THE PERKINS
OPPORTUNITY
FUND
April 15, 1998
Dear Shareholders:
After over 18 months of difficult times, The Perkins Opportunity Fund reached a
low on January 12, 1998 at $12.12. Since then the Fund has rallied, finishing
the March quarter at $14.24, an NAV gain of 17.49% from the low. This followed a
similar pattern, up from April 1997 through September then back to the April
lows, after the October stock market decline. We see this as a base building
period with a successful test, in January, of the previous spring's lows. During
this time period, small aggressive growth stocks have under-performed large
company stocks, resulting in very attractive current valuations for small-cap
and micro-cap companies relative to large-caps. In our September shareholder
letter, we felt that trend had changed and believe that the action since then
has demonstrated a continuation of that change. A review of stock fundamentals
and price charts supports this with many large companies trading near their all
time highs with EPS multiples of 30x and growth of 15% while the reverse is true
for many small companies. Although sometimes it may seem like it, these trends
don't go on forever. It is our belief that the change is at hand. Our bottom-up
investment approach remains unchanged, as we continue to search for unique
companies that we believe have the potential to be long-term winners. As an
aggressive growth fund, the Fund has been and should continue to be more
volatile than the overall market.
Perkins Opportunity Fund
Value of $10,000 vs S & P 500 and Russell 2000 Indices
Perkins
Opportunity S & P 500 Russell 2000
Quarter Fund Index w/inc w/inc
------- ---- ----------- -----
02/17/93 10,000.00 10,000.00 10,000.00
03/31/93 10,107.90 10,457.86 10,203.87
06/30/93 10,603.20 10,500.46 10,427.54
09/30/93 12,323.80 10,779.31 11,339.44
12/31/93 13,287.60 11,032.33 11,633.07
03/31/94 13,365.00 10,609.86 11,323.24
06/30/94 12,053.30 10,647.12 10,880.20
09/30/94 15,294.10 11,177.64 11,636.10
12/31/94 15,260.40 11,172.98 11,420.91
03/31/95 18,540.10 12,259.85 11,948.21
06/30/95 21,833.40 13,429.36 13,068.33
09/30/95 25,855.90 14,495.65 14,359.00
12/31/95 25,995.90 15,366.49 14,670.22
03/31/96 28,019.70 16,194.41 15,418.78
06/30/96 31,172.90 16,909.95 16,190.12
09/30/96 27,487.70 17,439.71 16,244.90
12/31/96 24,089.90 18,899.42 17,089.99
03/31/97 19,911.40 19,400.04 16,206.31
06/30/97 22,158.90 22,780.63 18,833.44
09/30/97 25,387.80 24,489.97 21,636.42
12/31/97 19,974.70 25,201.37 20,911.89
03/31/98 22,538.80 28,714.48 22,805.76
Average Annual Total Return
Period Ended March 31, 1998
1 Year ......................... 7.80%
5 Year ......................... 16.25%
Since Inception (2/18/93) ...... 17.21%
Past performance is not predictive of future performance.
The Russell 2000 is formed by taking the 3,000 largest U. S. companies and then
eliminating the largest 1,000 leaving a good small company index. The S&P 500 is
a broad market-weighted average of U. S. blue-chip companies. The indices are
unmanaged and returns include reinvested dividends.
