HODGES FUND
-------------
HF
May 13, 1998
Dear Hodges Fund Shareholders:
For the year ending March 31, 1998, the Hodges Fund performed well. The one year
total return is 37.69%. The five year average annual total return is 17.96%.
Since inception on October 9, 1992, the average annual total return is 19.28%
and the total return since then is 162.68%.
Some of our core holdings that have done particularly well this year include
Home Depot, Inc., Southwest Airlines Company, Costco Companies, Inc., Wal-Mart
Stores, Inc., Capital Southwest Corp., and William Wrigley, Jr. Co.
Contrarian stocks in our portfolio that have done well include Palm Harbor
Homes, Inc., CMI Corp., Calloway's Nursery, Inc., and Triangle Pacific Corp.
We continue to look for value in moderate growth stocks, as well as companies
that are growing very rapidly, and in stocks whose shares have been battered and
are depressed, but appear to have good turnaround potential. It is a mix which
provides great balance.
We are delighted to have you as one of our shareholders and trust that you are
pleased with your investment. If you have family or friends who should have an
interest in hearing about the Fund, we would be glad to send them a prospectus
and encourage them to read it carefully. Just call 1-800-456-1979.
Sincerely,
/s/ Don Hodges
Don Hodges
<PAGE>
HODGES FUND
-------------
HF
Value of $10,000 vs S & P 500 and Russell 2000 Indices
Qtr Adj Fund Adj S & P Adj Russ2
10/9/92 10000 10000 10000
12/31/92 10685.1 10893.874 11776.617
3/31/93 11208.4 11364.276 12279.959
6/30/93 10961 11410.562 12549.139
9/30/93 11322.5 11713.581 13646.564
12/31/93 11347 11988.534 13999.939
3/31/94 11232.6 11529.451 13627.076
6/30/94 10435.2 11569.939 13093.893
9/30/94 11170.7 12146.439 14003.593
12/31/94 11458.5 12141.378 13744.614
3/31/95 12311.2 13322.444 14379.196
6/30/95 13157.5 14593.321 15727.227
9/30/95 14890 15752.027 17280.492
12/31/95 14379.5 16698.352 17655.03
3/31/96 16290.9 17598.023 18555.899
6/30/96 17329.3 18375.585 19484.174
9/30/96 17407 18951.257 19550.098
12/31/96 18331.3 20537.484 20567.135
3/31/97 18599 21081.501 19503.662
6/30/97 20998.2 24755.091 22665.307
9/30/97 25343.2 26612.59 26038.58
12/31/97 24139.6 27385.643 25166.639
3/31/98 26267.9 31203.243 27445.837
Average Annual Total Return
Period Ended March 31, 1998
1 Year .......................... 37.69%
5 Year .......................... 17.96%
Since Inception (10/9/92) ....... 19.28%
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>
HODGES FUND
-------------
HF
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at March 31, 1998
- ----------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 98.4% Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Aircraft Manufacturing: 1.2%
7,500 Boeing Company........................................... $ 390,938
---------
Airlines: 4.2%
2,000 AMR Corp................................................. 286,375
5,000 KLM Royal Dutch Airlines................................. 203,125
30,000 Southwest Airlines Company............................... 886,875
---------
1,376,375
---------
Broadcasting and Communications: 4.8%
10,000 A.H. Belo Corp........................................... 550,000
29,620 CBS Corp................................................. 1,005,229
---------
1,555,229
---------
Building Materials: 7.6%
25,000 Elcor Corp.*............................................. 671,875
25,000 NCI Building System, Inc.*............................... 1,212,500
15,000 Triangle Pacific Corp.*.................................. 570,000
---------
2,454,375
---------
Commercial Services: 0.8%
131,500 The Dwyer Group, Inc.*................................... 263,000
---------
Computers, Software and Networking: 5.5%
2,000 America Online, Inc.*.................................... 136,625
10,000 American Power Conversion Corp.*......................... 286,875
2,000 International Business Machines Corp..................... 207,750
1,000 Lernout & Hauspie Speech Products........................ 87,375
100,000 ODS Networks, Inc.*...................................... 600,000
35,900 Tyler Corp............................................... 278,225
2,000 Yahoo! Inc.*............................................. 184,875
---------
1,781,725
---------
Confectionaries: 4.8%
10,300 Tootsie Roll Industries, Inc............................. 738,381
10,000 William Wrigley, Jr. Company............................. 817,500
---------
1,555,881
---------
</TABLE>
See accompanying Notes to Financial Statements.
