June 9 1997
Securities and Exchange Commission
Attn: Filing Desk, Stop 1-4
450 Fifth Street, N.W.
Washington, DC 20549
Re: Professionally Managed Portfolios
File No. 811-5037
CIK No. 811030
Dear Sir or Madam:
On behalf of the above Registrant and pursuant to Rule 30b-2 under
the Investment Company Act of 1940, I enclose for filing via EDGAR,
a copy of the Annual Report to shareholders of the Avondale Total
Return Fund series of the Registrant for the twelve month period
ended March 31, 1997.
If you have any questions, please contact me at (602) 952-1100.
Sincerely yours,
Robert H. Wadsworth
<PAGE>
AVONDALE
TOTAL RETURN FUND
ANNUAL REPORT
March 31, 1997
<PAGE>
AVONDALE
TOTAL RETURN FUND
April 17, 1997
Dear Fellow Shareholder:
Avondale Total Return Fund's fiscal year ended March 31, 1997. It is clear to me
and everyone in the investment field that 1995 and, to a lesser degree, 1996
were outstanding years for the U.S. stock markets. Record numbers of funds
entered the overall equity market arena, "encouraged" by the magic economic
combination of low inflation and a positive economic growth rate.
The vast majority of major retirement programs in the U.S. require investment in
common stocks. It seems that in both 1995 and 1996 (and continuing in 1997) an
ever increasing amount of money is flowing into these programs, obviously
encouraged by the overall bullish environment.
Strange as it may seem, the flow is so strong that it "must" be directed to the
more-liquid, high-capitalization companies. Long term, we believe a wide
diversification of company size hedges the risk which can come from investment
in a single-capitalization category -- even though that category may be composed
of the largest corporations in the market.
Avondale's approach to equities has always included a representative percentage
of medium- capitalization as well as a few smaller-capitalization positions.
While not dormant, those groups have not yet contributed the results of the "Dow
Jones" type stocks. From a value standpoint, however, we think they present the
"better buys." That is somewhat academic without the market providing more
widespread demand. That demand appears to be materializing as many large-cap
stocks become very overpriced.
Looking ahead, one has to at least anticipate an end to this euphoric stock
market environment. At that point, the true value of our balanced-fund approach
again will materialize -- namely, the ability to assume a defensive position by
expanding our bond and short-term-cash-equivalent positions.
Thank you for joining with my associates and me as a shareholder. I assure you
Avondale continues to pursue the strong disciplines which have been management's
hallmark for more than a quarter of a century. Please feel comfortable calling
us with any questions.
Sincerely,
Herbert R. Smith, Chairman/CEO
Herbert R. Smith, Incorporated
<PAGE>
AVONDALE
TOTAL RETURN FUND
Comparison of Change in Value of $10,000 Investment in
Avondale Total Return Fund and a Matching Index
Average Annual Total Return
1-Year 5_year Since Inception
1.10% 8.38% 8.93%
<TABLE>
<CAPTION>
Avondale Matching S&P 500 Shearson
<S> <C> <C> <C> <C> <C>
1/89 10000 10000 10000 10000
2/89 10332.66 10315.71 10520 10200
3/89 10604.84 10600.49 10909.24 10401.96
4/89 10589.72 10734.04 10898.33 10664.09
5/89 11123.01 11250.94 11879.18 10882.7
6/89 11102.7 11259.91 12081.13 10742.32
7/89 11026.66 11266.27 12020.72 10792.81
8/89 10985.73 11302.4 11756.27 11021.61
9/89 11251.8 11450.72 11991.39 11126.32
10/89 11217.9 11564.59 12279.18 11157.47
11/89 10833.62 11236.15 11468.76 11086.06