<PAGE>
The following table shows the Fund's returns by quarter and since inception
compared to several popular indices:
<TABLE>
<CAPTION>
The Perkins S & P Dow Jones NASDAQ Russell
Opportunity 500 Industrial Composite 2000
Calendar Period Fund Index Index Index Index
<S> <C> <C> <C> <C> <C>
First Quarter 1993 6.13% 4.33% 3.37% 4.00% 4.68%
Second Quarter 1993 4.90% .41% 3.08% 2.00% 1.81%
Third Quarter 1993 16.23% 2.67% 1.84% 8.36% 8.39%
Fourth Quarter 1993 7.82% 2.33% 6.31% 1.84% 2.23%
First Quarter 1994 .58% (3.83)% (2.51)% (4.29)% (2.78)%
Second Quarter 1994 (9.81)% .35% .39% (5.04)% (6.99)%
Third Quarter 1994 26.89% 4.98% 6.74% 8.26% 6.59%
Fourth Quarter 1994 (.22)% (.04)% .51% (1.61)% (2.25)%
First Quarter 1995 21.49% 9.77% 9.17% 8.68% 4.16%
Second Quarter 1995 17.76% 9.40% 10.30% 14.22% 8.77%
Third Quarter 1995 18.42% 8.06% 5.77% 11.79% 9.43%
Fourth Quarter 1995 .54% 5.99% 7.50% .82% 1.80%
First Quarter 1996 7.79% 5.39% 9.81% 4.68% 4.68%
Second Quarter 1996 11.25% 4.42% 1.76% 7.59% 4.79%
Third Quarter 1996 (11.82)% 3.13% 4.63% 3.54% (.07)%
Fourth Quarter 1996 (12.36)% 8.37% 10.75% 5.23% 4.68%
First Quarter 1997 (17.35)% 2.67% 2.14% (5.37)% (5.53)%
Second Quarter 1997 11.29% 17.40% 17.07% 18.04% 15.71%
Third Quarter 1997 14.57% 7.50% 3.99% 16.89% 14.49%
Fourth Quarter 1997 (21.32)% 2.90% (0.02)% (6.84)% (3.70)%
First Quarter 1998 12.84% 13.94% 11.74% 16.90% 9.99%
Annualized since 18.33% 22.96% 24.05% 22.04% 16.52%
2-18-93 inception
In closing, we thank you for your continued support.
Sincerely,
/s/ Richard W. Perkins /s/ Daniel S. Perkins /s/ Richard C. Perkins
Richard W. Perkins, C.F.A. Daniel S. Perkins, C.F.A. Richard C. Perkins, C.F.A.
President Vice President Vice President
</TABLE>
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS at March 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 95.8% Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Business Services: 4.2%
87,500 Appliance Recycling Centers of America, Inc.(a)*........................ $ 229,687
437,500 Health Fitness Corp.*................................................... 820,313
450,000 Integrated Security Systems, Inc.(a)*................................... 267,187
115,000 IntraNet Solutions, Inc.*............................................... 718,750
10,000 RTW, Inc.*.............................................................. 80,000
275,000 Reality Interactive, Inc.(a)*........................................... 240,625
-----------
2,356,562
-----------
Computer - Memory Devices: 3.5%
150,000 Ciprico, Inc.*.......................................................... 1,968,750
-----------
Computer - Peripheral Equipment: 1.1%
270,000 Digital Biometrics, Inc.*............................................... 421,875
100,000 RSI Systems, Inc.*...................................................... 212,500
-----------
634,375
-----------
Computer - Services: 4.6%
150,000 En Pointe Technologies, Inc.*........................................... 1,415,625
175,000 UniComp, Inc.*.......................................................... 1,170,313
-----------
2,585,938
-----------
Computer - Software: 8.9%
1,400,000 Delphi Information Systems, Inc. (a)*................................... 1,093,750
200,000 Fourth Shift Corp.*..................................................... 525,000
584,375 IVI Publishing, Inc. (a)*............................................... 3,214,063
79,305 Liferate Systems, Inc.*................................................. 49,566
115,000 Onelink Communications, Inc.*........................................... 86,250
614 Touchstone Software Corp.*.............................................. 1,382
-----------
4,970,011
-----------
Consumer Products - Miscellaneous: 3.9%
75,000 Lamaur Corp. (a)*....................................................... 178,125
300,000 Minnesota Brewing Company (a)*.......................................... 975,000
35,000 Recovery Engineering, Inc.*............................................. 1,032,500
-----------
2,185,625
-----------
</TABLE>
See accompanying Notes to Financial Statements.
