Professionally Managed Portfolios
Harris Bretall Sullivan & Smith Growth Equity Fund
2025 East Financial Way, Suite 101
Glendora, CA 91741
Notice of Special Meeting
To Be Held ________ __, 1997
To the shareholders of the Harris Bretall Sullivan & Smith Growth Equity Fund
(the "Fund"), a series of Professionally Managed Portfolios (the "Trust"), for a
Special Meeting of the Fund to be held on ________ __, 1997:
Notice is hereby given that a Special Meeting (the "Meeting") of
shareholders of the Fund, will be held on ________ __, 1997, at _____ a.m.,
Pacific Standard Time, at the offices of the Trust, 2025 East Financial Way,
Suite 101, Glendora, California 91741. At the Meeting, you and the other
shareholders of the Fund will be asked to consider and vote:
1. To approve a new investment advisory agreement between the Fund and
Harris Bretall Sullivan & Smith L.L.C. ("New HBSS") pursuant to which
New HBSS will act as adviser with respect to the assets of the Fund,
to become effective upon the contribution of the assets of Harris
Bretall Sullivan & Smith, Inc. to New HBSS and acquisition of a
majority of non-managing units by Value Asset Management, Inc. in New
HBSS.
2. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Shareholders of record at the close of business on September 30, 1997 are
entitled to notice of, and to vote at, the Meeting. Please read the accompanying
Proxy Statement. Regardless of whether you plan to attend the Meeting, PLEASE
COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so that a quorum will
be present and a maximum number of shares may be voted. If you attend the
Meeting, you may change your vote at that time.
By Order of the Board of Trustees
Robin Berger, Secretary
Los Angeles, California
________ __, 1997
Professionally Managed Portfolios
Harris Bretall Sullivan & Smith Growth Equity Fund
2025 East Financial Way, Suite 101
Glendora, CA 91741
PROXY STATEMENT
To the shareholders of the Harris Bretall Sullivan & Smith Growth Equity Fund
(the "Fund"), a series of Professionally Managed Portfolios (the "Trust"), an
open-end management investment company, for a Special Meeting of shareholders of
the Fund to be held on ________ __, 1997:
This Proxy Statement is furnished by the Trust to the shareholders of the
Fund on behalf of the Trust's Board of Trustees in connection with the Fund's
solicitation of voting instructions for use at a Special Meeting of Shareholders
of the Fund (the "Meeting") to be held on ________ __, 1997 at _____ a.m.,
Pacific Standard Time, at the offices of the Trust, 2025 East Financial Way,
Suite 101, Glendora, California 91741 for the purposes set forth below and in
the accompanying Notice of Special Meeting. The approximate mailing date of this
Proxy Statement is ________ __, 1997. At the Meeting, the shareholders of the
Fund will be asked:
1. To approve a new investment advisory agreement between the Fund and
Harris Bretall Sullivan & Smith L.L.C. ("New HBSS") pursuant to which
New HBSS will act as adviser with respect to the assets of the Fund,
to become effective upon the contribution of the assets of Harris
Bretall Sullivan & Smith, Inc. ("HBSS") to New HBSS and acquisition of
a majority of non-managing units by Value Asset Management, Inc.
("VAM") in New HBSS.
2. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Any voting instructions given to the Fund may be revoked at any time before
the Meeting by notifying the Secretary of the Trust.
The Trust will request broker-dealer firms, custodians, nominees and
fiduciaries to forward proxy materials to the beneficial owners of the shares of
the Fund held of record by such persons. HBSS or VAM may reimburse such
broker-dealer firms, custodians, nominees and fiduciaries for their reasonable
expenses incurred in connection with such proxy solicitation. In addition to the
solicitation of proxies by mail, officers and employees of the Trust, without
additional compensation, may solicit proxies in person or by telephone. The
costs associated with such solicitation and the Meeting will be borne by HBSS
and not by the Fund or the Trust.
If sufficient votes are not received by the date of the Meeting, a person
named as proxy may propose one or more adjournments of the Meeting for a period
or periods not more than 120 days in the aggregate to permit further
solicitation of proxies. The persons named as proxies will vote all proxies in
favor of adjournment that voted in favor of proposal no. 1 (or abstained) and
vote against adjournment all proxies that voted against proposal no. 1.
Shareholders of the Fund at the close of business on September 30, 1997
will be entitled to be present and vote at the Meeting. As of that date, there
were 416,314 shares of Harris Bretall Sullivan & Smith Growth Equity Fund
outstanding and entitled to vote, representing total net assets of approximately
$5,748,280.
