September 8, 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. 811-05037
CIK No. 0000811030
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 Matrix
Emerging Growth Fund and Matrix Growth Fund series of the
Registrant for the six month period ended June 30, 1997.
If you have any questions, please contact me at (602) 952-1100.
Sincerely yours,
Robert H. Wadsworth
<PAGE>
Matrix Growth Fund
Matrix Emerging Growth Fund
Semi-Annual Report
June 30, 1997
<PAGE>
Matrix Growth Fund
Matrix Emerging Growth Fund
July 20, 1997
Dear Matrix Shareholder,
Riding the strength of a strong second quarter the stock market enjoyed solid
gains for the first half of 1997. Gains of 20.6% by the S&P 500 and 9.3% by the
Russell 2000 indexes indicate that large capitalization stocks enjoyed positive
relative performance during the period, and the Matrix Growth and Matrix
Emerging Growth Funds gained 17.23% and 10.04%, respectively.
The scale of these recent gains is not extraordinary but the cumulative record
of the current bull market is increasingly exceptional, and the economic
conditions fostering such gains absolutely are exceptional. Corporate earnings
have maintained an up trend for 21 quarters and continue to rise at double-digit
rates, data on inflation remains excellent, and by most measures interest rates
are now lower than in recent prior periods.
There are numerous instances in stock market history where the major averages
have advanced 20% or more for two consecutive years, but a third consecutive
year of such growth will put the current bull market into a class by itself. We
share the belief of most investors that the very positive current environment is
not a guarantee of a trouble-free future, and we believe our attention to
portfolios should be focused even more sharply as the market rises to higher
levels.
Stock prices did not make much progress at the outset of the year. The major
indexes were mixed while emerging growth stocks significantly underperformed the
general market, and during the first quarter Matrix Emerging Growth declined
10.8% while Matrix Growth fell 2%. Following good earnings releases in April,
however, the general market began to advance and small capitalization growth
stocks rose sharply. Matrix Emerging Growth surged 23.2% in the second quarter.
Most industry sectors contributed to the first-half advance of Matrix Emerging
Growth. Particularly noteworthy individual gains in share value during this
period were: 99 Cents Only Stores +84%, Advocat +57%, American Oncology +65%,
ASM Lithography +135%, Firstplus Financial +61%, General Nutrition +66%,
Harbinger +60%, Neomagic +56%, Staffmark +79%, and Transkaryontic +67%.
<PAGE>
We attribute the rebound in small cap issues to a general broadening of the
market and particularly to recognition of the relative under-valuation of
emerging growth stocks relative to larger cap issues. Although we can't be sure
the strong second quarter performance marked a major turning point in the
relative performance of emerging growth stocks, we are encouraged by their
continued strength early in the third quarter.
The larger capitalization holdings of Matrix Growth mirrored the strong
performance of the major Blue Chips. Notable performers in the portfolio were:
Colgate Palmolive +67%, General Electric +45%, EMC Corp +48%, and Norwest Corp
+45%. We believe the large capitalization stocks are benefitting from the
preference of many investors for large liquid issues in this extended bull
market.
Looking ahead, in addition to their attractive relative valuations, small growth
stocks could also benefit from their superior earnings growth rates in an
environment where corporate earnings forecasts for the market over the next
twelve months are slowing. A lower capital gains tax rate is a potential
positive for all stocks should currently proposed legislation become law.
We thank you for your continuing confidence and we look forward to continuing
our efforts to maintain Matrix Growth and Matrix Emerging Growth Funds as
rewarding holdings for our current and future shareholders.