3
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS at March 31, 1998, Continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Shares Market Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Educational - Products/Services: 3.1%
200,000 The TesseracT Group, Inc.*.............................................. $ 1,225,000
50,000 UOL Publishing, Inc.*................................................... 500,000
-----------
1,725,000
-----------
Electrical Products - Miscellaneous: 11.1%
75,000 AMETEK, Inc............................................................. 2,245,313
100,000 Barringer Technologies, Inc.*........................................... 1,218,750
430,000 Destron Fearing Corp.*.................................................. 725,625
500,000 Insignia Systems, Inc. (a)*............................................. 875,000
410,000 Micro Component Technology, Inc.(a)*.................................... 717,500
30,000 RF Monolithics, Inc.*................................................... 453,750
-----------
6,235,938
-----------
Financial Services - Miscellaneous: 8.8%
35,000 Metris Companies, Inc................................................... 1,522,500
100,000 TCF Financial Corp...................................................... 3,393,750
-----------
4,916,250
-----------
Leisure - Gaming: 4.4%
100,000 American Wagering, Inc.*................................................ 587,500
175,000 Innovative Gaming Corporation of America*............................... 710,937
125,000 Shuffle Master, Inc.*................................................... 1,164,062
-----------
2,462,499
-----------
Medical - Drugs: 3.6%
250,000 GalaGen, Inc.*.......................................................... 406,250
150,000 Orphan Medical, Inc.*................................................... 1,631,250
-----------
2,037,500
-----------
Medical - Products: 18.3%
175,000 ATS Medical, Inc.*...................................................... 1,378,125
300,000 Diametrics Medical, Inc.*............................................... 2,400,000
550,000 Everest Medical Corp. (a)*.............................................. 1,100,000
450,000 Innerdyne, Inc.*........................................................ 1,434,375
100,000 Ion Laser Technology, Inc.*............................................. 243,750
130,000 LecTec Corp.*........................................................... 544,375
50,000 Patterson Dental Company................................................ 1,550,000
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS at March 31, 1998, Continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Shares Market Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Medical - Products, continued
200,000 SpectraScience, Inc. (a)*............................................... $ 1,300,000
75,000 Zymetx, Inc.*........................................................... 318,750
-----------
10,269,375
-----------
Real Estate Investment Trust: 2.5%
45,000 Anthracite Mortgage Capital, Inc.*...................................... 675,000
40,000 Capital Automotive REIT*................................................ 755,000
-----------
1,430,000
-----------
Retail - Miscellaneous: 7.6%
100,000 BT Office Products International, Inc.*................................. 1,193,750
75,000 Funco, Inc.*............................................................ 1,321,875
175,000 Krause's Furniture, Inc.*............................................... 656,250
100,000 SkyMall, Inc.*.......................................................... 437,500
50,000 Wilsons The Leather Experts, Inc.*...................................... 662,500
-----------
4,271,875
-----------
Retail - Restaurants: 2.7%
200,000 Big Buck Brewery & Steakhouse, Inc. (a)*................................ 1,000,000
100,000 Hotel Discovery, Inc.*.................................................. 375,000
150,000 Woodroast Systems, Inc.*................................................ 150,000
-----------
1,525,000
-----------
Telecommunications - Equipment and Services: 7.5%
85,000 ChoiceTel Communications, Inc.*......................................... 286,875
100,000 Norstan, Inc.*.......................................................... 2,475,000
450,000 Racotek, Inc.*.......................................................... 1,434,375
-----------
4,196,250
-----------
Total Common Stocks (cost $61,446,532).................................. 53,770,948
-----------
PREFERRED STOCK: 1.0%
- ------------------------------------------------------------------------------------------------------------------
Business Services: 1.0%
70,000 IntraNet Solutions, Inc.* (cost $350,000)............................... 589,225
-----------
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS at March 31, 1998, Continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Shares WARRANTS: 0.7% Market Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Business Services: 0.1%
62,500 Health Fitness Corp., Exp. 4/4/1999**................................... $ 0
70,000 IntraNet Solutions, Inc., Exp. 7/22/2002................................ 74,900
------------
74,900
------------
Computer - Software: 0.0%
1,400,000 Delphi Information Systems, Inc., Exp. 4/17/1999........................ 0
500,000 Insignia Systems, Inc. Exp. 1/16/2000 (a)............................... 0
275,000 Reality Interactive, Inc., Exp. 4/10/2000 (a)........................... 17,187
------------
17,187
------------
Electric Products - Miscellaneous: 0.2%
100,000 Barringer Technologies, Inc., Exp. 11/12/1999........................... 106,250
------------
Retail - Miscellaneous: 0.1%
50,000 Wilsons The Leather Experts, Inc., Exp. 5/27/2000....................... 53,906
------------
Retail - Restaurants: 0.2%
300,000 Big Buck Brewery & Steakhouse, Inc., Exp. 6/12/2000..................... 89,063
100,000 Hotel Discovery, Inc., Exp. 11/3/2001................................... 0
------------
89,063
------------
Telecommunications - Equipment and Services: 0.1%
85,000 ChoiceTel Communications, Inc., Exp. 11/10/2002......................... 53,125
------------