To the knowledge of the Trust's management, before the close of business on
September 30, 1997 the officers and Trustees of the Trust owned, as a group,
less than 1% of the shares of the Fund.
To the knowledge of the Trust's management, before the close of business on
September 30, 1997, the only persons owning beneficially more than 5% of the
outstanding shares of the Fund were as follows:
Name and Address
Shares held and Percent of Fund
First National Bank for Benef. Cust.
Photon 401K,
Trust Services
800 Silverado Street
La Jolla, CA 92307
184,975
44.550%
Charles Schwab & Co., Inc.
Special Custody Account for Benef. Cust.
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
29,409
7.083%
The Fund's current investment adviser is Harris Bretall Sullivan & Smith,
Inc., One Sansome Street, Suite 3300, San Francisco, California 94104. The
Fund's distributor is First Fund Distributors, Inc., 4455 E. Camelback, Suite
261E, Phoenix, Arizona 85018. The Fund's Transfer and Dividend Distributing
Agent is American Data Services, Inc, P.O.
Box 5536, Hauppauge, New York 11788-0132.
The persons named in the accompanying proxy will vote in each case as
directed in the proxy, but in the absence of such direction, they intend to vote
FOR proposal no. 1 and may vote in their discretion with respect to other
matters not now known to the Board of Trustees that may be presented to the
Meeting.
PROPOSAL NO. 1:
APPROVAL OR DISAPPROVAL OF INVESTMENT
ADVISORY AGREEMENT BETWEEN
THE FUND AND THE ADVISER
Background
General. HBSS has entered into an agreement with VAM, a Connecticut-based
holding company 100%-owned by BancBoston Ventures, Inc., to form a limited
liability company to be called "Harris Bretall Sullivan & Smith L.L.C." ("New
HBSS"). The Meeting has been called for the purpose of considering a new
advisory agreement for the Fund as a result of a proposed transaction (the
"Proposed Transaction") whereby HBSS will transfer substantially all of its
assets and business to New HBSS (HBSS and new HBSS are hereinafter sometimes
collectively referred to as the "Adviser"). It is anticipated that all key
personnel will transfer to New HBSS. VAM will be the majority owner of New HBSS.
The Proposed Transaction represents an ownership change of the Adviser and, as
such, has the effect of terminating the existing Investment Management Agreement
with respect to the Fund. Accordingly, shareholders of the Fund are being asked
to approve a new Investment Management Agreement (the "New Advisory Agreement")
with respect to the Fund. The New Advisory Agreement embodies exactly the same
terms and fees with New HBSS, differing only in the effective and termination
dates and minor updating changes. The Trust's Board of Trustees has approved the
submission of the New Advisory Agreement to shareholders for shareholder
approval.
Existing Advisory Agreement
HBSS currently serves as the adviser for the Fund under an Investment
Management Agreement (the "Existing Advisory Agreement") dated April 1, 1996.
The Existing Advisory Agreement provides for its automatic termination in the
event of a legal assignment. A change in ownership of the Adviser would,
therefore, terminate the Existing Advisory Agreement. The initial shareholder of
the Fund approved the Existing Advisory Agreement in April 1996, prior to the
Fund's commencement of operation on May 1, 1996. The Board of Trustees of the
Trust, including a majority of the "non-interested" Trustees, most recently
approved continuation of the Existing Advisory Agreement for an additional
one-year period on August 19, 1997. Under the Existing Advisory Agreement, HBSS
is entitled to receive an annual fee of 0.75% of the Fund's average net assets.
New Advisory Agreement
Except for different effective and termination dates and minor updating
changes, the terms of the New Advisory Agreement are identical in all respects
to the terms of the Existing Advisory Agreement. A form of the New Advisory
Agreement is attached to this Proxy Statement as Exhibit A, and the description
set forth in this Proxy Statement of the New Advisory Agreement is qualified in
its entirety by reference to Exhibit A.
Under the New Advisory Agreement, the Adviser will provide certain
investment advisory services to the Fund, including deciding what securities
will be purchased and sold by the Fund, when such purchases and sales are to be
made, and arranging for such purchases and sales, all in accordance with the
provisions of the Investment Company Act of 1940, as amended (the "Investment
Company Act") and any rules or regulations thereunder; any other applicable
provisions of law; the provisions of the Declaration of Trust and By-Laws of the
Trust as amended from time to time; any policies and determinations of the Board
of Trustees of the Trust; and the fundamental policies of the Trust relating to
the Fund, as reflected in the Trust's Registration Statement under the
Investment Company Act (including by reference the Statement of Additional
Information) as such Registration Statement is amended from time to time, or as
amended by the stockholders of the Fund.