Sincerely,
SENA WELLER ROHS WILLIAMS INC
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at June 30, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 97.8% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Conglomerates: 6.3%
<S> <C> <C>
11,000 General Electric Company................................................ $ 719,125
---------
Consumer Cyclical: 9.4%
17,088 Mattel, Inc............................................................. 578,856
10,000 McDonald's Corp......................................................... 483,125
-------
1,061,981
---------
Consumer Non-Cyclical: 19.9%
12,000 Albertson's, Inc........................................................ 438,000
12,000 Colgate-Palmolive Company............................................... 783,000
8,000 Health Care & Retirement Corp........................................... 267,000
16,000 Schering-Plough Corp.................................................... 766,000
-------
2,254,000
---------
Energy: 12.2%
4,000 British Petroleum Company............................................... 299,500
13,000 Enron Corp.............................................................. 530,562
8,000 Mobil Corp.............................................................. 559,000
-------
1,389,062
---------
Financial: 14.2%
8,000 American Express Company................................................ 596,000
18,000 Norwest Corp............................................................ 1,012,500
---------
1,608,500
---------
Industrials: 8.6%
5,000 Allied Signal, Inc...................................................... 420,000
16,125 Thermo Electron Corp.................................................... 554,297
-------
974,297
-------
Technology: 16.6%
11,200 Automatic Data Processing, Inc.......................................... 526,400
6,750 Computer Associates International, Inc.................................. 375,891
5,000 EMC Corp.-Massachusetts*................................................ 195,000
3,000 Motorola, Inc........................................................... 228,000
16,000 Stryker Corp............................................................ 558,000
-------
1,883,291
---------
<PAGE>
Matrix Growth Fund
SCHEDULE OF INVESTMENTS at June 30, 1997 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities: 10.6%
6,500 Ameritech Corp.......................................................... $ 441,594
24,000 Worldcom, Inc.*......................................................... 768,000
-------
1,209,594
---------
Total Common Stocks (cost $4,127,641)................................... 11,099,850
----------
Total Investment in Securities (cost $4,127,641+): 97.8%................ 11,099,850
Other Assets less Liabilities: 2.2%..................................... 249,513
-------
Total Net Assets: 100.0%................................................ $11,349,363
===========
<FN>
* Non-income producing security.
+ At June 30, 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........................................... $ 6,972,209
Gross unrealized depreciation........................................... 0
-
Net unrealized appreciation...................................... $ 6,972,209
===========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at June 30, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (cost $4,127,641) ................................. $11,099,850
Cash................................................................................... 40,665
Receivables:
Investment securities sold....................................................... 271,991
Dividends........................................................................ 9,020
Deferred organization costs............................................................ 12,506
Prepaid expenses and other assets...................................................... 361
---
Total assets .............................................................. 11,434,393
----------
LIABILITIES
Payables:
Advisory fee..................................................................... 8,432
Administration fee............................................................... 2,589
Distribution costs............................................................... 6,796
Fund shares redeemed............................................................. 59,102
Accrued expenses ...................................................................... 8,111
-----
Total liabilities.......................................................... 85,030
------
NET ASSETS ................................................................................ $11,349,363
===========
Net asset value, offering and redemption price per share
($11,349,363/642,964 shares outstanding;
unlimited number of shares authorized without par value) ........................ $17.65
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $ 3,800,604
Accumulated net investment loss........................................................ (31,561)
Undistributed net realized gain on investments......................................... 608,111
Net unrealized appreciation on investments............................................. 6,972,209
---------
Net assets ...................................................................... $11,349,363
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Six Months Ended June 30, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C>
Dividends........................................................................ $ 69,626