12/89 10891.52 11306.15 11594.91 11127.08
1/90 11060.34 11446.22 11919.57 11141.55
2/90 10906.5 11337.66 11633.5 11102.55
3/90 11553.68 11962.36 12738.68 11346.81
4/90 11447.58 11999.46 12662.25 11498.86
5/90 11495.68 12062.88 12636.93 11658.69
6/90 10832.99 11637.89 11474.33 11610.89
7/90 10597.83 11537.19 10923.56 11700.29
8/90 10581.67 11600.77 10890.79 11836.02
9/90 11039.64 12012.55 11576.91 12015.92
10/90 11293.41 12238.56 11901.07 12180.54
11/90 11565.54 12504.94 12424.71 12304.78
12/90 11848.56 12916.31 13294.44 12403.22
1/91 12213.21 13108.13 13626.8 12487.56
2/91 12021.32 13194.6 13667.68 12623.68
3/91 12334.21 13512.19 14228.06 12700.68
4/91 11975.76 13215.66 13587.8 12710.84
5/91 12536.52 13655.48 14240.01 12853.2
6/91 12969.58 13959.44 14596.01 13098.7
7/91 13163.9 13920.46 14347.88 13324
8/91 13554.85 14097.73 14548.75 13475.89
9/91 13292.36 13876.4 13952.25 13630.86
10/91 14325.58 14904.1 15542.81 13970.27
11/91 13801.27 14735.86 15263.04 13843.14
12/91 13958.3 14801.65 15446.19 13812.69
1/92 13565.74 14634.61 15152.71 13758.82
2/92 13314.48 14909.45 15607.3 13879.9
3/92 13526.19 15017.74 15654.12 14095.04
4/92 13238.03 15011.91 15419.31 14303.64
5/92 13613.16 15467.58 16066.92 14588.28
6/92 13435.67 15314.02 15713.44 14734.17
7/92 13518.5 15480.25 15902.01 14934.55
8/92 13561.32 15468.71 15981.52 14740.4
9/92 13953.88 15805.65 16508.91 14684.39
10/92 14107.34 15996.18 16707.01 14881.16
11/92 14179.07 16179.65 16857.38 15169.85
12/92 14364.38 16399.67 17076.52 15409.54
1/93 14812.71 16658.3 17435.13 15471.18
2/93 14216.02 16443.6 17034.12 15594.95
3/93 14529.28 16794.75 17579.21 15560.64
4/93 14723.51 16894.13 17631.95 15804.94
5/93 14595.81 16872.8 17579.05 15842.87
6/93 15104.96 17390.78 18229.48 16094.77
7/93 15167.82 17318.08 18083.64 16160.76
8/93 15020.76 17591.95 18481.48 16204.39
9/93 14699.16 17441.05 18278.19 16113.65
10/93 15118.5 17608.53 18497.53 16187.77
11/93 15431.87 18038.99 19144.94 16205.74
12/93 15489.43 17627.38 18608.88 15965.9
1/94 14691.21 17028.22 17799.39 15702.46
2/94 14742.47 17115.77 17977.38 15595.68
3/94 14787.32 17291.05 18247.04 15606.59
4/94 14405.74 17001.62 17790.87 15608.16
5/94 14577.39 17468.82 18395.76 15832.91
6/94 15349.84 17964.09 19149.98 15881.99
7/94 15394.1 17607.66 18671.23 15735.88
8/94 15619.02 17890.4 19082 15734.31
9/94 15010.4 17436.64 18395.05 15663.5
10/94 15464.78 17642.65 18670.98 15718.32
11/94 15531.73 18042.76 19156.42 15982.39
12/94 15745.96 18655.97 19903.52 16313.23
1/95 15839.89 19093.49 20500.63 16406.21
2/95 16316.83 19577.84 21115.65 16609.65
3/95 16780.33 20266.35 21960.27 17111.26
4/95 17625.6 20634.62 22465.36 17225.91
5/95 18783.58 21146.32 23206.72 17227.63
6/95 18790.32 21231.41 23276.34 17384.4
7/95 19087.02 21955.29 24253.94 17509.57
8/95 18857.62 21935.83 24156.93 17703.93
9/95 19788.7 22716.06 25219.83 17935.85
10/95 19885.85 23043.47 25648.57 18124.17
11/95 19936.29 23671.48 26520.62 18280.04
12/95 19993.93 23784.7 26759.31 18066.17
1/96 20064.54 23948.4 27026.9 17983.06
2/96 20310.29 24069.08 27135.01 18173.69
3/96 20700.59 24551.75 27840.52 18159.15
4/96 20344.98 24808.51 28258.13 18095.59
5/96 19297.37 24016.46 27014.77 18149.88
6/96 19927.45 24410.28 27582.08 18158.95
7/96 20524.14 25552.33 29134.95 18411.36
8/96 20661.02 26133.37 29950.73 18737.24
9/96 21375.83 27689.75 32226.99 18984.57
10/96 20813.94 27256.97 31582.45 18863.07
11/96 21528.18 28579.06 33572.14 18936.64
12/96 21248.7 28767.78 33840.72 18972.62
1/97 20286.02 27832.86 32453.25 18841.71
</TABLE>
Past performance is not predictive of future performance.