As compensation for its services to the Fund under the New Advisory
Agreement, the Adviser will be entitled to receive from the Fund fees calculated
at the same rate as those charged under the Existing Advisory Agreement
described above.
The New Advisory Agreement will continue in effect for a period not to
exceed two years from its effective date, and will continue in effect thereafter
for successive annual periods, provided its continuance is specifically approved
at least annually by (1) a majority vote, cast in person at a meeting called for
that purpose, of the Trust's Board of Trustees or (2) a vote of the holders of a
majority of the outstanding voting securities (as defined in the Investment
Company Act and the rules thereunder) of the Fund, and (3) in either event by a
majority of the Trustees who are not parties to the New Advisory Agreement or
interested persons of the Trust or of any such party. The Board of Trustees of
the Trust is expected to approve the New Advisory Agreement at the next regular
Board meeting on October 24, 1997, and will regularly review the Agreement
thereafter at the Board's regular summer meeting beginning in 1999 or at such
sooner time as circumstances shall warrant.
The New Advisory Agreement provides that it may be terminated with respect
to the Fund at any time, without penalty, by either party upon 60-days' written
notice, provided that such termination by the Fund shall be directed or approved
by a vote of the Trustees of the Trust, or by a vote of holders of a majority of
the shares of the Fund.
The Adviser will provide, at its expense, office space, facilities and
equipment for carrying out its duties under the New Advisory Agreement. All
other expenses incurred in the operation of the Fund will be borne by the Fund.
Fund expenses include legal and auditing fees, fees and expenses of its
custodian, accounting services and third-party shareholder servicing agents,
Trustees' fees, the cost of communicating with shareholders and registration
fees, as well as its other operating expenses.
Although the Adviser is not required to do so, the New Advisory Agreement,
like the Existing Advisory Agreement, permits the Adviser to reimburse the Fund
to the extent necessary so that its ratio of operating expenses to average net
assets will not exceed voluntary expense limits. The Adviser has agreed to
maintain an expense limit of 1.29% for the current fiscal year.
The expense limit is described in the prospectus for the Fund and is
voluntary by the Adviser. The Adviser may remove the expense limit at any time
following the conclusion of the current fiscal year by amending the prospectus
and notifying shareholders.
Expenses of the Fund, as defined in the New Advisory Agreement, exclude (i)
interest, (ii) taxes, (iii) brokerage commissions, (iv) extraordinary expenses
and (v) sales charges and any distribution fees.
The New Advisory Agreement provides that the Adviser shall not be liable
for any loss sustained by reason of the purchase, sale or retention of any
security whether the purchase, sale or retention has been based on its own
investigation and research or upon investigation and research made by any other
individual, firm or corporation, if the purchase, sale or retention has been
made and the other individual, firm or corporation has been selected in good
faith. The New Advisory Agreement, however, provides that nothing contained in
the New Advisory Agreement shall be construed to protect the Adviser against any
liability to the Trust or its security holders by reason of willful misfeasance,
bad faith, or gross negligence in the performance of its duties, or by reason of
its reckless disregard of obligations and duties under the New Advisory
Agreement. Additionally, the New Advisory Agreement provides that the federal
securities laws impose liabilities under certain circumstances on persons who
act in good faith, and therefore nothing in the New Advisory Agreement shall in
any way constitute a waiver or limitation of any rights which the Funds'
shareholders may have under any federal securities laws. The New Advisory
Agreement also provides that the Adviser shall have no responsibility or
liability for the accuracy or completeness of the Trust's Registration Statement
under the Investment Company Act or the Securities Act of 1933 except for
information supplied by the Adviser for inclusion in the Trust's Registration
Statement. The New Advisory Agreement provides that the Trust may indemnify the
Adviser to the full extent permitted by the Trust's Declaration of Trust.
The Proposed Transaction Agreement
HBSS has entered into an agreement with VAM, a Connecticut-based holding
company 100% owned by BancBoston Ventures, Inc., to form a limited liability
company to be called "Harris Bretall Sullivan & Smith L.L.C." ("New HBSS").
HBSS will transfer substantially all of its assets and business to New HBSS
(the "Proposed Transaction"). It is anticipated that all key personnel will
transfer to the new entity. Executive Vice Presidents John J. Sullivan and Henry
B. Dunlap Smith will continue their responsibilities and ownership roles. W.
Graeme Bretall, the current President of HBSS, who will also remain with the new
entity, will become a member of the Board of Directors of VAM. Co-Founder Dave
Harris also will continue in his role in Research for HBSS. VAM will be the
majority owner of the new entity.
