PROFESSIONALLY MANAGED PORTFOLIOS, 497, 1997-03-07

PROFESSIONALLY MANAGED PORTFOLIOS
497, 1997-03-07

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STATEMENT OF ADDITIONAL INFORMATION
August 1, 1996

Revised March 6, 1997

AVONDALE TOTAL RETURN FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
1105 Holliday
Wichita Falls, Texas 76301
(817) 761-3777

This Statement of Additional Information is not a prospectus, and it should be
read in conjunction with the prospectus of the Avondale Total Return Fund (the
"Fund"). Copies of the prospectus are available by calling (817) 761-3777 or
(800) 385-7003.

<TABLE>

<CAPTION>
TABLE OF CONTENTS
<S> <C>
The Trust.......................................................................................................B-2
Investment Objective and Policies...............................................................................B-2
Investment Restrictions.........................................................................................B-4
Distributions and Tax Information...............................................................................B-6
Trustees and Executive Officers.................................................................................B-8
The Fund's Investment Advisor..................................................................................B-10
The Fund's Administrator.......................................................................................B-11
The Fund's Distributor.........................................................................................B-12
Execution of Portfolio Transactions............................................................................B-12
Additional Purchase and Redemption Information.................................................................B-14
Determination of Share Price...................................................................................B-15
Performance Information........................................................................................B-16
General Information............................................................................................B-17
Financial Statements...........................................................................................B-18
Appendix.......................................................................................................B-19
</TABLE>

Avondale SAI B-1

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THE TRUST

Professionally Managed Portfolios (the "Trust") is an open-end
management investment company organized as a Massachusetts business trust. The
Trust consists of various series which represent separate investment portfolios.
This Statement of Additional Information relates only to the Fund.

INVESTMENT OBJECTIVE AND POLICIES

The Avondale Total Return Fund is a mutual fund with the investment
objective of seeking the combination of income and capital appreciation that
will produce the maximum total return consistent with reasonable risk. The Fund
seeks to achieve its objective by investing primarily in equity securities
(common and preferred stocks) and higher quality fixed income obligations. The
balance between debt and equity securities may be adjusted based upon the market
interpretation of the Investment Advisor of the Fund. The following discussion
supplements the discussion of the Fund's investment objective and policies as
set forth in the Prospectus. There can be no assurance the objective of the Fund
will be attained.

Repurchase Agreements

The Fund may enter into repurchase agreements as discussed in the
Prospectus. Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price. The repurchase price may
be higher than the purchase price, the difference being income to the Fund, or
the purchase and repurchase prices may be the same, with interest at a stated
rate due to the Fund together with the repurchase price on repurchase. In either
case, the income to the Fund is unrelated to the interest rate on the U.S.
Government security itself. Such repurchase agreements will be made only with
banks with assets of $500 million or more that are insured by the Federal
Deposit Insurance Corporation or with Government securities dealers recognized
by the Federal Reserve Board and registered as broker-dealers with the
Securities and Exchange Commission ("SEC") or exempt from such registration. The
Fund will generally enter into repurchase agreements of short durations, from
overnight to one week, although the underlying securities generally have longer
maturities. The Fund may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 10% of the value of the Fund's
total assets would be invested in illiquid securities including such repurchase
agreements.

Avondale SAI B-2

<PAGE>

being able to sell the security. Delays may involve loss of interest or a
decline in price of the U.S. Government security. If a court characterizes the
transaction as a loan and the Fund has not perfected a security interest in the
U.S. Government security, the Fund may be required to return the security to the
seller's estate and be treated as an unsecured creditor of the seller. As an
unsecured creditor, the Fund would be at the risk of losing some or all of the
principal and income involved in the transaction. As with any unsecured debt
instrument purchased for the Fund, the Investment Advisor seeks to minimize the
risk of loss through repurchase agreements by analyzing the creditworthiness of
the obligor, in this case the seller of the U.S. Government security.

Apart from the risk of bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security. However, the
Fund will always receive as collateral for any repurchase agreement to which it
is a party securities acceptable to it, the market value of which is equal to at
least 100% of the amount invested by the Fund plus accrued interest, and the
Fund will make payment against such securities only upon physical delivery or
evidence of book entry transfer to the account of its Custodian. If the market
value of the U.S. Government security subject to the repurchase agreement
becomes less than the repurchase price (including interest), the Fund will
direct the seller of the U.S. Government security to deliver additional
securities so that the market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price. It is possible that the
Fund will be unsuccessful in seeking to impose on the seller a contractual
obligation to deliver additional securities.

Lending of Portfolio Securities

As noted in the Prospectus, the Fund may lend up to 30% of its portfolio
securities in order to generate additional income. The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the income earned on the cash to the borrower or placing
broker. Loans are subject to termination at the option of the Fund or the
borrower at any time.

When-Issued Securities

The Fund may from time to time purchase securities on a "when-issued"
basis. The price of such securities, which may be expressed in yield terms, is
fixed at the time the commitment to purchase is made, but delivery and payment
for the when-issued securities take place at a later date. Normally, the
settlement date occurs within one month of the purchase; during the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. To the extent that assets of the Fund are
held in cash pending the settlement of a purchase of securities, the Fund would
earn no income; however, it is the Fund's intention to be fully invested to the
extent practicable and subject to the policies stated above. While when-issued
securities may be sold prior to the settlement date, the Fund intends to
purchase such securities with the purpose of actually acquiring them unless a
sale appears desirable for investment reasons. At the time the Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the value of the security in determining its net asset
value. The market value of the when-issued securities may be more or less than
the purchase price. The Fund does not believe that its net

Avondale SAI B-3

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asset value or income will be adversely affected by its purchase of securities
on a when-issued basis. The Fund will establish a segregated account with its
Custodian in which it will maintain liquid assets equal in value to commitments
for when-issued securities. Such segregated assets either will mature or, if
necessary, be sold on or before the settlement date.

Foreign Securities

The Fund may invest up to 15% of its total assets in foreign
securities. Foreign economies may differ from the U.S. economy; individual
foreign companies may differ from domestic companies in the same industry and
foreign currencies maybe stronger or weaker than the U.S. dollar. An investment
may be affected by changes in currency rates and in exchange control
regulations, and the Fund may incur transaction charges in exchanging
currencies. Foreign companies are frequently not subject to the accounting and
financial reporting standards applicable to domestic companies, and there may be
less information available about foreign issuers. Foreign stock markets may have
substantially less volume than the New York Stock Exchange, and securities of
foreign issuers may be generally less liquid and more volatile than those of
comparable domestic issuers. There is frequently less government regulation of
exchanges, broker-dealers and issuers than in the United States. In addition,
investments in foreign countries are subject to the possibility of expropriation
or confiscatory taxation, political or social instability or diplomatic
developments that could adversely affect the value of those investments.

INVESTMENT RESTRICTIONS

The following policies and investment restrictions have been adopted by
the Fund and (unless otherwise noted) are fundamental and cannot be changed
without the affirmative vote of a majority of the Fund's outstanding voting
securities as defined in the 1940 Act. The Fund may not:

1. With respect to 75% of its total assets: (a) invest more than 5% of
its total assets (taken at market value at the time of investment) in the
securities of any one issuer, or (b) acquire more than 10% of the outstanding
voting securities of any one issuer (at the time of acquisition); except that
this restriction does not apply to securities issued or guaranteed by the United
States Government or its agencies or instrumentalities.

2. Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objectives and policies, (b)
through the lending of its portfolio securities as described above and in its
Prospectus, or (c) to the extent the entry into a repurchase agreement is deemed
to be a loan.

3. (a) Borrow money, except temporarily for extraordinary or emergency
purposes from a bank and then not in excess of 10% of its total assets (at the
lower of cost or fair market value). Any such borrowing will be made only if
immediately thereafter there is an asset coverage of at least 300%

Avondale SAI B-4

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of all borrowings, and no additional investments may be made while any such
borrowings are in excess of 5% of total assets.

(b) Mortgage, pledge or hypothecate any of its assets except in connection
with any such borrowings.

4. Purchase securities on margin, sell securities short, participate on
a joint or joint and several basis in any securities trading account, or
underwrite securities. (Does not preclude the Fund from obtaining such
short-term credit as may be necessary for the clearance of purchases and sales
of its portfolio securities.)

5. Buy or sell interests in oil, gas or mineral exploration or
development programs, or real estate. (Does not preclude investments in
marketable securities of issuers engaged in such activities.)

6. Purchase or hold securities of any issuer, if, at the time of
purchase or thereafter, any of the Trustees or officers of the Trust or the
Fund's Investment Advisor owns beneficially more than 1/2 of 1%, and all such
Trustees or officers holding more than 1/2 of 1% together own beneficially more
than 5% of the issuer's securities.

7. Purchase or sell commodities or commodity contracts or invest in
put, call, straddle or spread options. (As a matter of operating policy, the
Board of Trustees may authorize the Fund to engage in certain activities
involving options and/or futures for bona fide hedging purposes; any such
authorization will be accompanied by appropriate notification to shareholders.)

8. Invest, in the aggregate, more than 10% of its total assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable and repurchase agreements with more than seven days
to maturity.

9. Invest in any issuer for purposes of exercising control or management.

10. Invest more than 25% of the market value of its assets in the
securities of companies engaged in any one industry. (Does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities.)

11. Issue senior securities, as defined in the 1940 Act, except that
this restriction shall not be deemed to prohibit the Fund from (a) making any
permitted borrowings, mortgages or pledges, or (b) entering into repurchase
transactions.

The Fund observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote.

12. Invest in securities of other investment companies which would result
in the Fund owning more than 3% of the outstanding voting securities of any one
such investment company, the Fund

Avondale SAI B-5

<PAGE>

owning securities of another investment company having an aggregate value in
excess of 5% of the value of the Fund's total assets, or the Fund owning
securities of investment companies in the aggregate which would exceed 10% of
the value of the Fund's total assets.

If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in the
values of assets will not constitute a violation of that restriction, except as
otherwise noted.

DISTRIBUTIONS AND TAX INFORMATION

Distributions

Dividends from net investment income and distributions from net profits
from the sale of securities are generally made annually, as described in the
Prospectus after the conclusion of the Fund's fiscal year (March 31). Also, the
Fund expects to distribute any undistributed net investment income on or about
December 31 of each year. Any net capital gains realized through the period
ended October 31 of each year will also be distributed by December 31 of each
year.

Each distribution by the Fund is accompanied by a brief explanation of
the form and character of the distribution. In January of each year the Fund
will issue to each shareholder a statement of the federal income tax status of
all distributions.

Tax Information

Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund intends to continue to qualify and elect to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), provided it complies with all
applicable requirements regarding the source of its income, diversification of
its assets and timing of distributions. The Fund's policy is to distribute to
its shareholders all of its investment company taxable income and any net
realized long-term capital gains for each fiscal year in a manner that complies
with the distribution requirements of the Code, so that the Fund will not be
subject to any federal income or excise taxes. To comply with the requirements,
the Fund must also distribute (or be deemed to have distributed) by December 31
of each calendar year (I) at least 98% of its ordinary income for such year,
(ii) at least 98% of the excess of its realized capital gains over its realized
capital losses for the 12-month period ending on October 31 during such year and
(iii) any amounts from the prior calendar year that were not distributed and on
which the Fund paid no federal income tax.

