks most down were: Oakley, Pall, and Department 56.
Gillette continues to benefit from rapid earnings increases and the expectation
of strong growth from its acquisition of Duracell. Nabisco is beginning to
benefit from the cessation of excessive price competition. Newell's most recent
earnings comparisons have been very strong, and the company has recently
completed several acquisitions in office products and home furnishings. Thomson
Corp., a Toronto-based provider of professional information and newspaper
publisher, is expected to grow faster in the future because of its dominance in
the electronic dissemination of information. Federal Home Loan continues its
steady growth as a result of enjoying, along with Fannie Mae, its unique status
as a government agency providing mortgage loans. A catalyst for American Express
is the possibility of being able to issue credit cards through U.S. banks.
Coca-Cola is enjoying the strongest market position it has ever held over Pepsi.
Harley-Davidson is suffering from the perception - we think misguided - that
there will no longer be over-capacity in motorcycles.
Oakley's revenue growth has stopped recently because of an inventory glut at its
largest customer, Sunglass Hut. We believe this inventory glut is only
temporary. Department 56's stock price fell recently because of the company's
recent declaration that 1997 will be a continuation of slow sales growth. We
believe that Department 56's unique niche in collectibles will return the
company to growth, although it is hard to forecast when this may occur.
NEW HOLDINGS
Stock purchases during the six-month period included: Coca-Cola, First Data,
Gaylord Entertainment, Gillette, Johnson & Johnson, Oakley, Pall, and Reuters.
Although the stock price of Coca-Cola is at an historically high
<PAGE>
level, we believe the company's global strength against Pepsi will allow
the stock price valuation to remain high. First Data is the largest credit card
transaction processor, and, as a result, enjoys economies of scale. We like
Gaylord Entertainment's unique niche in country music and lifestyle, and believe
that the company will exploit this advantage. Gaylord owns Opryland Hotel, the
Grand Ole Opry, Opryland theme park, and the cable channels The Nashville
Network and Country Music Television. Gaylord recently announced the sale of
those two cable channels to Westinghouse Electric's subsidiary CBS. Later on
this year, approximately two-thirds of Gaylord's value will convert to the newly
formed and named CBS Corp.; one-third will remain Gaylord Entertainment. Johnson
& Johnson enjoys a strong presence in six different therapeutic areas and, in
addition, has a strong presence in medical devices and equipment and
over-the-counter products. Oakley is unique in sunglass manufacturing as the
most accomplished technological manufacturer. The company enjoys dominance
particularly in sports sunglasses. Pall Corp. is the largest provider of
industrial filters for industries such as microchip manufacturing, chemical
plants, and blood filtering. Reuters enjoys the position of the largest provider
of financial information in the world.
SIGNIFICANT REALIZED GAINS AND LOSSES
The largest realized gain during the six-month period was in First Brands. The
largest realized loss during the six-month period was in Marvel Entertainment,
which suffered from high levels of debt and weak sports trading card business.
We look forward to the remainder of a strong year for the Trent Equity Fund.
TRENT CAPITAL MANAGEMENT, INC.
<PAGE>
TRENT EQUITY FUND
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 100.1% Market Value
- -------------------------------------------------------------------------------------------------------------------
Beverages: 3.9%
<S> <C> <C>
2,000 Coca-Cola Company....................................................... $ 122,000
---------
Chemicals: 3.3%
4,800 Pall Corp............................................................... 104,400
-------
Collectibles: 1.9%
3,400 Department 56, Inc.*.................................................... 61,200
------
Consumer Products: 8.8%
2,531 Gillette Corp........................................................... 200,265
8,500 Oakley, Inc.*........................................................... 75,438
------
275,703
-------
Financial Services: 19.2%
4,000 American Express Company................................................ 261,500
6,800 Federal Home Loan Mortgage Corp......................................... 202,300
3,800 First Data Corp......................................................... 139,175
-------
602,975
-------
Food Processing: 6.8%
5,200 Nabisco Holdings Corp., Class A......................................... 213,850
-------
Household Products: 9.8%
4,000 Libbey, Inc............................................................. 120,000
5,000 Newell Company.......................................................... 185,625
-------
305,625
-------
Media and Broadcasting: 9.2%
6,300 Gaylord Entertainment Company........................................... 127,575
7,800 Thomson Corporation..................................................... 160,615
-------
288,190
-------
Medical Supplies: 4.0%
2,200 Johnson & Johnson....................................................... 126,775
-------
Pharmaceuticals: 5.7%
3,200 Abbott Laboratories..................................................... 180,000
-------
<PAGE>
TRENT EQUITY FUND
SCHEDULE OF INVESTMENTS at February 28, 1997 (Unaudited), Continued
- -------------------------------------------------------------------------------------------------------------------
Shares Market Value
Publishing: 4.5%
2,200 Reuters Holdings - PLC.................................................. $ 141,075
---------
Recreation: 7.4%
6,200 Harley-Davidson, Inc.................................................... 231,725
-------
Retail: 15.6%
6,200 Family Dollar Stores, Inc............................................... 146,475
8,800 Michael's Stores, Inc. *................................................ 129,800
39,500 Natural Wonders, Inc. *................................................. 212,313
-------
488,588
-------
Total Common Stocks (cost $2,730,681)................................... 3,142,106
---------
Total Investments in Securities (cost $2,730,681+): 100.1% ............. 3,142,106
Liabilities in excess of Other Assets: (0.1)%........................... (2,967)
------
Total Net Assets: 100.0% ............................................... $3,139,139
==========
<FN>
*Non-income producing security.