VAM and HBSS have indicated that the new structure is designed to enable
the organization to retain and attract top industry talent, enhance returns and
offer additional services. Three current officers of HBSS will become equity
holders in New HBSS: Susan Foley, Senior Vice President and Portfolio Manager,
Gordon Ceresino, Senior Vice President and Director of Marketing and Client
Service, and David S. Post, Director of Research. All of Messrs. Bretall,
Sullivan and Smith, as well as the three new equity holders, have agreed to
enter into five-year employment agreements with New HBSS.
Although VAM will obtain a majority equity interest in New HBSS, the
current managers of HBSS will maintain management autonomy in the new
organization. It is anticipated that the Proposed Transaction will be
consummated on or about November 15, 1997.
Legal Requirements Under the Investment Company Act
Section 15(f) of the Investment Company Act provides that, when a change in
control of an investment adviser occurs, the investment adviser or any of its
affiliated persons may receive any amount or benefit in connection therewith as
long as two conditions are satisfied. First, no "unfair burden" may be imposed
on the investment company as a result of the transaction relating to the change
of control, or any express or implied terms, conditions or understandings. The
term "unfair burden," as defined in the Investment Company Act, includes any
arrangement during the two-year period after the change in control whereby the
investment adviser (or predecessor or successor adviser), or any interested
person of any such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its security holders
(other than fees for bona fide investment advisory or other services) or from
any person in connection with the purchase or sale of securities or other
property to, from, or on behalf of the investment company (other than fees for
bona fide principal underwriting services). No such compensation arrangements
are contemplated in the Proposed Transaction. In the Proposed Transaction
Agreement, HBSS and VAM have agreed to use their best efforts to ensure that
none of the transactions contemplated by the Proposed Agreement will cause the
imposition of an unfair burden, as that term is defined in Section 15(f) of the
Investment Company Act, on the Fund.
The second condition is that, during the three-year period immediately
following consummation of the transaction, at least 75% of the investment
company's board of directors must not be "interested persons" of the investment
adviser or predecessor investment adviser within the meaning of the Investment
Company Act. The composition of the board is presently in compliance with the
75% requirement and will continue to be so if the Proposed Transaction is
consummated. In the Proposed Transaction Agreement, HBSS and VAM have agreed
that if the Proposed Transaction is consummated, at least 75% of the Fund's
board of directors shall not be interested persons, as that term is defined in
the Investment Company Act.
There are a number of conditions precedent to the closing of the Proposed
Transaction. Such conditions include, among other things, that all regulatory
approvals will have been duly and properly obtained, and that consents required
will have been obtained from a specified percentage of HBSS' current clients,
including the Fund among others, as required by applicable law. At the present
time it is anticipated that the closing of the Proposed Transaction will occur
on or about November 15, 1997. In addition, the Board of Trustees of the Trust
must approve the New Advisory Agreement, which approval is expected to be given
at the next regular Board meeting of the Trust.
If the conditions for the Proposed Transaction are not met and the Proposed
Transaction is not consummated, the Existing Advisory Agreement will remain in
effect. However, if the Proposed Transaction is consummated and the Board of
Trustees of the Trust approves the New Advisory Agreement, but the New Advisory
Agreement is not approved by the Fund's shareholders, the Trustees will promptly
seek to enter into a new advisory arrangement for the Fund, subject to approval
by the Fund's shareholders.
During the fiscal year ended March 31, 1997, HBSS earned advisory fees of
$15,020 from the Fund under the Existing Advisory Agreement, However, HBSS
reimbursed the Fund $74,252, for that fiscal year.
Information Regarding the Adviser and VAM
Harris Bretall Sullivan & Smith, Inc., a California corporation with
offices at One Sansome Street, Suite 3300, San Francisco, California 94104, is
owned by the Stockholders. HBSS is registered under the Investment Advisers Act
of 1940 (the "Advisers Act"). Harris Bretall Sullivan & Smith L.L.C. ("New
HBSS"), a Delaware limited liability company, will, as of the closing date of
the Proposed Transaction, be registered under the Advisers Act, have the same
address as and employ the same key personnel as HBSS did previously.
HBSS serves as investment adviser to other mutual funds having a similar
objective to the Harris Bretall Sullivan & Smith Growth Equity Fund. These
mutual funds are shown below.
Other Fund Net Assets of Other Fund Annual Fee Rate
(in millions)
The Legends Fund, Inc. $30 .50%
The Saratoga Advantage Trust- $49 .65%
Large Capitalization Growth
Portfolio
Jones Heward American Fund $11.5 .45%
[Canada]
The Adviser's principal executive officers and directors are shown
below. The address of each, as it relates to his duties at the Adviser, is the
same as that of the Adviser.