Net investment income consists of interest and dividend income, less
expenses. Net realized capital gains for a fiscal period are computed by taking
into account any capital loss carryforward of the Fund.

Avondale SAI B-6

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Distributions of net investment income and net short-term capital gains
are taxable to shareholders as ordinary income. In the case of corporate
shareholders, a portion of the distributions may qualify for the intercorporate
dividends-received deduction to the extent the Fund designates the amount
distributed as a qualifying dividend. The aggregate amount so designated cannot,
however, exceed the aggregate amount of qualifying dividends received by the
Fund for its taxable year. In view of the Fund's investment policy, it is
expected that dividends from domestic corporations will be part of the Fund's
gross income and that, accordingly, part of the distributions by the Fund may be
eligible for the dividends-received deduction for corporate shareholders.
However, the portion of the Fund's gross income attributable to qualifying
dividends is largely dependent on that Fund's investment activities for a
particular year and therefore cannot be predicted with any certainty. The
deduction may be reduced or eliminated if the Fund shares held by a corporate
investor are treated as debt-financed or are held for less than 46 days.

Distributions of the excess of net long-term capital gains over net
short-term capital losses are taxable to shareholders as long-term capital
gains, regardless of the length of time they have held their shares. Capital
gains distributions are not eligible for the dividends-received deduction
referred to in the previous paragraph. Distributions of any net investment
income and net realized capital gains will be taxable as described above,
whether received in shares or in cash. Shareholders electing to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are generally taxable
when received. However, distributions declared in October, November or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31. Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.

A redemption or exchange of Fund shares may result in recognition of a
taxable gain or loss. Any loss realized upon a redemption or exchange of shares
within six months from the date of their purchase will be treated as a long-term
capital loss to the extent of any amounts treated as distributions of long-term
capital gains during such six-month period. In determining gain or loss from an
exchange of Fund shares for shares of another mutual fund, the sales charge
incurred in purchasing the shares that are surrendered will be excluded from
their tax basis to the extent that a sales charge that would otherwise be
imposed in the purchase of the shares received in the exchange is reduced. Any
portion of a sales charge excluded from the basis of the shares surrendered will
be added to the basis of the shares received. Any loss realized upon a
redemption or exchange may be disallowed under certain wash sale rules to the
extent shares of the same Fund are purchased (through reinvestment of
distributions or otherwise) within 30 days before or after the redemption or
exchange.

Under the Code, the Fund will be required to report to the Internal
Revenue Service ("IRS") all distributions of taxable income and capital gains as
well as gross proceeds from the redemption or exchange of Fund shares, except in
the case of exempt shareholders, which includes most corporations. Pursuant to
the backup withholding provisions of the Internal Revenue Code, distributions of
any taxable income and capital gains and proceeds from the redemption of Fund

Avondale SAI B-7

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shares may be subject to withholding of federal income tax at the rate of 31
percent in the case of non-exempt shareholders who fail to furnish the Fund with
their taxpayer identification numbers and with required certifications regarding
their status under the federal income tax law. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Corporate and other exempt shareholders should provide the Fund with
their taxpayer identification numbers or certify their exempt status in order to
avoid possible erroneous application of backup withholding. The Fund reserves
the right to refuse to open an account for any person failing to provide a
certified taxpayer identification number.

The Fund will not be subject to tax in the Commonwealth of
Massachusetts as long as it qualifies as a regulated investment company for
federal income tax purposes. Distributions and the transactions referred to in
the preceding paragraphs may be subject to state and local income taxes, and the
tax treatment thereof may differ from the federal income tax treatment.
Moreover, the above discussion is not intended to be a complete discussion of
all applicable federal tax consequences of an investment in the Fund.
Shareholders are advised to consult with their own tax advisers concerning the
application of federal, state and local taxes to an investment in the Fund.

The foregoing discussion of U.S. federal income tax law relates solely to
the application of that law to U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts and estates. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30 percent (or at a lower rate
under an applicable income tax treaty) on amounts constituting ordinary income.

This discussion and the related discussion in the prospectus have been
prepared by Fund management, and counsel to the Fund has expressed no opinion in
respect thereof.

TRUSTEES AND EXECUTIVE OFFICERS

The Trustees of the Trust, who were elected for an indefinite term by
the initial shareholders of the Trust, are responsible for the overall
management of the Trust, including general supervision and review of the
investment activities of the Fund. The Trustees, in turn, elect the officers of
the Trust, who are responsible for administering the day-to-day operations of
the Trust and its separate series. The current Trustees and officers and their
affiliations and principal occupations for the past five years are set forth
below.

Steven J. Paggioli,* 46 President and Trustee

479 West 22nd Street, New York, New York 10011. Executive Vice President,
The Wadsworth Group (consultants) since 1986; Executive Vice President of
Investment Company Administration

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Corporation ("ICAC"); mutual fund administrator and the Trust's
administrator),and Vice President of First Fund Distributors, Inc. ("FFD");
registered broker-dealer and the Fund's Distributor) since 1990.

Dorothy A. Berry, 52 Trustee

40 Maple Lane, Copake, NY 12516. President, Talon Industries (venture capital
and business consulting); formerly Chief Operating Officer, Integrated Asset
Management (investment advisor and manager) and formerly President, Value Line,
Inc., (investment advisory and financial publishing firm).

Wallace L. Cook, 56 Trustee

One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice
President, Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.

Carl A. Froebel, 57 Trustee

333 Technology Dr., Malvern, PA. Managing Director, Premier Solutions, Ltd.
Formerly President and Founder, National Investor Data Services, Inc.
(investment related computer software).

Rowley W.P. Redington, 51 Trustee

260 Washington Street, Newark, New Jersey 07102. Vice President, PRS of New
Jersey, Inc. (management consulting); Chief Financial Officer, Jersey
Electronics, Inc. (formerly ESI, Inc.) (consumer electronics service and
marketing); formerly President, Aveco Inc. (consumer electronic service and
marketing) and formerly Chief Executive Officer, Rowley Associates
(consultants).

Eric M. Banhazl*, 39 Treasurer

2025 E. Financial Way, Suite 101, Glendora, California 91741. Senior Vice
President, The Wadsworth Group, Senior Vice President of ICAC and Vice President
of FFD since 1990.

Robin Berger*, 40 Secretary

479 West 22nd St., New York, New York 10011. Vice President, The Wadsworth
Group since June, 1993; formerly Regulatory and Compliance Coordinator,
Equitable Capital Management, Inc. (1991- 93).

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Robert H. Wadsworth*, 57 Vice President

4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018. President of
The Wadsworth Group since 1982, President of ICAC and FFD since 1990.

*Indicates an "interested person" of the Trust as defined in the 1940 Act.

Set forth below is the rate of compensation received by the following
Trustees from the Fund and all other portfolios of the Trust. This total amount
is allocated among the portfolios. Disinterested trustees receive an annual
retainer of $7,500 and a fee of $2,500 for each regularly scheduled meeting.
These trustees also receive a fee of $1000 for any special meeting attended. The
Chairman of the Board of Trustees receives an additional annual retainer of
$4,500. Disinterested trustees are also reimbursed for expenses in connection
with each Board meeting attended. No other compensation or retirement benefits
were received by any Trustee or officer from the Fund or any other portfolios of
the Trust.

Name of Trustee Total Annual Compensation

Dorothy A. Berry $22,000
Wallace L. Cook $17,500
Carl A. Froebel $17,500
Rowley W.P. Redington $17,500

During the fiscal year ended March 31, 1996, trustees' fees and
expenses in the amount of $3,308 were allocated to the Fund. As of the date of
this Statement of Additional Information, the Trustees and Officers of the Trust
as a group did not own more than 1% of the outstanding shares of the Fund.

THE FUND'S INVESTMENT ADVISOR

As stated in the Prospectus, investment advisory services are provided
to the Fund by Herbert R. Smith, Incorporated, the Manager, pursuant to an
Investment Advisory Agreement. The Agreement continues in effect from year to
year so long as such continuation is approved at least annually by (1) the Board
of Trustees of the Trust or the vote of a majority of the outstanding shares of
the Fund, and (2) a majority of the Trustees who are not interested persons of
any party to the Agreement, in each case cast in person at a meeting called for
the purpose of voting on such approval. The Agreement may be terminated at any
time, without penalty, by either the Fund or the Manager upon sixty days'
written notice and is automatically terminated in the event of its assignment as
defined in the 1940 Act.

For the fiscal years ended March 31, 1994, March 31, 1995, and March
31, 1996, the Manager received investment advisory fees of $58,018, $44,869 and
$58,529 under the Agreement.

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Herbert R. Smith, Incorporated is independently owned by its officers.
Herbert R. Smith is the Chairman, Chief Executive Officer and a Director of the
Manager and owns a controlling interest in the Investment Advisor.

The use of the name "Avondale" by the Fund is pursuant to a license
granted by the Investment Advisor, and in the event the Investment Advisory
Agreement with the Fund is terminated, the Investment Advisor has reserved the
right to require the Fund to remove any references to the name "Avondale."

The Investment Advisory Agreement continues in effect for successive
annual periods so long as such continuation is approved at least annually by the
vote of (1) the Board of Trustees of the Trust (or a majority of the outstanding
shares of the Fund to which the agreement applies), and (2) a majority of the
Trustees who are not interested persons of any party to the Agreement, in each
case cast in person at a meeting called for the purpose of voting on such
approval. Any such agreement may be terminated at any time, without penalty, by
either party to the agreement upon sixty days' written notice and is
automatically terminated in the event of its "assignment," as defined in the
1940 Act.

THE FUND'S ADMINISTRATOR

The Fund has an Administration Agreement with Investment Company
Administration Corporation (the "Administrator"), a corporation owned and
controlled by Messrs. Banhazl, Paggioli and Wadsworth with offices at 4455 E.
Camelback Rd., Ste. 261-E, Phoenix, AZ 85018. The Administration Agreement
provides that the Administrator will prepare and coordinate reports and other
materials supplied to the Trustees; prepare and/or supervise the preparation and
filing of all securities filings, periodic financial reports, prospectuses,
statements of additional information, marketing materials, tax returns,
shareholder reports and other regulatory reports or filings required of the
Fund; prepare all required filings necessary to maintain the Fund's
qualification and/or registration to sell shares in all states where the Fund
currently does, or intends to do business; coordinate the preparation, printing
and mailing of all materials (e.g., Annual Reports) required to be sent to
shareholders; coordinate the preparation and payment of Fund related expenses;
monitor and oversee the activities of the Fund's servicing agents (i.e.,
transfer agent, custodian, fund accountants, etc.); review and adjust as
necessary the Fund's daily expense accruals; and perform such additional
services as may be agreed upon by the Fund and the Administrator. For its
services, the Administrator receives an annual fee equal to the greater of .15%
of the Fund's average daily net assets or $30,000, provided that if the Fund's
annual operating expenses exceed $90,000 after waiver of the Investment
Advisor's fee, and if the net assets of the Fund are $5 million or less, the
Administrator will waive its fee in an amount equal to such excess.

