SECURITIES ACT FILE NO. 33-12213
INVESTMENT COMPANY ACT FILE NO. 811-5037
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post Effective Amendment No. 49 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 50 [X]
(Check appropriate box or boxes)
PROFESSIONALLY MANAGED PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
479 West 22nd Street
New York, NY 10011
Registrant's Telephone Number, including Area Code:
(212) 633-9700
Steven J. Paggioli
Professionally Managed Portfolios
479 West 22nd Street
New York, NY 10011
(Name and Address of Agent for Service)
Copy to:
Julie Allecta, Esq.
Paul, Hastings, Janofsky & Walker
345 California Street
San Francisco, CA 94104
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It is proposed that this filing will become effective (check appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[X] On July 10, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 495)
N-1A Item No. Location
Part A
Item 1. Cover Page........................... Cover Page
Item 2. Synopsis............................. Expense
Table
Item 3. Financial Highlights................. Financial
Highlights
Item 4. General Description of Registrant.... Objective and
Investment
Approach of the
Funds
Item 5. Management of the Funds.............. Management
of the Funds
Item 5A Management's Discussion of Fund See Annual
Performance Reports to
Shareholders
Item 6. Capital Stock and Other Securities. . . Distributions
and Taxes;
How the
Funds' Per
Share Value
is Determined
Item 7. Purchase of Securities Being Offered . . How to Invest
in the Funds;
How the
Funds' Per
Share Value
is Determined
Item 8. Redemption or Repurchase. . . . . . . . How to Redeem
an Investment
in the Funds
Item 9. Pending Legal Proceedings . . . . . . . N/A
Part B
Item 10. Cover Page ............................. Cover Page
Item 11. Table of Contents....................... Table of
Contents
Item 12. General Information and History . . . . The Trust;
General
Information
Item 13 Investment Objectives and Policies .... Investment
Objective and
Policies;
Investment
Restrictions
Item 14. Management of the Fund................... Trustees and
Executive Officers
Item 15. Control Persons and Principal Holders
of Securities............................ General Information
Item 16. Investment Advisory and Other Services.... The Funds' Investment
Advisor; the Funds'
Administrator; General
Information
Item 17. Brokerage Allocation...................... Execution of
Portfolio
Transactions
Item 18. Capital Stock and Other Securities........ General
Information
Item 19. Purchase, Redemption and Pricing of
Shares Being Offered.............. Additional
Purchase and
Redemption
Information
Item 20. Tax Status.............................. Distributions
and Tax Infor-
mation
Item 21. Underwriters............................ The Funds'
Distributor
Item 22. Performance Information.................. Performance
Information
Item 23. Financial Statements.................... N/A
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement
<PAGE>
TITAN FINANCIAL SERVICES FUND
9672 Pennsylvania Avenue
Upper Marlboro, Maryland 20772
888-44-TITAN
Account Inquiries 1-800-282-2340
Titan Financial Services Fund (the "Fund"), is a mutual fund with the primary
objective of capital appreciation. Its secondary objective is moderate income.
The Fund will seek to achieve its objectives by investing principally in equity
securities of financial services companies, which include commercial banks,
consumer banks, savings and loan institutions, insurance companies, finance
companies, mortgage and other lenders, securities brokerage companies, credit
card providers, service providers to the banking and financial services sectors
and holding companies. See "Investment Objectives and Policies." No assurance
can be given that the Fund's investment objectives will be realized.
This Prospectus concisely sets forth information about the Fund that you should
know before investing. Please retain this Prospectus for future reference. A
Statement of Additional Information ("SAI"), dated July 10,1998 (which is
incorporated by reference herein), is on file with the Securities and Exchange
Commission. You can obtain a free copy of the SAI, and further inquiries can be
made, by contacting the Fund, or by calling 888-44-TITAN. The SEC maintains an
internet site (http://www.sec.gov) that contains the SAI, other material
incorporated by reference and information about other companies that file
electronically with the SEC.
Table of Contents
Prospectus Summary 2
Expenses of Investing in the Fund 3
Financial Highlights 4
Investment Objectives and Policies; Risk Factors 5
Management and Administration of the Fund 8
Purchase of Fund Shares 9
How to Redeem an Investment in the Fund 10
Plan of Distribution 11
Determination of Net Asset Value 11
Dividends, Distributions and Taxes 11
Performance Information 12
General Information 12
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED OR ENDORSED
BY ANY BANK. SHARES OF THE FUND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC"), FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
Prospectus dated July 10, 1998
TITAN FINANCIAL SERVICES FUND
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information included elsewhere in this Prospectus.
The Fund. Titan Financial Services Fund (the "Fund"), a diversified,
professionally managed mutual fund, is a separate series of Professionally
Managed Portfolios (the "Trust"), a registered open-end management investment
company.
Investment Objectives and Policies. Capital appreciation and, secondarily,
moderate income; invests principally in equity securities of financial services
companies, which include commercial banks, consumer banks, savings and loan
institutions, insurance companies, finance companies, mortgage and other
lenders, securities brokerage companies, credit card providers, service
providers to the banking and financial services sectors and holding companies.
<PAGE>
Investment Adviser. Titan Investment Advisers, LLC (the "Investment Adviser").
See "Management and Administration of the Fund."
Administrator. Investment Company Administration Corporation (the
"Administrator"). See "Management and Administration of the Fund."
Purchases. Shares of the Fund are available without a sales charge. See
"Purchase of Fund Shares."
Redemptions. The Fund's shareholders may redeem shares at net asset value
through American Data Services, Inc., the Fund's transfer agent (the "Transfer
Agent").
Dividends. Declared and paid annually; net capital gain also is distributed
annually. See "Dividends, Distributions and Taxes."
Minimum Purchase. $5,000 for first purchase ($2,000 for Individual Retirement
Accounts); $100 for subsequent purchases.
Who Should Invest. The Fund invests primarily in equity securities of financial
services companies, which include commercial banks, consumer banks, savings and
loan institutions, insurance companies, finance companies, mortgage and other
lenders, securities brokerage companies, credit card providers, service
providers to the banking and financial services sectors and holding companies.
Accordingly, the Fund is designed for investors who are seeking capital
appreciation potential and to a lesser extent, moderate income, for a portion of
their assets and who can assume the risks of greater fluctuation of market value
resulting from investment in a portfolio concentrated in the banking and savings
and loan industries. While the Fund is not intended to provide a complete or
balanced investment program it can serve as one component of an investor's
long-term program to accumulate assets for retirement, college tuition or other
major goals.
Risk Factors. There can be no assurance that the Fund will achieve its
investment objective, and the Fund's net asset value will fluctuate based upon
changes in the value of its portfolio securities. The Fund's concentration in
the financial services industries subjects its shares to greater risk than the
shares of a fund whose portfolio is not so concentrated and, in particular, its
shares will be affected by economic, legislative and regulatory developments
impacting those industries. Neither the federal insurance of bank and savings
and loan deposits nor governmental regulation of the bank and savings and loan
industries ensures the solvency or profitability of commercial banks and thrifts
or their holding companies or insurers against the risks of investing in the
equity securities issued by these institutions. The Fund's investments in
foreign securities and its use of options also entail special risks.
EXPENSES OF INVESTING IN THE FUND
The following table is intended to assist investors in understanding the
expenses associated with investing in the Fund.
Shareholder Transactions Costs:
Maximum sales charge on purchases (as a % of offering price) NONE
Sales charges on reinvested distributions NONE
Deferred sales charges NONE
Redemption fee1 1.00%
Annual Fund Operating Expenses (as a % of average net assets):
Investment advisory fees 1.00%
12b-1 distribution and service fees2 0.25%
Other expenses (including recoupment) 1.02%
Total Fund Operating Expenses
(including recoupment)2 2.27%
1 A redemption fee is assessed on redemptions of shares purchased and redeemed
within one year of purchase; the fee is 1.00% of the value of the shares
redeemed in the first year.
2 The Fund has adopted a plan of distribution under which the fund will pay a
distribution fee at an annual rate of up to 0.25% of the Fund's net assets. A
long-term shareholder may pay more, directly and indirectly, in such fees than
the maximum sales charge permitted under the rules of the National Association
of Securities Dealers. For the fiscal year ended April 30, 1998, The Fund repaid
the Investment Adviser for amounts it had absorbed during prior fiscal periods.
Without such repayment, total fund operating expenses would have been 2.10%
Example of Effect of Expenses:
An investor would pay the following expenses on a $1,000 assuming (1) a 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Assuming No Redemption $23 $71 $122 $261
Assuming complete redemption at the
end of period, with redemption fee $33 $71 $122 $261
</TABLE>
This Example assumes that all dividends and other distributions are reinvested
and that the percentage amounts listed under Annual Fund Operating Expenses
remain the same in the years shown. This Example should not be considered a
representation of past or future expenses, and the Fund's actual expenses may be
more or less than those shown. The actual expenses attributable to the Fund's
shares will depend upon, among other things, the level of average net assets,
the extent to which the Fund incurs variable expenses, such as transfer agency
costs, and whether the Investment Adviser reimburses all or a portion of the
Fund's expenses and/or waives all or a portion of its advisory fees.
Titan Financial Services Fund
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
The following information has been audited by Tait, Weller & Baker, independent
accountants, whose unqualified report covering the period ended April 30, 1998
is incorporated by reference herein and appears in the annual report to
shareholders. This information should be read in conjunction with the financial
statements and accompanying notes which appear in the annual report and are
incorporated by reference into the Statement of Additional Information. Further
information about the Fund's performance is contained in its annual report,
which may be obtained without charge by writing or calling the Investment
Advisor at the address or number on the cover page.
Year May 22, 1996*
Ended through
April 30, 1998 April 30, 1997
Net asset value, beginning of period $12.60 $10.00
Income from investment operations:
Net investment (loss) income (0.06) 0.04
Net realized and unrealized gain on investments 7.93 2.62
Total from investment operations 7.87 2.66
Less distributions:
From net investment income 0.00 (0.06)
From net capital gains (0.86) 0.00
Total distributions (0.86) (0.06)
Net asset value, end of period $19.61 $12.60
Total return 63.47% 26.67%
Ratios/supplemental data:
Net assets, end of period (millions) $ 33.1 $ 7.6
Ratio of expenses to average net assets:
Before expense reimbursement/recoupment 2.10% 3.14%+
After expense reimbursement/recoupment 2.27% 2.49%+
Ratio of net investment (loss)
income to average net assets:
Before expense reimbursement/recoupment (0.44%) (0.33%)+
After expense reimbursement/recoupment (0.61%) 0.33%+
<PAGE>
Portfolio turnover rate 107.12% 97.84%
Average commission rate paid per share $.0493 $.0464
*Commencement of operations.
+Annualized.
INVESTMENT OBJECTIVES AND POLICIES; RISK FACTORS
The Fund's primary investment objective is capital appreciation. Its secondary
objective is moderate income. The investment objectives of the Fund are
fundamental and may not be changed without the approval of the holders of a
majority of the Fund's shares. There is no assurance that the Fund's investment
objectives will be achieved.
The Fund will seek to achieve its investment objectives by investing at least
65%, and possibly up to 100% of its total assets in equity securities of
financial services companies, which include commercial banks, consumer banks,
savings and loan institutions, insurance companies, finance companies, mortgage
and other lenders, securities brokerage companies, credit card providers and
service providers to the banking and financial services sectors, and holding
companies for each of the foregoing. Equity securities may include common
stocks, preferred stocks, securities convertible into common or preferred
stocks, warrants, and convertible bonds.
In seeking its objective, the Fund will concentrate on equity securities of such
companies that are, in the Investment Adviser's opinion, undervalued both from
the standpoint of book value and earnings. The Investment Adviser will seek to
identify companies whose prospects are deemed attractive on the basis of a
growth in earnings and assets and the companies' fundamentals. Equity selection
will be made on the basis of book value, earnings, quality of assets, merger
potential, and franchise value (particularly in regard to banks and savings and
loan institutions). The Investment Adviser will pay particular attention to
smaller banking institutions with assets of $5 billion or less. In addition, the
Fund will invest in stronger mutual savings banks that have converted to
publicly held companies. The Fund will also endeavor to open deposit accounts
with mutual savings and loan associations with the intent of subscribing to
stock in the event the institutions go public.
The Fund may also invest up to 35% of its assets in equity securities of other
types of issuers and in debt securities of all issuers, including money market
investments. The market value of the debt securities in the Fund's portfolio
will also tend to vary inversely with changes in interest rates. For example, as
interest rates rise, the market value of debt securities tends to decline. The
Fund also may invest up to 20% of its total assets in American Depository
Receipts ("ADRs"). See "Risk Factors of Foreign Securities."
The Fund will invest no more than 5% of its total assets in the securities of
any one issuer other than the U.S. government, except that up to 25% of the
Fund's total assets may be invested without regard to this limitation. In
addition, the Fund normally expects to be invested in the securities of at least
30 separate companies.
The Fund does not constitute a complete investment program. Thus, it is
recommended that an investment in the Fund be considered only one portion of
your overall investment portfolio. Securities in which the fund invests, and its
share price and returns, are subject to fluctuation, and investors may have a
gain or loss when they redeem shares. Investments in equity securities in
general are subject to market risks that may cause their prices to fluctuate
over time. An investment in the Fund is more suitable for longer term investors
who can bear the risk of short-term fluctuation in principal and net asset value
that are inherent in investing in equity securities for capital appreciation.
Special Considerations and Risks Relating to the Financial Services Industry.
Because the Fund's investments will be concentrated in the financial services
industry, its shares are subject to greater risks than the shares of a fund
whose portfolio is not so concentrated, and it will be particularly affected by
economic, legislative and regulatory developments affecting those industries.
Events may occur which significantly affect the banking and financial services
industries resulting in the Fund's share value increasing or decreasing at rates
faster than the share value of a mutual fund with investments in many
industries.