Interest......................................................................... 8,321
-----
Total income .............................................................. 77,947
------
Expenses
Advisory fees ................................................................... 50,589
Administration fees.............................................................. 14,876
Distribution costs............................................................... 14,053
Custodian and accounting fees.................................................... 12,941
Audit fees....................................................................... 6,563
Transfer agent fees.............................................................. 5,123
Amortization of organization costs............................................... 2,480
Reports to shareholders.......................................................... 2,376
Insurance fee.................................................................... 1,595
Legal fees....................................................................... 1,436
Other expenses................................................................... 1,254
-----
Total expenses............................................................. 113,286
Less: expenses reimbursed by Advisor....................................... (14,918)
-------
Net expenses............................................................... 98,368
------
Net investment loss ............................................... (20,421)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions .......................................... 607,704
Net change in unrealized appreciation on investments .................................. 1,107,317
---------
Net realized and unrealized gain on investments ........................... 1,715,021
---------
Net Increase in Net Assets Resulting from Operations ................ $ 1,694,600
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended
Ended December 31,
June 30, 1997* 1996
- ------------------------------------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment loss........................................................ $ (20,421) $ (9,270)
Net realized gain from security transactions .............................. 607,704 938,727
Net change in unrealized appreciation on investments....................... 1,107,317 1,096,723
--------- ---------
Net increase in net assets resulting from operations ................ 1,694,600 2,026,180
--------- ---------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain from security transactions............................... -0- (1,769,911)
- ----------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets derived from net change in
outstanding shares (a) .............................................. (2,419,993) (489,004)
---------- --------
Total decrease in net assets ........................................ (725,393) (232,735)
NET ASSETS
Beginning of period ....................................................... 12,074,756 12,307,491
---------- ----------
End of period (including accumulated net investment loss of
$31,561 and $11,140, respectively)................................... $11,349,363 $12,074,756
=========== ===========
<FN>
(a) A summary of capital shares transactions is as follows:
Six Months Ended Year Ended
June 30, 1997* December 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ...................................... 6,998 $ 110,452 39,993 $ 656,241
Shares issued in reinvestment of distribution..... -0- -0- 106,649 1,609,332
Shares redeemed .................................. (164,062) (2,530,445) (169,234) (2,754,577)
-------- ---------- -------- ----------
Net decrease ..................................... (157,064) $(2,419,993) (22,592) $ (489,004)
======== =========== ======= ==========
*Unaudited.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, 1997* 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $15.09 $14.96 $13.45 $14.51 $14.05 $14.01
Income from investment operations:
Net investment income (loss)................ (.04) (.01) .10 .05 .06 .09
Net realized and unrealized gain (loss)
on investments .......................... 2.60 2.69 3.06 (.75) 1.25 .60
---- ---- ---- ---- ---- ---
Total from investment operations.................. 2.56 2.68 3.16 (.70) 1.31 .69
---- ---- ---- ---- ---- ---
Less distributions:
Dividends from net investment income........ 0.00 0.00 (.10) (.05) (.06) (.09)
Distributions from net capital gains ....... 0.00 (2.55) (1.55) (.31) (.79) (.56)
---- ----- ----- ---- ---- ----
Total distributions............................... 0.00 (2.55) (1.65) (.36) (.85) (.65)
---- ----- ----- ---- ---- ----
Net asset value, end of period.................... $17.65 $15.09 $14.96 $13.45 $14.51 $14.05
====== ====== ====== ====== ====== ======
Total return ..................................... 17.23% 17.93% 23.52% (4.82)% 9.32% 4.92%
Ratios/supplemental data:
Net assets, end of period (millions).............. $ 11.4 $ 12.1 $ 12.3 $ 15.5 $ 19.1 $ 19.0
Ratio of expenses to average net assets:
Before expense reimbursement ............... 2.02%+ 1.99% 1.76% 1.84% 1.67% 1.68%
After expense reimbursement................. 1.75%+ 1.75% 1.75% 1.84% 1.67% 1.50%
Ratio of net investment (loss) income
to average net assets:
Before expense reimbursement ............... (0.63)%+ (0.33)% 0.47% 0.29% 0.40% 0.51%
After expense reimbursement ................ (0.36)%+ (0.08)% 0.48% 0.29% 0.40% 0.69%
Portfolio turnover rate .......................... 0% 0% 27% 25% 30% 51%
Average commission rate paid per share++........... $.1412 $.0665 -- -- -- --
<FN>
*Unaudited.