During each of the fiscal years ended March 31, 1996, March 31, 1995
and March 31, 1994, respectively, the Administrator and its predecessor received
fees of $30,000.

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THE FUND'S DISTRIBUTOR

First Fund Distributors, Inc., (the "Distributor"), a corporation owned
by Mr. Banhazl, Mr. Paggioli and Mr. Wadsworth, acts as the Fund's principal
underwriter in a continuous public offering of the Fund's shares. The
Distribution Agreement between the Fund and the Distributor continues in effect
for periods not exceeding one year if approved at least annually by (i) the
Board of Trustees or the vote of a majority of the outstanding shares of the
Fund (as defined in the 1940 Act) and (ii) a majority of the Trustees who are
not interested persons of any such party, in each case cast in person at a
meeting called for the purpose of voting on such approval. The Distributing
Agreement may be terminated without penalty by the parties thereto upon sixty
days' written notice, and is automatically terminated in the event of its
assignment as defined in the 1940 Act.

EXECUTION OF PORTFOLIO TRANSACTIONS

Pursuant to the Investment Advisory Agreement, the Manager determines
which securities are to be purchased and sold by the Fund and which
broker-dealers will be used to execute the Fund's portfolio transactions.
Purchases and sales of securities in the over-the-counter market will be
executed directly with a "market-maker" unless, in the opinion of the Manager, a
better price and execution can otherwise be obtained by using a broker for the
transaction.

Purchases of portfolio securities for the Fund also may be made
directly from issuers or from underwriters. Where possible, purchase and sale
transactions will be effected through dealers (including banks) which specialize
in the types of securities which the Fund will be holding, unless better
executions are available elsewhere. Dealers and underwriters usually act as
principal for their own account. Purchases from underwriters will include a
concession paid by the issuer to the underwriter and purchases from dealers will
include the spread between the bid and the asked price. If the execution and
price offered by more than one broker, dealer or underwriter are comparable, the
order may be allocated to a broker, dealer or underwriter that has provided
research or other services as discussed below.

In placing portfolio transactions, the Manager will use its best
efforts to choose a broker-dealer capable of providing the services necessary to
obtain the most favorable price and execution available. The full range and
quality of services available will be considered in making these determinations,
such as the size of the order, the difficulty of execution, the operational
facilities of the firm involved, the firm's risk in positioning a block of
securities, and other factors. In those instances where it is reasonably
determined that more than one broker-dealer can offer the most favorable price
and execution available, consideration may be given to those broker-dealers
which furnish or supply research and statistical information to the Manager that
it may lawfully and appropriately use in its investment advisory capacities, as
well as provide other services in addition to execution services. The Manager
considers such information, which is in addition to and not in lieu of the
services required to be performed by it under its Agreement with the Fund, to be
useful in varying degrees, but of indeterminable value. Portfolio transactions
may be placed with broker-dealers who sell shares of the Fund subject to rules
adopted by the National Association of Securities Dealers, Inc.

While it is the Fund's general policy to seek first to obtain the most
favorable price and execution available, in selecting a broker-dealer to execute
portfolio transactions for the Fund, weight is also given to the ability of a
broker-dealer to furnish brokerage and research services to the Fund or to the
Manager, even if the specific services are not directly useful to the Fund and
may be useful to the Manager in advising other clients. In negotiating
commissions with a broker or evaluating the spread to be paid to a dealer, the
Fund may therefore pay a higher commission or spread than would be the case if
no weight were given to the furnishing of these supplemental services, provided
that the amount of such commission or spread has been determined in good faith
by the Manager to be reasonable in relation to the value of the brokerage and/or
research services provided by such broker-dealer. The standard of reasonableness
is to be measured in light of the Manager's overall responsibilities to the
Fund. In this regard, during the fiscal year ended March 31, 1996, substantially
all of the brokerage commissions paid by the Fund were directed to the selected
brokers because of research services provided and were effected at rates
believed by the Manager to be higher than otherwise obtainable, but reasonable
in relation to the services provided. The services obtained by this allocation
of brokerage included the Bridge Trading System software and data access fees
and research reports from William O'Neil & Co.

Investment decisions for the Fund are made independently from those of
other client accounts or mutual funds ("Funds") managed or advised by the
Manager. Nevertheless, it is possible that at times identical securities will be
acceptable for both the Fund and one or more of such client accounts. In such
event, the position of the Fund and such client account(s) in the same issuer
may vary and the length of time that each may choose to hold its investment in
the same issuer may likewise vary. However, to the extent any of these client
accounts seeks to acquire the same security as the Fund at the same time, the
Fund may not be able to acquire as large a portion of such security as it
desires, or it may have to pay a higher price or obtain a lower yield for such
security. Similarly, the Fund may not be able to obtain as high a price for, or
as large an execution of, an order to sell any particular security at the same
time. If one or more of such client accounts simultaneously purchases or sells
the same security that the Fund is purchasing or selling, each day's
transactions in such security will be allocated between the Fund and all such
client accounts in a manner deemed equitable by the Manager, taking into account
the respective sizes of the accounts and the amount being purchased or sold. It
is recognized that in some cases this system could have a detrimental effect on
the price or value of the security insofar as the Fund is concerned. In other
cases, however, it is believed that the ability of the Fund to participate in
volume transactions may produce better executions for the Fund.

The Fund does not effect securities transactions through brokers solely
for selling shares of the Fund, although the Fund may consider the sale of
shares as a factor in allocating brokerage. However, as stated above,
broker-dealers who execute brokerage transactions may effect purchases of shares
of the Fund for their customers.

Avondale SAI B-12

<PAGE>

The Fund does not use the Distributor to execute its portfolio
transactions. For the fiscal years ended March 31, 1994, March 31, 1995, and
March 31, 1996, respectively, the aggregate brokerage commissions paid by the
Fund were $17,664, $12,690 and $15,895.

In-Kind Purchases

The Fund issues shares for consideration other than cash only where
there is a bona fide reorganization, statutory merger, or where the securities
to be acquired meet the investment objectives and policies of the Fund, are
acquired for investment and not for resale, and liquid and not restricted as to
transfer either by law or market liquidity, and have a value which is readily
ascertainable (and not established only by valuation procedures), as evidenced
by a listing on the American Stock Exchange, the New York Stock Exchange or
NASDAQ.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Trust reserves the right in its sole discretion (i) to suspend the
continued offering of the Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Manager or the Distributor such rejection
is in the best interest of the Fund, and (iii) to reduce or waive the minimum
for initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of the Fund's
shares.

Payments to shareholders for shares of the Fund redeemed directly from
the Fund will be made as promptly as possible but no later than seven days after
receipt by the Fund's Transfer Agent of the written request in proper form, with
the appropriate documentation as stated in the Prospectus, except that the Fund
may suspend the right of redemption or postpone the date of payment during any
period when (a) trading on the New York Stock Exchange is restricted as
determined by the SEC or such Exchange is closed for other than weekends and
holidays; (b) an emergency exists as determined by the SEC making disposal of
portfolio securities or valuation of net assets of the Fund not reasonably
practicable; or (c) for such other period as the SEC may permit for the
protection of the Fund's shareholders. At various times, the Fund may be
requested to redeem shares for which it has not yet received confirmation of
good payment; in this circumstance, the Fund may delay the redemption until
payment for the purchase of such shares has been collected and confirmed to the
Fund.

The Fund intends to pay cash (U.S. dollars) for all shares redeemed,
but, under abnormal conditions which make payment in cash unwise, the Fund may
make payment partly in securities with a current market value equal to the
redemption price. Although the Fund does not anticipate that it will make any
part of a redemption payment in securities, if such payment were made, an
investor may incur brokerage costs in converting such securities to cash. The
Fund has elected to be governed by the provisions of Rule 18f-1 under the 1940
Act, which contains a formula for determining the minimum redemption amounts
that must be paid in cash.

Avondale SAI B-13

<PAGE>

The value of shares on redemption or repurchase may be more or less
than the investor's cost, depending upon the market value of the Fund's
portfolio securities at the time of redemption or repurchase.

Check-A-Matic

As discussed in the Prospectus, the Fund provides a Check-A-Matic Plan
for the convenience of investors who wish to purchase shares of the Fund on a
regular basis. All record keeping and custodial costs of the Check-A-Matic Plan
are paid by the Fund. The market value of the Fund's shares is subject to
fluctuation, so before undertaking any plan for systematic investment, the
investor should keep in mind that this plan does not assure a profit nor protect
against depreciation in declining markets.

DETERMINATION OF SHARE PRICE

As noted in the Prospectus, the net asset value and offering price of
shares of the Fund will be determined once daily as of the close of public
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time) on
each day that the Exchange is open for trading. It is expected that the Exchange
will be closed on Saturdays and Sundays and on New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas. The Fund does not expect to determine the net asset value of its
shares on any day when the Exchange is not open for trading even if there is
sufficient trading in its portfolio securities on such days to materially affect
the net asset value per share.

In valuing the Fund's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust shall determine in good faith to reflect the security's fair value. All
other assets of each Fund are valued in such manner as the Board of Trustees in
good faith deems appropriate to reflect their fair value.

The net asset value per share of the Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.

Avondale SAI B-14

<PAGE>

PERFORMANCE INFORMATION

From time to time, the Fund may state its total return in
advertisements and investor communications. Total return may be stated for any
relevant period as specified in the advertisement or communication. Any
statements of total return will be accompanied by information on the Fund's
average annual compounded rate of return over the most recent four calendar
quarters and the period from the Fund's inception of operations. The Fund may
also advertise aggregate and average total return information over different
periods of time.

The Fund's total return may be compared to relevant indices, including
Standard & Poor's 500 Composite Stock Index and indices published by Lipper
Analytical Services, Inc. From time to time, evaluations of a Fund's performance
by independent sources may also be used in advertisements and in information
furnished to present or prospective investors in the Funds.

Investors should note that the investment results of the Fund will
fluctuate over time, and any presentation of the Fund's total return for any
period should not be considered as a representation of what an investment may
earn or what an investor's total return may be in any future period.

The Fund's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the following formula:

P(1+T)n = ERV

Where: P = a hypothetical initial purchase order of $1,000 from which the
maximum sales load is deducted

T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase at
the end of the period

Aggregate total return is calculated in a similar manner, except that
the results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period.

The average annual compounded rate of returns, or total return, for the
Fund for the one year and five year periods and from the period from inception
of the Fund on October 12, 1988 through December 31, 1996 were 4.67%, 7.75% and
9.55%, respectively.

Avondale SAI B-15

<PAGE>

GENERAL INFORMATION

Investors in the Fund will be informed of the Fund's progress through
periodic reports. Financial statements certified by independent public
accountants will be submitted to shareholders at least annually.

Star Bank N.A., 425 Walnut Street, Cincinnati, OH 45202 acts as
Custodian of the securities and other assets of the Fund. American Data
Services, Inc., 24 West Carver St., Huntington, NY 11743 is the Fund's transfer
and shareholder service agent. The Custodian and Transfer Agent do not
participate in decisions relating to the purchase and sale of securities by the
Fund.