Total Warrants (cost $169,475).......................................... 394,431
------------
Principal Amount REPURCHASE AGREEMENT: 3.0%
- ------------------------------------------------------------------------------------------------------------------
$1,674,000 Star Bank Repurchase Agreement, 5.00%, dated 3/31/1998,
due 4/1/1998, collateralized by $1,710,594 GNMA, 7.375%,
due 5/20/2024 (proceeds $1,674,233) (cost $1,674,000)................... 1,674,000
------------
Total Investment in Securities (cost $63,640,007++): 100.5%.............. 56,428,604
Liabilities in excess of Other Assets: (0.5)%........................... (299,574)
------------
Total Net Assets: 100.0%................................................ $ 56,129,030
============
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
SCHEDULE OF INVESTMENTS at March 31, 1998, Continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
*Non-income producing security.
**Restricted security.
(a)Affiliated company (see Note 8).
++At March 31, 1998, the cost of securities for Federal income tax purposes was $63,836,537. Unrealized appreciation
and depreciation were as follows:
<S> <C>
Gross unrealized appreciation .......................................... $ 10,626,179
Gross unrealized depreciation .......................................... (18,034,112)
------------
Net unrealized depreciation .................................. $ (7,407,933)
============
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
STATEMENT OF ASSETS AND LIABILITIES at March 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $63,640,007)................................. $ 56,428,604
Cash................................................................................... 340
Receivables:
Securities sold ................................................................. 284,053
Fund shares sold................................................................. 170,246
Interest......................................................................... 233
Prepaid expenses....................................................................... 35,430
------------
Total assets .............................................................. 56,918,906
------------
LIABILITIES
Payables:
Advisory fees.................................................................... 47,595
Administration fee............................................................... 9,094
Fund shares redeemed............................................................. 75,087
Securities purchased............................................................. 525,000
Accrued expenses ...................................................................... 133,100
------------
Total liabilities ......................................................... 789,876
------------
NET ASSETS ................................................................................. $ 56,129,030
============
Net asset value and redemption price per share
($56,129,030/3,941,484 shares outstanding;
unlimited number of shares authorized without par value) ........................ $14.24
======
Computation of offering price per share
(Net asset value $14.24/.9525) .................................................. $14.95
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $ 75,580,546
Accumulated net realized loss on investments .......................................... (12,240,113)
Net unrealized depreciation on investments ............................................ (7,211,403)
------------
Net assets ...................................................................... $ 56,129,030
============
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
STATEMENT OF OPERATIONS - For the Year Ended March 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Income
Interest ........................................................................ $ 223,862
Dividends........................................................................ 86,443
-----------
Total income .............................................................. 310,305
-----------
Expenses
Advisory fees.................................................................... 726,828
Transfer agent fees ............................................................. 264,903
Shareholder service fee.......................................................... 160,272
Distribution fees................................................................ 145,366
Administration fee............................................................... 140,366
Reports to shareholders ......................................................... 54,759
Registration fees................................................................ 36,599
Fund accounting fees............................................................. 35,750
Custody fees..................................................................... 22,823
Trustee fees .................................................................... 15,211
Audit fee........................................................................ 14,501
Miscellaneous.................................................................... 9,860
Insurance........................................................................ 8,345
Amortization of deferred organization costs...................................... 7,889
Legal fees...................................................................... 5,001
Interest......................................................................... 3,796
-----------
Total expenses ............................................................ 1,652,269
-----------
Net investment loss ................................................. (1,341,964)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss from security transactions .................................... (5,974,426)
Net change in unrealized depreciation on investments ............................ 16,076,454
-----------
Net realized and unrealized gain on investments ........................... 10,102,028
-----------
Net increase in net assets resulting from operations ................ $ 8,760,064
===========
</TABLE>
See accompanying Notes to Financial Statements.