<PAGE>
Commercial banks, savings and loan institutions and their holding companies are
especially influenced by adverse effects of volatile interest rates, portfolio
concentrations in loans to particular businesses, such as real estate and
energy, and competition from new entrants in their areas of business. These
institutions are subject to extensive federal regulation and, in some cases, to
state regulation as well. However, neither federal insurance of deposits nor
regulation of the bank and savings and loan industries ensures the solvency or
profitability of commercial banks or savings and loan institutions or their
holding companies, or insures against the risk of investing in the equity
securities issued by these institutions.
Investment banking, securities and commodities brokerage and investment advisory
companies also are subject to governmental regulation and investments in those
companies are subject to the risks related to securities and commodities trading
and securities underwriting activities. Insurance companies also are subject to
extensive governmental regulation, including the imposition of maximum rate
levels, which may be inadequate for some lines of business. The performance of
insurance companies will be affected by interest rates, severe competition in
the pricing of services, claims activities, marketing competition and general
economic conditions.
The financial services industry may be subject to greater government regulation
than many other industries and changes in governmental policies and the need for
regulatory approval may have a material effect on the services of this industry.
As previously noted, banks, savings and loan institutions, and finance companies
are subject to extensive governmental regulations which may limit both the
financial commitments they can make, including the amounts and types of loans,
and the interest rates and fees they can charge. Profitability is largely
dependent on the availability and cost of capital funds, and can fluctuate
significantly when interest rates change.
Financial services companies also could be adversely affected if their computer
systems do not properly process and calculate information related to dates
beginning January 1, 2000. See "Year 2000" at page 13.
Risk Factors of Foreign Securities. As previously stated in this Prospectus, the
Fund may invest up to 20% of its total assets in ADRs, which are securities
convertible into securities of corporations based in foreign countries. These
investments may involve special risks arising from political, economic and
social developments abroad, as well as those that may result from the
differences between the regulations to which U.S. and foreign issuers and
markets are subject. These risks may include expropriation, confiscatory
taxation, withholding taxes on dividends and interest, limitations on the use or
transfer of Fund assets and political or social instability or diplomatic
developments. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. Securities of many foreign companies may be less
liquid and their prices more volatile than securities of comparable U.S.
companies.
While the Fund generally invests only in securities that are traded on
recognized exchanges or in over-the-counter ("OTC") markets, from time to time
foreign securities may be difficult to liquidate rapidly without significantly
depressing the price of such securities. There may be less publicly available
information concerning foreign issuers of securities held by the Fund than is
available concerning U.S. companies. Foreign securities trading practices,
including those involving securities settlement where the Fund's assets may be
released prior to receipt of payment, may expose the Fund to increased risk in
the event of a failed trade or the insolvency of a foreign broker-dealer.
Transactions in foreign securities may be subject to less efficient settlement
practices. Legal remedies for defaults and disputes may have to be pursued in
foreign courts, whose procedures may differ substantially from those of U.S.
courts.
Because foreign securities ordinarily are denominated in currencies other than
the U.S. dollar (as are some securities of U.S. issuers), changes in foreign
currency exchange rates will affect the Fund's net asset value, the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and capital gain, if any, to be distributed
to shareholders by the Fund. If the value of a foreign currency rises against
the U.S. dollar, the value of the Fund's assets denominated in that currency
will decrease. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets,
international balances of payments, speculation and other economic and political
conditions. In addition, some foreign currency values may be volatile and there
is the possibility of governmental intervention in the currency markets. Any of
<PAGE>
these factors could adversely affect the Fund.
Hedging Strategies. The Fund may attempt to reduce the overall risk of its
investments (hedge) by purchasing and selling (writing) call and put options on
debt and equity securities which are listed on Exchanges or are written in
over-the-counter transactions ("OTC Options"). Listed options, which are
currently listed on several different Exchanges, are issued by the Options
Clearing Corporation ("OCC"). Ownership of a listed call option gives the Fund
the right to buy the underlying security covered by the option at the stated
exercise price (the price per unit of the underlying security) by filing an
exercise notice prior to the expiration date of the option. The writer (seller)
of the option would then have the obligation to sell the underlying security at
that exercise price prior to the expiration date of the option, regardless of
its then current market price. Ownership of a listed put option would give the
Fund the right to sell the underlying security at the stated exercise price. OTC
options are purchased from or sold (written) to dealers or financial
institutions which have entered into direct agreements with the Fund. With OTC
options, such variables as expiration date, exercise price and premium will be
agreed upon between the Fund and the transacting dealer, without the
intermediation of a third party. The Fund will engage in OTC option transactions
only with primary U.S. government securities dealers recognized by the Federal
Reserve Bank of New York.
Illiquid Securities. The Fund may invest up to 15% of its net assets in illiquid
securities, including cover for OTC options and securities whose disposition is
restricted under the federal securities law (other than "Rule 144A" securities
the Investment Adviser has determined to be liquid under procedures approved by
the Fund's Board of Trustees). Rule 144A establishes a "safe harbor" from
registration requirements of the Securities Act of 1933 ("1933 Act") for resale
of certain securities to qualified institutional buyers. Institutional markets
for restricted securities have developed as a result of Rule 144A, providing
both readily ascertainable value for restricted securities and the ability to
liquidate an investment to satisfy share redemption orders. An insufficient
number of qualified institutional buyers interested in purchasing Rule
144A-eligible restricted securities held by the Fund, however, could affect
adversely the marketability of such portfolio securities and the Fund might be
unable to dispose of such securities promptly or at favorable prices.
Other Information. When the Investment Adviser believes that conditions in the
securities markets warrant a temporary defensive strategy, the Investment
Adviser may temporarily invest up to 100% of the Fund's total assets in debt
securities, preferred stock, cash or money market instruments or invest in any
other securities the Investment Adviser considers consistent with such defensive
strategies. It is impossible to predict when, or for how long, the Investment
Adviser may use these alternative strategies.
The Fund intends to buy and hold securities for capital appreciation. Although
the Fund does not intend to engage in substantial short-term trading as a means
of achieving its investment objective, it may sell portfolio securities without
regard to the length of time they have been held, in accordance with the
investment policies described earlier. Fund changes will be made whenever the
Fund's Investment Adviser believes they will benefit the performance of the
portfolio. The Fund does expect to engage in a substantial number of portfolio
transactions. It is anticipated that, under normal market conditions, the Fund's
portfolio turnover rate will not exceed 100% in any one year. The Fund will
incur brokerage costs commensurate with its portfolio turnover rate; thus a
higher level (over 100%) of portfolio transactions will increase the Fund's
overall brokerage expenses. Short term gains and losses may result from such
portfolio transactions.
MANAGEMENT AND ADMINISTRATION OF THE FUND
The overall management of the business and affairs of the Fund is vested in the
Board of Trustees. The Board of Trustees must approve all significant agreements
between the Fund and persons or companies furnishing services to it, including
the Fund's agreements with its investment adviser, administrator, custodian and
transfer agent. The day-to-day operations of the Fund are delegated to its
officers, to the Investment Adviser, and to the Administrator subject always to
the investment objectives and policies of the Fund and to general supervision by
the Board of Trustees.
Investment Adviser
Pursuant to an investment advisory contract with the Fund, Titan Investment
Advisers, LLC actively manages the Fund's portfolio with a view to achieving the
Fund's investment
<PAGE>
objectives. In determining which securities to purchase for the Fund or hold in
the Fund's portfolio, the Investment Adviser will rely on information from
various sources, including research, analysis and appraisals of brokers and
dealers, as well as investment factors it deems relevant. Subject to such
policies as the Trustees may determine, the Investment Adviser furnishes a
continuing investment program for the Fund and makes investment decisions on its
behalf. As compensation for its services, the Investment Adviser receives from
the Fund a fee accrued daily and paid monthly at an annual rate of 1.00% of the
Fund's average net assets.
Gilbert R. Giordano, President of the Investment Adviser, has primary
responsibility for the day-to-day management of the Fund's portfolio. Mr.
Giordano has been employed by the Adviser since its inception in 1996. Mr.
Giordano has over thirty years experience in the banking and financial services
industry. He was founder of the United Bank & Trust Company of Maryland in 1966,
and continues to serve as Chairman of that organization, which was merged with
First Virginia Bank and is now known as First Virginia Bank of Maryland. The
Adviser has its principal executive offices at 9672 Pennsylvania Avenue, Upper
Marlboro, Maryland 20772.
Dr. Mervin H. Zimmerman, M.D., Partner in the Investment Adviser, assists in the
Fund's portfolio management, especially in regard to non-financial holdings. Dr.
Zimmerman, a registered investment adviser with over 30 years experience in the
financial markets, has been employed by the Adviser since its inception in 1996.
The Fund pays all of its operating expenses. The Adviser has agreed to limit the
Fund's operating expenses to assure that the Fund's annual ratio of operating
expenses to average net assets will not exceed 2.50%. The Adviser also may
reimburse additional amounts to the Fund at any time in order to reduce the
Fund's expenses, or to the extent required by applicable laws. Reductions made
by the Adviser in its fees or payments or reimbursement of expenses which are
the Fund's obligation are subject to reimbursement by the Fund within a three
year period provided the Fund is able to do so and remain in compliance with any
expense limits then in effect.
Administrator
Investment Company Administration Corporation (the "Administrator") acts as the
Fund's Administrator under an Administration Agreement. Under that agreement,
the Administrator prepares various federal and state regulatory filings, reports
and returns for the Fund, prepares reports and materials to be supplied to the
trustees, monitors the activities of the Fund's custodian, transfer agent and
accountants, and coordinates the preparation and payment of Fund expenses and
reviews the Fund's expense accruals. For its services, the Administrator
receives a monthly fee at the following annual rate:
Average net assets of the Fund Fee or fee rate
Under $15 million $30,000
$15 to $50 million 0.20% of average net assets
$50 to $100 million 0.15% of average net assets
$100 million to $150 million 0.10% of average net assets
Over $150 million 0.05% of average net assets
PURCHASE OF FUND SHARES
The minimum initial investment in the Fund is $5,000 ($2,000 for Individual
Retirement Accounts). Subsequent investments must be at least $100. First Fund
Distributors, Inc. (the "Distributor"), acts as Distributor of the Fund's
shares. The Distributor may, at its discretion, waive the minimum investment
requirements for purchases in conjunction with certain group or periodic plans.
Shares of the Fund are offered continuously for purchase at their net asset
value per share next determined after a purchase order is received. The public
offering price is effective for orders received by the Fund prior to the time of
the next determination of the Fund's net asset value. Orders received after the
time of the next determination of the applicable Fund's net asset value will be
entered at the next calculated public offering price. Investors may be charged a
fee if they effect transactions through a broker or agent.
Investors may purchase shares of the Fund by check or wire:
By Check: For initial investments, an investor should complete the Fund's
Account
<PAGE>
Application (included with this Prospectus). The completed application, together
with a check payable to "Titan Financial Services Fund" should be mailed to the
Fund: Titan Financial Services Fund, P.O. Box 640856, Cincinnati, OH 45264-0856.
A stub is attached to the account statement sent to shareholders after each
transaction. For subsequent investments the stub should be detached from the
statement and, together with a check payable to "Titan Financial Services Fund,"
mailed to the Fund in the envelope provided at the address indicated above. The
investor's account number should be written on the check.
By Wire: For initial investments, before wiring funds, an investor should call
the Transfer Agent at (800) 282-2340 between the hours of 9:00 a.m. and 4:00
p.m. Eastern time, on a day when the New York Stock Exchange ("NYSE") is open
for trading in order to receive an account number. The Transfer Agent will
request the investor's name, address, taxpayer identification number, amount
being wired and wiring bank. The investor should then instruct the wiring bank
to transfer funds by wire to: Star Bank, Cincinnati, OH, ABA #0420-0001-3, DDA
#485776504, for credit to Titan Financial Services Fund, for further credit to
[investor's name and account number]. The investor should also ensure that the
wiring bank includes the name of the Fund and the account number with the wire.
If the funds are received by the Transfer Agent prior to the time that the
Fund's net asset value is calculated, the funds will be invested on that day;
otherwise they will be invested on the next business day. Finally, the investor
should write the account number provided by the Transfer Agent on the
Application Form and mail the Form promptly to the Transfer Agent.
For subsequent investments, an investor should call the Transfer Agent at (800)
282-2340 before the wire is sent. Failure to do so will cause the purchase to be
credited the next day, when the Transfer Agent receives notice of the wire. The
investor's bank should wire the funds as indicated above. It is essential that
complete information regarding the investor's account be included in all wire
instructions in order to facilitate prompt and accurate handling of investments.
Investors may obtain further information from the Transfer Agent about remitting
funds in this manner and from their own banks about any fees that may be
imposed.
General. Investors will not be permitted to redeem any shares purchased with an
initial investment made by wire until one business day after the completed
Account Application is received by the Fund. All investments must be made in
U.S. dollars and, to avoid fees and delays, checks should be drawn only on U.S.
banks and should not be made by third party check. A charge may be imposed if
any check used for investment does not clear. The Fund and the Distributor
reserve the right to reject any purchase order in whole or in part. If an order,
together with payment in proper form, is received by the Transfer Agent by the
close of trading on the NYSE (currently 4:00 p.m., New York City time), Fund
shares will be purchased at the offering price determined as of the close of
trading on that day. Otherwise, Fund shares will be purchased at the offering
price determined as of the close of trading on the NYSE on the next business
day. Federal tax law requires that investors provide a certified taxpayer
Identification Number and certain other required certifications upon opening or
reopening an account in order to avoid backup withholding of taxes at the rate
of 31% on taxable distributions and proceeds of redemptions. See the Fund's
Account Application for further information concerning this requirement.
The Fund does not issue share certificates. All shares are normally held in
non-certificated form registered on the books of the Fund and the Fund's
Transfer Agent for the account of the shareholder.