Name and Position with HBSS
Principal Occupation
W. Graeme Bretall
President
Principal, President and Portfolio Manager at HBSS since 1971.
John J. Sullivan
Executive Vice President
Principal, Executive Vice President and Portfolio
Manager at HBSS since 1981.
Mr. Henry B. Dunlap Smith
Executive Vice President
Principal, Executive Vice President and Portfolio
Manager at HBSS since 1984.
After the acquisition, New HBSS will be a limited liability company whose
majority owner will be VAM, a Connecticut-based holding company 100% owned by
BancBoston Ventures, Inc., itself a subsidiary of BancBoston, N.A. VAM is a
Connecticut-based holding company that invests in privately owned asset
management firms with assets under management between $500 million and $10
billion. VAM seeks to create an institutional investment group to offer quality
performance and client service.
Trustees' Consideration
The New Advisory Agreement is expected to be approved by the Board of
Trustees of the Fund, including a majority of the non-interested Trustees, at
the next regularly scheduled Board meeting on October 24, 1997. The Board of
Trustees of the Trust, at a special telephone meeting held on [October __,]
1997, recommended that the New Advisory Agreement be submitted to the
shareholders of the Fund for approval in advance of the Board's formal review.
The Board will have completed its review and approval process prior to the date
of the Meeting. If the Board of Trustees does not approve the New Advisory
Agreement, shareholders will be notified and the Meeting may be adjourned.
The Board of Trustees of the Trust will be presented with information
demonstrating that the terms of the New Advisory Agreement are fair to, and in
the best interest of, the Trust, the Fund and the shareholders of the Fund. In
considering the New Advisory Agreement, the Trustees will have before them
information that will allow them to evaluate the experience of the Adviser's key
personnel in portfolio management, the quality of services the Adviser is
expected to provide to the Fund, and the compensation proposed to be paid to the
Adviser. The Trustees will be asked to give consideration to all factors deemed
to be relevant to the Fund, including, but not limited to the following: (1)
that the fee and expense ratio of the Fund is reasonable given the quality of
services expected to be provided and the fee and expense ratios of comparable
mutual funds; (2) the favorable performance of the Fund since commencement of
operations; (3) the research-intensive nature and quality of the services
expected to be rendered to the Fund by the Adviser; (4) the compensation payable
to the Adviser by the Fund under the proposed New Advisory Agreement, which will
be at the same rate as the compensation now payable by the Fund to the Adviser
under the Existing Advisory Agreement; (5) the terms of the Existing Advisory
Agreement, which will be unchanged under the New Advisory Agreement except for
different effective and termination dates and minor updating changes; (6) the
favorable history, reputation, qualification and background of the Adviser and
VAM, as well as the qualifications of their personnel and their respective
financial conditions; (7) the commitment of HBSS to pay or reimburse the Fund
for the expenses incurred in connection with the Proposed Transaction; (8) HBSS'
favorable investment performance record; (9) the benefits expected to be
realized as a result of the Adviser's affiliation with VAM, including the
resources of VAM that would be available to the Adviser, such as other
distribution channels for the sale of the Fund's shares, and access to the best
available technology; and (10) other factors deemed relevant.
HBSS intends to advise the Board of Trustees that it expects that there
will be no diminution in the scope and quality of advisory services provided to
the Fund as a result of the Proposed Transaction.
Along with the approval of the Board of Trustees of the Trust, the
affirmative vote of the holders of a majority of the outstanding shares of the
Fund is required for the New Advisory Agreement with respect to the Fund to
become effective. "Majority" for this purpose under the Investment Company Act
means the lesser of (i) 67% of the shares represented at the meeting if more
than 50% of the outstanding shares is represented, or (ii) shares representing
more than 50% of the outstanding shares. Abstentions will count as votes present
at the Meeting for quorum purposes. All properly executed proxies received prior
to the Meeting will be voted at the Meeting in accordance with the instructions
marked thereon. Proxies received prior to the Meeting on which no vote is
indicated will be voted "for" each proposal as to which it is entitled to vote.
Abstentions do not constitute votes "for" a proposal and are treated as votes
"against" a proposal. Broker non-votes (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other person entitled to vote shares on a particular matter with
respect to which the broker or nominees do not have discretionary power) do not
constitute votes "for" or "against" a proposal and are disregarded in
determining the "votes cast" when the voting requirement for a proposal is based
on achieving a percentage of the outstanding shares entitled to vote present in
person or by proxy at the Meeting. Broker non-votes do not constitute votes
"for" and are treated as votes "against" when the voting requirement for a
proposal is based on achieving a percentage of the outstanding shares entitled
to vote. 40% of the outstanding shares entitled to vote on a proposal must be
present in person or by proxy to have a quorum to conduct business at the
Meeting. Broker non-votes will count as votes present at the Meeting for quorum
purposes.