<PAGE>
AVONDALE
TOTAL RETURN FUND
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at March 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 77.5% Market Value
Banks: 9.8%
<S> <C> <C>
8,700 Countrywide Credit Industries, Inc...................................... $ 215,325
5,300 First Commerce Corp..................................................... 214,650
7,285 First Commercial Corp................................................... 279,562
4,600 NationsBank Corp........................................................ 254,725
-------
964,262
-------
Beverages - Alcoholic: 2.5%
5,900 Anheuser Busch Companies, Inc........................................... 248,537
-------
Beverages - Soft Drink: 2.6%
4,600 Coca-Cola Company....................................................... 257,025
-------
Building - Heavy Construction: 1.9%
5,100 Covol Technologies, Inc.*............................................... 42,713
2,800 Fluor Corp.............................................................. 147,000
-------
189,713
-------
Computer Services: 5.0%
8,900 Exar Corp.*............................................................. 144,625
10,400 First Data Corp......................................................... 352,300
-------
496,925
-------
Computers: 3.0%
1,400 IBM Corp................................................................ 192,325
1,800 U.S. Robotics Inc.*..................................................... 99,675
------
292,000
-------
Consumer Products: 4.9%
6,200 Bell & Howell Holdings Company*......................................... 129,425
3,600 General Electric Corp................................................... 357,300
-------
486,725
-------
Consumer Services: 2.5%
3,400 Walt Disney Company..................................................... 248,200
-------
See accompanying Notes to Financial Statements.
<PAGE>
AVONDALE
TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS at March 31, 1997, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Drugs: 10.1%
2,800 Bristol-Myers/Squibb Company............................................ $ 165,200
8,500 Carrington Labs, Inc.*.................................................. 51,000
4,800 Johnson & Johnson....................................................... 253,800
3,200 Pfizer, Inc............................................................. 269,200
3,600 Schering-Plough Corp.................................................... 261,900
-------
1,001,100
---------
Electronic Instrumentation: 3.0%
21,600 Kollmorgen Corp......................................................... 297,000
-------
Electric Services: 1.7%
3,900 Duke Power Company...................................................... 172,088
-------
Finance: 4.5%
3,400 American Express Company................................................ 203,575
2,700 Transamerica Corp....................................................... 241,650
-------
445,225
-------
Healthcare: 2.0%
5,900 Columbia Healthcare..................................................... 198,388
-------
Hotel/Motel: 4.6%
5,600 Doubletree Corp.*....................................................... 198,800
5,200 Marriott International, Inc............................................. 258,700
-------
457,500
-------
Industrial Machinery: 4.9%
6,400 Toro Company............................................................ 217,600
4,800 Tyco International Ltd.................................................. 264,000
-------
481,600
-------
Insurance: 2.8%
5,667 Travelers Group Inc..................................................... 271,308
-------
See accompanying Notes to Financial Statements.
