Matrix Growth Fund
Matrix Energing Growth Fund
Annual Report
December 31, 1997
<PAGE>
January 20, 1998
Dear Matrix Shareholder,
Stock prices continued their upward trek in 1997 as all major indexes enjoyed
solid gains. The S&P 500 advanced 33.3% while the Russell 2000 rose a
respectable 22.4%. Even more impressive than these recent gains is the
persistence of the advance in stock prices, as the S&P 500 has now enjoyed
positive returns for 12 consecutive quarters. In this favorable environment, the
Matrix Growth and Matrix Emerging Growth Funds gained 34.6% and 16.6% for the
year.
This impressive show of strength is largely the result of the relentless war on
inflation waged by central banks in recent years. While inflation and economic
growth have receded generally, growing corporate earnings have simply become
more valuable. And in an increasingly global economy, large US based
corporations are extending their brand franchises and global market share with
great success.
The less liquid emerging growth stocks have not been primary beneficiaries of
global expansion and in 1997 lagged large capitalization issues. Matrix Emerging
Growth was ahead 30.2% for the first nine months, but declined 10.5% during the
fourth quarter when investors abandoned small cap stocks in favor of the more
liquid large cap issues over fears of Asian financial turmoil.
Technology sector holdings with Asian based production suffered particularly
severe setbacks.
While we recognize that capital may award a premium price to more liquid issues
during periods of uncertainty, we believe that small growth companies are not
without appeal. Factors that favor smaller cap issues include; a more favorable
earnings outlook, less foreign earnings exposure, historically depressed
valuations, and muted investor interest. In addition, investment flows from
falling foreign markets have historically benefitted the smaller stock sector,
as has reduction in capital gains rates. Both of these influences are present in
the current capital market.
While the immediate circumstances of large cap stocks is more auspicious, it is
increasingly difficult to presume they can sustain their superior relative
performance. We believe the key to stock performance in 1998 will be
<PAGE>
continued moderate economic growth allowing interest rates to remain at benign
levels, while inflation and employment trends remain well behaved. The relative
success for emerging stocks in 1998 will depend on their ability to deliver
strong earnings growth relative to larger companies. Generally, capital is
willing to tolerate lower liquidity in pursuit of greater profits.
Any easing of the Asian crisis could fuel a very positive revaluation of
emerging growth stocks' strong fundamentals while removing a negative from the
market generally. Accordingly, we see positive potential for stocks in 1998
though not on the scale of 1997.
To improve service level to our shareholders Matrix Growth Funds will initiate a
site on the world wide web in the upcoming year. This service will improve our
shareholders access to price and other information about the Matrix Funds. We
look forward to maintaining Matrix Growth and Matrix Emerging Growth Funds as
rewarding holdings for our current and future shareholders.
Sincerely,
SENA WELLER ROHS WILLIAMS INC
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE MATRIX GROWTH FUND AND THE S & P 500 INDEX.
Average Annual Total Return
One Year Five Year Since Inception
34.75% 15.30% 11.86%
Matrix Growth S&P 500 Index
31-Dec-89 13,443 16,778
31-Dec-90 12,837 16,292
31-Dec-91 17,224 21,253
31-Dec-92 18,085 22,882
31-Dec-93 19,757 25,181
31-Dec-94 18,804 25,502
31-Dec-95 23,226 35,073
31-Dec-96 27,391 43,137
31-Dec-97 36,859 57,521
Past Performance is not predictive of future performance
The Fund's date of inception is May 14, 1986. The Advisor,
Sena Wller Rohs Williams, Inc. became invetment advisor on January 1, 1989,
which is depicted in the above graph.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE MATRIX EMERGING GROWTH FUND AND THE S & P 500
AND THE RUSSELL 2000 INDEXES.