HOW TO REDEEM AN INVESTMENT IN THE FUND
Shareholders have the right to have the Fund redeem all or any portion of their
outstanding shares at the current net asset value on each day the NYSE is open
for trading. The redemption price is the net asset value per share next
determined after the shares are validly tendered for redemption.
Direct Redemption. A written request for redemption must be received by the
Fund's Transfer Agent in order to constitute a valid tender for redemption.
Redemption requests should be sent to Titan Financial Services Fund, c/o
American Data Services, P.O. Box 5536, Hauppauge, NY 11788-0132. To protect the
Fund and its shareholders, a signature guarantee is required for certain
transactions, including redemptions. Signature(s) on the redemption request must
be guaranteed by an "eligible guarantor institution" as defined in the federal
securities laws. These institutions include banks,
<PAGE>
broker-dealers, credit unions and savings institutions. A broker-dealer
guaranteeing signatures must be a member of a clearing corporation or maintain
net capital of at least $100,000. Credit unions must be authorized to issue
signature guarantees. Signature guarantees will be accepted from any eligible
guarantor institution which participates in a signature guarantee program. A
notary public is not an acceptable guarantor.
Redemption Fee. A redemption fee is imposed upon redemptions of fund shares
within one year of the initial purchase. The fee is designed to compensate the
Fund for transaction costs and administrative expenses that may arise from
frequent short-term trading activity in its shares. The fee is 1.0% of the
amount redeemed.
Telephone Redemption. Shareholders who complete the Redemption by Telephone
portion of the Fund's Account Application may redeem shares on any business day
the NYSE is open by calling the Fund's Transfer Agent at (800) 282-2340 between
the hours of 9:00 a.m. and 4:00 p.m. Eastern time. Redemption proceeds will be
mailed to the address of record or wired at the shareholder's direction the next
business day to the predesignated account. The minimum amount that may be wired
is $1,000 (wire charges, if any, will be deducted from redemption proceeds). By
establishing telephone redemption privileges, a shareholder authorizes the Fund
and its Transfer Agent to act upon the instruction of any person by telephone to
redeem from the account for which such service has been authorized and send the
proceeds to the address of record on the account or transfer the proceeds to the
bank account designated in the Authorization. The Fund and the Transfer Agent
will use procedures to confirm that redemption instructions received by
telephone are genuine, including recording of telephone instructions and
requiring a form of personal identification before acting on such instructions.
If these identification procedures are followed, neither the Fund nor its agents
will be liable for any loss, liability or cost which results from acting upon
instructions of a person believed to be a shareholder with respect to the
telephone redemption privilege. The Fund may change, modify, or terminate these
privileges at any time upon at least 60 days' notice to shareholders.
Shareholders may request telephone redemption after an account is opened;
however, the authorization form will require a separate signature guarantee.
Shareholders may experience delays in exercising telephone redemption privileges
during periods of abnormal market activity.
General. Payment of redemption proceeds will be made promptly, but not later
than seven days after the receipt of all documents in proper form, including a
written redemption order with appropriate signature guarantee in cases where
telephone redemption privileges are not being utilized. The Fund may suspend the
right of redemption under certain extraordinary circumstances in accordance with
the Rules of the SEC. In the case of shares purchased by check and redeemed
shortly after purchase, the Fund will not mail redemption proceeds until it has
been notified that the check used for the purchase has been collected, which may
take up to 15 days from the purchase date. To minimize or avoid such delay,
investors may purchase shares by certified check or federal funds wire. A
redemption may result in recognition of a gain or loss for federal income tax
purposes. Due to the relatively high cost of maintaining smaller accounts, the
Fund reserves the right to redeem shares in any account, other than retirement
plan or Uniform Gift to Minors Act accounts, if at any time, due to redemptions
by the shareholder, the total value of a shareholder's account does not equal at
least $2,000. If the Fund determines to make such an involuntary redemption, the
shareholder will first be notified that the value of the account is less than
$2,000 and will be allowed 30 days to make an additional investment to bring the
value of the account to at least $2,000 before the Fund takes any action.
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the Act
(the "Plan'), under which the Fund pays the Adviser, as Distribution
Coordinator, a fee, which is accrued daily and payable monthly, at the annual
rate of 0.25% the Fund's average daily net assets.
Amounts paid under the Plan are paid to the Distribution Coordinator for
services provided and the expenses borne by the Distribution Coordinator and
others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to and
expenses of account executives and others who engage in or support distribution
of shares or who service stock accounts, including overhead and telephone
expenses; printing and distribution of prospectuses and
<PAGE>
reports used in connection with the offering of the Fund's shares to other than
current shareholders; and preparation, printing and distribution of sales
literature and advertising materials. The Adviser may in its discretion and out
of its own funds, compensate third parties, such as financial planners,
advisers, brokers and financial institutions, for sales and marketing assistance
with respect to the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined once daily as of the
close of trading on the NYSE currently 4:00 p.m. Eastern time. Next asset value
is calculated by taking the value of all assets of the Fund, subtracting all its
liabilities, dividing by the number of shares outstanding and adjusting to the
nearest cent.
The Fund values its assets based on their current market value when market
quotations are readily available. If such value cannot be established, assets
are valued at fair value as determined in good faith by or under the direction
of the Fund's Board of Trustees. The amortized cost method of valuation
generally is used to value debt obligations with 60 days or less remaining to
maturity unless the Board of Trustees determines that this does not represent
fair value.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to pay dividends at least annually and to distribute
substantially all of the Fund's net investment income and net short-term capital
gains, if any. The Fund intends to distribute dividends from net long-term
capital gains, if any, once each year. All dividends and any capital gains
distributions will be paid in additional Fund shares and automatically credited
to the shareholder's account without issuance of a share certificate unless the
shareholder requests in writing that all dividends be paid in cash. Shares
acquired from the reinvestment of dividends or capital gains distributions are
not subject to the imposition of a charge upon their redemption.
Because the Fund intends to distribute all of its net investment income and net
short-term capital gains to shareholders and otherwise qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code, it is not
expected that the Fund will be required to pay any federal income tax.
Shareholders who are required to pay taxes on their income will normally have to
pay federal income taxes, and any state income taxes, on the dividends and
distributions they receive from the Fund. Such dividends and distributions, to
the extent that they are derived from net investment income or short-term
capital gains, are taxable to the shareholder as ordinary dividend income
regardless of whether the shareholder receives such distributions in additional
shares or in cash.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term or mid-term capital gains regardless of how long a
shareholder has held the Fund's shares and regardless of whether the
distribution is received in additional shares or in cash.
At the end of the calendar year, shareholders will be sent full information on
their dividends and capital gains distributions for tax purposes, including
information as to the portion taxable as ordinary income, the portion taxable as
long-term capital gains, and the amount of dividends qualifying for the
corporate dividends-received deduction. To avoid being subject to a 31% federal
backup withholding tax on taxable dividends, capital gains distributions and the
proceeds of redemptions and repurchases, shareholders must furnish their
taxpayer identification numbers and certify the accuracy of the numbers.
Shareholders should consult their tax advisers concerning federal, state and
local taxation of distribution from the Fund.
PERFORMANCE INFORMATION
From time to time the Fund may quote its "total return" in advertisements and
sales literature. The total return of the Fund is based on historical earnings
and is not intended to indicate future performance. The "average annual total
return" of the Fund refers to a figure reflecting the average annualized
percentage increase (or decrease) in the value of an initial investment in the
Fund of $1,000 over a period of one year as well as over the life of the Fund,
if less than any of the foregoing. Average annual total return reflects all
income earned by the Fund, any appreciation or depreciation of the Fund's
assets, all expenses incurred by the Fund and all sales charges which would be
incurred by redeeming shareholders, for the stated periods. It also assumes
<PAGE>
reinvestment of all dividends and distributions paid by the Fund.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. The Fund may also advertise the growth of a
hypothetical investment of $10,000 in shares of the Fund. The Fund from time to
time may also advertise its performance relative to certain performance rankings
and indexes compiled by independent organizations (such as Lipper Analytical
Services, Inc., Morningstar, the S&P Mid-Cap Index, NASDAQ Composite, Russell
Mid Cap Index, S&P 100 Index and the Wilshire Mid Cap Index).
GENERAL INFORMATION
Organization. The Trust is registered with the Securities and Exchange
Commission as an open-end management investment company and was organized as a
Massachusetts Business Trust on February 17, 1987. The Fund is a series of the
Trust. The Board of Trustees may from time to time issue other series, the
assets and liabilities of which will be separate and distinct from any other
series.
All shares of beneficial interest of the Fund (no par value) are equal as to
earnings, assets and voting privileges. There are no conversion, preemptive or
other subscription rights. In the event of a liquidation, each share of the Fund
is entitled to its portion of all the Fund's assets after all debts and expenses
have been paid. The shares do not have cumulative voting rights.
Year 2000. Like other business organizations around the world, the Fund could be
adversely affected if the computer systems used by its Adviser, Sub-Adviser and
other service providers do not properly process and calculate information
related to dates beginning January 1, 2000. This is commonly known as the "Year
2000 Issue." The Fund's Adviser is taking steps that it believes are reasonably
designed to address the Year 2000 Issue with respect to its own computer
systems, and it has obtained assurances from the Fund's other service providers
that they are taking comparable steps. However, there can be no assurance that
these actions will be sufficient to avoid any adverse impact on the Fund.
Shareholder Rights. Shares issued by the Fund have no preemptive, conversion, or
subscription rights. Shareholders have equal and exclusive rights as to
dividends and distributions as declared by the Fund and to the net assets of the
Fund upon liquidation or dissolution. The Fund, as a separate series of the
Trust, votes separately on matters affecting only the Fund (e.g., approval of
the Advisory Agreement); all series of the Trust vote as a single class on
matters affecting all series jointly or the Trust as a whole (e.g., election or
removal of Trustees). Voting rights are not cumulative, so that the holders of
more than 50% of the shares voting in any election of Trustees can, if they so
choose, elect all of the Trustees. While the Trust is not required and does not
intend to hold annual meetings of shareholders, such meetings may be called by
the Trustees in their discretion, or upon demand by the holders of 10% or more
of the outstanding shares of the Trust for the purpose of electing or removing
Trustees.
Custodian and Transfer Agent. Star Bank, N.A., 425 Walnut St., Cincinnati, OH
45202 is custodian of the Fund's assets. American Data Services, Inc., P.O. Box
5536, Hauppauge, NY 11788-0132 is the Fund's Transfer Agent.
Confirmation and Statements. Shareholders will receive confirmation of purchases
and redemptions of Fund shares. Shareholders will also receive audited and
unaudited semi-annual financial statements of the Fund.
Titan Financial Services Fund
9672 Pennsylvania Avenue
Upper Marlboro, Maryland 20772
888-44-TITAN
Account Inquiries 1-800-385-7003
Distributor
First Fund Distributors, Inc.
4455 E. Camelback Rd., Ste. 261E
<PAGE>
Phoenix, AZ 85018
Custodian
Star Bank
425 Walnut St.
Cincinnati, Ohio 45202
Shareholder Service and Transfer Agent
American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
(800) 282-2340
Auditors
Tait, Weller, & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103
Counsel to the Fund
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
Prospectus
July 10, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
July 10, 1998
TITAN FINANCIAL SERVICES FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
9672 Pennsylvania Avenue
Upper Marlboro, Maryland 20772
888-44-TITAN or 1-800-282-2340
Titan Financial Services Fund (the "Fund"), a diversified,
professionally managed mutual fund, is a separate series of Professionally
Managed Portfolios, an open-end management investment company. This Statement of
Additional Information ("SAI") is not a prospectus and should be read only in
conjunction with the Fund's current Prospectus, dated July 10, 1998. A copy of
the Prospectus may be obtained by calling toll-free at 1-800-282-2340. This SAI
is dated July 10, 1998.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Investment Policies and Restrictions............................................................................B-2
Trustees and Executive Officers................................................................................B-16
Investment Management, Administration And Distribution
Arrangements...............................................................................................B-18
The Fund's Administrator.......................................................................................B-19
Portfolio Transactions.........................................................................................B-20
Valuation of Shares............................................................................................B-22
Performance Information........................................................................................B-23
Taxes..........................................................................................................B-25
General Information............................................................................................B-27
Financial Statements...........................................................................................B-28
Appendix.......................................................................................................B-29
</TABLE>
Titan SAI B-1
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The following supplements the information contained in the Prospectus
concerning the Fund's investment policies and limitations.
Yield Factors and Ratings. Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's ("S&P") and other nationally recognized statistical rating
organizations ("NRSROs") are private services that provide rating of the credit
quality of debt obligations. A description of the ratings assigned to corporate
debt obligations by Moody's and S&P is included in the Appendix to this SAI. The
Fund may use these ratings in determining whether to purchase, sell or hold a
security. It should be emphasized, however, that ratings are general and are not
absolute standards of quality. Consequently, securities with the same maturity,
interest rate and rating may have different market prices.
Special Considerations Concerning the Banking Industry and the Savings and
Loan Industry.
-- The Banking Industry. In the United States, the deposits of
commercial banks are insured by the Federal Deposit Insurance Corporation (the
"FDIC"). Many of these banks are subsidiaries of bank holding companies.
Commercial banks accept deposits, make commercial and other loans, and engage in
a variety of other investments. The Fund normally intends to invest in the
securities of those bank holding companies which receive a substantial portion
of their income from one or more commercial bank subsidiaries, as well as in the
securities of banking institutions.
Despite some measure of deregulation, commercial banks and their
holding companies are also subject to extensive government regulation that
significantly affects their activities, earnings, and competitive environment.