Tait, Weller & Baker, 121 South Broad Street, Philadelphia, PA 19107,
are the independent auditors for the Fund.

Heller, Ehrman, White & McAuliffe, 333 Bush Street, San Francisco,
California 94104, are legal counsel to the Fund.

The following persons are beneficial owners of more than 5% of the
Fund's outstanding voting securities as of February 20, 1997. An asterisk (*)
denotes an account affiliated with the Fund's investment advisor, officers or
trustees:

Trust Company of Texas, Trustee, Humphrey Printing Co. Profit Sharing
Trust, Dallas, TX 75205; 5.35%.

Star Bank, custodian for Ted F Gingrich IRA Account, Yuba City, CA
95991; 5.40%.

The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Trust's Agreement and Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust. The
Agreement and Declaration of Trust also provides for indemnification and
reimbursement of expenses out of the Fund's assets for any shareholder held
personally liable for obligations of the Fund or Trust. The Agreement and
Declaration of Trust provides that the Trust shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the Fund or Trust and satisfy any judgment thereon. All such rights are limited
to the assets of the Fund. The Agreement and Declaration of Trust further
provides that the Trust may maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Trust, its shareholders, trustees, officers, employees and agents to cover
possible tort and other liabilities. Furthermore, the activities of the Trust as
an investment company would not likely give rise to liabilities in excess of the
Trust's total assets. Thus, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Fund itself is unable to meet its
obligations.

Avondale SAI B-16

<PAGE>

The Trust is registered with the SEC as a management investment
company. Such a registration does not involve supervision of the management or
policies of the Fund. The Prospectus of the Fund and this Statement of
Additional Information omit certain of the information contained in the
Registration Statement filed with the SEC. Copies of such information may be
obtained from the SEC upon payment of the prescribed fee.

FINANCIAL STATEMENTS

The annual report to shareholders for the Fund for the fiscal year
ended March 31, 1996 is a separate document supplied with this Statement of
Additional Information and the financial statements, accompanying notes and
report of independent accountants appearing therein are incorporated by
reference in this Statement of Additional Information.

Avondale SAI B-17

<PAGE>

APPENDIX

Description of Bond Ratings*

Moody's Investors Service

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations or protective elements
may be of greater amplitude or there may be other elements present which make
long-term risks appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements: their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Avondale SAI B-18

<PAGE>

Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

Standard & Poor's Corporation

AAA: Bonds rated AAA are highest grade debt obligations. This rating
indicates an extremely strong capacity to pay principal and interest.

AA: Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.

A: Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.

BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.

BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.

*Ratings are generally given to securities at the time of issuance. While the
rating agencies may from time to time revise such ratings, they undertake no
obligation to do so.

Avondale SAI B-19

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
August 1, 1996

Revised March 6, 1997

HODGES FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
2905 Maple Avenue
Dallas, Texas 75201
(800) 388-8512

This Statement of Additional Information is not a prospectus and it
should be read in conjunction with the prospectus of the Hodges Fund (the
"Fund"). A copy of the prospectus of the Fund dated August 1, 1996 is available
by calling (800) 388-8512 or (800) 385-7003.

<TABLE>

<CAPTION>
TABLE OF CONTENTS
<S> <C>
The Trust.......................................................................................................B-2
Investment Objective and Policies...............................................................................B-2
Investment Restrictions.........................................................................................B-7
Distributions and Tax Information...............................................................................B-9
Trustees and Executive Officers................................................................................B-11
The Fund's Investment Advisor..................................................................................B-13
The Fund's Administrator.......................................................................................B-14
The Fund's Distributor.........................................................................................B-15
Execution of Portfolio Transactions............................................................................B-15
Additional Purchase and Redemption Information.................................................................B-17
Determination of Share Price...................................................................................B-18
Performance Information........................................................................................B-18
General Information............................................................................................B-19
Financial Statements...........................................................................................B-21
</TABLE>

Hodges SAI B-1

<PAGE>

THE TRUST

INVESTMENT OBJECTIVE AND POLICIES

The Hodges Fund is a mutual fund with the investment objective of
seeking capital appreciation. The following discussion supplements the
discussion of the Fund's investment objective and policies as set forth in the
Prospectus. There can be no assurance the objective of the Fund will be
attained.

Repurchase Agreements

The Fund may enter into repurchase agreements as discussed in the
Prospectus. Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price. The repurchase price may
be higher than the purchase price, the difference being income to the Fund, or
the purchase and repurchase prices may be the same, with interest at a stated
rate due to the Fund together with the repurchase price on repurchase. In either
case, the income to the Fund is unrelated to the interest rate on the U.S.
Government security itself. Such repurchase agreements will be made only with
banks with assets of $500 million or more that are insured by the Federal
Deposit Insurance Corporation or with Government securities dealers recognized
by the Federal Reserve Board and registered as broker-dealers with the
Securities and Exchange Commission ("SEC") or exempt from such registration. The
Fund will generally enter into repurchase agreements of short durations, from
overnight to one week, although the underlying securities generally have longer
maturities. The Fund may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 15% of the value of the Fund's
total assets would be invested in illiquid securities including such repurchase
agreements.

For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from the Fund to the seller of the
U.S. Government security subject to the repurchase agreement. It is not clear
whether a court would consider the U.S. Government security acquired by the Fund
subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, the Fund may encounter delays and incur costs before being able to
sell the security. Delays may involve loss of interest or a decline in price of
the U.S. Government security. If a court characterizes the transaction as a loan
and the Fund has not perfected a security interest in the U.S. Government
security, the Fund may be required to return the security to the seller's estate
and be treated as an unsecured creditor of the seller. As an unsecured creditor,

Hodges SAI B-2

<PAGE>

the Fund would be at the risk of losing some or all of the principal and income
involved in the transaction. As with any unsecured debt instrument purchased for
the Fund, the investment advisor seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligor, in this
case the seller of the U.S. Government security.

When-Issued Securities

U. S. Government Securities

U.S. Government securities in which the Fund may invest include direct
obligations issued by the U.S. Treasury, such as Treasury bills, certificates of
indebtedness, notes and bonds. U.S.

Hodges SAI B-3

<PAGE>

Government agencies and instrumentalities that issue or guarantee securities
include, but are not limited to, the Federal Housing Administration, Federal
National Mortgage Association, Federal Home Loan Banks, Government National
Mortgage Association, International Bank for Reconstruction and Development and
Student Loan Marketing Association.

All Treasury securities are backed by the full faith and credit of the
United States. Obligations of U.S. Government agencies and instrumentalities may
or may not be supported by the full faith and credit of the United States. Some,
such as the Federal Home Loan Banks, are backed by the right of the agency or
instrumentality to borrow from the Treasury. Others, such as securities issued
by the Federal National Mortgage Association, are supported only by the credit
of the instrumentality and not by the Treasury. If the securities are not backed
by the full faith and credit of the United States, the owner of the securities
must look principally to the agency issuing the obligation for repayment and may
not be able to assert a claim against United States in the event that the agency
or instrumentality does not meet its commitment.

Among the U.S. Government securities that may be purchased by the Fund
are "mortgage-backed securities" of the Government National Mortgage Association
("Ginnie Mae"), the Federal Home Loan Mortgage Association ("Freddie Mac") and
the Federal National Mortgage Association ("Fannie Mae"). These mortgage-backed
securities include "pass-through" securities and "participation certificates,"
both of which represent pools of mortgages that are assembled, with interests
sold in the pool. Payments of principal (including prepayments) and interest by
individual mortgagors are "passed through" to the holders of interests in the
pool; thus each payment to holders may contain varying amounts of principal and
interest. Prepayments of the mortgages underlying these securities may result in
the Fund's inability to reinvest the principal at comparable yields.
Mortgage-backed securities also include "collateralized mortgage obligations,"
which are similar to conventional bonds in that they have fixed maturities and
interest rates and are secured by groups of individual mortgages. Timely payment
of principal and interest on Ginnie Mae pass-throughs is guaranteed by the full
faith and credit of the United States. Freddie Mac and Fannie Mae are both
instrumentalities of the U.S. Government, but their obligations are not backed
by the full faith and credit of the United States.

Securities Lending

Although the Fund's objective is capital appreciation, the Fund
reserves the right to lend its portfolio securities in order to generate
additional income. Securities may be loaned to broker-dealers, major banks or
other recognized domestic institutional borrowers of securities who are not
affiliated with the Advisor or Distributor and whose creditworthiness is
acceptable to the Advisor. The borrower must deliver to the Fund cash or cash
equivalent collateral, or provide to the Fund an irrevocable letter of credit
equal in value to at least 100% of the value of the loaned securities at all
times during the loan. During the time the portfolio securities are on loan, the
borrower pays the Fund any interest paid on such securities. The Fund may invest
the cash collateral and earn additional income, or it may receive an agreed-upon
amount of interest income if the borrower has delivered equivalent collateral or
a letter of credit. The Fund may pay reasonable administrative and custodial

Hodges SAI B-4

<PAGE>

fees in connection with a loan and may pay a negotiated portion of the income
earned on the cash to the borrower or placing broker. Loans are subject to
termination at the option of the Fund or the borrower at any time. It is not
anticipated that more than 5% of the value of the Fund's portfolio securities
will be subject to lending.

Options on Securities

The Fund may write (sell) covered call options to a limited extent on
its portfolio securities ("covered options") in an attempt to enhance gain.

When the Fund writes a covered call option, it gives the purchaser of
the option the right, upon exercise of the option, to buy the underlying
security at the price specified in the option (the "exercise price") at any time
during the option period, generally ranging up to nine months. If the option
expires unexercised, the Fund will realize income to the extent of the amount
received for the option (the "premium"). If the call option is exercised, a
decision over which the Fund has no control, the Fund must sell the underlying
security to the option holder at the exercise price. By writing a covered
option, the Fund forgoes, in exchange for the premium less the commission ("net
premium") the opportunity to profit during the option period from an increase in
the market value of the underlying security above the exercise price.

The Fund may terminate its obligation as writer of a call option by
purchasing an option with the same exercise price and expiration date as the
option previously written. This transaction is called a "closing purchase
transaction."

Closing sale transactions enable the Fund immediately to realize gains
or minimize losses on its options positions. There is no assurance that a liquid
secondary market on an options exchange will exist for any particular option, or
at any particular time, and for some options no secondary market may exist. In
addition, stock index prices may be distorted by interruptions in the trading of
securities of certain companies or of issuers in certain industries, which could
disrupt trading in option positions on such indices and preclude the Fund from
closing out its options positions. If the Fund is unable to effect a closing
purchase transaction with respect to options it has written, it will not be able
to terminate its obligations or minimize its losses under such options prior to
their expiration. If the Fund is unable to effect a closing sale transaction
with respect to options that it has purchased, it would have to exercise the
option in order to realize any profit.

The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements may take place in the underlying markets that cannot be
reflected in the options markets. The purchase of options is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions.