9
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
March 31, March 31,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ........................................................... $ (1,341,964) $ (1,441,305)
Net realized loss from security transactions .................................. (5,974,426) (145,477)
Net change in unrealized depreciation on investments .......................... 16,076,454 (38,322,304)
------------ ------------
Net increase (decrease) in net assets resulting from operations ......... 8,760,064 (39,909,086)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain from security transactions................................... -0- (6,511,345)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Net (decrease) increase in net assets derived from net change
in outstanding shares (a).................................................... (27,905,372) 29,413,017
------------ ------------
Total decrease in net assets ............................................ (19,145,308) (17,007,414)
NET ASSETS
Beginning of year.............................................................. 75,274,338 92,281,752
------------ ------------
End of year .................................................................. $ 56,129,030 $75,274,338
============ ===========
</TABLE>
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1998 March 31, 1997
--------------------------- --------------------------
Shares Value Shares Value
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Shares sold ...................................... 890,435 $12,140,118 7,051,945 $91,519,504
Shares issued in reinvestment of distributions.... -0- -0- 374,001 6,141,789
Shares redeemed .................................. (2,932,794) (40,045,490) (3,899,033) (68,248,276)
---------- ------------ ---------- -----------
Net (decrease) increase .......................... (2,042,359) $(27,905,372) 3,526,913 $29,413,017
========== ============ ========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each year
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
------------------------------------------------------------
1998 1997 1996++ 1995++ 1994++
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............... $12.58 $18.78 $13.03 $10.37 $ 7.96
------ ------ ------ ------ ------
Income from investment operations:
Net investment loss ....................... (0.34) (0.24) (0.12) (0.13) (0.13)
Net realized and unrealized gain (loss)
on investments........................... 2.00 (4.98) 6.66 3.79 2.70
------ ------ ------ ------ ------
Total from investment operations................. 1.66 (5.22) 6.54 3.66 2.57
------ ------ ------ ------ ------
Less distributions:
From net capital gains ................... 0.00 (0.98) (0.79) (1.00) (0.16)
------ ------ ------ ------ ------
Net asset value, end of year..................... $14.24 $12.58 $18.78 $13.03 $10.37
====== ====== ====== ====== ======
Total return .................................... 13.20% (28.94)% 51.29% 38.72% 32.22%
Ratios/supplemental data:
Net assets, end of year (millions)............... $56.1 $75.3 $92.3 $12.5 $3.3
Ratio of expenses to average net assets:
Before expense reimbursement .............. 2.27% 1.90% 1.97% 3.08% 5.14%
After expense reimbursement................ 2.27% 1.90% 1.97% 2.63% 2.49%
Ratio of net investment loss to average net assets:
Before expense reimbursement .............. (1.85%) (1.25%) (1.16%) (2.76%) (4.93%)
After expense reimbursement ............... (1.85%) (1.25%) (1.16%) (2.31%) (2.28%)
Portfolio turnover rate ......................... 53.37% 86.88% 92.45% 124.86% 90.63%
Average commission rate paid per share++.......... $.0496 $.0608 - - -
</TABLE>
++Per share data has been restated to give effect to a 2-for-1 stock split to
shareholders of record as of the close on June 3, 1996.
++For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate paid per share for security trades on
which commissions are charged. This amount may vary from period to period and
fund to fund depending on the mix of trades executed in various markets where
trading practices and commission rate structures may differ.
See accompanying Notes to Financial Statements.
11
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
NOTES TO FINANCIAL STATEMENTS at March 31, 1998
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Perkins Opportunity Fund (the "Fund") is a diversified series of
shares of beneficial interest of Professionally Managed Portfolios (the
"Trust"), which is registered under the Investment Company Act of 1940 (the
"1940 Act") as an open-end management investment company. The Fund's primary
investment objective is capital appreciation. The Fund began operations on
February 18, 1993.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities traded on a national
securities exchange or included in the NASDAQ National Market System
are valued at the last reported sale price at the close of regular
trading on the last business day of the period; securities traded on
an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the last reported bid
price. Securities for which quotations are not readily available are
valued at their respective fair values as determined in good faith
by the Board of Trustees. Short-term investments are stated at cost,
which when combined with accrued interest, approximates market
value.