Average Annual Total Return
One Year Since Inception
16.58% 20.59%
Matrix Emerging S&P 500 Russell 2000
Growth Fund Index Index
4-Apr-95 10,000 10,000 10,000
30-Jun-95 10,790 10,853 10,913
31-Dec-95 12,980 12,419 12,251
30-Jun-96 14,490 13,666 13,520
31-Dec-96 14,339 15,274 14,272
30-Jun-97 15,779 18,411 15,728
31-Dec-97 16,718 20,367 17,464
Past Performance is not predictive of future performance
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 93.98% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Conglomerates: 6.42%
<S> <C> <C>
11,000 General Electric Company................................................ $ 807,124
---------
Consumer Cyclical: 8.86%
17,088 Mattel, Inc............................................................. 636,528
10,000 McDonald's Corp......................................................... 477,500
-------
1,114,028
---------
Consumer Non-Cyclical: 17.79%
12,000 Albertson's, Inc........................................................ 568,500
9,000 Colgate-Palmolive Company............................................... 661,500
8,000 Health Care and Retirement Corp.*....................................... 322,000
11,000 Schering-Plough Corp.................................................... 683,375
-------
2,235,375
---------
Energy: 11.43%
4,000 British Petroleum Company, ADR.......................................... 318,750
13,000 Enron Corp.............................................................. 540,313
8,000 Mobil Corp.............................................................. 577,500
-------
1,436,563
---------
Financial: 14.90%
8,000 American Express Company................................................ 714,000
30,000 Norwest Corp............................................................ 1,158,750
---------
1,872,750
---------
Industrials: 8.81%
10,000 AlliedSignal, Inc....................................................... 389,375
16,125 Thermo Electron Corp.*.................................................. 717,563
-------
1,106,938
---------
Technology: 15.83%
11,200 Automatic Data Processing, Inc.......................................... 687,400
10,125 Computer Associates International, Inc.................................. 535,359
3,000 Motorola, Inc........................................................... 171,188
16,000 Stryker Corp............................................................ 596,000
-------
1,989,947
---------
<PAGE>
Matrix Growth Fund
SCHEDULE OF INVESTMENTS at December 31, 1997, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities: 9.94%
6,500 Ameritech Corp.......................................................... $ 523,250
24,000 WorldCom, Inc.*......................................................... 726,000
-------
1,249,250
---------
Total Common Stocks (cost $3,842,656)................................... 11,811,975
----------
Principal Amount REPURCHASE AGREEMENT: 6.00%
- ------------------------------------------------------------------------------------------------------------------------------------
$754,000 Star Bank Repurchase Agreement, 5.50%, dated 12/31/97,
due 1/2/98, collateralized by $755,000 GNMA,
(proceeds $754,230) (cost $754,000)..................................... 754,000
-------
Total Investment in Securities (cost $4,596,656+): 99.98%............... 12,565,975
Other Assets less Liabilities: 0.02%.................................... 2,175
-----
Total Net Assets: 100.00% .............................................. $12,568,150
===========
<FN>
* Non-income producing security.
+ At December 31, 1997, the cost of investments for Federal tax purposes was the
same as the basis for financial reporting. Unrealized appreciation and
depreciation of securities were as follows:
Gross unrealized appreciation........................................... $ 7,981,746
Gross unrealized depreciation........................................... (12,427)
-------
Net unrealized appreciation...................................... $ 7,969,319
===========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (cost $4,596,656) ................................. $12,565,975
Cash................................................................................... 888
Receivables:
Fund shares sold................................................................. 2,650
Dividends and interest........................................................... 16,673
Deferred organization costs............................................................ 9,985
Prepaid expenses and other assets...................................................... 3,379
-----
Total assets .............................................................. 12,599,550
----------
LIABILITIES
Payables:
Advisory fees.................................................................... 7,506
Administration fee............................................................... 2,671
Distribution fees................................................................ 7,633
Accrued expenses ...................................................................... 13,590
------
Total liabilities.......................................................... 31,400
------
NET ASSETS $12,568,150
===========
Net asset value, offering and redemption price per share
($12,568,150/674,212 shares outstanding;
unlimited number of shares authorized without par value) ........................ $18.64
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $ 4,340,511
Undistributed net realized gain on investments......................................... 258,320