3
<PAGE>
HODGES FUND
-------------
HF
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at March 31, 1998, Continued
- ----------------------------------------------------------------------------------------------
Shares Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Construction Equipment: 3.9%
200,000 CMI Corp., Class A....................................... $ 1,275,000
-----------
Construction Materials: 2.6%
5,000 Texas Industries, Inc.................................... 289,062
5,000 Vulcan Materials Company................................. 547,500
-----------
836,562
-----------
Consumer Products: 1.0%
271,000 Pentech International, Inc.*+............................ 311,938
-----------
Correctional: 2.8%
30,000 Children's Comprehensive Services, Inc.*................. 570,000
10,000 Corrections Corporation of America....................... 341,250
-----------
911,250
-----------
Cosmetics and Toiletries: 1.8%
5,000 The Estee Lauder Companies, Inc., Class A................ 339,375
5,000 Kimberly-Clark Corp...................................... 250,625
-----------
590,000
-----------
Electronic Components: 5.4%
10,000 Dallas Semiconductor Corp................................ 336,250
15,000 Kent Electronics Corp.................................... 315,937
10,000 Micron Technology, Inc................................... 290,625
15,000 Texas Instruments, Inc................................... 811,875
-----------
1,754,687
-----------
Entertainment: 1.1%
9,999 Gaylord Entertainment Company, Class A*.................. 357,464
-----------
Financial: 3.0%
50,000 Capstead Mortgage Corp................................... 987,500
-----------
Food Products: 1.4%
10,000 Earthgrains Company*..................................... 441,875
-----------
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
HODGES FUND
-------------
HF
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at March 31, 1998, Continued
- ----------------------------------------------------------------------------------------------
Shares Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Gas Distribution: 1.8%
20,000 Atmos Energy Corp........................................ $ 592,500
---------
Home Manufacturing: 2.1%
18,750 Palm Harbor Homes, Inc.*................................. 691,406
---------
Hotels/Motels: 1.2%
7,500 Bristol Hotel Company.................................... 206,250
10,000 Host Marriott Corp....................................... 189,375
---------
395,625
---------
Medical Related Services: 6.5%
90,000 Diagnostic Health Services, Inc.*........................ 1,147,500
170,000 Laboratory Specialists of America, Inc.*................. 818,125
10,000 Physicians Reliance Network, Inc......................... 137,500
---------
2,103,125
---------
Oil and Gas Drilling: 1.5%
20,000 Global Marine, Inc.*..................................... 495,000
---------
Pharmaceuticals: 2.8%
10,000 Agouron Pharmaceuticals, Inc.*........................... 378,750
10,000 Carter-Wallace, Inc...................................... 181,875
2,000 Warner Lambert Company................................... 340,625
---------
901,250
---------
Photo Equipment and Supplies: 0.6%
3,000 Eastman Kodak Company.................................... 194,625
---------
Publishing - Books: 3.7%
20,000 Houghton Mifflin Company................................. 637,500
40,000 Thomas Nelson, Inc....................................... 550,000
---------
1,187,500
---------
Racetracks: 1.2%
15,000 Speedway Motorsports, Inc................................ 402,188
---------
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
HODGES FUND
-------------
HF
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at March 31, 1998, Continued
- ----------------------------------------------------------------------------------------------
Shares Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Real Estate: 2.4%
17,500 Texas Pacific Land Trust................................. $ 765,625
----------
Restaurants: 2.5%
20,000 Cracker Barrel Old Country Store Corp.................... 800,000
----------
Retail: 14.0%
249,400 Calloway's Nursery, Inc.*................................ 709,231
5,000 CompUSA, Inc............................................. 130,000
20,000 Costco Companies, Inc.*.................................. 1,070,000
356,500 E-Z Serve Corp.*......................................... 133,688
40,000 Harold Stores, Inc....................................... 295,000
15,000 Home Depot, Inc. ........................................ 1,021,875
250,000 Southland Corp.*......................................... 519,531
35,000 Travel Ports of America, Inc............................. 140,000
10,000 Wal-Mart Stores, Inc..................................... 508,125
----------
4,527,450
----------
Shoe and Boot Manufacturing: 2.4%
26,500 Justin Industries........................................ 372,656
30,000 Stride Rite Corp......................................... 406,875
----------
779,531
----------
Stock Brokerage: 1.9%
25,000 E*Trade Group, Inc.*..................................... 623,438
----------
Venture Capital: 1.9%
5,500 Capital Southwest Corp................................... 517,000
100,000 Southern Venture II LP*.................................. 84,588
----------
601,588
----------
Total Common Stocks (cost $26,146,620) .................. 31,904,650
----------
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
HODGES FUND
-------------
HF
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at March 31, 1998, Continued
- ----------------------------------------------------------------------------------------------