+At February 28, 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:
Gross unrealized appreciation........................................... $ 692,193
Gross unrealized depreciation........................................... (280,768)
--------
Net unrealized appreciation........................................ $ 411,425
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
TRENT EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (identified cost $2,730,681) (Note 2-A) ........... $3,142,106
Cash................................................................................... 15,618
Receivables:
Fund shares sold................................................................. 1,500
Dividends and interest .......................................................... 3,278
Prepaid expenses and other assets...................................................... 5,399
Deferred organization costs (Note 4)................................................... 2,830
-----
Total assets .............................................................. 3,170,731
---------
LIABILITIES
Payables:
Fund shares redeemed............................................................. 13,600
Due to Advisor (Note 3).......................................................... 201
Other accrued expenses................................................................. 17,791
------
Total liabilities.......................................................... 31,592
------
NET ASSETS ................................................................................. $3,139,139
==========
Net asset value, offering and redemption price per share
($3,139,139/293,830 shares outstanding;
unlimited number of shares authorized without par value) .............................. $10.68
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $2,914,554
Accumulated net investment loss........................................................ (31,750)
Accumulated net realized loss on investments........................................... (155,090)
Net unrealized appreciation on investments............................................. 411,425
-------
Net assets ...................................................................... $3,139,139
==========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
TRENT EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Six Months Ended February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Dividends........................................................................ $ 18,684
Interest......................................................................... 1,493
-----
Total income............................................................... 20,177
------
Expenses
Advisory fees (Note 3)........................................................... 18,116
Custodian and accounting fees.................................................... 9,373
Administration fee (Note 3)...................................................... 6,405
Audit fees....................................................................... 5,552
Transfer agent fees.............................................................. 5,160
Amortization of organization costs (Note 4)...................................... 1,844
Legal fees....................................................................... 1,768
Insurance fees................................................................... 1,698
Registration fees................................................................ 1,127
Trustees' fees................................................................... 1,111
Miscellaneous fees............................................................... 1,041
Reports to shareholders.......................................................... 831
---
Total expenses............................................................. 54,026
Less, expenses reimbursed and waived (Note 3).............................. (22,005)
-------
Net expenses............................................................... 32,021
------
Net investment loss ................................................. (11,844)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions..................................... 5,276
Net change in unrealized appreciation on investments............................. 258,825
-------
Net realized and unrealized gain on investments............................ 264,101
-------
Net Increase in Net Assets Resulting from Operations ................ $ 252,257
=========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
TRENT EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
February 28, August 31,
1997# 1996
- -------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment loss........................................................... $ (11,844) $ (19,906)
Net realized gain (loss) from security transactions........................... 5,276 (77,268)
Net change in unrealized appreciation on investments.......................... 258,825 285,069
------- -------
Net increase in net assets resulting from operations ................... 252,257 187,895
------- -------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain from security transactions**................................ -- (301,203)
--------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets derived from net change in
outstanding shares (a).................................................. (151,746) (653,999)
-------- --------
Total increase (decrease) in net assets ...................................... 100,511 (767,307)
NET ASSETS
Beginning of period........................................................... 3,038,628 3,805,935
--------- ---------
End of period (including accumulated net investment loss of
$31,750 and $19,906, respectively)...................................... $3,139,139 $3,038,628
========== ==========
<FN>
(a) A summary of capital shares transactions is as follows:
Six Months Year
Ended Ended
February 28, 1997# August 31, 1996
- -------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value
- -------------------------------------------------------------------------------------------------------------------
Shares sold ......................................... 6,622 $ 68,349 23,105 $ 223,608
Shares issued in reinvestment of distributions....... -- -- 32,409 280,983
Shares redeemed...................................... (20,938) (220,095) (119,166) (1,158,590)
------- -------- -------- ----------
Net decrease ........................................ (14,316) $(151,746) (63,652) $ (653,999)
======= ========= ======= ==========
#Unaudited.