Net unrealized appreciation on investments............................................. 7,969,319
---------
Net assets ...................................................................... $12,568,150
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Year Ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Dividends........................................................................ $ 147,341
Interest......................................................................... 16,454
------
Total income .............................................................. 163,795
-------
Expenses
Advisory fees ................................................................... 104,356
Administration fee............................................................... 30,000
Distribution fees................................................................ 28,988
Fund accounting fees............................................................. 15,366
Audit fee........................................................................ 13,174
Transfer agent fees.............................................................. 12,640
Custody fees..................................................................... 6,909
Amortization of deferred organization costs...................................... 5,000
Reports to shareholders.......................................................... 4,470
Legal fees....................................................................... 3,771
Trustee fees..................................................................... 3,734
Miscellaneous.................................................................... 1,126
-----
Total expenses............................................................. 229,534
Less: expenses waived and reimbursed....................................... (26,619)
-------
Net expenses............................................................... 202,915
-------
Net investment loss ............................................... (39,120)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions .......................................... 1,292,345
Net change in unrealized appreciation on investments .................................. 2,104,427
---------
Net realized and unrealized gain on investments ........................... 3,396,772
---------
Net increase in net assets resulting from operations ................ $ 3,357,652
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
December 31, December 31,
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment loss........................................................ $ (39,120) $ (9,270)
Net realized gain from security transactions .............................. 1,292,345 938,727
Net change in unrealized appreciation on investments....................... 2,104,427 1,096,723
--------- ---------
Net increase in net assets resulting from operations ................ 3,357,652 2,026,180
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain on investments........................................... (1,034,432) (1,769,911)
---------- ----------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets derived from net change in
outstanding shares (a) .............................................. (1,829,826) (489,004)
---------- --------
Total increase (decrease) in net assets ............................. 493,394 (232,735)
NET ASSETS
Beginning of year.......................................................... 12,074,756 12,307,491
---------- ----------
End of year ............................................................... $12,568,150 $12,074,756
=========== ===========
<FN>
(a) A summary of capital shares transactions is as follows:
Year Ended Year Ended
December 31, 1997 December 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ...................................... 35,928 $ 673,028 39,993 $ 656,241
Shares issued in reinvestment of distribution..... 49,749 907,913 106,649 1,609,332
Shares redeemed .................................. (211,493) (3,410,767) (169,234) (2,754,577)
-------- ---------- -------- ----------
Net decrease ..................................... (125,816) $(1,829,826) (22,592) $ (489,004)
======== =========== ======= ==========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each year
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $15.09 $14.96 $13.45 $14.51 $14.05
------ ------ ------ ------ ------
Income from investment operations:
Net investment (loss) income.......................... (.06) (.01) .10 .05 .06
Net realized and unrealized gain (loss)
on investments .................................... 5.24 2.69 3.06 (.75) 1.25
---- ---- ---- ---- ----
Total from investment operations............................ 5.18 2.68 3.16 (.70) 1.31
---- ---- ---- ---- ----
Less distributions:
From net investment income............................ 0.00 0.00 (.10) (.05) (.06)
From net capital gains ............................... (1.63) (2.55) (1.55) (.31) (.79)
----- ----- ----- ---- ----
Total distributions......................................... (1.63) (2.55) (1.65) (.36) (.85)
----- ----- ----- ---- ----
Net asset value, end of year................................ $18.64 $15.09 $14.96 $13.45 $14.51
====== ====== ====== ====== ======
Total return ............................................... 34.57% 17.93% 23.52% (4.82)% 9.32%
Ratios/supplemental data:
Net assets, end of year (millions)................ $ 12.6 $ 12.1 $ 12.3 $ 15.5 $ 19.1