Contracts LONG EQUITY OPTIONS: 0.7% Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks / Expiration Date / Exercise Price
------------------------------------------------
40 America Online, Inc. / April 30 Call..................... $ 153,500
50 Corrections Corporation of America / April 30 Call....... 21,562
50 Texas Instruments, Inc. / July 50 Call................... 49,375
-----------
Total Long Equity Options (cost $132,475)................ 224,437
-----------
LONG INDEX OPTIONS: 0.1%
- ----------------------------------------------------------------------------------------------
Index / Expiration Date / Exercise Price
----------------------------------------
25 OEX Index S&P 100 / April 525 Put (cost $80,125)......... 20,313
-----------
Principal Amount REPURCHASE AGREEMENT: 2.0%
- ----------------------------------------------------------------------------------------------
$678,000 Star Bank Repurchase Agreement, 5.00%, dated 3/31/1998,
due 4/1/1998, collateralized by $694,450 GNMA, due
5/20/2024 (proceeds $678,094) (cost $678,000)............ 678,000
-----------
Total Investment in Securities (cost $27,037,220++): 101.2% 32,827,400
Liabilities in excess of Other Assets: (1.2%)............ (393,265)
-----------
Total Net Assets: 100.0%................................. $32,434,135
===========
* Non-income producing security.
+ Restricted security.
++ At March 31, 1998, the cost of securities for Federal tax purposes was
$27,085,520. Unrealized appreciation and depreciation of securities were as
follows:
Gross unrealized appreciation............................ $ 7,214,018
Gross unrealized depreciation............................ (1,472,138)
-----------
Net unrealized appreciation..................... $ 5,741,880
===========
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
HODGES FUND
-------------
HF
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at March 31, 1998
- ----------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $27,037,220) ................ $32,827,400
Cash .................................................................. 172
Receivables:
Dividends and interest .......................................... 24,782
Fund shares sold ................................................ 182,155
Prepaid expenses ...................................................... 2,597
-----------
Total assets .............................................. 33,037,106
-----------
LIABILITIES
Payables:
Advisory fees ................................................... 22,604
Distribution fees ............................................... 36,956
Administration fee .............................................. 5,319
Securities purchased ............................................ 517,615
Accrued expenses ...................................................... 20,477
-----------
Total liabilities ......................................... 602,971
-----------
NET ASSETS .................................................................. $32,434,135
===========
Net asset value and redemption price per share
($32,434,135/2,246,224 shares outstanding;
unlimited shares authorized without par value) .................. $14.44
======
Computation of offering price per share
(Net asset value $14.44/.975) ................................... $14.81
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................... $27,073,158
Distribution in excess of net realized gains on investments ........... (429,203)
Net unrealized appreciation on investments ............................ 5,790,180
-----------
Net assets ...................................................... $32,434,135
===========
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
HODGES FUND
-------------
HF
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Year Ended March 31, 1998
- ----------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Income
Dividends ......................................................... $ 267,125
Interest .......................................................... 52,890
----------
Total income ................................................ 320,015
----------
Expenses
Advisory fees ..................................................... 225,283
Distribution fees ................................................. 132,520
Administration fee ................................................ 53,008
Transfer agent fees ............................................... 23,244
Custody fees ...................................................... 23,002
Fund accounting fees .............................................. 18,699
Registration fees ................................................. 10,173
Audit fee ......................................................... 10,119
Reports to shareholders ........................................... 7,118
Trustee fees ...................................................... 6,841
Miscellaneous ..................................................... 5,947
Legal fees ........................................................ 3,000
Insurance ......................................................... 2,303
----------
Total expenses .............................................. 521,257
----------
Net investment loss ................................... (201,242)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions ............................ 3,942,955
Net change in unrealized appreciation on investments .................... 4,957,429
----------
Net realized and unrealized gain on investments ............. 8,900,384
----------
Net increase in net assets resulting from operations .. $8,699,142
==========
</TABLE>
See accompanying Notes to Financial Statements.