Hodges SAI B-5

<PAGE>

Options on Securities Indices

The Fund may write (sell) covered call options on securities indices in
an attempt to increase gain. A securities index option written by the Fund would
obligate it, upon exercise of the options, to pay a cash settlement, rather than
to deliver actual securities, to the option holder. Although the Fund will not
ordinarily own all of the securities comprising the stock indices on which it
writes call options, such options will usually be written on those indices which
correspond most closely to the composition of the Fund's portfolio. As with the
writing of covered call options on securities, the Fund will realize a gain in
the amount of the premium received upon writing an option if the value of the
underlying index increases above the exercise price and the option is exercised,
the Fund will be required to pay a cash settlement that may exceed the amount of
the premium received by the Fund. The Fund may purchase call options in order to
terminate its obligations under call options it has written.

The Fund may purchase call and put options on securities indices for
the purpose of hedging against the risk of unfavorable price movements adversely
affecting the value of the Fund's securities or securities the Fund intends to
buy. Securities index options will not be purchased for speculative purposes.
Unlike an option on securities, which gives the holder the right to purchase or
sell specified securities at a specified price, an option on a securities index
gives the holder the right, upon the exercise of the option, to receive a cash
"exercise settlement amount" equal to (i) the difference between the exercise
price of the option and the value of the underlying securities index on the
exercise date multiplied by (ii) a fixed "index multiplier."

A securities index fluctuates with changes in the market value of the
securities included in the index. For example, some securities index options are
based on a broad market index such as the Standard & Poor's 500 or the Value
Line Composite Index, or a narrower market index such as the Standard & Poor's
100. Indices may also be based on industry or market segments.

The Fund may purchase put options in order to hedge against an
anticipated decline in stock market prices that might adversely affect the value
of the Fund's portfolio securities. If the Fund purchases a put option on a
stock index, the amount of payment it receives on exercising the option depends
on the extent of any decline in the level of the stock index below the exercise
price. Such payments would tend to offset a decline in the value of the Fund's
portfolio securities. If, however, the level of the stock index increases and
remains above the exercise price while the put option is outstanding, the Fund
will not be able to profitably exercise the option and will lose the amount of
the premium and any transaction costs. Such loss may be partially offset by an
increase in the value of the Fund's portfolio securities. The Fund may write put
options on stock indices in order to close out positions in stock index put
options which it has purchased.

The Fund may purchase call options on stock indices in order to
participate in an anticipated increase in stock market prices or to lock in a
favorable price on securities that it intends to buy in the future. If the Fund
purchases a call option on a stock index, the amount of the payment it receives

Hodges SAI B-6

<PAGE>

upon exercising the option depends on the extent of any increase in the level of
the stock index above the exercise price. Such payments would in effect allow
the Fund to benefit from stock market appreciation even though it may not have
had sufficient cash to purchase the underlying stocks. Such payments may also
offset increases in the price of stocks that the Fund intends to purchase. If,
however, the level of the stock index declines and remains below the exercise
price while the call option is outstanding, the Fund will not be able to
exercise the option profitably and will lose the amount of the premium and
transaction costs. Such loss may be partially offset by a reduction in the price
the Fund pays to buy additional securities for its portfolio. The Fund may write
call options on stock indices in order to close out positions in stock index
call options which it has purchased.

The effectiveness of hedging through the purchase of options on
securities indices will depend upon the extent to which price movements in the
portion of the securities portfolio being hedged correlate with price movements
in the selected stock index. Perfect correlation is not possible because the
securities held or to be acquired by the Fund will not exactly match the
composition of the stock indices on which the options are available. In
addition, the purchase of stock index options involves the risk that the premium
and transaction costs paid by the Fund in purchasing an option will be lost as a
result of unanticipated movements in prices of the securities comprising the
stock index on which the option is based.

INVESTMENT RESTRICTIONS

1. Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objectives and policies, (b)
through the lending of its portfolio securities as described above and in its
Prospectus, or (c) to the extent the entry into a repurchase agreement is deemed
to be a loan.

2. (a) Borrow money, except temporarily for extraordinary or emergency
purposes from a bank and then not in excess of 10% of its total assets (at the
lower of cost or fair market value). Any such borrowing will be made only if
immediately thereafter there is an asset coverage of at least 300% of all
borrowings, and no additional investments may be made while any such borrowings
are in excess of 5% of total assets.

(b) Mortgage, pledge or hypothecate any of its assets except in connection
with any such borrowings.

3. Purchase securities on margin, participate on a joint or joint and
several basis in any securities trading account, or underwrite securities. (Does
not preclude the Fund from obtaining

Hodges SAI B-7

<PAGE>

such short-term credit as may be necessary for the clearance of purchases
and sales of its portfolio securities.)

4. Buy or sell interests in oil, gas or mineral exploration or
development programs or related leases, or real estate. (Does not preclude
investments in marketable securities of issuers engaged in such activities.)

5. Purchase or sell commodities or commodity contracts (As a matter of
operating policy, the Board of Trustees may authorize the Fund to engage in
certain activities regarding futures contracts for bona fide hedging purposes;
any such authorization will be accompanied by appropriate notification to
shareholders).

6. Invest more than 25% of the market value of its assets in the securities
of companies engaged in any one industry. (Does not apply to investment in the
securities of the U.S. Government, its agencies or instrumentalities.)

7. Issue senior securities, as defined in the 1940 Act, except that
this restriction shall not be deemed to prohibit the Fund from (a) making any
permitted borrowings, mortgages or pledges, or (b) entering into options,
futures or repurchase transactions.

8. Invest in any issuer for purposes of exercising control or management.

The Fund observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote. The Fund may not:

9. Invest in securities of other investment companies which would
result in the Fund owning more than 3% of the outstanding voting securities of
any one such investment company, the Fund owning securities of another
investment company having an aggregate value in excess of 5% of the value of the
Fund's total assets, or the Fund owning securities of investment companies in
the aggregate which would exceed 10% of the value of the Fund's total assets.

10. Invest, in the aggregate, more than 15% of its total assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable and repurchase agreements with more than seven days
to maturity.

Hodges SAI B-8

<PAGE>

DISTRIBUTIONS AND TAX INFORMATION

Distributions

Dividends from net investment income and distributions from net profits
from the sale of securities, if any, are generally made annually by the Fund
after the conclusion of its fiscal year (March 31). Also, the Fund expects to
distribute any undistributed net investment income on or about December 31 of
each year. Any net capital gains realized through the twelve month period ended
October 31 of each year will also be distributed by December 31 of each year.

Tax Information

The Fund is treated as a separate entity for federal income tax
purposes. The Fund intends to continue to qualify and elect to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986 (the "Code"). In order to qualify, the Fund must comply with all applicable
requirements regarding the source of its income, diversification of its assets
and timing of its distributions. The Fund's policy is to distribute to its
shareholders all of its investment company taxable income and any net realized
long-term capital gains for each fiscal year in a manner that complies with the
distribution requirements of the Code, so that the Fund will not be subject to
any federal income tax or excise taxes based on net income. The Fund will
generally be subject to federal income tax on its undistributed net investment
income and capital gains. To avoid federal excise taxes based on its net income,
the Fund must distribute (or be deemed to have distributed) by December 31 of
each calendar year (i) at least 98% of its ordinary income for such year, (ii)
at least 98% of the excess of its realized capital gains over its realized
capital losses for the 12-month period ending on October 31 during such year and
(iii) any amounts from the prior calendar year that were not distributed.

Net investment income consists of interest and dividend income and
foreign currency gain, less expenses. Net realized capital gains for a fiscal
period are computed by taking into account any capital loss carryforward of the
Fund.

Hodges SAI B-9

<PAGE>

for corporate shareholders. However, the portion of the Fund's gross income
attributable to qualifying dividends is largely dependent on the Fund's
investment activities for a particular year and therefore cannot be predicted
with any certainty. The deduction may be reduced or eliminated if the Fund
shares held by a corporate investor are treated as debt-financed or are held for
less than 46 days.

Distributions of the excess of net long-term capital gains over net
short-term capital losses are taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholders have held their shares.
Capital gains distributions are not eligible for the dividends-received
deduction referred to in the previous paragraph. Distributions of any net
investment income and net realized capital gains will be taxable as described
above, whether received in shares or in cash. Shareholders electing to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are generally taxable
when received. However, distributions declared in October, November or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31. Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.

The Fund may write, purchase or sell certain options and futures
contracts. Such transactions are subject to special tax rules that may affect
the amount, timing and character of distributions to shareholders. Unless the
Fund is eligible to make and makes a special election, such contracts that are
"Section 1256 contracts" will be "marked-to-market" for federal income tax
purposes at the end of each taxable year, i.e., each contract will be treated as
sold for its fair market value on the last day of the taxable year. In general,
unless the special election referred to in the previous sentence is made, gain
or loss from transactions in such contracts will be 60% long-term and 40%
short-term capital gain or loss. Section 1092 of the Code, which applies to
certain "straddles", may affect the taxation of the Fund's transactions in
options and futures contracts. Under Section 1092 of the Code, the Fund may be
required to postpone recognition for tax purposes of losses incurred in certain
closing transactions.

One of the requirements for qualification as a regulated investment
company is that less than 30% of the Fund's gross income must be derived from
gains from the sale or other disposition of securities held for less than three
months. Accordingly, the Fund may be restricted in effecting closing
transactions within three months after entering into an option contract.

A redemption of Fund shares may result in recognition of a taxable gain
or loss. Any loss realized upon a redemption of shares within six months from
the date of their purchase will be treated as a long-term capital loss to the
extent of any amounts treated as distributions of long-term capital gains during
such six-month period. Any loss realized upon a redemption of Fund shares may be
disallowed under certain wash sale rules to the extent shares of the Fund are
purchased (through reinvestment of distributions or otherwise) within 30 days
before or after the redemption.

Hodges SAI B-10

<PAGE>

Under the Code, the Fund will be required to report to the Internal
Revenue Service all distributions of taxable income and capital gains as well as
gross proceeds from the redemption or exchange of Fund shares, except in the
case of exempt shareholders, which includes most corporations. Pursuant to the
backup withholding provisions of the Code, distributions of any taxable income
and capital gains and proceeds from the redemption of Fund shares may be subject
to withholding of federal income tax at the rate of 31 percent in the case of
non-exempt shareholders who fail to furnish the Fund with their taxpayer
identification numbers and with required certifications regarding their status
under the Code. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld. Corporate and
other exempt shareholders should provide the Fund with their taxpayer
identification numbers or certify their exempt status in order to avoid possible
erroneous application of backup withholding. The Fund reserves the right to
refuse to open an account for any person failing to provide a certified taxpayer
identification number.

The Fund will not be subject to tax in The Commonwealth of
Massachusetts as long as it qualifies as a regulated investment company for
federal income tax purposes. Distributions and the transactions referred to in
the preceding paragraphs may be subject to state and local income taxes, and the
tax treatment thereof may differ from the federal income tax treatment.
Moreover, the above discussion is not intended to be a complete discussion of
all applicable tax consequences of an investment in the Fund. Shareholders are
advised to consult with their own tax advisers concerning the application of
federal, state and local taxes to an investment in the Fund.