+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>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at June 30, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 94.4% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals: 1.5%
<S> <C> <C>
1,500 Cambrex Corp.*.......................................................... $ 59,437
1,200 OM Group, Inc.*......................................................... 39,750
------
99,187
------
Communications: 12.3%
1,500 Advanced Fibre Communications, Inc...................................... 90,562
1,000 C Net, Inc.............................................................. 29,250
1,000 Cascade Communications Corp............................................. 27,625
1,500 Cisco Systems, Inc...................................................... 100,688
5,000 Digex, Inc.............................................................. 64,531
4,000 Harmonic Lightwaves, Inc................................................ 68,500
1,050 Netscape Communications Corp............................................ 33,666
3,000 Network General Corp.................................................... 44,625
2,400 Octel Communications Corp............................................... 56,250
3,000 Ortel Corp.............................................................. 54,000
1,500 Qualcomm, Inc........................................................... 76,313
2,500 Tellabs, Inc............................................................ 139,687
-------
785,697
-------
Energy: 5.4%
7,000 Comstock Resources...................................................... 73,063
3,000 Cross Timbers Oil Co.*.................................................. 57,750
3,000 Falcon Drilling Co., Inc................................................ 172,875
1,500 United Meridian Corp.................................................... 45,000
------
348,688
-------
Financial Services: 13.0%
1,000 Advanta Corp., Class A*................................................. 36,750
3,500 Amerin Corp............................................................. 84,875
2,550 Arm Financial Group, Inc................................................ 51,000
5,000 First Plus Financial Group, Inc......................................... 170,000
2,500 First USA Paymentech, Inc............................................... 72,344
2,756 Litchfield Financial Corp.*............................................. 45,130
2,000 Meadowbrook Insurance Group*............................................ 49,875
1,500 Mid Ocean, Ltd. ORD - ADR*.............................................. 78,656
1,333 Mutual Risk Management, Ltd.*........................................... 61,151
2,100 Partner Re Holdings, Ltd.*.............................................. 80,063
<PAGE>
Matrix Emerging Growth Fund
SCHEDULE OF INVESTMENTS at June 30, 1997 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Services, continued
4,000 PMT Services, Inc....................................................... $ 61,000
1,000 Vesta Insurance Group, Inc.............................................. 43,250
------
834,094
-------
Health Care Recoveries - Industrial & Commercial: 13.0%
5,000 Advocat, Inc............................................................ 56,875
3,800 American Oncology Resources, Inc........................................ 64,125
5,000 Apple Orthodontix, Inc.................................................. 45,312
2,400 Genesis Health Ventures, Inc............................................ 81,000
3,500 Heathcare Recoveries, Inc............................................... 67,813
4,000 Healthsouth Corp........................................................ 99,750
3,750 Multicare Companies, Inc................................................ 102,656
2,000 Phycor, Inc............................................................. 68,875
3,375 Tenet Healthcare Corp................................................... 99,773
1,200 United Healthcare Corp.*................................................ 62,400
2,000 Vencor, Inc............................................................. 84,500
------
833,079
-------
Industrial and Commercial Services: 6.9%
2,500 Accustaff, Inc.......................................................... 59,219
1,000 Corrections Corp. of America............................................ 39,750
3,000 Covance, Inc............................................................ 57,937
2,000 Norrell Corp.*.......................................................... 66,000
5,000 Staffmark, Inc.......................................................... 111,875
5,000 Telespectrum Worldwide, Inc............................................. 35,156
2,500 Wackenhut Corrections Corp.............................................. 72,812
------
442,749
-------
Industrial Technology: 0.9%
2,500 Aftermarket Technology Corp............................................. 55,625
------
Manufactured Housing: 2.1%
2,500 American Homestar Corp.................................................. 53,437
2,500 Palm Harbor Homes, Inc.................................................. 82,188
------
135,625
-------
<PAGE>
Matrix Emerging Growth Fund
SCHEDULE OF INVESTMENTS at June 30, 1997 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Media - Broadcasting: 1.7%
1,300 Lin Television Corp..................................................... $ 57,363
1,500 Young Broadcasting Corp., Class A....................................... 48,750
------
106,113
-------
Medical - Advanced Devices: 4.0%
1,500 Guidant Corp.*.......................................................... 127,500
2,600 Nellcor Puritan Bennett, Inc............................................ 47,125
4,250 Physician Sales and Service, Inc........................................ 80,750
------
255,375
-------
Pharmaceuticals: 6.4%
2,000 Biogen, Inc............................................................. 67,750
2,300 Elan Corp., PLC - ADR................................................... 104,075
2,000 Express Scripts, Inc., Class A.......................................... 83,500
2,600 Transkaryotic Therapies, Inc............................................ 80,275
1,739 Watson Pharmaceutical, Inc.............................................. 73,473
------
409,073
-------
Restaurants: 0.1%
6,000 New World Coffee, Inc................................................... 7,313
-----
Retailers - Specialty: 3.1%