<PAGE>
AVONDALE
TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS at March 31, 1997, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
Oil - Energy: 9.6%
4,600 Chevron Corp............................................................ $ 320,275
3,200 Louisiana Land & Exploration Corp....................................... 151,600
1,500 Mobil Corp.............................................................. 195,937
6,500 Panenergy Corp.......................................................... 280,312
-------
948,124
-------
Restaurants: 1.7%
5,400 Boston Chicken, Inc.*................................................... 164,700
-------
Telecommunications Equipment: 0.4%
4,000 IPC Information Systems*................................................ 38,500
------
Total common stock (cost $6,360,613).................................... 7,658,920
---------
Principal Amount BONDS: 18.9%
- ------------------------------------------------------------------------------------------------------------------------------------
Agencies: 10.3%
$100,000 FHLMC, 7.77%, 3/6/2002.................................................. 100,303
150,000 FNMA, 5.30%, 12/10/1998................................................. 147,282
100,000 FNMA, 6.15%, 11/6/1998.................................................. 99,712
250,000 FNMA, 6.375%, 10/13/2000................................................ 246,589
241,159 FNMA, 7.00%, 6/1/2003................................................... 239,350
180,820 FNMA, 7.50%, 8/1/2002................................................... 182,655
-------
1,015,891
---------
U.S. Treasury Notes: 7.6%
50,000 7.125%, 2/29/2000....................................................... 50,672
700,000 5.875%, 7/31/1997....................................................... 700,656
-------
751,328
-------
Corporate: 1.0%
75,000 Associates Corp., 6.75%, 10/15/1999..................................... 74,812
25,000 IBM, 6.375%, 6/15/2000.................................................. 24,661
------
99,473
------
Total bonds (cost $1,875,548)........................................... 1,866,692
---------
See accompanying Notes to Financial Statements.
<PAGE>
AVONDALE
TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS at March 31, 1997, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value
Short-Term Money Market Investment: 3.1%
$305,349 Star Treasury Cash Management, 4.71%, 4/1/1997 (cost $305,349).......... $ 305,349
---------
Total Investment in Securities (cost $8,541,510+): 99.5%................ 9,830,961
Other Assets less Liabilities: 0.5%..................................... 46,980
------
Total Net Assets: 100.0%................................................ $ 9,877,941
===========
<FN>
*Non-income producing security.
+At March 31, 1997, the cost of securities for Federal tax purposes was
$8,548,289. Unrealized appreciation and depreciation of securities were as
follows:
Gross unrealized appreciation........................................... $ 1,748,081
Gross unrealized depreciation........................................... (465,409)
--------
Net unrealized appreciation.................................... $ 1,282,672
===========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
AVONDALE
TOTAL RETURN FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at March 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (identified cost $8,541,510) (Note 2-A) ............. $ 9,830,961
Cash..................................................................................... 18,041
Receivables:
Fund shares purchased.............................................................. 8,015
Dividends and interest............................................................. 33,136
Prepaid expenses ........................................................................ 2,333
Other assets............................................................................. 12,290
------
Total assets ................................................................ 9,904,776
---------
LIABILITIES
Payables:
Advisory fees...................................................................... 6,090
Administration fee................................................................. 2,842
Accrued expenses ........................................................................ 17,903
------
Total liabilities ........................................................... 26,835
------
NET ASSETS ................................................................................... $ 9,877,941
===========
Net asset value, offering and redemption price per share
($9,877,941/378,080 shares outstanding;
unlimited number of shares authorized without par value) ........................ $26.13
======
COMPONENTS OF NET ASSETS
Paid-in capital ......................................................................... $ 8,341,434
Undistributed net realized gain on investments .......................................... 247,056
Net unrealized appreciation on investments .............................................. 1,289,451
---------
Net assets ........................................................................ $ 9,877,941
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
AVONDALE
TOTAL RETURN FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Year Ended March 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Dividends ....................................................................... $ 105,505
Interest ......................................................................... 144,454
-------
Total income ............................................................... 249,959
-------
Expenses
Advisory fees (Note 3)............................................................. 71,531
Administration fee (Note 3)........................................................ 30,000