THE BOARD OF TRUSTEES OF THE TRUST HAS APPROVED THE SUBMISSION OF THE NEW
ADVISORY AGREEMENT TO SHAREHOLDERS FOR APPROVAL.
Additional Information on the Trust and the Adviser
The following is a listing of the executive officers and Trustees of the
Trust, their positions with the Trust, and their positions with the Adviser, if
any:
Name
Position with Trust
Position with Adviser
Steven J. Paggioli
President and Trustee
n/a
Dorothy A. Berry
Trustee
n/a
Wallace L. Cook
Trustee
n/a
Carl A. Froebel
Trustee
n/a
Rowley W.P. Redington
Trustee
n/a
Eric M. Banhazl
Treasurer
n/a
Robin Berger
Secretary
n/a
Robert H. Wadsworth
Vice President
n/a
With the exception of transactions which are not related to the business or
operation of the Trust and to which the Trust is not a party, since March 31,
1996 no Trustee of the Trust has had any direct or indirect interest in any
transaction with New HBSS, VAM or any parent or subsidiary of either. In
addition, no Trustee has had such an interest in any proposed transaction with
any of the above entities.
GENERAL INFORMATION
Other Matters to Come Before the Meeting
The Trust's management does not know of any matters to be presented at the
Meeting other than those described in this Proxy Statement. If other business
should properly come before the Meeting, the proxyholders will vote thereon in
accordance with their best judgment.
Shareholder Proposals
The Meeting is a special meeting of shareholders. The Trust is not required
to, nor does it intend to, hold regular annual meetings of its shareholders. If
such a meeting is called, any shareholder who wishes to submit a proposal for
consideration at the meeting should submit the proposal promptly to the Trust.
Any proposal to be considered for submission to shareholders must comply with
Rule 14a-8 under the Securities Exchange Act of 1934.
Reports to Shareholders
The Trust will furnish, without charge, a copy of the most recent Annual
Report to Shareholders of the Trust, and the most recent Semi-Annual Report
succeeding such Annual Report, if any, on request. Requests for such reports
should be directed to the Trust, Professionally Managed Portfolios, Harris
Bretall Sullivan & Smith Growth Equity Fund, 2025 East Financial Way, Suite 101,
Glendora, California 91741 (800) ___ -____.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Robin Berger, Secretary
Los Angeles, California
________ __, 1997
EXHIBIT LIST
Exhibit A Form of new Investment Management Agreement.
PROFESSIONALLY MANAGED PORTFOLIOS
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this __ day of ______, 1997 by and between
PROFESSIONALLY MANAGED PORTFOLIOS (the "Trust"), a Massachusetts business
trust and HARRIS BRETALL SULLIVAN & SMITH, L.L.C. a California limited
liability company (the "Adviser").
WITNESSETH:
WHEREAS, a series of the Trust having separate assets and
liabilities has been created entitled the HARRIS BRETALL SULLIVAN & SMITH
GROWTH EQUITY FUND (the "Fund"); and
WHEREAS, it is therefore desirable to have an investment advisory
agreement (i.e., this Agreement) relating to the Fund, which agreement will
apply only to this Fund;
NOW THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is hereby agreed by and among
the parties hereto as follows:
1. In General.
The Adviser agrees, all as more fully set forth herein, to act as
investment adviser to the Trust with respect to the investment of the assets
of the Fund and to supervise and arrange the purchase and sale of securities
held in the portfolio of the Fund.
2. Duties and Obligations of the Adviser with respect to Investment of
Assets of the Fund.
(a) Subject to the succeeding provisions of this section and subject to
the direction and control of the Board of Trustees of the Trust, the Adviser
shall:
(i) Decide what securities shall be purchased or sold by the
Trust with respect to the Fund and when; and
(ii) Arrange for the purchase and the sale of securities held in
the portfolio of the Fund by placing purchase and sale orders for the Trust
with respect to the Fund.
(b) Any investment purchases or sales made by the Adviser shall at all
times conform to, and be in accordance with, any requirements imposed by:
(1) the provisions of the 1940 Act and of any rules or regulations in force
thereunder; (2) any other applicable provisions of law; (3) the provisions
of the Declaration of Trust and By-Laws of the Trust as amended from time to
time; (4) any policies and determinations of the Board of Trustees of the
Trust; and (5) the fundamental policies of the Trust relating to the Fund,
as reflected in the Trust's registration statement under the 1940 Act
(including by reference the Statement of Additional Information) as such
registration statement is amended from time to time, or as amended by the
shareholders of the Fund.