2,000 99 Cents Only Stores.................................................... 60,250
3,000 General Nutrition Companies, Inc........................................ 84,000
3,562 OfficeMax, Inc.......................................................... 51,426
------
195,676
-------
Semiconductors and Related: 7.4%
950 ASM Lithography Holdings................................................ 55,575
3,000 Cymer, Inc.............................................................. 146,250
1,000 DuPont Photomasks, Inc.................................................. 54,000
1,500 Neomagic Corp........................................................... 33,563
2,000 Rambus, Inc............................................................. 93,000
1,500 SDL, Inc................................................................ 28,688
1,800 TriQuint Semiconductor, Inc............................................. 61,875
------
472,951
-------
<PAGE>
Matrix Emerging Growth Fund
SCHEDULE OF INVESTMENTS at June 30, 1997 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Software and Processing: 13.2%
2,250 Advent Software, Inc.................................................... $ 59,906
2,000 Arbor Software Corp..................................................... 70,500
2,250 Cadence Design Systems, Inc............................................. 75,375
3,000 Harbinger Corp.......................................................... 84,000
2,400 HNC Software Services, Inc.............................................. 91,500
2,350 Hyperion Software Corp.................................................. 52,581
3,000 Medic Computer Systems, Inc............................................. 66,750
1,950 Oracle Corp............................................................. 98,231
1,500 Parametric Technology Corp.............................................. 63,844
5,000 Phoenix International Ltd., Inc......................................... 115,000
2,500 Structural Dynamics Research Corp....................................... 65,625
- ------
843,312
-------
Telephone Systems: 3.4%
3,750 Brightpoint, Inc........................................................ 122,109
3,000 Worldcom, Inc........................................................... 96,000
------
218,109
-------
Total Common Stocks (cost $3,966,405)................................... 6,042,666
---------
Principal Amount REPURCHASE AGREEMENT: 4.8%
- ------------------------------------------------------------------------------------------------------------------------------------
$305,000 Star Bank Repurchase Agreement, 5.25%, dated 6/30/97, due 7/1/97,
collateralized by $305,000 GNMA, 6.50% due 2/20/24 (proceeds
$305,054) (cost $305,000)............................................... 305,000
-------
Total Investment in Securities (cost $4,271,405+): 99.2%................ 6,347,666
Other Assets less Liabilities: 0.8%..................................... 49,136
------
Total Net Assets: 100.0%................................................ $ 6,396,802
===========
<FN>
* Income-producing security.
+ At June 30, 1997, the cost of securities for Federal income tax purposes was
the same as the basis for financial reporting. Unrealized appreciation and
depreciation were as follows:
Gross unrealized appreciation........................................... $ 2,255,272
Gross unrealized depreciation........................................... (179,011)
--------
Net unrealized appreciation...................................... $ 2,076,261
===========
</FN>
</TABLE>
See accompanying Notes to Financial Statements
<PAGE>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at June 30, 1997 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (cost $4,271,405) ................................. $ 6,347,666
Cash .................................................................................. 735
Receivables:
Due from Advisor................................................................. 3,644
Fund shares sold................................................................. 3,216
Investment securities sold....................................................... 39,132
Dividends and interest........................................................... 329
Deferred organization costs............................................................ 16,804
Prepaid expenses....................................................................... 2,475
-----
Total assets .............................................................. 6,414,001
---------
LIABILITIES
Payables:
Administration fee............................................................... 2,397
Distribution costs............................................................... 3,539
Accrued expenses ...................................................................... 11,263
------
Total liabilities.......................................................... 17,199
------
NET ASSETS $ 6,396,802
===========
Net asset value, offering and redemption price per share
($6,396,802/408,182 shares outstanding; unlimited number
of shares authorized without par value) ......................................... $15.67
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $ 4,556,672
Accumulated net investment loss........................................................ (121,136)
Accumulated net realized loss on investments........................................... (114,995)
Net unrealized appreciation on investments............................................. 2,076,261
---------
Net assets ...................................................................... $ 6,396,802
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Six Months Ended June 30, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C>
Interest ........................................................................ $ 14,354
Dividends........................................................................ 4,639
-----
Total income .............................................................. 18,993
------
Expenses
Advisory fees ................................................................... 25,449
Administration fees.............................................................. 14,876
Custodian and accounting fees.................................................... 11,977
Distribution costs............................................................... 7,069
Audit fees....................................................................... 6,593