Ratio of expenses to average net assets:
Before expense reimbursement ......................... 1.98% 1.99% 1.76% 1.84% 1.67%
After expense reimbursement........................... 1.75% 1.75% 1.75% 1.84% 1.67%
Ratio of net investment (loss) income to average net assets:
Before expense reimbursement ......................... (0.57)% (0.33)% 0.47% 0.29% 0.40%
After expense reimbursement .......................... (0.34)% (0.08)% 0.48% 0.29% 0.40%
Portfolio turnover rate .......................... 0% 0% 27% 25% 30%
Average commission rate paid per share++........... $.1239 $.0665 -- -- --
<FN>
++For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate paid per share for security trades on
which commissions are charged. This amount may vary from period to period and
fund to fund depending on the mix of trades executed in various markets where
trading practices and commission rate structures may differ.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Energing Growth Fund
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 95.68% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Apparel Manufacturing: 0.67%
<S> <C> <C>
2,350 Novel Denim Holdings Ltd................................................ $ 47,000
--------
Chemicals: 1.62%
1,500 Cambrex Corp.*.......................................................... 69,000
1,200 OM Group, Inc.*......................................................... 43,950
------
112,950
-------
Commercial Services: 1.03%
4,500 International Total Services, Inc....................................... 71,438
- ------
Computer Networking: 1.80%
2,250 Cisco Systems, Inc...................................................... 125,437
-------
Consulting Services: 1.13%
3,500 Hagler Bailly, Inc...................................................... 78,750
------
Distribution/Wholesale: 1.49%
7,500 Brightpoint, Inc........................................................ 104,062
-------
Energy: 7.35%
7,000 Comstock Resources, Inc................................................. 83,562
3,000 Cross Timbers Oil Company*.............................................. 74,812
3,500 Marine Drilling Companies, Inc.......................................... 72,625
6,000 R&B Falcon Corp......................................................... 210,375
2,500 United Meridian Corp.................................................... 70,313
------
511,687
-------
Financial Services: 11.13%
3,500 Amerin Corp............................................................. 98,000
5,000 FIRSTPLUS Financial Group, Inc.......................................... 191,875
2,756 Litchfield Financial Corp.*............................................. 53,398
1,500 Mid Ocean, Ltd. ORD Shares*............................................. 81,375
2,666 Mutual Risk Management, Ltd.*........................................... 79,813
2,100 Partner Re, Ltd.*....................................................... 97,388
5,000 PMT Services, Inc....................................................... 69,375
1,750 Vesta Insurance Group, Inc.*............................................ 103,906
-------
775,130
-------
<PAGE>
Matrix Energing Growth Fund
SCHEDULE OF INVESTMENTS at December 31, 1997, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care Services: 4.82%
3,500 Healthcare Recoveries, Inc.............................................. $ 77,875
4,000 HEALTHSOUTH Corp........................................................ 111,000
3,000 Res-Care, Inc........................................................... 87,000
1,200 United Healthcare Corp.*................................................ 59,625
------
335,500
-------
Hotels and Motels: 0.91%
6,500 Execustay Corp.......................................................... 63,375
------
Industrial and Commercial Services: 5.45%
2,500 AccuStaff, Inc.......................................................... 57,500
1,000 Corrections Corp. of America............................................ 37,062
3,000 Norrell Corp.*.......................................................... 59,625
5,000 StaffMark, Inc.......................................................... 158,125
2,500 Wackenhut Corrections Corp.............................................. 67,188
------
379,500
-------
Industrial Technology: 0.65%
2,500 Aftermarket Technology Corp............................................. 45,312
- ------
Internet Content: 0.63%
1,750 At Home Corp............................................................ 43,969
------
Manufactured Housing: 2.16%
3,750 American Homestar Corp.................................................. 61,875
3,125 Palm Harbor Homes, Inc.................................................. 88,281
------
150,156
-------
Media Broadcasting: 2.30%
1,300 Lin Television Corp..................................................... 70,850
2,300 Young Broadcasting Corp., Class A....................................... 89,125
------
159,975
-------
Medical - Advance Devices: 3.99%
3,000 Guidant Corp.*.......................................................... 186,750
4,250 Physician Sales and Service, Inc........................................ 91,375
------
278,125
-------
<PAGE>
Matrix Energing Growth Fund
SCHEDULE OF INVESTMENTS at December 31, 1997, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Medical - Hospitals: 2.47%
3,000 PMR Corp................................................................ $ 60,000
3,375 Tenet Healthcare Corp................................................... 111,797