(c) The Adviser shall give the Trust the benefit of its best judgment
and effort in rendering services hereunder, but the Adviser shall not be
liable for any loss sustained by reason of the purchase, sale or retention
of any security whether or not such purchase, sale or retention shall have
been based on its own investigation and research or upon investigation and
research made by any other individual, firm or corporation, if such
purchase, sale or retention shall have been selected in good faith. Nothing
herein contained shall, however, be construed to protect the Adviser against
any liability to the Trust or its security holders by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of its reckless disregard of obligations and duties
under this Agreement. The federal securities laws impose liabilities under
certain circumstances on persons who act in good faith, and therefore
nothing herein shall in any way constitute a waiver or limitation of any
rights which the Fund's shareholders may have under any federal securities
laws.
(d) Nothing in this Agreement shall prevent the Adviser or any
affiliated person (as defined in the 1940 Act) of the Adviser from acting as
investment adviser or manager and/or principal underwriter for any other
person, firm or corporation and shall not in any way limit or restrict the
Adviser or any such affiliated person from buying, selling or trading any
securities for its or their own accounts or the accounts of others for whom
it or they may be acting, provided, however, that the Adviser expressly
represents that it will undertake no activities which, in its judgment, will
adversely affect the performance of its obligations to the Trust under this
Agreement.
(e) It is agreed that the Adviser shall have no responsibility or
liability for the accuracy or completeness of the Trust's Registration
Statement under the 1940 Act or the Securities Act of 1933 except for
information supplied by the Adviser for inclusion therein. The Trust may
indemnify the Adviser to the full extent permitted by the Trust's
Declaration of Trust.
3. Broker-Dealer Relationships.
The Adviser is responsible for decisions to buy and sell securities for
the Fund, broker-dealer selection, and negotiation of brokerage commission
rates. The Adviser's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Adviser will take
the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the
size of and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the Fund
on a continuing basis. Accordingly, the price to the Fund in any transaction
may be less favorable than that available from another broker-dealer if the
difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies as the Board of
Trustees of the Trust may determine, the Adviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides brokerage or research services to the Adviser an amount
of commission for effecting a portfolio transaction in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Adviser's overall responsibilities
with respect to the Trust. The Adviser is further authorized to allocate the
orders placed by it on behalf of the Fund to such brokers or dealers who
provide research or statistical material, or other services, to the Trust,
the Adviser, or any affiliate of either. Such allocation shall be in such
amounts and proportions as the Adviser shall determine, and the Adviser
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis
therefor. The Adviser is also authorized to consider sales of shares as a
factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best execution, i.e., that such
brokers or dealers are able to execute the order promptly and at the best
obtainable securities price.
4. Allocation of Expenses.
The Adviser agrees that it will furnish the Trust, at the Adviser's
expense, with office space and facilities, equipment and clerical personnel
necessary for carrying out its duties under this Agreement. The Adviser will
also pay all compensation of any Trustees, officers and employees of the
Trust who are affiliated persons of the Adviser. All operating costs and
expenses relating to the Fund not expressly assumed by the Adviser under
this Agreement shall be paid by the Trust from the assets of the Fund,
including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of the
Trust's Trustees other than those affiliated with the Adviser or the
Manager; (v) legal and audit expenses; (vi) fees and expenses of the Trust's
custodian, shareholder servicing or transfer agent and accounting services
agent; (vii) expenses incident to the issuance of the Fund's shares,
including issuance on the payment of, or reinvestment of, dividends; (viii)
fees and expenses incident to the registration under Federal or state
securities laws of the Trust or the shares of the Fund; (ix) expenses of
preparing, printing and mailing reports and notices and proxy material to
shareholders of the Trust; (x) all other expenses incidental to holding
meetings of the Trust's shareholders; (xi) dues or assessments of or
contributions to the Investment Company Institute or any successor; (xii)
such non-recurring expenses as may arise, including litigation affecting the
Trust and the legal obligations which the Trust may have to indemnify its
officers and Trustees with respect thereto; and (xiii) all expenses which
the Trust or the Fund agrees to bear in any distribution agreement or in any
plan adopted by the Trust and/or a Fund pursuant to Rule 12b-1 under the
Act.
5. Compensation of the Adviser.
(a) The Trust agrees to pay the Adviser and the Adviser agrees to
accept as full compensation for all services rendered by the Adviser
hereunder, an annual management fee, payable monthly and computed on the
value of the net assets of the Fund at of the close of business each
business day at the annual rate of 0.75% of such net assets.