The Office of the Comptroller of the Currency is the primary federal regulator
of national banks. The FDIC is the primary federal regulatory of most
state-chartered commercial banks with FDIC-insured deposits. State-chartered
commercial banks are also subject to primary supervision and regulation by state
banking authorities. The Board of Governors of the Federal Reserve System
("FRB") is the primary federal regulator of bank holding companies and also has
regulatory authority over state-chartered banks which are members of the Federal
Reserve System. Federal regulators receive comprehensive reports on and conduct
examinations of a number of aspects of a federally regulated commercial bank's
operations and financial condition, including capital adequacy, liquidity,
earnings, dividends, investments, management practice and loan loss reserves.
Federal regulators also require that commercial banks maintain minimum levels of
capital and liquidity, require the establishment of loan loss reserves, and may
limit the bank's ability to pay dividends in certain circumstances.
Bank holding companies must file regular reports with the FRB and are
subject to examinations of certain aspects of their own and their subsidiaries'
operations. The activities of a bank holding company are restricted by federal
regulations which, among other things, generally prohibit a bank holding company
from controlling banks in more than one state, except where
Titan SAI B-2
<PAGE>
specifically permitted by state law, and restrict the types of non-banking
activities in which the holding company directly or indirectly may engage.
Certain economic factors are of particular importance to commercial
banks. The availability and cost of funds to commercial banks and other finance
companies is important to their profitability. This factor has increased in
importance with the deregulation of interest rates. The quality of a bank's
portfolio of loans can be adversely affected by depressed market conditions in
certain industries. Recent examples of such industries that have affected the
loan portfolios of some banks include commercial real estate, international
sovereign credits, energy and agriculture. Smaller banks can be particularly
affected by such conditions if the economic base of the area in which they are
located is closely tied to a depressed industry, such as agriculture.
-- The Savings and Loan Industry. The principal business of
savings and loan institutions traditionally has consisted of attracting deposits
from the general public and originating or purchasing mortgage loans secured by
liens on residential real estate. In addition to long-term, fixed-rate
residential mortgage loans, savings institutions recently have begun to extend a
greater number of loans with shorter terms and/or adjustable interest rates,
including consumer and commercial loans, and construction loans on both
residential and commercial real estate developments. These types of loans may
involve greater risks of default than residential mortgage loans.
Historically, many savings institutions were organized primarily as
mutual companies and as such were owned by their depositors and did not issue
common stock. However, in recent years, the need for equity capital and the
deregulation of the industry have encouraged conversion to stock ownership.
Securities of newly converted savings institutions may not be readily
marketable, due to the lack of a public trading market or certain restrictions
on transfer. Some savings institutions are controlled by holding companies. The
Fund normally intends to invest in the securities of those savings institution
holding companies, the savings institution subsidiaries of which comprise a
significant percentage of their total assets and provide a significant
percentage of their income.
Savings institutions and their holding companies are subject to
extensive government regulation. Savings institutions with FDIC-insured deposits
are subject to periodic FDIC examination and to FDIC regulation and supervision
of their operations. A state-chartered savings institution is also regulated by
the laws and bank regulatory authority of the state in which it has its
principal office. Savings institutions with federally insured deposits are
subject to certain minimum net worth or capital requirements and to other
requirements limiting the types of investments they may make. In addition,
holding companies of savings institutions which are federally chartered may be
subject in certain cases to restrictions on the activities in which they may
engage.
The results of operations of savings institutions may be materially
affected by general economic conditions, the monetary and fiscal policies of the
federal government and the regulatory policies of governmental authorities.
Although in recent years savings institutions have derived an increased portion
of their income from receipt of fees, the results of operations of savings
institutions
Titan SAI B-3
<PAGE>
continue to depend to a large extent on the level of their "net interest income"
(the difference between the interest earned on loans and investments and the
interest paid on deposits and borrowings). During the period between the late
1970s and mid-1982, general market interest rates rose to, and remained at,
historically high levels as a result of inflationary pressures and governmental
policies. During the same period, savings institutions generally experienced a
shift in the composition of their deposits form relatively long-term, low-rate
certificate accounts or low-rate passbook accounts to certificates of deposit
and accounts bearing rates determined by market conditions, often with short
maturities. Competition from alternative investments such as money market mutual
funds affected savings flows, causing reduced inflows to (or actual net outflows
from) savings institutions, thus limiting their ability to make new loans or
investments. As a result, the average cost of funds of most savings institutions
increased faster than the average yield earned on their assets, which consisted
principally of long-term real estate loans at fixed rates of interest. These
factors had a severe adverse impact on the earnings of most of the savings
industry, with the large majority of savings institutions reporting operating
losses for 1991 and 1992. Although interest rates have since declined, there can
be no assurance that interest rates will remain at current levels.
Beginning in the early 1980s a substantial number of savings
institutions significantly expanded the amount of their investments in
construction lending, real estate development projects, and secured and
unsecured commercial and consumer loans. These investments generally entail more
risk than mortgage loans secured by residential real estate and may result in
losses for certain institutions. Many institutions have also initiated asset and
liability management programs designed to minimize vulnerability to interest
rate changes. These programs have included such activities as increasing use of
adjustable rate mortgages, origination of a higher proportion of shorter-term
commercial and consumer loans, and the lengthening of maturities for deposits
and borrowings. By including such investments, the assets of savings
institutions have begun to match the maturities of their liabilities more
closely. In addition, some savings institutions are conducting hedging
transactions to reduce their exposure to interest rate risk. The Fund's
investments in savings institutions will be affected by changes in the levels of
interest rates, national and local cycles in real estate and other economic
factors.
Federal and state regulations do not insure the solvency or
profitability of savings and banking institutions or their holding companies,
nor do they insure against risk any investments in securities issued by such
institutions. The FDIC insure the deposits of member institutions but in no way
protect or insure investments in the securities of these institutions.
--Legislative Concerns. Legislation has been enacted which has
altered the regulatory structure and capital requirements of the banking and
savings and loan institution industries. This legislation was enacted as a
response to financial problems experienced by a number of banks and savings and
loan institutions relating to inadequate capital, adverse economic conditions
and alleged fraud and mismanagement. This legislation also strengthened the
civil sanctions and criminal penalties for defrauding or otherwise damaging
depository institutions and their depositors and curtailed the authority of
savings and loan institutions to engage in real estate investment and certain
other activities. In addition, the legislation has given federal regulators
substantial authority to use all of
Titan SAI B-4
<PAGE>
the assets of a bank or savings and loan institution holding company to satisfy
federal claims against an insolvent savings and loan institution or bank owned
by the holding company and mandated regulatory action against institutions with
inadequate capital levels. Legislative and regulatory actions have also
increased the capital requirements applicable to commercial banks and savings
and loan institutions. These changes have extended the risk to holding company
shareholders in the event of the insolvency of any depository institution owned
by the holding company.
Legislative proposals have been introduced that if enacted could expose
bank holding companies to well-established competitors, such as securities firms
and insurance companies, as well as companies engaged in other areas of
business. Increased competition may also result from the broadening of
interstate banking powers, which has already lead to a reduction in the number
of publicly traded regional banks. Although the costs of insurance premiums have
been reduced, these rates can be increased in the future which may adversely
affect the Fund.
Special Considerations Concerning Other Financial Services Industries.
Many of the investment considerations discussed in connection which banks and
savings associations also apply to financial services companies. These companies
are all subject to extensive regulation, rapid business changes, value
fluctuations due to the concentration of loans in particular industries
significantly affected by economic conditions, volatile performance dependent
upon the availability and cost of capital and prevailing interest rates, and
significant competition. General economic conditions significantly affect these
companies. Credit and other losses resulting from the financial difficulty of
borrowers or other third parties have a potentially adverse effect on companies
in this industry. Investment banking, securities brokerage and investment
advisory companies are particularly subject to government regulation and rate
setting, potential anti-trust and tax law changes, and industry-wide pricing and
competition cycles. Property and casualty insurance companies may be affected by
weather and other catastrophes. Life and health insurance companies may be
affected by mortality and morbidity rates, including the effects of epidemics,
and by possible future changes in the health care industries. Individual
insurance companies may be exposed to reserve inadequacies, problems in
investment portfolios (for example, due to real estate or "junk" bond holdings)
and failures of reinsurance carriers. Proposed or potential anti-trust or tax
law changes also may affect adversely insurance companies' policy sales, tax
obligations and profitability. In addition, several significant companies have
recently reported liquidity or solvency difficulties and credit rating
downgrades.
The financial services industries currently are changing relatively
rapidly as existing distinctions between various financial services industries
become less clear. For example, recent business combinations have included
different financial services industries such as insurance, finance and
securities brokerage under single ownership. In addition, changes in
governmental regulation have permitted companies traditionally active in one
area to expand into other areas. The effect of these changes in particular
segments of the financial services industries is difficult to predict.
Repurchase Agreements. Repurchase agreements are transactions in which the
Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell
Titan SAI B-5
<PAGE>
the securities to the bank or dealer at an agreed-upon date and price reflecting
a market rate of interest unrelated to the coupon rate or maturity of the
purchased securities. The Fund maintains custody of the underlying securities
prior to their repurchase; thus, the obligation of the bank or dealer to pay the
repurchase price on the date agreed to is, in effect, secured by such
securities. If the value of such securities is less than the repurchase price,
plus any agreed-upon additional amount, the other party to the agreement must
provide additional collateral so that at all times the collateral is at least
equal to the repurchase price, plus any agreed-upon additional amount. The
difference between the total amount to be received upon repurchase of the
securities and the price that was paid by the Fund upon their acquisition is
accrued as interest and included in the Fund's net investment income.
Repurchase agreements carry certain risks not associated with direct
investments in securities, including possible declines in the market value of
the underlying securities and delays and costs to the Fund if the other party to
a repurchase agreement becomes bankrupt. The Fund intends to enter into
repurchase agreements only with banks and dealers in transactions believed by
Titan Investment Advisers, LLC (the "Investment Adviser") to present minimal
credit risks in accordance with guidelines established by the Fund's Board of
Trustees. The Investment Adviser will review and monitor the creditworthiness of
those institutions under the Board's general supervision.
Lending of Fund Securities. Although it has no present intention of
doing so during the coming year, the Fund may lend up to 331/3% of the total
value of its portfolio securities to broker-dealers or institutional investors
that the Investment Adviser deems qualified, but only when the borrower
maintains with the Fund's custodian collateral either in cash or money market
instruments in an amount at least equal to the market value of the securities
loaned, plus accrued interest and dividends, determined on a daily basis and
adjusted accordingly. In determining whether to lend securities to a particular
broker-dealer or institutional investor, the Investment Adviser will consider,
and during the period of the loan will monitor, all relevant facts and
circumstances, including the creditworthiness of the borrower. The Fund will
retain authority to terminate any loans at any time. The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or money market
instruments held as collateral to the borrower or placing broker. The Fund will
receive reasonable interest on the loan or a flat fee from the borrower and
amounts equivalent to any dividends, interest or other distributions on the
securities loaned. The Fund will retain record ownership of loaned securities to
exercise beneficial rights, such as voting and subscription rights and rights to
dividends, interest or other distributions, when retaining such rights is
considered to be in the Fund's interest.
Reverse Repurchase Agreements. Although it has no intention of doing so
during the coming year, the Fund may enter into reverse repurchase agreements
with banks up to an aggregate value of not more than 5% of its total assets.
Such agreements involve the sale of securities held by the Fund subject to the
Fund's agreement to repurchase the securities at an agreed-upon date and price
reflecting a market rate of interest. Such agreements are considered to be
borrowings and may be entered into only for temporary or emergency purposes.
While a reverse repurchase agreement
Titan SAI B-6
<PAGE>
is outstanding, the Fund will segregate liquid assets, marked to market daily,
in an amount at least equal to the Fund's obligations under the reverse
repurchase agreement.
Illiquid Securities. As indicated in the Prospectus, the Fund may
invest up to 15% of its net assets in illiquid securities. The term "illiquid
securities" for this purpose means securities that cannot be disposed of within
seven days in the ordinary course of business at approximately the amount at
which the Fund has valued the securities and includes, among other things,
purchased over-the-counter ("OTC") options, repurchase agreements maturing in
more than seven days and restricted securities other than those the Investment
Adviser has determined are liquid pursuant to guidelines established by the
Board of Trustees. The assets used as cover for OTC options written by the Fund
will be considered illiquid unless the OTC options are sold to qualified dealers
who agree that the Fund may repurchase any OTC option it writes at a maximum
price to be calculated by a formula set forth in the option agreement. The cover
for an OTC option written subject to this procedure would be considered illiquid
only to the extent that the maximum repurchase price under the formula exceeds
the intrinsic value of the option. Illiquid restricted securities may be sold
only in privately negotiated transactions or in public offerings with respect to
which a registration statement is in effect under the Securities Act of 1933
("1933 Act"). Where registration is required, the Fund may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the 1933 Act, including private placements, repurchase
agreements, commercial paper, foreign securities and corporate bonds and notes.
These instruments are often restricted securities because the securities are
sold in transactions not requiring registration. Institutional investors
generally will not seek to sell these instruments to the general public, but
instead will often depend either on an efficient institutional market in which
such unregistered securities can be readily resold or on an issuer's ability to
honor a demand for repayment. Therefore, the fact that there are contractual or
other restrictions on resale to the general public or certain institutions is
not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act established a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment to satisfy share redemption orders. Such markets might include
automated systems for the trading, clearance and settlement of unregistered
securities of domestic and foreign issuers, such as the PORTAL System sponsored
by the National Association of Securities Dealers, Inc. ("NASD"). An
insufficient number of qualified buyers interested in purchasing Rule
144A-eligible restricted securities held by the Fund, however, could affect
adversely the marketability of such portfolio and the Fund might be unable to
dispose of such securities promptly or at favorable prices.