9
<PAGE>
HODGES FUND
-------------
HF
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------
Year Year
Ended Ended
March 31, March 31,
1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss ......................................... $ (201,242) $ (158,367)
Net realized gain from security transactions ................ 3,942,955 3,206,306
Net change in unrealized appreciation on investments ........ 4,957,429 (904,746)
------------ ------------
Net increase in net assets resulting from operations .. 8,699,142 2,143,193
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain from security transactions ................ (5,773,636) (1,706,975)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) ................................ 10,086,163 5,714,684
------------ ------------
Total increase in net assets .......................... 13,011,669 6,150,902
NET ASSETS
Beginning of year ........................................... 19,422,466 13,271,564
------------ ------------
End of year ................................................. $ 32,434,135 $ 19,422,466
============ ============
</TABLE>
(a) A summary of capital shares 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 ................................. 478,221 $ 6,465,806 385,232 $ 5,092,543
Shares issued in reinvestment of distribution 451,510 5,757,747 113,132 1,399,627
Shares redeemed ............................. (154,460) (2,137,390) (58,775) (777,486)
------------ ------------ ------------ ------------
Net increase ................................ 775,271 $ 10,086,163 439,589 $ 5,714,684
============ ============ ============ ============
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE>
HODGES FUND
-------------
HF
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each year
- -----------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................ $ 13.20 $ 12.87 $ 11.55 $ 10.80 $ 11.78
Income from investment operations:
Net investment loss ......................... (0.09) (0.11) (0.07) (0.08) (0.03)
Net realized and unrealized
gain on investments ...................... 4.79 1.85 3.42 1.09 0.07
--------- --------- --------- --------- ---------
Total from investment operations .................. 4.70 1.74 3.35 1.01 0.04
--------- --------- --------- --------- ---------
Less distributions:
From net investment income .................. 0.00 0.00 0.00 0.00 (0.01)
From net capital gains ...................... (3.46) (1.41) (2.03) (0.26) (1.01)
--------- --------- --------- --------- ---------
Total distributions ............................... (3.46) (1.41) (2.03) (0.26) (1.02)
--------- --------- --------- --------- ---------
Net asset value, end of year ...................... $ 14.44 $ 13.20 $ 12.87 $ 11.55 $ 10.80
========= ========= ========= ========= =========
Total return ...................................... 41.21% 14.18% 32.33% 9.60% 0.22%
Ratios/supplemental data:
Net assets, end of year (millions) ................ $ 32.4 $ 19.4 $ 13.3 $ 9.3 $ 8.5
Ratio of expenses to average net assets:
Before expense reimbursement ................ 1.96% 2.14% 2.08% 2.31% 2.63%
After expense reimbursement ................. 1.96% 2.14% 2.08% 2.31% 2.07%
Ratio of net investment loss to average net assets:
Before expense reimbursement ................ (0.76%) (0.95%) (0.61%) (0.75%) (0.84%)
After expense reimbursement ................. (0.76%) (0.95%) (0.61%) (0.75%) (0.29%)
Portfolio turnover rate ........................... 94.05% 115.77% 124.89% 73.65% 192.03%
Average commission rate paid per share++ .......... $ .0303 $ .0331 -- -- --
</TABLE>
++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>
HODGES FUND
-------------
HF
NOTES TO FINANCIAL STATEMENTS at March 31, 1998
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Hodges Fund (the "Fund") is a series of shares of beneficial interest of
Professionally Managed Portfolios (the "Trust"), which is registered under the
Investment Company Act of 1940 (the "1940 Act") as a non-diversified, open-end
management investment company. The Fund's primary investment objective is
capital appreciation. The Fund began operations on October 9, 1992.