Registration fees................................................................ 4,933
Transfer agent fees.............................................................. 4,415
Armortization of deferred organization costs..................................... 2,976
Reports to shareholders.......................................................... 2,343
Trustees' fees................................................................... 2,267
Miscellaneous fees............................................................... 1,897
Legal fees....................................................................... 1,438
-----
Total expenses............................................................. 86,233
Less: fees waived and expenses reimbursed.................................. (29,679)
-------
Net expenses............................................................... 56,554
------
Net investment loss ............................................... (37,561)
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss from security transactions .......................................... (36,118)
Net change in unrealized appreciation on investments .................................. 661,811
-------
Net realized and unrealized gain on investments ........................... 625,693
-------
Net Increase in Net Assets Resulting from Operations ................ $ 588,132
=========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended
Ended December
June 30, 1997* 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment loss........................................................ $ (37,561) $ (73,819)
Net realized loss from security transactions .............................. (36,118) (52,283)
Net change in unrealized appreciation on investments....................... 661,811 632,937
------- -------
Net increase in net assets resulting from operations ................ 588,132 506,835
------- -------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain from security transactions............................... -0- (39,249)
- -------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding
shares (a) .......................................................... 147,062 920,395
------- -------
Total increase in net assets ........................................ 735,194 1,387,981
NET ASSETS
Beginning of period ....................................................... 5,661,608 4,273,627
--------- ---------
End of period (including accumulated net investment loss of
$121,136 and $83,575, respectively).................................. $ 6,396,802 $5,661,608
=========== ==========
<FN>
(a) A summary of capital shares transactions is as follows:
Six Months Year
Ended Ended
June 30, 1997* December 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold................................. 27,237 $ 385,459 79,088 $1,073,686
Shares issued in reinvestment of
distribution.............................. -0- -0- 2,621 37,316
Shares redeemed ............................ (16,535) (238,397) (13,397) (190,607)
------- -------- ------- --------
Net increase ............................... 10,702 $ 147,062 68,312 $ 920,395
====== ========= ====== =========
*Unaudited.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Emerging Growth Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year April 4, 1995*
Ended Ended through
June 30, 1997# December 31, 1996 December 31,1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period...................... $14.24 $12.98 $10.00
------ ------ ------
Income from investment operations:
Net investment loss................................. (.09) (.18) (.03)
Net realized and unrealized gain on investments..... 1.52 1.54 3.01
---- ---- ----
Total from investment operations.......................... 1.43 1.36 2.98
---- ---- ----
Less distributions:
Distributions from net capital gains................ -0- (.10) -0-
- ---- -
Net asset value, end of period............................ $15.67 $14.24 $12.98
====== ====== ======
Total return.............................................. 10.04% 10.47% 42.09%+
Ratios/supplemental data:
Net assets, end of period (millions)...................... $ 6.4 $ 5.7 $ 4.3
Ratio of expenses to average net assets:
Before expense reimbursement........................ 3.05%+ 3.13% 3.43%+
After expense reimbursement......................... 2.00%+ 2.00% 2.00%+
Ratio of net investment loss to average net assets:
Before expense reimbursement........................ (2.38)%+ (2.53)% (1.87)%+
After expense reimbursement......................... (1.33)%+ (1.40)% (0.43)%+
Portfolio turnover rate................................... 14.12% 29.54% 9.95%
Average commission rate paid per share++................... $.0827 $.0992 --
<FN>
*Commencement of operations.
+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.
#Unaudited.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
Matrix Emerging Growth Fund
NOTES TO FINANCIAL STATEMENTS at June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Matrix Growth Fund and the Matrix Emerging Growth Fund (the "Funds")
are each one of a series of shares of beneficial interest of Professionally
Managed Portfolios (the "Trust"), which is registered under the Investment
Company Act of 1940 (the "1940 Act") as a diversified, open-end management
investment company. The Funds began operations on May 14, 1986 and April 4,
1995, respectively. Prior to January 1, 1995, Matrix Growth Fund was a series of
shares in the Gateway Trust, a family of four no-load diversified mutual funds
registered under the 1940 Act. The investment objectives of the Funds are
long-term growth of capital and long-term capital appreciation, respectively.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. 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 sales 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. Repurchase Agreements. The Funds require the custodian to hold
sufficient collateral to secure repurchase agreements. To reduce the
chance of loss in the event that the Funds are delayed from securing
their collateral, the Funds enter into repurchase agreements only
with banks that have more than $1 billion in assets and are
creditworthy according to Sena Weller Rohs Williams, Inc., the Funds'
investment advisor.
C. Federal Income Taxes. The Funds intend to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
their shareholders. Therefore, no federal income tax provision is
required.