Titan SAI B-7
<PAGE>
The Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to the Investment Adviser, pursuant to guidelines
approved by the Board. The Investment Adviser takes into account a number of
factors in reaching liquidity decisions, including (1) the frequency of trades
for the security, (2) the number of dealers that make quotes for the security,
(3) the number of dealers that have undertaken to make a market in the security,
(4) the number of other potential purchasers and (5) the nature of the security
and how trading is effected (e.g., the time needed to sell the security, how
offers are solicited and the mechanics of transfer). The Investment Adviser will
monitor the liquidity of restricted securities in the Fund's portfolio and
report periodically on such decisions to the Board of Trustees.
When-Issued and Delayed Delivery Securities. A security purchased on a
when-issued or delayed delivery basis is recorded as an asset on the commitment
date and is subject to changes in market value, generally based upon changes in
the level of interest rates. Thus, fluctuation in the value of the security from
the time of the commitment date will affect the Fund's net asset value. When the
Fund commits to purchase securities on a when-issued or delayed delivery basis,
its custodian will segregate liquid assets with a market value equal to the
amount of the commitment. If necessary, additional assets will be placed in the
account daily so that the value of the account will equal or exceed the amount
of the Fund's purchase commitment. The Fund purchases when-issued securities
only with the intention of taking delivery, but may sell the right to acquire
the security prior to delivery if the Investment Adviser deems it advantageous
to do so, which may result in capital gain or loss to the Fund.
Special Considerations Relating to Foreign Securities. To the extent
that the Fund invests in U.S. dollar-denominated securities of foreign issuers,
these securities may not be registered with the SEC, nor may the issuers thereof
be subject to its reporting requirements. Accordingly, there may be less
publicly available information concerning foreign issuers of securities held by
the Funds than is available concerning U.S. companies. Foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards or other regulatory requirements comparable to those applicable to
U.S. companies.
The Funds may invest in foreign securities by purchasing American
Depository Receipts ("ADRs"), which are securities convertible into securities
of corporations based in foreign countries. These securities may not necessarily
be denominated in the same currency as the securities into which they may be
converted. Generally, ADRs, in registered form, are denominated in U.S. dollars
and are designed for use in the U.S. securities markets. ADRs are receipts
typically issued by a U.S. bank or Fund company evidencing ownership of the
underlying securities. For purposes of the Fund's investment policies, ADRs are
deemed to have the same classification as the underlying securities they
represent. Thus, an ADR representing ownership of common stock will be treated
as common stock.
The Fund anticipates that their brokerage transactions involving
securities of companies headquartered in countries other than the United States
will be conducted primarily on the principal exchanges of such countries.
Foreign security trading practices, including those involving securities
settlement where assets of the Fund may be released prior to receipt of payment,
may expose the
Titan SAI B-8
<PAGE>
Fund to increased risk in the event of a failed trade or the insolvency of a
foreign broker-dealer. Transactions on foreign exchanges are usually subject to
fixed commissions that are generally higher than negotiated commissions on U.S.
transactions, although the Fund will endeavor to achieve the best net results in
effecting its portfolio transactions. There is generally less government
supervision and regulation of exchanges and brokers in foreign countries than in
the United States.
The values of foreign investments are affected by changes in currency
rates or exchange control regulations, restrictions or prohibitions on the
repatriation of foreign currencies, application of foreign tax laws, including
withholding taxes, changes in governmental administration or economic or
monetary policy (in the United States or abroad) or changes in dealings between
nations. Costs are also incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions are generally higher than
those charged in the United States, and foreign securities markets may be less
liquid, more volatile and subject to less governmental supervision than in the
United States. Investments in foreign countries could be affected by other
factors not present in the United States, including expropriation, confiscatory
taxation, lack of uniform accounting and auditing standards and potential
difficulties in enforcing contractual obligations, and could be subject to
extended clearance and settlement periods.
Investment income on certain foreign securities in which the Fund may
invest may be subject to foreign withholding or other taxes that could reduce
the return on these securities. Tax treaties between the United States and
foreign countries, however, may reduce or eliminate the amount of foreign taxes
to which the Fund would be subject.
Segregated Assets. When the Fund enters into certain transactions that
involve obligations to make future payments to third parties, including the
purchase of securities on a when-issued or delayed delivery basis or reverse
repurchase agreements, the Fund will maintain with its custodian liquid assets,
marked to market daily, in an amount at least equal to the Fund's obligation or
commitment under such transactions. As described below under "Special Risks of
Hedging Strategies," segregation of liquid assets may also be required in
connection with certain transactions involving options.
Special Risks of Hedging Strategies. The use of options involves
special considerations and risks, as described below. Risks pertaining to
particular instruments are described in the sections that follow.
(1) Successful use of options depends upon the Investment Adviser's
ability to predict movements of the overall securities, currency and interest
rate markets, which require different skills than predicting changes in the
prices of individual securities.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the investments
being hedged. For example, if the value of a an instrument used in a short hedge
increased by less than the decline in value of the hedged investment, the hedge
would not be fully successful. Such a lack of correlation might occur due to
Titan SAI B-9
<PAGE>
factors unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which instruments are traded.
The effectiveness of hedges using instruments on indices will depend on the
degree of correlation between price movements in the index and price movements
in the securities being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies can also
reduce opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Fund entered into a
short hedge because the Investment Adviser projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by a
decline in the price of the instrument. Moreover, if the price of the instrument
declined by more than the increase in the price of the security, the Fund could
suffer a loss. In either such case, the Fund would have been in a better
position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated assets or make margin payments when it takes
positions in instruments involving obligations to third parties (i.e.,
instruments other than purchased options). If the Fund were unable to close out
its positions in such instruments, it might be required to continue to maintain
such assets or make such payments until the position expired or matured. These
requirements might impair the Fund's ability to sell a portfolio security or
make an investment at a time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a disadvantageous time. The
Fund's ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in the
absence of such a market, the ability and willingness of a contra party to enter
into a transaction closing out the position. Therefore, there is no assurance
that any hedging position can be closed out at a time and price that is
favorable to the Fund.
Writing Call Options. The Fund may write (sell) call options on
securities and indices. Call options generally will be written on securities
that, in the opinion of the Investment Adviser, are not expected to make any
major price moves in the near future but that, over the long term, are deemed to
be attractive investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security
at a specified price (the exercise price) at any time until a certain date (the
expiration date). So long as the obligation of the writer of a call option
continues, he or she may be assigned an exercise notice, requiring him or her to
deliver the underlying security against payment of the exercise price. This
obligation terminates upon the expiration of the call option, or such earlier
time at which the writer effects a closing purchase transaction by purchasing an
option identical to that previously sold.
Portfolio securities on which call options may be written will be
purchase solely on the basis of investment considerations consistent with the
Fund's investment objective. When writing a call option, the Fund, in return for
the premium, gives up the opportunity for profit from a price increase in the
underlying security above the exercise price, and retains the risk of loss
should the price of the
Titan SAI B-10
<PAGE>
security decline. Unlike one who owns securities not subject to an option, the
Fund has no control over when it may be required to sell the underlying
securities, since most options may be exercised at any time prior to the
option's expiration. If a call option that the Fund has written expires, the
Fund will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of underlying security, which will be increased or offset by
the premium received. The Fund does not consider a security covered by a call
option to be "pledged" as that term is used in the Fund's policy that limits the
pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. However, if the security
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security at less than its market value.
The premium that the Fund receives for writing a call option is deemed
to constitute the market value of an option. The premium the Fund will receive
from writing a call option will reflect, among other things, the current market
price of the underlying investment, the relationship of the exercise price to
such market price, the historical price volatility of the underlying investment,
and the length of the option period. In determining whether a particular call
option should be written, the Investment Adviser will consider the
reasonableness of the anticipated premium and the likelihood that a liquid
secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Furthermore, effecting a
closing transaction will permit the Fund to write another call option on the
underlying security with either a different exercise price or expiration date or
both.
The Fund will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity normally are higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the
current market values of the underlying securities at the time the options are
written. From time to time, the Fund may purchase an underlying security for
delivery in accordance with the exercise of an option, rather than delivering
such security from its portfolio. In such cases, additional costs will be
incurred.
The Fund will realize a profit or loss from a closing purchase
transaction is less or more, respectively, than the premium received from
writing the option. Because increases in the market price of a call option
generally will reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely to be offset
in whole or in part by appreciation of the underlying security owned by the
Fund.
Titan SAI B-11
<PAGE>
Writing Put Options. The Fund may write put options on securities and
indices. A put option gives the purchases of the option the right to sell, and
the writer (seller) the obligation to buy, the underlying security at the
exercise price at any time until the expiration date. The operation of put
options in other respects, including their related risks and rewards, is
substantially identical to that of call options.
The Fund generally would write put options in circumstances where the
Investment Adviser wishes to purchase the underlying security for the Fund's
portfolio at a price lower than the current market price of the security. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund also would receive interest on debt securities maintained to
cover the exercise price of the option, this technique could be used to enhance
current return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security would
decline below the exercise price, less the premium received.
Writing put options can serve as a limited long hedge because increases
in the value of the hedged investment would be offset to the extent of the
premium received for writing the option. However, if the security depreciates to
a price lower than the exercise price of the put option, it can be expected that
the put option will be exercised and the Fund will be obligated to purchase the
security at more than its market value.
Purchasing Put Options. The Fund may purchase put options on securities
and indices. As the holder of a put option, the Fund would have the right to
sell the underlying security at the exercise price at any time until the
expiration date. The Fund may enter into closing sale transactions with respect
to such options, exercise such options or permit such options to expire.
The Fund may purchase a put option on an underlying security
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security. Such hedge protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. For
example, a put option may be purchased in order to protect unrealized
appreciation of a security when the Investment Adviser deems it desirable to
continue to hold the security because of tax considerations. The premium paid
for the put option and any transaction costs would reduce any profit otherwise
available for distribution when the security eventually is sold.
The Fund also may purchase put options at a time when the Fund does not
own the underlying security. By purchasing put options on a security it does not
own, the Fund seeks to benefit from a decline in the market price of the
underlying security. If the put option is not sold when it has remaining value,
and if the market price of the underlying security remains equal to or greater
than the exercise price during the life of the put option, the Fund will lose
its entire investment in the put option. In order for the purchase of a put
option to be profitable, the market price of the underlying
Titan SAI B-12
<PAGE>
security must decline sufficiently below the exercise price to cover the premium
and transaction costs, unless the put option is sold in a closing sale
transaction.
Purchasing Call Options. The Fund may purchase call options on
securities and indices. As the holder of a call option, the Fund would have the
right to purchase the underlying security at the exercise price at any time
until the expiration date. The Fund may enter into closing sale transactions
with respect to such options, exercise such options or permit such options to
expire.
The Fund also may purchase call options on underlying securities it
owns in order to protect unrealized gains on call options previously written by
it. A call option could be purchased for this purpose where tax considerations
make it inadvisable to realize such gains through a closing purchase
transaction. Call options also may be purchased at times to avoid realizing
losses that would result in a reduction of the Fund's current return. For
example, where the Fund has written a call option on an underlying security
having a current market value below the price at which such security was
purchased by the Fund, an increase in the market price could result in the
exercise of the call option written by the Fund and the realization of a loss on
the underlying security. Accordingly, the Fund could purchase a call option on
the same underlying security, which could be exercised to fulfill the Fund's
delivery obligations under its written call (if it is exercised). This strategy
could allow the Fund to avoid selling the Fund security at a time when it has an
unrealized loss; however, the Fund would have to pay a premium to purchase the
call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of
such Fund's total assets at the time of purchase.
Options may be either listed on an exchange or traded over-the-counter
("OTC"). Listed options are third-party contracts (i.e., performance of the
obligations of the purchase and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. OTC options differ from exchange-traded options in that OTC options are
transacted with dealers directly and not through a corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of a quote
provided by the dealer. In the case of OTC options, there can be no assurance
that a liquid secondary market will exist for any particular option at any
specific time.
The staff of the SEC considers purchased OTC options to be illiquid
securities. A Fund may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
the Fund. The assets used as cover for OTC options written by the Fund will be
considered illiquid unless the OTC options are sold to qualified dealers who
agree that the Fund may repurchase any OTC option its writes at a maximum price
to be calculated by a formula set forth in the option agreement. The cover for
an OTC option written subject to this procedure would be considered illiquid
only to the extent that the maximum repurchase price under the formula exceeds
the intrinsic value of the option.
Titan SAI B-13
<PAGE>
The Fund's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. The Fund
intends to purchase or write only those exchange-traded options for which there
appears to be liquid secondary market. However, there can be no assurance that
such a market will exist at any particular time. Closing transactions can be
made for OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
Investment Restrictions
The following investment restrictions are fundamental policies of the
Fund. Under the 1940 Act, a fundamental policy may not be changed without the
vote of a majority of the outstanding voting securities of a Fund, which is
defined in the 1940 Act as the lesser of (1) 67% or more of the shares present
at a Fund meeting, if the holders of more than 50% of the outstanding shares of
the Fund are present or represented by proxy or (2) more than 50% of the
outstanding shares of the Fund.
Under the investment restrictions adopted by the Fund:
1. The Fund may not purchase securities of any one issuer, if as a
result, more than 5% of the Fund's total assets would be invested in
securities of that issuer or the Fund would own or hold more than 10%
of the outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to this
limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its agencies
and instrumentalities or to securities issued by other investment
companies.
2. The Fund may not issue senior securities or borrow money, except as
permitted under the Investment Company Act of 1940 (the "1940 Act") and
then not in excess of 33-1/3% of the Fund's total assets (including the
amount of the senior securities issued but reduced by any liabilities
not constituting senior securities) at the time of the issuance or
borrowing, except that the Fund may borrow up to an additional 5% of
its total assets (not including the amount borrowed) for temporary or
emergency purposes.
3. The Fund may not purchase or sell physical commodities unless
acquired as a result of owning securities or other instruments, except
that the Fund may purchase, sell or enter into financial options.