-------
171,797
-------
Medical and Dental Practices Management: 4.66%
3,800 American Oncology Resources, Inc........................................ 60,800
4,000 AmeriPath, Inc.......................................................... 68,000
5,000 Apple Orthodontix, Inc.................................................. 59,375
6,000 Castle Dental Centers, Inc.............................................. 46,500
1,000 OrthAlliance, Inc....................................................... 9,125
3,000 PhyCor, Inc............................................................. 81,000
------
324,800
-------
Medical Labs and Testing: 2.69%
2,500 BioReliance Corp........................................................ 57,500
3,000 Covance, Inc............................................................ 59,625
4,200 Kendle International, Inc............................................... 70,350
------
187,475
-------
Optical Supplies: 1.28%
3,400 Ocular Sciences, Inc.................................................... 89,250
------
Pharmaceuticals: 6.34%
2,300 Elan Corp., PLC - ADR................................................... 117,731
2,000 Express Scripts, Inc., Class A.......................................... 120,000
2,600 Transkaryotic Therapies, Inc............................................ 91,325
3,478 Watson Pharmaceuticals, Inc............................................. 112,818
-------
441,874
-------
Real Estate Investment/Management: 1.51%
1,500 LaSalle Partners, Inc................................................... 53,438
2,000 Trammell Crow Company................................................... 51,500
------
104,938
-------
Resorts: 0.64%
3,000 American Skiing Corp.................................................... 44,625
------
<PAGE>
Matrix Energing Growth Fund
SCHEDULE OF INVESTMENTS at December 31, 1997, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Restaurants: 0.66%
4,000 Star Buffet, Inc........................................................ $ 46,000
--------
Retailers - Specialty: 3.46%
2,500 99 Cents Only Stores.................................................... 73,750
3,000 General Nutrition Companies, Inc........................................ 102,000
4,562 OfficeMax, Inc.......................................................... 65,009
------
240,759
-------
Retirement/Aged Care: 1.24%
2,000 Sunrise Assisted Living, Inc............................................ 86,250
------
Semiconductors and Related: 0.92%
950 ASM Lithography Holdings, NV............................................ 64,125
------
Software and Processing: 11.03%
2,250 Advent Software, Inc.................................................... 64,406
2,000 Arbor Software Corp..................................................... 81,000
4,500 Cadence Design Systems, Inc............................................. 110,250
2,400 HNC Software, Inc....................................................... 103,200
2,350 Hyperion Software Corp.................................................. 84,012
2,000 J.D. Edwards & Company.................................................. 59,000
2,925 Oracle Corp............................................................. 65,264
1,500 Parametric Technology Company........................................... 71,063
5,000 Phoenix International Ltd., Inc......................................... 73,750
2,500 Structural Dynamics Research Corp....................................... 56,250
------
768,195
-------
Telecommunications Equipment: 7.43%
3,000 Advanced Fibre Communications, Inc...................................... 87,375
3,500 Boston Technology, Inc.................................................. 87,937
3,625 Excel Switching Corp.................................................... 64,797
3,000 MRV Communications, Inc................................................. 71,625
1,500 QUALCOMM, Inc........................................................... 75,750
1,250 Tellabs, Inc............................................................ 66,094
3,150 Yurie Systems, Inc...................................................... 63,591
------
517,169
-------
<PAGE>
Matrix Energing Growth Fund
SCHEDULE OF INVESTMENTS at December 31, 1997, Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Telephone Systems: 3.11%
1,300 Pacific Gateway Exchange, Inc........................................... $ 69,956
1,750 Star Telecommunications, Inc............................................ 56,219
3,000 WorldCom, Inc........................................................... 90,750
------
216,925
-------
Travel Services: 1.11%
2,800 Galileo International, Inc.*............................................ 77,350
------
Total Common Stocks (cost $4,444,455)................................... 6,663,898
---------
Principal Amount REPURCHASE AGREEMENT: 5.94%
- ------------------------------------------------------------------------------------------------------------------------------------
$414,000 Star Bank Repurchase Agreement, 5.50%, dated 12/31/97, due 1/2/98,
collateralized by $415,000 GNMA, (proceeds $414,126)
(cost $414,000)......................................................... 414,000
-------
Total Investment in Securities (cost $4,858,455+): 101.62%.............. 7,077,898
Liabilities in excess of Other Assets: (1.62)%.......................... (113,188)
--------
Total Net Assets: 100.00% .............................................. $ 6,964,710
===========
<FN>
* Income-producing security.