The foregoing discussion of the Code relates solely to the application of
that law to U.S. citizens or residents and U.S. domestic corporations,
partnerships, trusts and estates. Each shareholder who is not a U.S. person
should consider the U.S. and foreign tax consequences of ownership of shares of
the Fund, including the possibility that such a shareholder may be subject to a
U.S. withholding tax at a rate of 30 percent (or at a lower rate under an
applicable income tax treaty) on amounts constituting ordinary income.

This discussion and the related discussion in the prospectus have been
prepared by Fund management, and counsel to the Fund has expressed no opinion in
respect thereof.

TRUSTEES AND EXECUTIVE OFFICERS

Hodges SAI B-11

<PAGE>

Steven J. Paggioli,* 46 President and Trustee

479 West 22nd Street, New York, New York 10011. Executive Vice President, The
Wadsworth Group (consultants) since 1986; Executive Vice President of Investment
Company Administration Corporation ("ICAC"); mutual fund administrator and the
Trust's administrator),and Vice President of First Fund Distributors, Inc.
("FFD"); registered broker-dealer and the Fund's Distributor) since 1990.

Dorothy A. Berry, 52 Trustee

Wallace L. Cook, 56 Trustee

One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice
President, Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.

Carl A. Froebel, 57 Trustee

333 Technology Dr., Malvern, PA. Managing Director, Premier Solutions, Ltd.
Formerly President and Founder, National Investor Data Services, Inc.
(investment related computer software).

Rowley W.P. Redington, 51 Trustee

Eric M. Banhazl*, 39 Treasurer

2025 E. Financial Way, Suite 101, Glendora, California 91741. Senior Vice
President, The Wadsworth Group, Senior Vice President of ICAC and Vice President
of FFD since 1990.

Robin Berger*, 40 Secretary

479 West 22nd St., New York, New York 10011. Vice President, The Wadsworth
Group since June, 1993; formerly Regulatory and Compliance Coordinator,
Equitable Capital Management, Inc. (1991- 93).

Hodges SAI B-12

<PAGE>

Robert H. Wadsworth*, 57 Vice President

4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018. President of
The Wadsworth Group since 1982, President of ICAC and FFD since 1990.

*Indicates an "interested person" of the Trust as defined in the 1940 Act.

Name of Trustee Total Annual Compensation

Dorothy A. Berry $22,000
Wallace L. Cook $17,500
Carl A. Froebel $17,500
Rowley W.P. Redington $17,500

During the fiscal year ended March 31, 1996, trustees' fees and
expenses in the amount of $3,209 were allocated to the Fund. As of the date of
this Statement of Additional Information, the Trustees and Officers of the Trust
as a group did not own more than 1% of the outstanding shares of the Fund.

THE FUND'S INVESTMENT ADVISOR

As stated in the Prospectus, investment advisory services are provided
to the Fund by Hodges Capital Management, Inc., the Advisor, pursuant to an
Investment Advisory Agreement. The Investment Advisory Agreement continues in
effect from year to year so long as such continuation is approved at least
annually by (1) the Board of Trustees of the Trust or the vote of a majority of
the outstanding shares of the Fund, and (2) a majority of the Trustees who are
not interested persons of any party to the Agreement, in each case cast in
person at a meeting called for the purpose of voting on such approval. The
Agreement may be terminated at any time, without penalty, by either the Fund or
the Advisor upon sixty days' written notice and is automatically terminated in
the event of its assignment as defined in the 1940 Act. For the fiscal year
ended March 31, 1994, the Advisor voluntarily waived $43,804 of its advisory fee
of $66,915. The Advisor received advisory fees totalling $73,966 and $94,361 for
the fiscal years ended March 31, 1995 and March 31, 1996, respectively.

Hodges SAI B-13

<PAGE>

The use of the name "Hodges" by the Fund is pursuant to a license
granted by the Advisor, and in the event the Investment Advisory Agreement with
the Fund is terminated, the Advisor has reserved the right to require the Fund
to remove any references to the name "Hodges."

THE FUND'S ADMINISTRATOR

The Fund has an Administration Agreement with Investment Company
Administration Corporation (the "Administrator"), a corporation owned and
controlled by Messrs. Banhazl, Paggioli and Wadsworth with offices at 4455 E.
Camelback Rd., Ste. 261-E, Phoenix, AZ 85018. The Administration Agreement
provides that the Administrator will prepare and coordinate reports and other
materials supplied to the Trustees; prepare and/or supervise the preparation and
filing of all securities filings, periodic financial reports, prospectuses,
statements of additional information, marketing materials, tax returns,
shareholder reports and other regulatory reports or filings required of the
Fund; prepare all required filings necessary to maintain the Fund's
qualification and/or registration to sell shares in all states where the Fund
currently does, or intends to do business; coordinate the preparation, printing
and mailing of all materials (e.g., Annual Reports) required to be sent to
shareholders; coordinate the preparation and payment of Fund related expenses;
monitor and oversee the activities of the Fund's servicing agents (i.e.,
transfer agent, custodian, fund accountants, etc.); review and adjust as
necessary the Fund's daily expense accruals; and perform such additional
services as may be agreed upon by the Fund and the Administrator. For its
services, ICAC receives a monthly fee at the following annual rate:

Average Net Assets Fee or Fee Rate
- ------------------ ---------------
Under $15 million $30,000
$15 to $15 million 0.20%
$50 to $100 million 0.15%
$100 to $150 million 0.10%
Over $150 million 0.05%

During the fiscal years ended March 31, 1996, March 31, 1995 and March 31, 1994,
ICAC and its predecessor received fees of $30,476, $30,000 and $30,000
respectively.

Hodges SAI B-14

<PAGE>

THE FUND'S DISTRIBUTOR

First Dallas Securities, (the "Distributor"), an affiliate of the
Advisor, acts as the Fund's principal underwriter in a continuous public
offering of the Fund's shares. The Distribution Agreement between the Fund and
the Distributor continues in effect from year to year if approved at least
annually by (i) the Board of Trustees or the vote of a majority of the
outstanding shares of the Fund (as defined in the 1940 Act) and (ii) a majority
of the Trustees who are not interested persons of any such party, in each case
cast in person at a meeting called for the purpose of voting on such approval.
The Distribution Agreement may be terminated without penalty by the parties
thereto upon sixty days' written notice, and is automatically terminated in the
event of its assignment as defined in the 1940 Act. In connection with the
distribution of the Fund's shares, the Distributor received as commissions
$16,914, $10,969 and $7,021 during the fiscal years ended March 31, 1994, March
31, 1995 and March 31, 1996, respectively.

The Fund has adopted a Distribution Plan in accordance with Rule 12b-1
under the 1940 Act. The Plan provides that the Fund will pay a fee to the
Distributor at an annual rate of up to 0.50% 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 activities. During
the year ended March 31, 1996, the Fund paid fees of $55,506 to the Distributor,
of which $44,405 was for selling compensation, and $1,033 was for expenses
related to advertising and sales material and $10,068 related to Distributor
printing expenses.

EXECUTION OF PORTFOLIO TRANSACTIONS

Hodges SAI B-15

<PAGE>

determinations, such as the size of the order, the difficulty of execution, the
operational facilities of the firm involved, the firm's risk in positioning a
block of securities, and other factors. In those instances where it is
reasonably determined that more than one broker-dealer can offer the most
favorable price and execution available, consideration may be given to those
broker-dealers which furnish or supply research and statistical information to
the Manager that it may lawfully and appropriately use in its investment
advisory capacities, as well as provide other services in addition to execution
services. The Manager considers such information, which is in addition to and
not in lieu of the services required to be performed by it under its Agreement
with the Fund, to be useful in varying degrees, but of indeterminable value.
Portfolio transactions may be placed with broker-dealers who sell shares of the
Fund subject to rules adopted by the National Association of Securities Dealers,
Inc.

Hodges SAI B-16

<PAGE>

During the Fund's fiscal years ended March 31, 1994, 1995 and 1996, the
Distributor received $25,603, $12,756 and $20,198 respectively in brokerage
commissions with respect to Fund portfolio transactions, which constituted all
of the Fund's brokerage commissions during those periods.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Hodges SAI B-17

<PAGE>

Check-A-Matic

DETERMINATION OF SHARE PRICE

PERFORMANCE INFORMATION

Hodges SAI B-18

<PAGE>

average annual compounded rate of return over the most recent four calendar
quarters and the period from the Fund's inception of operations. The Fund may
also advertise aggregate and average total return information over different
periods of time.

P(1+T)n = ERV

Where: P = a hypothetical initial purchase order of $1,000 from which the
maximum sales load is deducted

T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase at the
end of the period

The Fund's average annual total returns for the one year period and for
the period from inception on October 9, 1992 through December 31, 1996 were
24.31% and 15.40%, respectively.

GENERAL INFORMATION

Star Bank N.A., 425 Walnut St., Cincinnati, OH 45202 acts as Custodian of
the securities and other assets of the Fund. American Data Services, Inc., 24
West Carver St., Huntington, NY 11743

Hodges SAI B-19

<PAGE>

is the Fund's transfer and shareholder service agent. The Custodian and Transfer
Agent do not participate in decisions relating to the purchase and sale of
securities by the Fund.

Tait, Weller & Baker, Two Penn Center Plaza, Philadelphia, PA 19102,
are the independent auditors for the Fund.

The following persons are beneficial owners of more than 5% of the
Fund's outstanding voting securities as of February 21, 1997. An asterisk (*)
denotes an account affiliated with the Fund's investment advisor, officers or
trustees:

*Don W. Hodges, 2905 Maple Ave., Dallas, TX 75201; 8.02%;

Four K Investments, L.P., Dallas, TX 75244; 6.93%.

Heller, Ehrman, White & McAuliffe, 333 Bush Street, San Francisco,
California 94104, are legal counsel to the Fund.

Hodges SAI B-20

<PAGE>

FINANCIAL STATEMENTS

Hodges SAI B-21

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
August 1, 1996

Revised March 6, 1997

THE OSTERWEIS FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
One Maritime Plaza, Suite 1201
San Francisco, CA 94111
(415) 434-4441

This Statement of Additional Information is not a prospectus and it
should be read in conjunction with the prospectus of the Osterweis Fund (the
"Fund"). A copy of the prospectus of the Fund dated August 1, 1996 is available
by calling the number listed above or (800-385-7003).

<TABLE>

<CAPTION>
TABLE OF CONTENTS
<S> <C>
The Trust.......................................................................................................B-2
Investment Objective and Policies...............................................................................B-2
Investment Restrictions.........................................................................................B-6
Distributions and Tax Information...............................................................................B-7
Trustees and Executive Officers................................................................................B-10
The Fund's Investment Advisor..................................................................................B-12
The Fund's Administrator.......................................................................................B-13
The Fund's Distributor.........................................................................................B-13
Execution of Portfolio Transactions............................................................................B-14
Additional Purchase and Redemption Information.................................................................B-15
Determination of Share Price...................................................................................B-16
Performance Information........................................................................................B-17
General Information............................................................................................B-18
Financial Statements...........................................................................................B-19
Appendix.......................................................................................................B-20
</TABLE>

Osterweis SAI B-1

<PAGE>

THE TRUST

INVESTMENT OBJECTIVE AND POLICIES

The Osterweis Fund is a mutual fund with the investment objective of
attaining long term total returns. The following discussion supplements the
discussion of the Fund's investment objective and policies as set forth in the
Prospectus. There can be no assurance the objective of the Fund will be
attained.