Custodian and accounting fees...................................................... 25,410
Transfer agent fees................................................................ 12,676
Audit fees......................................................................... 12,001
Legal fees......................................................................... 9,586
Miscellaneous fees................................................................. 6,514
Insurance fees..................................................................... 5,982
Registration fees.................................................................. 5,655
Trustees' fees..................................................................... 4,328
Reports to shareholders............................................................ 2,962
-----
Total expenses............................................................... 186,645
-------
Net investment income.................................................. 63,314
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from security transactions............................................. 328,367
Net change in unrealized appreciation on investments..................................... (278,573)
--------
Net realized and unrealized gain on investments.............................. 49,794
------
Net Increase in Net Assets Resulting from Operations................... $ 113,108
=========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
AVONDALE
TOTAL RETURN FUND
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
March 31, March 31,
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment income..................................................... $ 63,314 $ 85,939
Net realized gain from security transactions.............................. 328,367 1,164,049
Net change in unrealized appreciation on investments...................... (278,573) 601,115
-------- -------
Net increase in net assets resulting from operations ............... 113,108 1,851,103
------- ---------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income..................................................... (103,009) (85,296)
Net realized gain from security transactions.............................. (618,518) (545,369)
-------- --------
Total dividends and distributions to shareholders .................. (721,527) (630,665)
-------- --------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in
outstanding shares (a).............................................. 695,317 1,635,207
------- ---------
Total increase in net assets ...................................... 86,898 2,855,645
NET ASSETS
Beginning of year......................................................... 9,791,043 6,935,398
--------- ---------
End of year (including undistributed net investment income
of $0 and $958, respectively)....................................... $9,877,941 $9,791,043
========== ==========
<FN>
(a) A summary of capital share transactions is as follows:
Year Ended Year Ended
March 31, 1997 March 31, 1996
Shares Value Shares Value
Shares sold....................................... 50,865 $1,401,783 66,460 $1,814,618
Shares issued in reinvestment of distributions.... 25,387 676,759 21,687 598,280
Shares redeemed................................... (50,907) (1,383,225) (29,486) (777,691)
------- ---------- ------- --------
Net increase...................................... 25,345 $ 695,317 58,661 $1,635,207
====== ========= ====== ==========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
AVONDALE
TOTAL RETURN FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each year
- ------------------------------------------------------------------------------------------------------------------------------------
Years Ended March 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............... $27.76 $23.58 $22.93 $24.78 $24.19
Income from investment operations:
Net investment income....................... .18 .27 .23 .26 .46
Net realized and unrealized gain
(loss) on investments ................ .14 6.00 1.49 (.44) 1.62
--- ---- ---- ---- ----
Total from investment operations.................. .32 6.27 1.72 (.18) 2.08
Less distributions:..............................
From net investment income.................. (.28) (.27) (.23) (.35) (.49)
From net capital gains...................... (1.67) (1.82) (.84) (1.32) (1.00)
----- ----- ---- ----- -----
Total distributions............................... (1.95) (2.09) (1.07) (1.67) (1.49)
----- ----- ----- ----- -----
Net asset value, end of year...................... $26.13 $27.76 $23.58 $22.93 $24.78
====== ====== ====== ====== ======
Total return...................................... 1.10% 26.67% 7.82% (0.82)% 9.19%
Ratios/supplemental data:
Net assets, end of period (millions).............. $ 9.9 $ 9.8 $ 6.9 $ 7.4 $ 7.6
Ratio of expenses to average net assets........... 1.83% 1.69% 1.77% 1.83% 1.78%
Ratio of net investment income to average net assets 0.62% 1.03% 0.96% 1.09% 1.97%
Portfolio turnover rate ......................... 40.87% 52.25% 52.24% 73.65% 157.64%
Average commission rate paid per share++........... $.1000 - - - -
<FN>
++For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on which
commissions are charged. This amount may vary from period to period and fund to
fund depending on the mix of trades executed in various markets where trading
practices and commission rate structures may differ.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
AVONDALE
TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS at March 31, 1997
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Avondale Total Return Fund (the "Fund") is a diversified series of shares
of beneficial interest of Professionally Managed Portfolios (the "Trust"), which
is registered under the Investment Company Act of 1940 (the "1940 Act") as an
open-end management investment company.