B. Federal Income Taxes. The Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no federal income tax provision is
required.
At March 31, 1998, there is a capital loss carryforward of
approximately $11,200,000, which expires March 31, 2006, available
to offset future gains, if any.
C. Security Transactions, Dividends and Distributions. As is common in
the industry, security transactions are accounted for on the trade
date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is recognized on an accrual
basis. Income and capital gains distributions to shareholders are
determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Those
differences are primarily due to differing treatments for net
operating losses.
D. Deferred Organization Costs. The Fund incurred expenses of $20,000
in connection with the organization of the Fund. These costs were
deferred and were amortized on a straight-line basis over five years
through the period ending February 17, 1998.
E. Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amount of assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenues
and expenses during the period. Actual results could differ from
those estimates.
12
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
NOTE 3 - RESTRICTED SECURITIES
On March 31, 1998, the Fund held a restricted security (i.e., security
which may not be publicly sold without registration under the Securities Act or
without an exemption under that Act). This security is valued at fair value as
determined by the Board of Trustees, giving consideration to credit quality,
dividend rate, if any, projected earnings and marketability of the securities of
comparable issuers. On March 31, 1998, and on the date of acquisition, there
were no market quotations available for unrestricted securities of the same
class. Dates of acquisition and cost of the restricted security is as follows:
<TABLE>
<CAPTION>
Per Unit Value
Acquisition Date at 3-31-98 Cost
---------------- -------------- ----------
<S> <C> <C> <C>
Health Fitness/Physical Therapy, Inc., Warrants April 4, 1995 0 $ 0
(fair value of $0 or 0% of net assets at March 31, 1998)
</TABLE>
NOTE 4 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the year ended March 31, 1998, Perkins Capital Management, Inc. (the
"Advisor") provided the Fund with investment management services under an
Investment Advisory Agreement. The Advisor furnished all investment advice,
office space and certain administrative services, and provides most of the
personnel needed by the Fund. As compensation for its services, the Advisor was
entitled to a monthly fee at the annual rate of 1.00% based upon the average
daily net assets of the Fund. For the year ended March 31, 1998, the Fund
incurred $726,828 in Advisory fees.
Investment Company Administration Corporation (the "Administrator") acts
as the Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Fund's
expense accruals. For its services, the Administrator receives a monthly fee at
the following annual rate:
Under $12 million - $30,000
$12 to $50 million - 0.25% of average daily net assets
$50 to $100 million - 0.20% of average daily net assets
$100 to $200 million - 0.15% of average daily net assets
Over $200 million - 0.10% of average daily net assets
For the year ended March 31, 1998, the Fund incurred $140,366 in
Administration fees.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
13
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
NOTE 5 - DISTRIBUTION COSTS
The Fund has adopted a Distribution Plan (the "Plan") in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that the Fund may pay a fee to
the Distributor at an annual rate of up to 0.20% of the average daily net assets
of the Fund. The fee is paid to the Distributor as reimbursement for, or in
anticipation of, expenses incurred for distribution-related activity.
During the year ended March 31, 1998, the Fund paid the Distributor $145,366.
NOTE 6 - SHAREHOLDER SERVICING FEE
The Fund has entered into a Shareholder Services Agreement with the
Advisor, under which the Fund pays servicing fees at an annual rate of up to
0.25% of the Fund's average daily net assets. Payments to the Advisor under the
Shareholder Servicing Agreement may reimburse the Advisor for payments it makes
to selected brokers, dealers and administrators which have entered into Service
Agreements with the Advisor for services provided to shareholders of the Fund.
The services provided by such intermediaries are primarily designed to assist
shareholders of the Fund and include the furnishing of office space and
equipment, telephone facilities, personnel and assistance to the Fund in
servicing such shareholders. Services provided by such intermediaries also
include the provision of support services to the Fund and include establishing
and maintaining shareholders' accounts and record processing purchase and
redemption transactions, answering routine client inquiries regarding the Fund,
and providing such other personal services to shareholders as the Fund may
reasonably request. For the year ended March 31, 1998, the Fund incurred
$160,272 in Shareholder Servicing fees.