+ At December 31, 1997, the cost of investments for Federal income tax purposes
was the same as the basis for financial reporting. Unrealized appreciation and
depreciation of securities were as follows:
Gross unrealized appreciation........................................... $ 2,407,785
Gross unrealized depreciation........................................... (188,342)
--------
Net unrealized appreciation...................................... $ 2,219,443
===========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Energing Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (cost $4,858,455) ................................. $ 7,077,898
Cash .................................................................................. 528
Dividends and interest receivable...................................................... 308
Deferred organization costs............................................................ 13,779
Prepaid expenses and other assets...................................................... 3,255
-----
Total assets .............................................................. 7,095,768
---------
LIABILITIES
Payables:
Advisory fees.................................................................... 2,292
Administration fee............................................................... 2,548
Distribution fees................................................................ 4,544
Securities purchased............................................................. 107,268
Accrued expenses ...................................................................... 14,406
------
Total liabilities.......................................................... 131,058
-------
NET ASSETS $ 6,964,710
===========
Net asset value, offering and redemption price per share
($6,964,710/426,452 shares outstanding; unlimited number
of shares authorized without par value) ......................................... $16.33
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $ 4,729,168
Undistributed net realized gain on investments......................................... 16,099
Net unrealized appreciation on investments............................................. 2,219,443
---------
Net assets ...................................................................... $ 6,964,710
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Energing Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Year Ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Interest ........................................................................ $ 9,384
Dividends........................................................................ 23,888
------
Total income .............................................................. 33,272
------
Expenses
Advisory fees ................................................................... 57,805
Administration fee............................................................... 30,000
Distribution fees................................................................ 16,057
Fund accounting fees............................................................. 13,787
Audit fee........................................................................ 12,904
Transfer agent fees.............................................................. 10,700
Custody fees..................................................................... 7,590
Armortization of deferred organization costs..................................... 6,001
Registration fees................................................................ 4,933
Miscellaneous.................................................................... 4,232
Trustee fees..................................................................... 3,879
Legal fees....................................................................... 3,199
Reports to shareholders.......................................................... 3,079
-----
Total expenses............................................................. 174,166
Less: expenses waived and reimbursed....................................... (45,537)
-------
Net expenses............................................................... 128,629
-------
Net investment loss ............................................... (95,357)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions .......................................... 245,027
Net change in unrealized appreciation on investments .................................. 804,993
-------
Net realized and unrealized gain on investments ........................... 1,050,020
---------
Net increase in net assets resulting from operations ................ $ 954,663
=========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Energing Growth Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
December December
31, 1997 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment loss........................................................ $ (95,357) $ (73,819)
Net realized gain (loss) from security transactions ....................... 245,027 (52,283)
Net change in unrealized appreciation on investments....................... 804,993 632,937
------- -------
Net increase in net assets resulting from operations ................ 954,663 506,835
------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain from security transactions............................... (108,341) (39,249)
-------- -------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding
shares (a) .......................................................... 456,780 920,395
------- -------
Total increase in net assets ........................................ 1,303,102 1,387,981
NET ASSETS
Beginning of year.......................................................... 5,661,608 4,273,627
--------- ---------
End of year ............................................................... $ 6,964,710 $5,661,608
=========== ==========
<FN>
(a) A summary of capital shares transactions is as follows:
Year Ended Year Ended
December 31, 1997 December 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ...................................... 49,723 $ 772,800 79,088 $1,073,686
Shares issued in reinvestment of distribution.... 3,456 53,845 2,621 37,316
Shares redeemed .................................. (24,207) (369,865) (13,397) (190,607)
------- -------- ------- --------
Net increase ..................................... 28,972 $ 456,780 68,312 $ 920,395
====== ========= ====== =========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Energing Growth Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------------------------
Year Year April 4, 1995*
Ended Ended through
December 31, 1997 December 31, 1996 December 31,1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period...................... $14.24 $12.98 $10.00
------ ------ ------
Income from investment operations:
Net investment loss................................. (.21) (.18) (.03)
Net realized and unrealized gain on investments..... 2.56 1.54 3.01
---- ---- ----
Total from investment operations.......................... 2.35 1.36 2.98
---- ---- ----
Less distributions:
From net capital gains.............................. (.26) (.10) 0.00
---- ---- ----
Net asset value, end of period............................ $16.33 $14.24 $12.98
====== ====== ======
Total return.............................................. 16.58% 10.47% 42.09%+
Ratios/supplemental data:
Net assets, end of period (millions)...................... $ 7.0 $ 5.7 $ 4.3
Ratio of expenses to average net assets:
Before expense reimbursement........................ 2.71% 3.13% 3.43%+
After expense reimbursement......................... 2.00% 2.00% 2.00%+
Ratio of net investment loss to average net assets:
Before expense reimbursement........................ (2.19)% (2.53)% (1.87)%+
After expense reimbursement......................... (1.48)% (1.40)% (0.43)%+
Portfolio turnover rate................................... 41.11% 29.54% 9.95%
Average commission rate paid per share++................... $.0746 $.0992 --
<FN>
*Commencement of operations.
+Annualized.
++For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate paid per share for security trades on
which commissions are charged. This amount may vary from period to period and
fund to fund depending on the mix of trades executed in various markets where
trading practices and commission rate structures may differ.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Matrix Growth Fund
Matrix Energing Growth Fund
NOTES TO FINANCIAL STATEMENTS at December 31, 1997
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Matrix Growth Fund and the Matrix Emerging Growth Fund (the "Funds")
are each a series of shares of beneficial interest of Professionally Managed
Portfolios (the "Trust"), which is registered under the Investment Company Act
of 1940 (the "1940 Act") as a diversified, open-end management investment
company. The Funds began operations on May 14, 1986 and April 4, 1995,
respectively. Prior to January 1, 1995, Matrix Growth Fund was a series of
shares in the Gateway Trust, a family of four no-load, diversified mutual funds
registered under the 1940 Act. The investment objectives of the Funds are
long-term growth of capital and long-term capital appreciation, respectively.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. These policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities traded on a national
securities exchange or included in the NASDAQ National Market System
are valued at the last reported sales price at the close of regular
trading on the last business day of the period; securities traded on
an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the last reported bid
price. Securities for which quotations are not readily available are
valued at their respective fair values as determined in good faith by
the Board of Trustees. Short-term investments are stated at cost,
which when combined with accrued interest, approximates market value.
B. Federal Income Taxes. The Funds intend to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of their taxable income
to their shareholders. Therefore, no federal income tax provision is
required.
C. Security Transactions, Investment Income and Distributions. As is
common in the industry, security transactions are accounted for on
the trade date. The cost of securities owned on realized
transactions is relieved on a first-in, first-out basis. Dividend
income and distributions to shareholders are recorded on the
ex-dividend date. D. Deferred Organization Costs. The costs incurred
by the Funds with respect to adopting their current management and
trust agreements, and initial organization for Emerging Growth, have
been deferred and are being amortized using the straight-line method
over a period of five years from January 1, 1995 for Growth and
April 4, 1995 (commencement of operations) for Emerging Growth.
E. Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
<PAGE>
Matrix Growth Fund
Matrix Energing Growth Fund
NOTES TO FINANCIAL STATEMENTS at December 31, 1997, Continued
- --------------------------------------------------------------------------------
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the year ended December 31, 1997, Sena Weller Rohs Williams, Inc. (the
"Advisor") provided the Funds with investment management services under an
Investment Advisory Agreement. The Advisor furnished all investment advice,
office space and certain administrative services, and most of the personnel
needed by the Funds. As compensation for its services, the Advisor was entitled
to a monthly fee at the annual rate of 0.90% based upon the average daily net
assets of the Funds up to $50 million per Fund, 0.70% of the next $50 million
and 0.60% of all such assets over $100 million.
The Advisor has agreed to reduce fees payable to it by the Funds and
reimburse other expenses to the extent necessary to limit the Funds' aggregate
annual operating expenses, excluding brokerage commissions and other portfolio
transaction expenses, interest, taxes, capital expenditures and extraordinary
expenses, to 1.75% and 2.00%, respectively, of average daily net assets through
December 31, 1997. As a result, the Advisor will reimburse the Funds for
expenses in excess of the limit in the amounts of $26,619 for Matrix Growth and
$40,592 for Matrix Emerging Growth, respectively.
Investment Company Administration Corporation (the "Administrator") acts
as the Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Funds; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Funds' custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Funds'
expense accruals. For its services, the Administrator receives a monthly fee
from each Fund at the following annual rate:
Under $15 million $30,000
$15 to $50 million 0.20% of average daily net assets
$50 to $100 million 0.15% of average daily net assets
$100 to $150 million 0.10% of average daily net assets
Over $150 million 0.05% of average daily net assets
For the year ended December 31, 1997, the Administrator voluntarily waived
$4,945 of its fee, for the Matrix Emerging Growth Fund.
Reynolds DeWitt Securities Company (the "Distributor") acts as the Funds'
principal underwriter in a continuous public offering of the Funds' shares. The
Distributor is an affiliate of the Advisor.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator.
<PAGE>
Matrix Growth Fund
Matrix Energing Growth Fund
NOTES TO FINANCIAL STATEMENTS at December 31, 1997, Continued
- --------------------------------------------------------------------------------
NOTE 4 - DISTRIBUTION COSTS
The Funds have adopted a Distribution Plan (the "Plan") in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that the Funds will pay a fee
to the Advisor as Distribution Coordinator at an annual rate of up to 0.25% of
the average daily net assets of the Funds. The fee is paid to the Advisor as
reimbursement for, or in anticipation of, expenses incurred for
distribution-related activity. For the year ended December 31, 1997, the Matrix
Growth Fund and the Matrix Emerging Growth Fund, paid fees of $28,988 and
$16,057, respectively, to the Advisor.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, other
than short-term investments, were $0 and $3,164,883, respectively, for the
Matrix Growth Fund and $2,856,896 and $2,427,471, respectively, for the Matrix
Emerging Growth Fund.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
Professionally Managed Portfolios
We have audited the accompanying statement of assets and liabilities of the
Matrix Growth Fund and of Matrix Emerging Growth Fund, each a series of shares
of the Professionally Managed Portfolios, including the schedules of investments
as of December 31, 1997, and the related statements of operations and changes in
net assets and the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
statements and financial highlights presented for the year ended December 31,
1996 and prior were audited by other auditors whose report dated February 9,
1997, expressed an unqualified opinion on those statements.
We conducted our audits 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
December 31, 1997, by correspondence with the custodian and brokers. Our 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 audits provide a reasonable basis for our
opinion.
In our opinion the 1997 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Matrix Growth Fund and Matrix Emerging Growth Fund as of December 31, 1997, the
results of their operations, the changes in their net assets, and their
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 16, 1998
<PAGE>
Advisor
Sena Weller Rohs Williams, Inc.
300 Main Street
Cincinnati, Ohio 45202
(513) 621-2875
(800) 877-3344
o
Distributor
Reynolds DeWitt Securities Company
a division of Sena Weller Rohs Williams, Inc.
300 Main Street
Cincinnati, Ohio 45202
(513) 621-2875
(800) 877-3344
o
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
o
Transfer Agent
American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
o
Auditors
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
o
Legal Counsel
Paul, Hastings, Janofsky & Walker, LLP
345 California Street, 29th Floor
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.