Titan SAI B-14
<PAGE>
4. The Fund may not purchase or sell real estate, except that
investments in securities of issuers that invest in real estate and
investments in mortgage-backed securities, mortgage participations or
other instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights under
agreements relating to such securities, including the right to enforce
security interests and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated in an orderly
manner.
5. The Fund may not engage in the business of underwriting securities
of other issuers, except to the extent that the Fund might be
considered an underwriter under the federal securities laws in
connection with its disposition of portfolio securities.
6. The Fund may not make loans, except through loans of portfolio
securities, or through repurchase agreements, provided that for
purposes of this restriction, the acquisition of bonds, debentures or
other debt securities and investments in government obligations,
commercial paper, certificates of deposit, bankers' acceptances or
similar instruments will not be considered the making of a loan.
The following investment restrictions may be changed by the Board of
Trustees without shareholder approval:
1. The Fund may not purchase any securities of other investment
companies, except to the extent permitted by the 1940 Act and except
that this limitation does not apply to securities received or acquired
as dividends, through offers of exchange, or as a result of
reorganization, consolidation, or merger.
2. The Fund may not purchase securities on margin, except for
short-term credit necessary for clearance of portfolio transactions and
except that the Fund may make margin deposits in connection with its
use of financial options.
3. The Fund may not make short sales of securities or maintain a short
position, except that a Fund may (a) sell short "against the box" and
(b) maintain short positions in connection with its use of financial
options.
4. The Fund may not mortgage, pledge, or hypothecate any assets except
in connection with permitted borrowings or the issuance of senior
securities.
Titan SAI B-15
<PAGE>
TRUSTEES AND EXECUTIVE OFFICERS
The Trustees of the Trust, who were elected for an indefinite term by
the initial shareholders of the Trust, are responsible for the overall
management of the Trust, including general supervision and review of the
investment activities of the Fund. The Trustees, in turn, elect the officers of
the Trust, who are responsible for administering the day-to-day operations of
the Trust and its separate series. The current Trustees and officers, their
affiliations, dates of birth and principal occupations for the past five years
are set forth below.
Steven J. Paggioli,* 04/03/50 President and Trustee
479 West 22nd Street, New York, NY 10011. Executive Vice President, The
Wadsworth Group (consultants) since 1986; Executive Vice President of Investment
Company Administration Corporation ("ICAC") (mutual fund administrator and the
Trust's administrator), and Vice President of First Fund Distributors, Inc.
("FFD") (a registered broker-dealer and the Fund's Distributor) since 1990.
Dorothy A. Berry, 08/12/43 Trustee
14 Five Roses East, Ancram, NY 12517. President, Talon Industries (venture
capital and business consulting); formerly Chief Operating Officer, Integrated
Asset Management (investment advisor and manager) and formerly President, Value
Line, Inc., (investment advisory and financial publishing firm).
Wallace L. Cook, 09/10/39 Trustee
One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.
Carl A. Froebel, 05/23/38 Trustee
2 Crown Cove Lane, Savannah, GA 31411. Private Investor. Formerly Managing
Director, Premier Solutions, Ltd. (asset management computer and software
products). Formerly President and Founder, National Investor Data Services, Inc.
(investment related computer software).
Rowley W.P. Redington, 06/01/44 Trustee
1191 Valley Road, Clifton, NJ 07103. President, Intertech (consumer electronics
and computer service and marketing); formerly Vice President, PRS of New Jersey,
Inc. (management consulting), and Chief Executive Officer, Rowley Associates
(consultants).
Eric M. Banhazl*, 08/05/57 Treasurer
Titan SAI B-16
<PAGE>
2020 E. Financial Way, Glendora, CA 91741. Senior Vice President, The Wadsworth
Group, Senior Vice President of ICAC and Vice President of FFD since 1990.
Robin Berger*, 11/17/56 Secretary
479 West 22nd St., New York, NY 10011. Vice President, The Wadsworth Group since
June, 1993; formerly Regulatory and Compliance Coordinator, Equitable Capital
Management, Inc. (investment management) (1991-93).
Robert H. Wadsworth*, 01/25/40 Vice President
4455 E. Camelback Road, Suite 261E, Phoenix, AZ 85018. President of The
Wadsworth Group since 1982, President of ICAC and FFD since 1990.
*Indicates an "interested person" of the Trust as defined in the 1940 Act.
Set forth below is the rate of compensation received by the following
Trustees from the Fund and all other portfolios of the Trust. This total amount
is allocated among the portfolios. Disinterested trustees receive an annual
retainer of $7,500 and a fee of $2,500 for each regularly scheduled meeting.
These trustees also receive a fee of $1000 for any special meeting attended. The
Chairman of the Board of Trustees receives an additional annual retainer of
$4,500. Disinterested trustees are also reimbursed for expenses in connection
with each Board meeting attended. No other compensation or retirement benefits
were received by any Trustee or officer from the Fund or any other portfolios of
the Trust.
Name of Trustee Total Annual Compensation
Dorothy A. Berry $22,000
Wallace L. Cook $17,500
Carl A. Froebel $17,500
Rowley W.P. Redington $17,500
During the fiscal year ended April 30, 1998, trustees' fees and
expenses in the amount of $5,096 were allocated to the Fund. As of the date of
this Statement of Additional Information, the Trustees and Officers of the Trust
as a group did not own more than 1% of the outstanding shares of the Fund.
The Fund receives investment advisory services pursuant to agreements
with the Advisor and the Trust. Each such agreement, after its initial term,
continues in effect for successive annual periods so long as such continuation
is approved at least annually by the vote of (1) the Board of Trustees of the
Trust (or a majority of the outstanding shares of the Fund to which the
agreement applies), and (2) a majority of the Trustees who are not interested
persons of any party to the Agreement, in each case cast in person at a meeting
called for the purpose of voting on such approval. Any such
Titan SAI B-17
<PAGE>
agreement may be terminated at any time, without penalty, by either party to the
agreement upon 60 days' written notice and is automatically terminated in the
event of its "assignment," as defined in the 1940 Act.
INVESTMENT MANAGEMENT, ADMINISTRATION AND DISTRIBUTION
ARRANGEMENTS
Investment Advisory Arrangements. Titan Investment Advisers, LLC acts
as the investment adviser to the Fund pursuant to a an investment advisory
agreement with the Fund ("Advisory Agreement") dated May 20, 1996.
For its services, the Investment Adviser receives, pursuant to the
Advisory Agreement, a fee at an annual rate of 1.00% of the Fund's average daily
net assets. The fee is computed daily and payable monthly.
Under the terms of the Advisory Agreement, the Fund bears all expenses
incurred in its operation that are not specifically assumed by the Fund's
Adviser. General expenses of the Fund not readily identifiable as belonging to
the Fund are allocated among series by or under the direction of the board of
Trustees in such manner as the board deems to be fair and equitable. Expenses
borne by the Fund include the following (or the Fund's share of the following):
(1) the cost (including brokerage commissions) of securities purchased or sold
by the Fund and any losses incurred in connection therewith, (2) fees payable to
and expenses incurred on behalf of the Fund by the Investment Adviser, (3)
organizational expenses, (4) filing fees and expenses relating to the
registration and qualification of the Fund's shares under federal and state
securities laws and maintenance of such registrations and qualifications, (5)
fees and salaries payable to Trustees who are not interested persons (as defined
in the 1940 Act) of the Fund, (6) all expenses incurred in connection with
Trustees' services, including travel expenses, (7) taxes (including any income
or franchise taxes) and governmental fees, (8) costs of any liability,
uncollectible items of deposit and other insurance or fidelity bonds, (9) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Fund for violation of any law, (10) legal,
accounting and auditing expenses, including legal fees of special counsel for
the independent Trustees, (11) charges of custodians, transfer agents and other
agents, (12) costs of preparing share certificates, (13) expenses of setting in
type and printing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials for existing
shareholders, and costs of mailing such materials to existing shareholders, (14)
any extraordinary expenses (including fees and disbursements of counsel)
incurred by the Fund, (15) fees, voluntary assessments and other expenses
incurred in connection with membership in investment company organizations, (16)
costs of mailing and tabulating proxies and costs of meetings of shareholders,
the board and any committees thereof, (17) the cost of investment company
literature and other publications provided to Trustees and officers and (18)
costs of mailing, stationery and communications equipment.
Titan SAI B-18
<PAGE>
Under the Advisory Agreement, the Investment Adviser will not be liable
for any error or judgment or mistake of law or for any loss suffered by the Fund
in connection with the performance of the contract, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Investment
Adviser in the performance of its duties or from reckless disregard of its
duties and obligations thereunder. The Advisory Agreement terminates
automatically upon its assignment and is terminable at any time without penalty
by the Board of Trustees or by vote of the holders of a majority of a Fund's
outstanding voting securities, on 60 days' written notice to the Investment
Adviser or by the Investment Adviser on 60 days' written notice to the Fund.
The Adviser has undertaken to limit the Fund's operating expenses to an
annual level of 2.5% of the Fund's average net assets. For the fiscal period
ending April 30, 1997, the Advisor received advisory fees of $46,576 and
reimbursed the Fund for operating expenses in the amount of $30,832. For the
fiscal year ending April 30, 1998, the Advisor received advisory fees of
$179,418; for the same period, the Fund repaid the Adviser $30,832 of the
amounts it had absorbed during prior fiscal periods.
THE FUND'S ADMINISTRATOR
The Fund has an Administration Agreement with Investment Company
Administration Corporation (the "Administrator"), a corporation owned and
controlled by Messrs. Banhazl, Paggioli and Wadsworth with offices at 4455 E.
Camelback Rd., Ste. 261-E, Phoenix, AZ 85018. The Administration Agreement
provides that the Administrator will prepare and coordinate reports and other
materials supplied to the Trustees; prepare and/or supervise the preparation and
filing of all securities filings, periodic financial reports, prospectuses,
statements of additional information, marketing materials, tax returns,
shareholder reports and other regulatory reports or filings required of the
Fund; prepare all required filings necessary to maintain the Fund's
qualification and/or registration to sell shares in all states where the Fund
currently does, or intends to do business; coordinate the preparation, printing
and mailing of all materials (e.g., Annual Reports) required to be sent to
shareholders; coordinate the preparation and payment of Fund related expenses;
monitor and oversee the activities of the Fund's servicing agents (i.e.,
transfer agent, custodian, fund accountants, etc.); review and adjust as
necessary the Fund's daily expense accruals; and perform such additional
services as may be agreed upon by the Fund and the Administrator. For its
services, ICAC receives a fee at the following annual rate:
Average Net Assets of the Fund Fee or Fee Rate
Under $15 million $30,000
$15 to $50 million 0.20% of average net assets
$50 to $100 million 0.15% of average net assets
$100 to $150 million 0.10% of average net assets
Over $150 million 0.05% of average net assets
Titan SAI B-19
<PAGE>
ICAC received fees of $28,591 from the Fund for the fiscal period ending April
30, 1997 and $39,532 for the fiscal year ending April 30, 1998.
Distribution Arrangements. First Fund Distributors, Inc. acts as the
distributor of the shares of the Fund under a distribution contract with the
Fund dated May 20, 1996 ("Distribution Contract").
Plan of Distribution
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1
under the Act (the "Plan"), under which, the fund pays the Adviser as
Distribution Coordinator a fee, which is accrued daily and paid monthly, at the
annual rate of 0.25% of the Fund's average daily assets. Among other things, the
Plan provides that (1) the Investment Adviser will submit to the Fund's Board of
Trustees at least quarterly, and the Trustees will review, reports regarding all
amounts expended under the Plan and the purposes for which such expenditures
were made, (2) the Plan will continue in effect only so long as it is approved
at least annually, and any material amendment thereto is approved, by the Fund's
Board of Trustees, including those who are not "interested persons" of the Fund
and who have no direct or indirect financial interest in operation of the plan
or any agreement related to the Plan, acting in person at a meeting called for
that purpose, (3) payments by the Fund under the Plan shall not be materially
increased without the affirmative vote of the holders of a majority of the
outstanding shares of the Fund and (4) while the Plan remains in effect, the
selection and nomination of Trustees who are not "interested persons" of the
Fund shall be committed to the discretion of the Trustees who are not interested
persons of the Fund. During the year ended April 30, 1998, the Fund paid fees of
$44,855 under the Plan, of which $16,724 was paid out as selling compensation to
dealers and $7,038 was for reimbursement of printing, postage and office
expenses, $861 was for reimbursement of travel and entertainment expenses and
$20,231 was for reimbursement of advertising/sales literature expenses.
PORTFOLIO TRANSACTIONS
Subject to policy established by the Board of Trustees of the Fund, the
Investment Adviser will arrange for the execution of the Fund's portfolio
transactions and the allocation of brokerage. In executing portfolio
transactions the Investment Adviser will seek to obtain the best net results for
the Fund, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), size of order, difficulty of execution
and operational facilities of the firm involved. The Fund may invest in
securities traded in the over-the-counter markets and deal directly with the
dealers who make markets in the securities involved, unless a better price or
execution could be obtained by using a broker. While the Investment Adviser
generally will sell reasonably competitive commission rates, payment of the
lowest commission or spread is not necessarily consistent with best results in
particular transactions.
Titan SAI B-20
<PAGE>
In placing orders with brokers and dealers, the Investment Adviser will
attempt to obtain the best net price and the most favorable execution for
orders; however, the Investment Adviser may, in its discretion, purchase and
sell portfolio securities through brokers and dealers who provide the Investment
Adviser or the Fund with research, analysis, advice and similar services. The
Investment Adviser may, in return for research and analysis, pay brokers a
higher commission than may be charged by other brokers, provided that the
Investment Adviser determines in good faith that such commission is reasonable
in terms either of that particular transaction or of the overall responsibility
of the Investment Adviser to the Fund and its other clients and that the total
commission paid by the Fund will be reasonable in relation to the benefits to
the Fund over the long term. Information and research received from such brokers
and dealers will be in addition to, and not in lieu of, the services required to
be performed by the Investment Adviser under its Advisory Agreement with the
Fund. The Fund has no obligation to deal with any broker or group of brokers in
the execution of transactions.