**See Financial Highlights for per share data.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
TRENT EQUITY FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
- -------------------------------------------------------------------------------------------------------------------
September 2,
Six Months Year Year Year 1992*
Ended Ended Ended Ended through
February 28, August 31, August 31, August 31, August 31,
1997# 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 9.86 $10.24 $11.50 $11.66 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment loss........................... (.04) (.06) -- (.07) (.08)
Net realized and unrealized gain on
investments................................ .86 .67 .67 .15 1.76
--- --- --- --- ----
Total from investment operations.................... .82 .61 .67 .08 1.68
--- --- --- --- ----
Less distributions:
From net investment income.................... -- -- -- -- (.01)
From net capital gains........................ -- (.99) (1.93) (.24) (.01)
---- ----- ---- ----
Total distributions................................. -- (.99) (1.93) (.24) (.02)
---- ----- ---- ----
Net asset value, end of period...................... $10.68 $ 9.86 $10.24 $11.50 $11.66
====== ====== ====== ====== ======
Total return........................................ 8.32%++++ 7.23% 9.38% 0.64% 16.91%+
Ratios/supplemental data:
Net assets, end of period (millions)................ $ 3.1 $ 3.0 $ 3.8 $ 3.9 $ 4.7
Ratio of expenses to average net assets:
Before expense reimbursement.................. 3.37%+ 3.63% 3.65% 3.16% 3.33%+ ++
After expense reimbursement................... 2.00%+ 2.10% 1.85% 1.85% 2.54%+ ++
Ratio of net investment loss to average net assets:
Before expense reimbursement.................. (2.11)%+ (2.15)% (2.00)% (1.68)% (1.84)%+ ++
After expense reimbursement................... (0.74)%+ (0.62)% (0.15)% (0.36)% (1.05)%+ ++
Portfolio turnover rate............................. 27.83% 59.33% 46.52% 149.25% 315.38%
Average commission rate paid per share **........... $.0600 $.0625 -- -- --
<FN>
#Unaudited.
*Commencement of operations.
+Annualized.
++Excludes taxes and tax reimbursements of 2.84% of average net assets on an annualized basis.
++++Not annualized.
**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.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
TRENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Trent Equity 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 a
diversified, open-end management investment company. The Fund began operations
on September 2, 1992. The investment objective of the Fund is to seek capital
appreciation, both realized and unrealized. The Fund seeks to achieve its
objective by investing primarily in equity securities.
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 by 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. 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. Security
transactions are recorded 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 - COMMITMENTS AND RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Trent Capital Management,
Inc. ("TCM") provides the Fund with a continuous program of supervision of the
Fund's assets, including the composition of its portfolio, and furnishes advice
and recommendations with respect to investments, investment policies, and the
purchase and sale of securities. As compensation for its services, TCM receives
a fee at the annual rate of 1.15% of the Fund's average daily net assets. TCM
has voluntarily limited the Fund's expenses to the annual level of 2.00% of
average daily net assets. Total reimbursed expenses from TCM for the six months
ended February 28, 1997 was $17,073.
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
<PAGE>
TRENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
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 equal to
the greater of 0.25% of the Fund's average daily net assets or $15,000. During
the six months ended February 28, 1997, the Administrator waived $4,932 of its
fee.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator and receives no compensation
for its services.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator and Distributor.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses incurred in connection with its organization and the
registration of its shares have been assumed by the Fund.
The organization expenses have been capitalized and are being amortized
over a period of sixty months. Investors purchasing shares of the Fund bear such
expenses only as they are amortized against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during the
amortization period, the redemption proceeds will be reduced by a pro rata
portion of any unamortized organization expenses in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares of
the Fund outstanding at the time of redemption.
NOTE 5 - INVESTMENT TRANSACTIONS
Purchases and sales of securities other than short-term investments, for
the six months ended February 28, 1997, were $876,356 and $1,006,936,
respectively.
<PAGE>
Advisor
Trent Capital Management, Inc.
3101 North Elm Street
Suite 150
Greensboro, North Carolina 27408
(910) 282-9302
Distributor
First Fund Distributors, Inc.
4455 East Camelback Road
Suite 261E
Phoenix, Arizona 85018
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
Transfer Agent
American Data Services, Inc.
24 West Carver Street, 2nd Floor
Huntington, New York 11743
Auditors
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, Pennsylvania 19102
Legal Counsel
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
This report is intended for shareholders of
Trent Equity Fund and may not be used
as sales literature unless preceded or
accompanied by a current prospectus.