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 sales price at the close of regular
trading on the last business day of the period; securities traded on
an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the last reported bid
price. Securities for which quotations are not readily available are
valued at their respective fair values as determined in good faith by
the Board of Trustees. Short-term investments are stated at cost,
which when combined with accrued interest, approximates market value.
B. Federal Income Taxes. The Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no federal income tax provision is
required.
C. Security Transactions, Investment Income and Distributions. As is
common in the industry, security transactions are accounted for on
the trade date. The cost of securities owned on realized transactions
are relieved on a first-in, first-out basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
D. Use of Estimates. The preparation financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements.
Actual results could differ from those estimates.
NOTE 3 - RESTRICTED SECURITIES
On March 31, 1998, the Fund held a restricted security (i.e., a 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. The date of acquisition and cost of the restricted security is as
follows:
12
<PAGE>
HODGES FUND
-------------
HF
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per Unit Value
Shares Acquisition Date at 3-31-98 Cost
------ ---------------- ---------- ----
<S> <C> <C> <C> <C>
Pentech International, Inc. 50,000 January 13, 1997 $0.4375 $25,000
=======
</TABLE>
The restricted security had a fair value of $21,875, or 0.07% of net assets at
March 31, 1998.
NOTE 4 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the year ended March 31, 1998, Hodges Capital Management, Incorporated
(the "Advisor") provided the Fund with investment management services under an
Investment Advisory Agreement. The Advisor furnished all investment advice,
office space, facilities, and 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 0.85% based upon the average daily net assets of the Fund. For
the year ended March 31, 1998, the Fund incurred $225,283 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 $15 million $30,000
$15 to $50 million 0.20% of average daily net assets
$50 to $100 million 0.15% of average daily net assets
$100 to $150 million 0.10% of average daily net assets
Over $150 million 0.05% of average daily net assets
For the year ended March 31, 1998, the Fund incurred $53,008 in
Administration fees.
First Dallas Securities, 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 Advisor. For the year ended March 31, 1998,
the Distributor received as commissions $95,040 from the Fund in connection with
its distribution of the Fund's shares.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator.
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 will pay a fee to
the Distributor at an annual rate of up to 0.50% 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 fees of $132,520 to the Distributor.
13
<PAGE>
HODGES FUND
-------------
HF
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of securities, excluding
short-term securities, for the year ended March 31, 1998, were $27,187,046 and
$23,344,539, respectively.
NOTE 7 - 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 the Fund's exposure to, this issue.
14
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF
HODGES 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 Hodges Fund, a series of
Professionally Managed Portfolios, 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 five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998, by correspondence with the custodian and brokers. Where brokers did
not reply to our confirmation request, we carried out other appropriate auditing
procedures. 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
Hodges 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 five years in the
period then ended, in conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
15
<PAGE>
Advisor
Hodges Capital Management, Incorporated
2905 Maple Avenue
Dallas, Texas 75201
(800) 388-8512
o
Distributor
First Dallas Securities, Inc.
2905 Maple Avenue
Dallas, Texas 75201
o
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
o
Transfer Agent
American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
o
Auditors
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
o
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, California 94104
This report is intended for shareholders of the Fund
and may not be used as sales literature unless
preceded or accompanied by a current prospectus.
Past performance results shown in this report should
not be considered a representation of future
performance. Share price and returns will fluctuate
so that shares, when redeemed, may be worth more
or less than their original cost. Statements and other
information herein are dated and are subject to change.
HODGES FUND
-------------
HF
Designed
for Investors
Who Want Growth
Annual Report
For the Year Ended
March 31, 1998