Investment decisions for the Fund and for other investment accounts
managed by the Investment Adviser are made independently of each other in the
light off differing considerations for the various accounts. However, the same
investment decision may occasionally be made for two or more such accounts. In
such cases, simultaneous transactions are inevitable. Purchases or sales are
then averaged as to price and allocated to accounts according to a formula
deemed equitable to each account. While in some cases this practice could have a
detrimental effect upon the price or value of the security as far as the Fund is
concerned, in other cases it is believed to be beneficial to the Fund.
The Fund does not use the Distributor to execute its portfolio
transactions. For the fiscal period ended April 30, 1997 and for the fiscal year
ending April 30, 1998 the aggregate brokerage commissions paid by the Fund were
$29,040 and $109,384, respectively.
Portfolio Turnover
Because the Fund's primary objective is long-term capital appreciation,
the Fund anticipates that its annual portfolio turnover rate generally will not
exceed 100%. The turnover rate will not be a limiting factor if the Investment
Adviser deems portfolio changes appropriate. The turnover rate may vary greatly
form year to year. Portfolio turnover rate is calculated by dividing the lesser
of the Fund's annual sales or purchases of portfolio securities (exclusive of
purchases or sales of all securities the maturities of which at the time of
acquisition were one year or less) by the monthly average value of securities in
the portfolio during the year (exclusive of portfolio securities the maturities
of which at the time of acquisition were one year or less).
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Trust reserves the right in its sole discretion (i) to suspend the
continued offering of the Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Adviser or the Distributor such rejection
is in the best interest of the Fund, and (iii) to reduce or waive the
Titan SAI B-21
<PAGE>
minimum for initial and subsequent investments for certain fiduciary accounts or
under circumstances where certain economies can be achieved in sales of the
Fund's shares.
Payments to shareholders for shares of the Fund redeemed directly from
the Fund will be made as promptly as possible but no later than seven days after
receipt by the Fund's Transfer Agent of the written request in proper form, with
the appropriate documentation as stated in the Prospectus, except that the Fund
may suspend the right of redemption or postpone the date of payment during any
period when (a) trading on the New York Stock Exchange is restricted as
determined by the SEC or such Exchange is closed for other than weekends and
holidays; (b) an emergency exists as determined by the SEC making disposal of
portfolio securities or valuation of net assets of the Fund not reasonably
practicable; or (c) for such other period as the SEC may permit for the
protection of the Fund's shareholders. At various times, the Fund may be
requested to redeem shares for which it has not yet received confirmation of
good payment; in this circumstance, the Fund may delay the redemption until
payment for the purchase of such shares has been collected and confirmed to the
Fund, which may take up to fifteen days after purchase.
The Fund intends to pay cash (U.S. dollars) for all shares redeemed,
but, under abnormal conditions which make payment in cash unwise, the Fund may
make payment partly in securities with a current market value equal to the
redemption price. Although the Fund does not anticipate that it will make any
part of a redemption payment in securities, if such payment were made, an
investor may incur brokerage costs in converting such securities to cash. The
Fund has elected to be governed by the provisions of Rule 18f-1 under the 1940
Act, which contains a formula for determining the minimum redemption amounts
that must be paid in cash.
The value of shares on redemption or repurchase may be more or less
than the investor's cost, depending upon the market value of the Fund's
portfolio securities at the time of redemption or repurchase.
VALUATION OF SHARES
The Fund determines its net asset value per share as of the close of
regular trading (currently 4:00 p.m., eastern time) on the NYSE on each Monday
through Friday when the NYSE is open. Currently, the NYSE is closed on the
observance of the following holidays: New Year's Day, Presidents' Day, Martin
Luther King Jr. Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Each security will be valued on the basis of the last sales price on
the valuation date on the principal exchange on which the security is traded.
Where securities are traded on one or more exchanges and also over-the-counter,
the securities will generally be valued using the quotations the Board of
Trustees or its delegate believes reflect most closely the value of such
securities. With respect to those securities for which no trades have taken
place that day and unlisted securities for which market quotations are readily
available, the value shall be determined by taking the latest "bid" prices.
Short-term securities which mature in more than 60 days will be valued at
current market
Titan SAI B-22
<PAGE>
quotations. Short-term securities which mature in 60 days or less will be valued
at amortized cost, if their term to maturity from date of purchase is 60 days or
less, or by amortizing their value on the 61st day prior to maturity, if their
term to maturity from date of purchase exceeds 60 days. Securities for which
market quotations are not readily available, including restricted securities,
and other assets will be valued at fair value as determined in good faith
according to a pricing procedure developed by the Investment Adviser and
approved by the Board of Trustees.
In the calculation of the Fund's net asset value; (1) an equity
portfolio security listed or traded on the New York or American Stock Exchange
or other domestic or foreign stock exchange or quoted by NASDAQ is valued at its
latest sale price on that exchange or quotation service prior to the time assets
are valued; if there were no sales that day, the security is valued at the
latest bid price (in cases where a security is traded on more than one exchange,
the security is valued on the exchange designated as the primary market by the
Fund's Board of Trustees); (2) an option is valued at the mean between the
latest bid and asked prices; (3) a futures contract is valued at the latest
sales price on the commodities exchange on which it trades unless the Board
determines that such price does not reflect its market value, in which case it
will be valued at its fair value as determined by the Board of Trustees; (4) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest bid price; (5) when market quotations
are not readily available, including circumstances under which it is determined
by the Investment Adviser that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Fund's Board of Trustees (valuation of debt securities for
which market quotations are not readily available may be used upon current
market prices of securities which are comparable in coupon, rating and maturity
or an appropriate matrix utilizing similar factors); (6) the value of short-term
debt securities which mature at a date less than sixty days subsequent to
valuation date will be determined on an amortized cost or amortized value basis;
and (7) the value of other assets will be determined in good faith at fair value
under procedures established by and under the general supervision of the Fund's
Board. For valuation purposes, quotations of foreign portfolio securities, other
assets and liabilities and forward contracts stated in foreign currency are
translated into U.S. dollar equivalents at the prevailing market ratings prior
to the close of the New York Stock Exchange. Dividends receivable are accrued as
the ex-dividend date or as of the time that the relevant ex-dividend date and
amounts become known. Interest income is accrued daily except when collection is
uncertain. Certain securities in the Fund's portfolio may be valued by an
outside pricing service approved by the Fund's Board of Trustees. The pricing
service may utilize a matrix system incorporating security quality, maturity and
coupon as the evaluation model parameters, and/or research evaluations by its
staff, including review of broker-dealer market price quotations, in determining
what it believes is the fair valuation of the portfolio securities valued by
such pricing service.
PERFORMANCE INFORMATION
The Fund's performance data quoted in advertising and other promotional
materials ("Performance Advertisements") represent past performance and are not
intended to indicate future
Titan SAI B-23
<PAGE>
performance. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
Total Return Calculations. Average annual total return quotes
("Standardized Return") used in the Fund's Performance Advertisements are
calculated according to the following formula:
P(1 + T)n = ERV
where: P = a hypothetical initial payment of $1,000 to
purchase shares of a Fund
T = average annual total return of shares of that Fund
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of that period.
Under the foregoing formula, the time periods used in Performance
Advertisements will be based on rolling calendar quarters, updated to the last
day of the most recent quarter prior to submission of the Performance
Advertisements for publication. Total return, or "T" in the formula above, is
computed by finding the average annual change in the value of an initial $1,000
investment over the period. All dividends and other distributions are assumed to
have been reinvested at net asset value.
The Fund also may refer in Performance Advertisements to total return
performance data that are not calculated according to the formula set forth
above ("Non-Standardized Return"). A Fund calculates Non-Standardized Return for
specified periods of time by assuming an investment of $1,000 in Fund shares and
assuming the reinvestment of all dividends and other distributions. The rate of
return is determined by subtracting the initial value of the investment from the
ending value and by dividing the remainder by the initial value.
The average annual rate of return, or total return, for the Fund for one
year and for the period from inception of the Fund on May 22, 1996 through April
30, 1998 were 63.47% and 45.54%, respectively.
Other Information. In Performance Advertisements, the Fund may compare its
Standardized Return and/or their Non-Standardized Return with data published by
Lipper Analytical Services, Inc. ("Lipper"), CDA Investment Technologies, Inc.
("CDA"), Wiesenberger Investment Companies Services ("Wiesenberger"), Investment
Company Data, Inc. ("ICD"), or Morningstar Mutual Funds ("Morningstar") or with
the performance of recognized stock and other indices, including (but not
limited to) the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average and the Wilshire 5000 Index. The Fund also may refer in such
materials to mutual fund performance rankings and other data, such as
comparative asset, expense and fee levels, published by Lipper, CDA,
Wiesenberger, ICD, Bloomberg Financial Markets Service or Morningstar.
Performance Advertisements also may refer to discussions of the Fund and
comparative mutual fund data and ratings reported in independent periodicals,
including (but not limited to) THE WALL STREET JOURNAL, MONEY Magazine, FORBES,
BUSINESS WEEK, FINANCIAL WORLD, BARRON'S, FORTUNE, THE NEW YORK TIMES, THE
CHICAGO TRIBUNE, THE
Titan SAI B-24
<PAGE>
WASHINGTON POST and THE KIPLINGER LETTERS. Ratings may include criteria relating
to portfolio characteristics in addition to performance information. In
connection with a ranking, a Fund may also provide additional information with
respect to the ranking, such as the particular category to which it relates, the
number of funds in the category, the criteria on which the ranking is based, and
the effect of sales charges, fee waivers and/or expense reimbursements.
The Fund may include discussions or illustrations of the effects of
compounding in Performance Advertisements. "Compounding" refers to the fact
that, if dividends or other distributions on the Fund investment are reinvested
by being paid in additional Fund shares, any future income or capital
appreciation of the Fund would increase the value, not only of the original Fund
investment, but also of the additional Fund shares received through
reinvestment. As a result, the value of the Fund investment would increase more
quickly than if dividends or other distributions had been paid in cash.
The Fund may also compare its performance with the performance of bank
certificates of deposit (CDS) as measured by the CDA Investment Technologies,
Inc. Certificate of Deposit Index, the Bank Rate Monitor National Index and the
averages of yields of CDS of major banks published by Banxquote (TM) Money
Markets. In comparing the Fund's performance to CD performance, investors should
keep in mind that bank CDS are insured in whole or in part by an agency of the
U.S. government and offer fixed principal and fixed or variable rates of
interest, and that bank CD yields may vary depending on the financial
institution offering the CD and prevailing interest rates. Shares of the Fund
are not insured or guaranteed by the U.S. government and returns thereon and net
asset value will fluctuate. The securities held by the Fund generally have
longer maturities than most CDS and may reflect interest rate fluctuations for
longer term securities.
TAXES
The Fund intends to continue to qualify and elect to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), provided it complies with all applicable
requirements regarding the source of its income, diversification of its assets
and timing of distributions. The Fund's policy is to distribute to its
shareholders all of its investment company taxable income and any net realized
long-term capital gains for each fiscal year in a manner that complies with the
distribution requirements of the Code, so that the Fund will not be subject to
any federal income or excise taxes. To comply with the requirements, the Fund
must also distribute (or be deemed to have distributed) by December 31 of each
calendar year (i) at least 98% of its ordinary income for such year, (ii) at
least 98% of the excess of its realized capital gains over its realized capital
losses for the 12-month period ending on October 31 during such year and (iii)
any amounts from the prior calendar year that were not distributed and on which
the Fund paid no federal income tax.
Net investment income consists of interest and dividend income, less
expenses. Net realized capital gains for a fiscal period are computed by taking
into account any capital loss carryforward of the Fund.
Titan SAI B-25
<PAGE>
Distributions of net investment income and net short-term capital gains are
taxable to shareholders as ordinary income. In the case of corporate
shareholders, a portion of the distributions may qualify for the intercorporate
dividends-received deduction to the extent the Fund designates the amount
distributed as a qualifying dividend. The aggregate amount so designated cannot,
however, exceed the aggregate amount of qualifying dividends received by the
Fund for its taxable year. In view of the Fund's investment policy, it is
expected that dividends from domestic corporations will be part of the Fund's
gross income and that, accordingly, part of the distributions by the Fund may be
eligible for the dividends-received deduction for corporate shareholders.
However, the portion of the Fund's gross income attributable to qualifying
dividends is largely dependent on that Fund's investment activities for a
particular year and therefore cannot be predicted with any certainty. The
deduction may be reduced or eliminated if the Fund shares held by a corporate
investor are treated as debt-financed or are held for less than 46 days.
Distributions of the excess of net long-term capital gains over net
short-term capital losses are taxable to shareholders as long-term or mid-term
capital gains, regardless of the length of time they have held their shares.
Capital gains distributions are not eligible for the dividends-received
deduction referred to in the previous paragraph. Distributions of any net
investment income and net realized capital gains will be taxable as described
above, whether received in shares or in cash. Shareholders electing to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are generally taxable
when received. However, distributions declared in October, November or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31. Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.
A redemption of Fund shares may result in recognition of a taxable gain or
loss. Any loss realized upon a redemption of shares within six months from the
date of their purchase will be treated as a long-term capital loss to the extent
of any amounts treated as distributions of long-term capital gains during such
six-month period. Any loss realized upon a redemption of Fund shares may be
disallowed under certain wash sale rules to the extent shares of the Fund are
purchased (through reinvestment of distributions or otherwise) within 30 days
before or after the redemption.