NOTE 7 - PURCHASES AND SALES OF SECURITIES
For the year ended March 31, 1998, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $36,069,000 and
$58,594,141, respectively.
14
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
NOTE 8 - INVESTMENTS IN AFFILIATES
Affiliated companies, as defined in Section 2 (a) (3) of the Investment
Company Act of 1940, are companies that have 5% or more of their outstanding
voting shares held by the Fund. During the year ended March 31, 1998, the Fund
engaged in the following transactions in securities of such affiliated
companies:
<TABLE>
<CAPTION>
Shares Held
- ------------------------------------------------------------ Value Realized
March 31, Shares Shares March 31, March 31, Dividend Gain/
1997 Purchased Sold 1998 1998 Income (Loss)
---- --------- ---- ---- ---- ------ ------
<S> <C> <C> <C> <C>
Appliance Recycling Centers of America, Inc.:
87,500 - - 87,500 $ 229,687 - $ -
Big Buck Brewery & Steakhouse, Inc.:
300,000 - 100,000 200,000 1,000,000 - 32,482
Delphi Information Systems, Inc.:
1,550,000 - 150,000 1,400,000 1,093,750 - (31,410)
Everest Medical Corp.:
600,000 - 50,000 550,000 1,100,000 - (46,975)
Insignia Systems, Inc.:
0 500,000 - 500,000 875,000 - -
Insignia Systems, Inc. - Warrants:
0 500,000 - 500,000 - - -
Integrated Security Systems, Inc.:
450,000 - - 450,000 267,187 - -
IVI Publishing, Inc.:
168,750 415,625 - 584,375 3,214,063 - -
Lamaur Corp.:
0 300,000 225,000 75,000 178,125 - (827,971)
Micro Component Technology, Inc.:
410,000 - - 410,000 717,500 - -
Minnesota Brewing Co.:
300,000 - - 300,000 975,000 - -
Reality Interactive, Inc.:
275,000 - - 275,000 240,625 - -
Reality Interactive, Inc. - Warrants:
275,000 - - 275,000 17,187 - -
SpectraScience, Inc.:
245,000 - 45,000 200,000 1,300,000 - 5,760
------------------------------------------
Totals $11,208,124 - ($868,114)
==========================================
</TABLE>
15
<PAGE>
THE PERKINS
OPPORTUNITY
FUND
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
NOTE 9 - YEAR 2000 ISSUE (Unaudited)
Like other mutual funds, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems it uses, and those used by the Fund's brokers and other major
service providers, do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 issue". Management is assessing its computer systems and the
systems compliance issues of its brokers and major service providers. Based on
information available to management, the Fund's brokers and major service
providers are taking steps that they believe are reasonably designed to address
the Year 2000 issue with respect to computer systems that they use. At this
time, however, there can be no assurance that these steps will be sufficient,
and the failure of a timely completion of all necessary procedures could have a
material adverse effect on the Fund's operations. Management will continue to
monitor the status of and its exposure to, this issue.
16
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF
PERKINS OPPORTUNITY FUND and
THE BOARD OF TRUSTEES OF
PROFESSIONALLY MANAGED PORTFOLIOS
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Perkins Opportunity Fund, a series of
Professionally Managed Portfolios, Inc., as of March 31, 1998, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the four years in the period then ended and for the
period February 18, 1993 (commencement of operations) to March 31, 1993. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Perkins Opportunity Fund as of March 31, 1998, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the four years in
the period then ended and for the period from February 18, 1993 (commencement of
operations) to March 31, 1993, in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 24, 1998
17
<PAGE>
Advisor
Perkins Capital Management, Inc.
730 East Lake Street
Wayzata, MN 55391-1769
(800) 998-3190
(612) 473-8367
o
Distributor
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
o
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
o
Transfer Agent and Shareholder Services
PFPC, Inc.
P.O. Box 8813
Wilmington, DE 19899-8813
(800) 280-4779
o
Auditors
Tait, Weller & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19101
o
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
THE PERKINS
OPPORTUNITY
FUND
A mutual fund seeking to provide
capital appreciation through a
continuing search for investment opportunities
Annual Report
to Shareholders
March 31, 1998