Repurchase Agreements

The Fund may enter into repurchase agreements as discussed in the
Prospectus. Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price. The repurchase price may
be higher than the purchase price, the difference being income to the Fund, or
the purchase and repurchase prices may be the same, with interest at a stated
rate due to the Fund together with the repurchase price on repurchase. In either
case, the income to the Fund is unrelated to the interest rate on the U.S.
Government security itself. Such repurchase agreements will be made only with
banks with assets of $500 million or more that are insured by the Federal
Deposit Insurance Corporation or with Government securities dealers recognized
by the Federal Reserve Board and registered as broker-dealers with the
Securities and Exchange Commission ("SEC") or exempt from such registration. The
Fund will generally enter into repurchase agreements of short durations, from
overnight to one week, although the underlying securities generally have longer
maturities. The Fund may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 15% of the value of the Fund's
total assets would be invested in illiquid securities including such repurchase
agreements.

Osterweis SAI B-2

<PAGE>

When-Issued Securities

Foreign Securities

Among the means through which the Fund may invest in foreign securities is
the purchase of American Depository Receipts ("ADR's") or European Depository
Receipts ("EDR's"). Generally,

Osterweis SAI B-3

<PAGE>

ADR's, in registered form, are denominated in U.S. dollars and are designed for
use in the U.S. securities markets, while EDR's, in bearer form, may be
denominated in other currencies and are designed for use in European securities
markets. ADR's are receipts typically issued by a U.S. bank or trust company
evidencing ownership of the underlying securities. EDR's are European receipts
evidencing a similar arrangement. For purposes of the Funds' investment
policies, ADR's and EDR's are deemed to have the same classification as the
underlying securities they represent. Thus an ADR or EDR representing ownership
of common stock will be treated as common stock.

Debt Securities and Ratings

Ratings of debt securities represent the rating agencies' opinions
regarding their quality, are not a guarantee of quality and may be reduced after
the Fund has acquired the security. If a security's rating is reduced while it
is held by the Fund, the Advisor will consider whether the Fund should continue
to hold the security but is not required to dispose of it. Credit ratings
attempt to evaluate the safety of principal and interest payments and do not
evaluate the risks of fluctuations in market value. Also, rating agencies may
fail to make timely changes in credit ratings in response to subsequent events,
so that an issuer's current financial conditions may be better or worse than the
rating indicates.

The Fund reserves the right to invest up to 30% of its assets in
securities rated lower than BBB by S & P or lower than Baa by Moody's but rated
at least B by S & P or Moody's (or, in either case, if unrated, deemed by the
Advisor to be of comparable quality). Lower-rated securities generally offer a
higher current yield than that available for higher grade issues. However,
lower-rated securities involve higher risks, in that they are especially subject
to adverse changes in general economic conditions and in the industries in which
the issuers are engaged, to changes in the financial condition of the issuers
and to price fluctuations in response to changes in interest rates. During
periods of economic downturn or rising interest rates, highly leveraged issuers
may experience financial stress which could adversely affect their ability to
make payments of interest and principal and increase the possibility of default.
In addition, the market for lower-rated debt securities has expanded rapidly in
recent years, and its growth paralleled a long economic expansion. At times in
recent years, the prices of many lower-rated debt securities declined
substantially, reflecting an expectation that many issuers of such securities
might experience financial difficulties. As a result, the yields on lower-rated
debt securities rose dramatically, but such higher yields did not reflect the
value of the income stream that holders of such securities expected, but rather,
the risk that holders of such securities could lose a substantial portion of
their value as a result of the issuers' financial restructuring or default.
There can be no assurance that such declines will not recur. The market for
lower-rated debt issues generally is thinner and less active than that for
higher quality securities, which may limit the Fund's ability to sell such
securities at fair value in response to changes in the economy or financial
markets. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may also decrease the values and liquidity of lower-rated
securities, especially in a thinly traded market.

Osterweis SAI B-4

<PAGE>

Lower-rated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption, a Fund may have
to replace the security with a lower-yielding security, resulting in a decreased
return for investors. Also, as the principal value of bonds moves inversely with
movements in interest rates, in the event of rising interest rates the value of
the securities held by a Fund may decline proportionately more than a Fund
consisting of higher-rated securities. If a Fund experiences unexpected net
redemptions, it may be forced to sell its higher-rated bonds, resulting in a
decline in the overall credit quality of the securities held by the Fund and
increasing the exposure of the Fund to the risks of lower-rated securities.
Investments in zero-coupon bonds may be more speculative and subject to greater
fluctuations in value due to changes in interest rates than bonds that pay
interest currently.

Options and Futures Transactions. As indicated in the prospectus, to the extent
consistent with its investment objectives and policies, the Fund may purchase
and write call and put options on securities, securities indexes and on foreign
currencies and enter into futures contracts and use options on futures
contracts, to the extent of up to 5% of its assets.

Transactions in options on securities and on indexes involve certain
risks. For example, there are significant differences between the securities and
options markets that could result in an imperfect correlation between these
markets, causing a given transaction not to achieve its objectives. A decision
as to whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.

There can be no assurance that a liquid market will exist when the Fund
seeks to close out an option position. If the Fund were unable to close out an
option that it had purchased on a security, it would have to exercise the option
in order to realize any profit or the option may expire worthless. If the Fund
were unable to close out a covered call option that it had written on a
security, it would not be able to sell the underlying security unless the option
expired without exercise. As the writer of a covered call option, the Fund
forgoes, during the option's life, the opportunity to profit from increases in
the market value of the security covering the call option above the sum of the
premium and the exercise price of the call.

If trading were suspended in an option purchased by the Fund, the Fund
would not be able to close out the option. If restrictions on exercise were
imposed, the Fund might be unable to exercise an option it has purchased. Except
to the extent that a call option on an index written by the Fund is covered by
an option on the same index purchased by the Fund, movements in the index may
result in a loss to the Fund; such losses may be mitigated or exacerbated by
changes in the value of the Fund's securities during the period the option was
outstanding.

Use of futures contracts and options thereon also involves certain
risks. The variable degree of correlation between price movements of futures
contracts and price movements in the related portfolio positions of the Fund
creates the possibility that losses on the hedging instrument may be greater
than gains in the value of the Fund's position. Also, futures and options
markets may not be

Osterweis SAI B-5

<PAGE>

liquid in all circumstances and certain over the counter options may have no
markets. As a result, in certain markets, the Fund might not be able to close
out a transaction at all or without incurring losses. Although the use of
options and futures transactions for hedging should minimize the risk of loss
due to a decline in the value of the hedged position, at the same time they tend
to limit any potential gain which might result from an increase in the value of
such position. If losses were to result from the use of such transactions, they
could reduce net asset value and possibly income. The Fund may use these
techniques to hedge against changes in interest rates or securities prices or as
part of its overall investment strategy. The Fund will maintain segregated
accounts consisting of liquid assets, (or, as permitted by applicable
regulation, enter into certain offsetting positions) to cover its obligations
under options and futures contracts to avoid leveraging of the Fund.

INVESTMENT RESTRICTIONS

1. Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objectives and policies, (b) to the
extent the entry into a repurchase agreement is deemed to be a loan.

2. (a) Borrow money, except as stated in the Prospectus and this
Statement of Additional Information. Any such borrowing will be made only if
immediately thereafter there is an asset coverage of at least 300% of all
borrowings.

(b) Mortgage, pledge or hypothecate any of its assets except in connection
with any such borrowings.

3. Purchase securities on margin, participate on a joint or joint and
several basis in any securities trading account, or underwrite securities. (Does
not preclude the Fund from obtaining such short-term credit as may be necessary
for the clearance of purchases and sales of its portfolio securities).

4. Purchase or sell real estate, commodities or commodity contracts
(other than futures transactions for the purposes and under the conditions
described in the prospectus and in this Statement of Additional Information).

5. Invest more than 25% of the market value of its assets in the securities
of companies engaged in any one industry. (Does not apply to investment in the
securities of the U.S. Government, its agencies or instrumentalities.)

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6. Issue senior securities, as defined in the 1940 Act, except that
this restriction shall not be deemed to prohibit the Fund from (a) making any
permitted borrowings, mortgages or pledges, or (b) entering into options,
futures, forward or repurchase transactions.

7. Purchase the securities of any issuer, if as a result more than 5%
of the total assets of the Fund would be invested in the securities of that
issuer, other than obligations of the U.S. Government, its agencies or
instrumentalities, provided that up to 25% of the value of the Fund's assets may
be invested without regard to this limitation.

The Fund observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote. The Fund may not:

8. Purchase any security if as a result the Fund would then hold more
than 10% of any class of securities of an issuer (taking all common stock issues
of an issuer as a single class, all preferred stock issues as a single class,
and all debt issues as a single class) or more than 10% of the outstanding
voting securities of an issuer.

9. Invest in any issuer for purposes of exercising control or management.

10. Invest in securities of other investment companies which would
result in the Fund owning more than 3% of the outstanding voting securities of
any one such investment company, the Fund owning securities of another
investment company having an aggregate value in excess of 5% of the value of the
Fund's total assets, or the Fund owning securities of investment companies in
the aggregate which would exceed 10% of the value of the Fund's total assets.

11. Invest, in the aggregate, more than 15% of its total assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable and repurchase agreements with more than seven days
to maturity.

DISTRIBUTIONS AND TAX INFORMATION

Distributions

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Tax Information

Distributions of net investment income and the excess of net short-term
capital gain over net long-term capital loss are taxable to shareholders as
ordinary income. In the case of corporate shareholders, a portion of the
distributions may qualify for the intercorporate dividends-received deduction to
the extent the Fund designates the amount distributed as a qualifying dividend.
The aggregate amount so designated cannot, however, exceed the aggregate amount
of qualifying dividends received by the Fund for its taxable year. In view of
the Fund's investment policy, it is expected that dividends from domestic
corporations will be part of the Fund's gross income and that, accordingly, part
of the distributions by the Fund may be eligible for the dividends-received
deduction for corporate shareholders. However, the portion of the Fund's gross
income attributable to qualifying dividends is largely dependent on the Fund's
investment activities for a particular year and therefore cannot be predicted
with any certainty. The deduction may be reduced or eliminated if the Fund
shares held by a corporate investor are treated as debt-financed or are held for
less than 46 days.

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<PAGE>

and net realized capital gains will be taxable as described above, whether
received in shares or in cash. Shareholders electing to receive distributions in
the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share on
the reinvestment date. Distributions are generally taxable when received.
However, distributions declared in October, November or December to shareholders
of record on a date in such a month and paid the following January are taxable
as if received on December 31. Distributions are includable in alternative
minimum taxable income in computing a shareholder's liability for the
alternative minimum tax.