Under the Code, the Fund will be required to report to the Internal Revenue
Service ("IRS") all distributions of taxable income and capital gains as well as
gross proceeds from the redemption or exchange of Fund shares, except in the
case of exempt shareholders, which includes most corporations. Pursuant to the
backup withholding provisions of the Internal Revenue Code, distributions of any
taxable income and capital gains and proceeds from the redemption of Fund shares
may be subject to withholding of federal income tax at the rate of 31 percent in
the case of non-exempt shareholders who fail to furnish the Fund with their
taxpayer identification numbers and with required certifications regarding their
status under the federal income tax law. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Corporate and other
Titan SAI B-26
<PAGE>
exempt shareholders should provide the Fund with their taxpayer identification
numbers or certify their exempt status in order to avoid possible erroneous
application of backup withholding. The Fund reserves the right to refuse to open
an account for any person failing to provide a certified taxpayer identification
number.
The Fund will not be subject to tax in the Commonwealth of Massachusetts as
long as it qualifies as a regulated investment company for federal income tax
purposes. Distributions and the transactions referred to in the preceding
paragraphs may be subject to state and local income taxes, and the tax treatment
thereof may differ from the federal income tax treatment. Moreover, the above
discussion is not intended to be a complete discussion of all applicable federal
tax consequences of an investment in the Fund. Shareholders are advised to
consult with their own tax advisers concerning the application of federal, state
and local taxes to an investment in the Fund.
The foregoing discussion of U.S. federal income tax law relates solely to
the application of that law to U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts and estates. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30 percent (or at a lower rate
under an applicable income tax treaty) on amounts constituting ordinary income.
This discussion and the related discussion in the prospectus have been
prepared by Fund management, and counsel to the Fund has expressed no opinion in
respect thereof.
GENERAL INFORMATION
Investors in the Fund will be informed of the Fund's progress through
periodic reports. Financial statements certified by independent public
accountants will be submitted to shareholders at least annually.
Star Bank N.A., 425 Walnut Street, Cincinnati, OH 45202 acts as Custodian
of the securities and other assets of the Fund. The Custodian does not
participate in decisions relating to the purchase and sale of securities by the
Fund. American Data Services, Inc., P.O. Box 5536, Hauppauge, NY 11788- 0132 is
the Fund's Transfer and Dividend Disbursing Agent.
Tait, Weller & Baker, Eight Penn Center Plaza, Philadelphia, PA 19103 are
the independent auditors for the Fund.
Paul, Hastings, Janofsky & Walker, 345 California Street, 29th Floor, San
Francisco, California 94104, are legal counsel to the Fund. Kirkpatrick &
Lockhart LLP, 1800 M St., NW, Washington, D.C. 20036-5891 is legal counsel to
the Adviser.
Titan SAI B-27
<PAGE>
The following persons are beneficial owners of more than 5% of the Fund's
outstanding voting securities as of July 1, 1998. An asterisk (*) denotes an
account affiliated with the Fund's investment advisor, officers or trustees:
Charles Schwab & Co., Inc. Special Custody Account FBO Customers, San
Francisco, CA 94104; 8.48%
*Mervin H. Zimmerman, Rockville, MD 20852; 6.04%
FINANCIAL STATEMENTS
The annual report to shareholders for the Fund for its most recent fiscal
year end is a separate document supplied with this Statement of Additional
Information and the financial statements, accompanying notes and report of
independent accountants appearing therein are incorporated by reference in this
Statement of Additional Information.
Titan SAI B-28
<PAGE>
APPENDIX
Description of Bond Ratings*
Moody's Investors Service
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations or protective elements
may be of greater amplitude or there may be other elements present which make
long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements: their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Titan SAI B-29
<PAGE>
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
Standard & Poor's Corporation
AAA: Bonds rated AAA are highest grade debt obligations. This rating indicates
an extremely strong capacity to pay principal and interest.
AA: Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
*Ratings are generally given to securities at the time of issuance. While the
rating agencies may from time to time revise such ratings, they undertake no
obligation to do so.
Titan SAI B-30
<PAGE>
<PAGE>
PROFESSIONALLY MANAGED PORTFOLIOS
FORM N-1A
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements for the fiscal year ended June 30, 1997:
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended June 30, 1997 (Boston Managed Growth Fund,
Leonetti Balanced Fund and U.S. Global Leaders Growth Fund Series).
Financial Statements: Financial Statements for the fiscal year ended
March 31, 1997: Incorporated by reference from the annual reports to
shareholders for the fiscal year ended March 31, 1997) (Avondale Total
Return, Harris Bretall Sullivan & Smith Growth Equity, Hodges,
Osterweis, Perkins Opportunity Fund Series).
Financial Statements: Financial Statements for the fiscal year ended
March 31, 1998: Incorporated by reference from the annual report to
shareholders for the fiscal year ended March 31, 1998) (Pro-Conscience
Women's Equity Mutual Fund Series).
Financial Statements for the fiscal year ended April 30, 1997:
Incorporated by Reference from the annual report to shareholders for
the fiscal year ended April 30, 1997 (Pzena Focused Value Fund
series).
Financial Statements for the fiscal year ended April 30, 1998:
Incorporated by Reference from the annual report to shareholders for
the fiscal year ended April 30, 1998 (Titan Financial Services Fund
series).
Financial Statements for the fiscal year ended August 31, 1997:
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended August 31, 1997 (Academy Value, Lighthouse
Contrarian and Trent Equity Fund Series).
Financial Statements for the fiscal year ended December 31, 1997;
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended December 31, 1997 (Matrix Growth Fund Series,
Matrix Emerging Growth Fund Series)
(b) Exhibits:
(1) Agreement and Declaration of Trust (2)
(2) By-Laws (2)
(3) Voting Trust Agreement--Not applicable
(4) Specimen stock certificate (3)
(5) Form of Investment Advisory Agreement (1)
(6) Form of Distribution Agreement (1)
(7) Benefit Plan--Not applicable
(8) Form of Custodian Agreement with Star Bank, NA (7)
(9) (1) Form of Administration Agreement with Investment
Company Administration Corporation (5)
(2)(a) Fund Accounting Service Agreement with
American Data Services (7)
(2)(b) Transfer Agency and Service Agreement with
American Data Services (7)
(3) Transfer Agency and Fund Accounting Agreement with
Countrywide Fund Services (6)
(4) Transfer Agency Agreement with Provident Financial
Processing Corporation (8)
(10) Opinion and consent of counsel (3)
(11) Consent of Independent Auditors
(12) All financial statements omitted from Item 23
--Not applicable
(13) Letter of understanding relating to initial capital (3)
(14) Model Retirement Plan Documents--Not applicable
(15) Form of Plan pursuant to Rule 12b-1 (1)
(16) Schedule for Computation of Performance
Quotations (4)
(17) Financial Data Schedule
1 Incorporated by reference from Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A, filed on January 16, 1996.
2 Incorporated by reference from Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A, filed on December 29, 1995.
3 Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on April 13, 1987.
4 Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A filed on June 17, 1992.
5 Incorporated by reference from Post-Effective Amendment No. 35 to the
Registration Statement on Form N-1A, filed on April 24, 1997.
6 Incorporated by reference from Post-Effective Amendment No. 43 to the
Registration Statement on Form N-1A, filed on February 5, 1998.
7 Incorporated by reference from Post-Effective Amendment No. 48 to the
Registration Statement on Form N-1A, filed on June 15, 1998.
8 To be filed by amendment.
Item 25. Persons Controlled by or under Common Control with Registrant.
As of the date of this Amendment to the Registration Statement, there
are no persons controlled or under common control with the Registrant.
Item 26. Number of Holders of Securities.
Number of Record
Holders as of
Title of Class April 8, 1998
Shares of Beneficial Interest, no par value:
Academy Value Fund 218
Avondale Total Return Fund 145
Boston Balanced Fund 251
Hodges Fund 1041
Osterweis Fund 128
PGP Korea Growth Fund 23
Perkins Opportunity Fund 6,307
Pro-Conscience Women's Equity Mutual Fd. 602
Trent Equity Fund 149
Matrix Growth Fund 388
Matrix Emerging Growth Fund 83
Leonetti Balanced Fund 355
Lighthouse Contrarian Fund 406
U.S.Global Leaders Growth Fund 459
Harris, Bretall, Sullivan & Smith
Growth Equity Fund 110
Pzena Focused Value Fund 230
Titan Financial Services Fund 980
Item 27. Indemnification
The information on insurance and indemnification is incorporated by
reference to Pre-Effective Amendment No. 1 and Post-Effective Amendment No. 1 to
the Registrant's Registration Statement.
In addition, insurance coverage for the officers and trustees of the
Registrant also is provided under a Directors and Officers/Errors and Omissions
Liability insurance policy issued by ICI Mutual Insurance Company with a
$1,000,000 limit of liability.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
With respect to Investment Advisors, the response to this item is
incorporated by reference to their Form ADVs as amended:
Herbert R. Smith & Co, Inc. File No. 801-7098
Hodges Capital Management, Inc. File No. 801-35811
Perkins Capital Management, Inc. File No. 801-22888
Osterweis Capital Management File No. 801-18395
Pro-Conscience Funds, Inc. File No. 801-43868
Trent Capital Management, Inc. File No. 801-34570
Academy Capital Management File No. 801-27836
Sena, Weller, Rohs, Williams File No. 801-5326
Leonetti & Associates, Inc. File No. 801-36381
Lighthouse Capital Management File No. 801-32168
Yeager, Wood & Marshall, Inc. File No. 801-4995
Harris Bretall Sullivan & Smith File No. 801-7369
Pzena Investment Management LLC File No. 801-50838
Titan Investment Advisers, LLC File No. 801-51306
Pacific Gemini Partners LLC File No. 801-50007
With respect to United States Trust Company of Boston, the response to this
item is incorporated by reference to the responses to Item 5 of Part A and Item
16 of Part B ("Management")of Post-Effective Amendment No. 20 to the
Registration Statement.
Item 29. Principal Underwriters.
(a) First Fund Distributors, Inc. (the "Distributor") is the principal
underwriter all series of the Registrant except for the Hodges Fund, the Matrix
Growth Fund and the Matrix Emerging Growth Fund. The Distributor acts as
principal underwriter for the following other investment companies:
Advisors Series Trust
Brandes Investment Trust
Fleming Mutual Fund Group
Fremont Mutual Funds
Guinness Flight Investment Funds
Jurika & Voyles Fund Group
Kayne Anderson Mutual Funds
Masters' Select Investment Trust
O'Shaughnessy Funds, Inc.
PIC Investment Trust
Purisima Funds
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group
UBS Private Investor Funds
First Dallas Securities, Inc., 2311 Cedar Springs Rd., Ste. 100, Dallas, TX
75201, an affiliate of Hodges Capital Management, acts as Distributor of the
Hodges Fund. The President and Chief Financial Officer of First Dallas
Securities, Inc. is Don W. Hodges. First Dallas does not act as principal
underwriter for any other investment companies. Reynolds, DeWitt Securities Co.,
an affiliate of Sena Weller Rohs Williams, 300 Main St., Cincinnati, OH 45202,
acts as Distributor for the Matrix Growth Fund and Matrix Emerging Growth Fund.
(b) The officers of First Fund Distributors, Inc. are:
Robert H. Wadsworth President & Treasurer
Eric Banhazl Vice President
Steven J. Paggioli Secretary
Each officer's business address is 4455 E. Camelback Rd., Ste. 261-E,
Phoenix, AZ 85018. Mr. Paggioli serves as President and a Trustee of the
Registrant. Mr. Wadsworth serves as Vice President of the Registrant. Mr.
Banhazl serves as Treasurer of the Registrant.
c. Incorporated by reference from the Statement of Additional
Information filed herewith as Part B.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession the Registrant's
custodian and transfer agent, except those records relating to portfolio
transactions and the basic organizational and Trust documents of the Registrant
(see Subsections (2) (iii). (4), (5), (6), (7), (9), (10) and (11) of Rule
31a-1(b)), which, with respect to portfolio transactions are kept by each Fund's
Advisor at its address set forth in the prospectus and statement of additional
information and with respect to trust documents by its administrator at 479 West
22nd Street, New York, NY 10011 and 2020 E. Financial Way, Ste. 100, Glendora,
CA 91741.
Item 31. Management Services.
There are no management-related service contracts not discussed in
Parts A and B.
Item 32. Undertakings
The registrant undertakes:
(a) To furnish each person to whom a Prospectus is delivered a
copy of Registrant's latest annual report to shareholders,
upon request and without charge.
(b) If requested to do so by the holders of at least 10% of the
Trust's outstanding shares, to call a meeting of shareholders
for the purposes of voting upon the question of removal of a
director and assist in communications with other shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this amendment to this registration statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this amendment to this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of New York in the State of
New York on June 30, 1998.
PROFESSIONALLY MANAGED PORTFOLIOS
By /S/ Steven J. Paggioli
Steven J. Paggioli
President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
/S/ Steven J. Paggioli Trustee June 30, 1998
Steven J. Paggioli
/S/ Eric M. Banhazl Principal June 30, 1998
Eric M. Banhazl Financial
Officer
Dorothy A. Berry Trustee June 30, 1998
*Dorothy A. Berry
Wallace L. Cook Trustee June 30, 1998
*Wallace L. Cook
Carl A. Froebel Trustee June 30, 1998
*Carl A. Froebel
Rowley W. P. Redington Trustee June 30, 1998
*Rowley W. P. Redington
* By /S/ Steven J. Paggioli
Steven J. Paggioli, Attorney-in-Fact under powers of
attorney as filed with Post-Effective Amendment No. 20 to the
Registration Statement filed on May 17, 1995
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the references to our firm in the Post-Effective Amendment No. 49
to the Registration Statement on Form N-1A of Professionally Managed Portfolios
and to the use of our report dated May 29, 1998 on the financial statements and
financial highlights of the Titan Financial Services Fund series of
Professionally Managed Portfolios. Such financial statements and financial
highlights appear in the 1998 Annual Report to Shareholders which is
incorporated by reference into the Statement of Additional Information.
Tait, Weller & Baker
Philadelphia, PA
June 30, 1998
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