D. Security Transactions, Investment Income and Distributions. As is
common in the industry, security transactions are accounted for on
the trade date. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recognized on an
accrual basis. Capital gains and losses are calculated on an
identified cost basis for financial statement and federal income tax
purposes. Discounts and premiums on securities purchased are
amortized over the life of the respective securities. Expenses that
cannot be directly associated with a specific Fund are allocated
under policies set by the Board of Trustees. Income and capital gain
distributions to shareholders are determined in accordance with
income tax regulations which may differ from generally accepted
accounting principles.
<PAGE>
Matrix Growth Fund
Matrix Emerging Growth Fund
NOTES TO FINANCIAL STATEMENTS at June 30, 1997 (Unaudited), Continued
- --------------------------------------------------------------------------------
E. Deferred Organization Costs. The costs incurred by the Funds with
respect to adopting their current management and trust agreements and
initial organization for Emerging Growth have been deferred and are
being amortized using the straight-line method over a period of five
years from January 1, 1995 for Growth and April 4, 1995 (commencement
of operations) for Emerging Growth.
F. Estimates and Assumptions. 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 and disclosures of contingent
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the six month period ended June 30, 1997, Sena Weller Rohs Williams,
Inc. (the "Advisor") provided the Funds 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 Funds. As compensation for its services, the Advisor
was entitled to a monthly fee at the annual rate of 0.90% based upon the average
daily net assets of the Funds up to $50 million per Fund, 0.70% of the next $50
million and 0.60% of all such assets over $100 million.
The Advisor has agreed to reduce fees payable to it by the Funds and
reimburse other expenses to the extent necessary to limit the Funds' aggregate
annual operating expenses, excluding brokerage commissions and other portfolio
transaction expenses, interest, taxes, capital expenditures and extraordinary
expenses, to 1.75% and 2.00%, respectively, of average daily net assets through
June 30, 1997. As a result, the Advisor will reimburse the Funds for expenses in
excess of the limit in the amounts of $14,918 for Matrix Growth and $29,679 for
Matrix Emerging Growth, respectively.
Investment Company Administration Corporation (the "Administrator") acts
as the Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Funds; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Funds' custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Funds'
expense accruals. For its services, the Administrator receives a monthly fee
from each Fund 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
<PAGE>
Matrix Growth Fund
Matrix Emerging Growth Fund
NOTES TO FINANCIAL STATEMENTS at June 30, 1997 (Unaudited), Continued
- --------------------------------------------------------------------------------
Reynolds DeWitt Securities Company (the "Distributor") acts as the Funds'
principal underwriter in a continuous public offering of the Funds' shares. The
Distributor is a division of the Advisor.
Certain officers and Trustees of the Trust are also officers and/or
directors of the Administrator.
NOTE 4 - DISTRIBUTION COSTS
The Funds have adopted a Distribution Plan (the "Plan") in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that the Funds will pay a fee
to the Advisor as Distribution Coordinator at an annual rate of up to 0.25% of
the average daily net assets of the Funds. The fee is paid to the Distribution
Coordinator as reimbursement for, or in anticipation of, expenses incurred for
distribution-related activity. The Funds' Statements of Assets and Liabilities
include payables for Matrix Growth Fund of $6,796 and for Matrix Emerging Growth
Fund of $3,539 to the Distribution Coordinator for distribution fees at June 30,
1997.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
For the six month period ended June 30, 1997, the cost of purchases and
the proceeds from sales of securities, excluding short-term securities, were $0
and $2,195,258, respectively, for the Matrix Growth Fund and $960,217 and
$727,697, respectively, for the Matrix Emerging Growth Fund.
<PAGE>
Advisor
Sena Weller Rohs Williams, Inc.
300 Main Street
Cincinnati, Ohio 45202
(513) 621-2875
(800) 877-3344
o
Distributor
Reynolds DeWitt Securities Company
a division of Sena Weller Rohs Williams, Inc.
300 Main Street
Cincinnati, Ohio 45202
(513) 621-2875
(800) 877-3344
o
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
o
Transfer Agent
American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
o
Auditors
Tait, Weller & Baker
2 Penn Center Plaza
Philadelphia, Pennsylvania 19102
o
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, California 94104
This report is intended for the shareholders of the
Matrix Growth Fund and the Matrix Emerging
Growth Fund and should not be used as sales
literature unless accompanied or preceded
by the Funds' current prospectus.