The Fund's primary investment objective is to realize 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 higher quality fixed income debt securities and equity
securities.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities traded on a national
securities exchange or included in the NASDAQ National Market System
are valued at the last reported sale price at the close of regular
trading on the last business day of the period; securities traded on
an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the last reported bid
price. Securities for which quotations are not readily available are
valued at their respective fair values as determined in good faith
by the Board of Trustees. Short-term investments are stated at cost,
which when combined with accrued interest, approximates market
value.
U.S. Government securities with less than 60 days remaining to
maturity when acquired by the Fund are valued on an amortized cost
basis. U.S. Government securities with more than 60 days remaining
to maturity are valued at the current market value (using the mean
between the bid and asked price) until the 60th day prior to
maturity, and then valued at amortized cost based upon the value on
such date unless the Board determines during such 60 day period that
this amortized cost basis does not represent fair value.
B. Federal Income Taxes. The Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no federal income tax provision is
required.
C. Security Transactions, Dividends and Distributions. As is common in
the industry, security transactions are accounted for on the trade
date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is recognized on an accrual
basis. Discounts and premiums on securities purchased are amortized
over the life of the respective securities.
D. Use of Estimates. In preparing financial statements in conformity
with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements, as well as
the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
<PAGE>
AVONDALE
TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the year ended March 31, 1997, Herbert R. Smith, Incorporated (the
"Manager") provided the Fund with investment management services under an
Investment Advisory Agreement. The Manager furnishes all investment advice,
office space and certain administrative services. As compensation for its
services, the Manager receives a monthly fee at the annual rate of 0.70% on the
first $200 million of average daily net assets; 0.60% on the next $300 million
of net assets; and 0.50% on net assets exceeding $500 million.
Investment Company Administration Corporation (the "Administrator") acts
as the Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Fund's
expense accruals. For its services, the Administrator receives a monthly fee at
an annual rate equal to the greater of 0.15% of the Fund's average daily net
assets or $30,000.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator and Distributor.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
For the year ended March 31, 1997, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities and U.S. Government
securities, were $3,334,520 and $2,772,112, respectively. For the year ended
March 31, 1997, the cost of purchases and the proceeds from sales of U.S.
Government securities were $1,482,909 and $1,107,777, respectively.
<PAGE>
AVONDALE
TOTAL RETURN FUND
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF
AVONDALE TOTAL RETURN FUND and
THE BOARD OF TRUSTEES OF
PROFESSIONALLY MANAGED PORTFOLIOS
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Avondale Total Return Fund (a series
of Professionally Managed Portfolios) as of March 31, 1997, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1997, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Avondale Total Return Fund as of March 31, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 17, 1997
<PAGE>
Investment Manager
Herbert R. Smith, Incorporated
1105 Holliday
Wichita Falls, Texas 76301
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
Transfer Agent
American Data Services, Inc.
24 West Carver Street
2nd Floor
Huntington, New York 11743
Auditors
Tait, Weller & Baker
Two Penn Center Plaza, Suite 700
Philadelphia, Pennsylvania 19102
Legal Counsel
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate
so that shares, when redeemed, may be worth more or less than their original
cost. Statements and other information herein are dated and are subject to
change.