(b) The Adviser may reduce any portion of the compensation or
reimbursement of expenses due to it under this Agreement, or may agree to
make payments to limit the expenses which are the responsibility of the
Fund. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to
reduce any future compensation or reimbursement due to the Adviser hereunder
or to continue future payments. Any fee withheld from the Adviser under this
paragraph shall be reimbursed by the Fund to the Adviser if the aggregate
expenses for the next succeeding fiscal year do not exceed the any more
restrictive limitation to which the Adviser has agreed.
6. Duration and Termination.
(a) This Agreement shall go into effect on the date that is the latest
of (1) the execution of this Agreement, (2) the approval of the Agreement by
the Board of Trustees of the Trust and (3) the approval of the Agreement by
the shareholders of the Fund in a special meeting of shareholders of the
Fund and shall, unless terminated as hereinafter provided, continue in
effect for a period of two years from that date, and thereafter from year to
year, but only so long as such continuance is specifically approved at least
annually by the Trust's Board of Trustees, including the vote of a majority
of the Trustees who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any such party cast in person at a
meeting called for the purpose of voting on such approval, or by the vote of
the holders of a "majority" (as so defined) of the outstanding voting
securities of the Fund and by such a vote of the Trustees.
(b) This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Trust sixty (60) days' written notice (which notice
may be waived by the Trust) and may be terminated by the Trust at any time
without penalty upon giving the Adviser sixty (60) days' written notice
(which notice may be waived by the Adviser), provided that such termination
by the Trust shall be directed or approved by the vote of a majority of all
of its Trustees in office at the time or by the vote of the holders of a
majority (as defined in the 1940 Act) of the voting securities of the Trust
at the time outstanding and entitled to vote. This Agreement shall
automatically terminate in the event of its assignment (as so defined).
7. Agreement Binding Only on Fund Property.
The Adviser understands that the obligations of this Agreement are
not binding upon any shareholder of the Trust personally, but bind only the
Trust's property; the Adviser represents that it has notice of the
provisions of the Trust's Declaration of Trust disclaiming shareholder
liability for acts or obligations of the Trust. This Agreement has been
executed by or with reference to any Trustee in such person's capacity as a
Trustee, and the Trustees shall not be personally liable hereon.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by duly authorized persons and their seals to be
hereunto affixed, all as of the day and year first above written.
PROFESSIONALLY MANAGED PORTFOLIOS
By: _______________________________________
ATTEST:
-------------------------------------
HARRIS BRETALL SULLIVAN & SMITH, L.L.C.
By: _______________________________________
ATTEST:
-------------------------------------
PROXY
Harris Bretall Sullivan & Smith Growth Equity Fund
SPECIAL MEETING OF SHAREHOLDERS
________ __, 1997
SOLICITED ON BEHALF OF
THE BOARD OF TRUSTEES OF
PROFESSIONALLY MANAGED PORTFOLIOS
The undersigned hereby appoints _________________ and _____________, and
each of them, as proxies of the undersigned, each with the power to appoint his
substitute, for the Special Meeting of Shareholders of Harris Bretall Sullivan &
Smith Growth Equity Fund (the "Fund"), a series of Professionally Managed
Portfolios (the "Trust"), to be held on ________ __, 1997 at the offices of
Professionally Managed Portfolios, 2025 East Financial Way, Suite 101, Glendora,
California 91741, or at any and all adjournments thereof (the "Meeting"), to
vote, as designated below, all shares of the Fund, held by the undersigned at
the close of business on September 30, 1997. Capitalized terms used without
definition have the meanings given to them in the accompanying Proxy Statement.
A SIGNED PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL LISTED BELOW UNLESS YOU
HAVE SPECIFIED OTHERWISE. PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY. YOU
MAY VOTE ONLY IF YOU HELD SHARES IN THE FUND AT THE CLOSE OF BUSINESS ON
SEPTEMBER 30, 1997. YOUR SIGNATURE AUTHORIZES THE PROXIES TO VOTE IN THEIR
DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING,
INCLUDING WITHOUT LIMITATION ALL MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
1. Approval of the new Investment Management Agreement between the Adviser and
the Fund:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Dated: ______________, 1997
-----------------------------------
Signature
-----------------------------------
Title (if applicable)
-----------------------------------
Signature (if held jointly)
-----------------------------------
Title (if applicable)
Please sign exactly as name or names appear on your shareholder account
statement. When signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full title. If shares are
held jointly, each shareholder should sign.