The Fund may write, purchase or sell certain options and futures contracts.
Such transactions are subject to special tax rules that may affect the amount,
timing and character of distributions to shareholders. Unless the Fund is
eligible to make and makes a special election, such contracts that are "Section
1256 contracts" will be "marked-to-market" for federal income tax purposes at
the end of each taxable year, i.e., each contract will be treated as sold for
its fair market value on the last day of the taxable year. In general, unless
the special election referred to in the previous sentence is made, gain or loss
from transactions in such contracts will be 60% long-term and 40% short-term
capital gain or loss. Section 1092 of the Code, which applies to certain
"straddles", may affect the taxation of the Fund's transactions in options and
futures contracts. Under Section 1092 of the Code, the Fund may be required to
postpone recognition for tax purposes of losses incurred in certain closing
transactions.

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Fund with their taxpayer identification numbers or certify their exempt status
in order to avoid possible erroneous application of backup withholding. The Fund
reserves the right to refuse to open an account for any person failing to
provide a certified taxpayer identification number.

This discussion and the related discussion in the prospectus have been
prepared by Fund management, and counsel to the Fund has expressed no opinion in
respect thereof.

TRUSTEES AND EXECUTIVE OFFICERS

Steven J. Paggioli,* 46 President and Trustee

Dorothy A. Berry, 52 Trustee

40 Maple Lane, Copake, NY 12516. President, Talon Industries (venture capital
and business consulting); formerly Chief Operating Officer, Integrated Asset
Management (investment advisor and

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<PAGE>

manager) and formerly President, Value Line, Inc., (investment advisory and
financial publishing firm).

Wallace L. Cook, 56 Trustee

One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice
President, Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.

Carl A. Froebel, 57 Trustee

333 Technology Dr., Malvern, PA. Managing Director, Premier Solutions, Ltd.
Formerly President and Founder, National Investor Data Services, Inc.
(investment related computer software).

Rowley W.P. Redington, 51 Trustee

Eric M. Banhazl*, 39 Treasurer

2025 E. Financial Way, Suite 101, Glendora, California 91741. Senior Vice
President, The Wadsworth Group, Senior Vice President of ICAC and Vice President
of FFD since 1990.

Robin Berger*, 40 Secretary

479 West 22nd St., New York, New York 10011. Vice President, The Wadsworth
Group since June, 1993; formerly Regulatory and Compliance Coordinator,
Equitable Capital Management, Inc. (1991- 93).

Robert H. Wadsworth*, 57 Vice President

4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018. President of
The Wadsworth Group since 1982, President of ICAC and FFD since 1990.

*Indicates an "interested person" of the Trust as defined in the 1940 Act.

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<PAGE>

trustees are also reimbursed for expenses in connection with each Board meeting
attended. No other compensation or retirement benefits were received by any
Trustee or officer from the Fund or any other portfolios of the Trust.

Name of Trustee Total Annual Compensation

Dorothy A. Berry $22,000
Wallace L. Cook $17,500
Carl A. Froebel $17,500
Rowley W.P. Redington $17,500

During the fiscal year ended March 31, 1996, trustees' fees and
expenses in the amount of $3,009 were allocated to the Fund. As of the date of
this Statement of Additional Information, the Trustees and officers of the Trust
as a group did not own more than 1% of the outstanding shares of the Fund.

THE FUND'S INVESTMENT ADVISOR

The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund. Osterweis Capital Management,
One Maritime Plaza, Suite 1201, San Francisco, CA 94111, is the Advisor to the
Fund.

Under an Investment Advisory Agreement with the Fund, the Advisor
provides the Fund with advice on buying and selling securities, manages the
investments of the Fund, furnishes the Fund with office space and certain
administrative services, and provides most of the personnel needed by the Fund.
As compensation, the Fund pays the Advisor a monthly management fee (accrued
daily) based upon the average daily net assets of the Fund at the rate of 1.00%
annually.

The Adviser has undertaken to limit the Fund's operating expenses to an
annual level of 1.75% of the Fund's average net assets. During the fiscal year
ended March 31, 1996, the Adviser received fees of $160,490 and reimbursed
expenses of $2,770. During the fiscal year ended March 31, 1995, the Fund
incurred advisory fees of $77,490 and the Advisor reimbursed expenses of
$44,889. During the Fund's initial fiscal period from October 4, 1993 through
March 31, 1994, the Fund incurred advisory fees of $14,490 and the Advisor
reimbursed expenses of $29,431.

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<PAGE>

. THE FUND'S ADMINISTRATOR

The Fund has an Administration Agreement with Investment Company
Administration Corporation (the "Administrator"), a corporation owned and
controlled by Messrs. Banhazl, Paggioli and Wadsworth with offices at 4455 E.
Camelback Rd., Ste. 261-E, Phoenix, AZ 85018. The Administration Agreement
provides that the Administrator will prepare and coordinate reports and other
materials supplied to the Trustees; prepare and/or supervise the preparation and
filing of all securities filings, periodic financial reports, prospectuses,
statements of additional information, marketing materials, tax returns,
shareholder reports and other regulatory reports or filings required of the
Fund; prepare all required filings necessary to maintain the Fund's
qualification and/or registration to sell shares in all states where the Fund
currently does, or intends to do business; coordinate the preparation, printing
and mailing of all materials (e.g., Annual Reports) required to be sent to
shareholders; coordinate the preparation and payment of Fund related expenses;
monitor and oversee the activities of the Fund's servicing agents (i.e.,
transfer agent, custodian, fund accountants, etc.); review and adjust as
necessary the Fund's daily expense accruals; and perform such additional
services as may be agreed upon by the Fund and the Administrator. For its
services, ICAC receives a monthly fee at the following annual rate:

Average Net Assets Fee or Fee Rate
- ------------------ ---------------
Under $15 million $30,000
$15 to $15 million 0.20%
$50 to $100 million 0.15%
$100 to $150 million 0.10%
Over $150 million 0.05%

During the fiscal years ended March 31, 1996, March 31, 1995, and March 31,
1994, ICAC and its predecessor received fees of $38,728, $30,000, and $14,712,
respectively.

THE FUND'S DISTRIBUTOR

First Fund Distributors, Inc., (the "Distributor"), a corporation owned
by Mr. Banhazl, Mr. Paggioli and Mr. Wadsworth, acts as the Fund's principal
underwriter in a continuous public offering of the Fund's shares. The
Distribution Agreement between the Fund and the Distributor continues in effect
for periods not exceeding one year if approved at least annually by (I) the
Board of Trustees or the vote of a majority of the outstanding shares of the
Fund (as defined in the 1940 Act) and (ii) a majority of the Trustees who are
not interested persons of any such party, in each case cast in person at a
meeting called for the purpose of voting on such approval. The Distributing
Agreement may be terminated without penalty by the parties thereto upon sixty
days' written notice, and is automatically terminated in the event of its
assignment as defined in the 1940 Act.

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EXECUTION OF PORTFOLIO TRANSACTIONS

The Fund does not use the Distributor to execute its portfolio
transactions. During the fiscal period from inception on October 4, 1993 through
March 31, 1994 and for the fiscal years ended March 31, 1995 and March 31, 1996,
aggregate brokerage commissions paid by the Fund were $7,043, $15,346 and
$23,276, respectively.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Trust reserves the right in its sole discretion (I) to suspend the
continued offering of the Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Manager or the Distributor such rejection
is in the best interest of the Fund, and (iii) to reduce or waive the minimum
for initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of the Fund's
shares.

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<PAGE>

except that the Fund may suspend the right of redemption or postpone the date of
payment during any period when (a) trading on the New York Stock Exchange is
restricted as determined by the SEC or such Exchange is closed for other than
weekends and holidays; (b) an emergency exists as determined by the SEC making
disposal of portfolio securities or valuation of net assets of the Fund not
reasonably practicable; or (C) for such other period as the SEC may permit for
the protection of the Fund's shareholders. At various times, the Fund may be
requested to redeem shares for which it has not yet received confirmation of
good payment; in this circumstance, the Fund may delay the redemption until
payment for the purchase of such shares has been collected and confirmed to the
Fund.

Check-A-Matic

DETERMINATION OF SHARE PRICE

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<PAGE>

PERFORMANCE INFORMATION

P(1+T)n = ERV

Where: P = a hypothetical initial purchase order of $1,000 from which the
maximum sales load is deducted

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T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase at the
end of the period

The Fund's average annual total returns for the one year period and
period from inception on October 4, 1993 through December 31, 1996 were 16.11%
and 10.33%, respectively.

GENERAL INFORMATION

Star Bank, 425 Walnut St., Cincinnati, OH 45201 acts as Custodian of
the securities and other assets of the Fund. American Data Services, 24 West
Carver St., Huntington, NY, 11743 acts as the Fund's transfer agent. The
Custodian and Transfer agent do not participate in decisions relating to the
purchase and sale of securities by the Fund.

Ernst & Young, 515 S. Flower St., Los Angeles, CA 90071, are the
independent auditors for the Fund.

Heller, Ehrman, White & McAuliffe, 333 Bush Street, San Francisco,
California 94104, are legal counsel to the Fund.

The following persons are beneficial owners of more than 5% of the
Fund's outstanding voting securities as of February 20, 1997. An asterisk
(*)denotes an account affiliated with the Advisor, officers or trustees:

U.S. Bank of Oregon as Custodian, Vesper Society, Portland, OR CA 94607;
12.08%.

*Osterweis Retirement Trust, John S. Osterweis, Trustee, San Francisco, CA
94111; 11.21%

Hawaiian Trust Co, Trustee, FBO J. Edmunds Amended Profit Sharing Trust,
Honolulu, HI 96805-1930; 6.52%

The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Trust's Agreement and Declaration

Osterweis SAI B-17

<PAGE>

of Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Trust. The Agreement and Declaration of Trust also provides
for indemnification and reimbursement of expenses out of the Fund's assets for
any shareholder held personally liable for obligations of the Fund or Trust. The
Agreement and Declaration of Trust provides that the Trust shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the Fund or Trust and satisfy any judgment thereon. All such
rights are limited to the assets of the Fund. The Agreement and Declaration of
Trust further provides that the Trust may maintain appropriate insurance (for
example, fidelity bonding and errors and omissions insurance) for the protection
of the Trust, its shareholders, trustees, officers, employees and agents to
cover possible tort and other liabilities. Furthermore, the activities of the
Trust as an investment company would not likely give rise to liabilities in
excess of the Trust's total assets. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which both inadequate insurance exists and the Fund itself is unable to meet
its obligations.

FINANCIAL STATEMENTS

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<PAGE>

APPENDIX

Description of Bond Ratings*

Moody's Investors Service

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

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Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

Standard & Poor's Corporation

AAA: Bonds rated AAA are highest grade debt obligations. This rating
indicates an extremely strong capacity to pay principal and interest.

A: Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.

The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.

*Ratings are generally given to securities at the time of issuance. While the
rating agencies may from time to time revise such ratings, they undertake no
obligation to do so.

Osterweis SAI B-20