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. 44 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 45 [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
------------------------
It is proposed that this filing will become effective (check appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On pursuant to paragraph (b)
[X] 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
Fund
Item 5. Management of the Fund............... Management
of the Fund
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
Fund's Per
Share Value
is Determined
Item 7. Purchase of Securities Being Offered . . How to Invest
in the Fund;
How the
Fund's Per
Share Value
is Determined
Item 8. Redemption or Repurchase. . . . . . . . How to Redeem
an Investment
in the Fund
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 Fund's Investment
Advisor; the Fund's
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 &
Redemption
Information
Item 20. Tax Status.............................. Distributions
& Tax Infor-
mation
Item 21. Underwriters............................ The Fund's
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
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PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. Information
contained herein is subject to completion or amendment. These securities may not
be sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such jurisdiction.
THE PERKINS DISCOVERY FUND
730 East Lake Street
Wayzata, MN 55391-1769
(612) 473-8367
(800) 998-3190
THE PERKINS DISCOVERY FUND (the "Fund") is a mutual fund with the investment
objective of seeking capital appreciation. The Fund seeks to achieve its
objective by investing principally in common stocks of small companies believed
by Perkins Capital Management, Inc. (the "Advisor"), to have potential for
capital appreciation. A substantial portion of the Fund's assets will be
invested in common stocks of companies with market capitalizations of less than
$100 million.
Due to investment considerations, it is presently intended that the Fund will
close to new investors when it reaches $50 million in total assets.
The Fund is not a complete investment program and is appropriate only for those
investors who understand and can bear the risks of investing in smaller
companies. Shares of such smaller companies and the Fund's net asset value may
be very volatile. The Fund may borrow for investment purposes, and engage in
short sales of securities, which may be regarded as speculative techniques. The
Fund is not appropriate for short-term investors and should be considered only
for the aggressive portion of an investor's portfolio. See "Investment
Objectives, Policies and Risks," at page__.
This Prospectus sets forth basic information about the Fund that prospective
investors should know before investing. It should be
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read and retained for future reference. The Fund is a series of Professionally
Managed Portfolios. A Statement of Additional Information dated April , 1998, as
may be amended from time to time, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. This Statement of
Additional Information is available without charge upon written request to the
Fund at the address given above.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Expense Table.....................................................................................
Investment Objectives, Policies and Risks.........................................................
Management of the Fund............................................................................
How To Invest in the Fund.........................................................................
How To Redeem an Investment in the Fund...........................................................
Services Available to the Fund's Shareholders.....................................................
How the Fund's Per Share Value Is Determined......................................................
Distributions and Taxes...........................................................................
General Information...............................................................................
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated April , 1998
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EXPENSE TABLE
Expenses are one of several factors to consider when investing in the Fund. The
purpose of the following fee table is to provide an understanding of the various
costs and expenses which may be borne directly or indirectly by an investment in
the Fund. Actual expenses may be more or less than those shown.
The Fund has adopted a plan of distribution under which the Fund will pay a
distribution fee at an annual rate of up to a maximum of 0.25% (currently 0.20%)
of the Fund's net assets. A long-term shareholder may pay more, directly and
indirectly, in sales charges and such fees than the maximum sales charge
permitted under rules of the National Association of Securities Dealers, Inc.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases....................4.75%
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load........................................None
Redemption Fees............................................None
Exchange Fee...............................................None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Investment Advisory Fees . . . . . . . . 1.00%
12b-1 Fees . . . . . . . . . . . . . . . . 0.20%
Shareholder Service Fee. . . . . . . . . . 0.25%
Other Expenses (after reduction) . . . . 1.05%
Total Fund Operating Expenses
(after reduction) . . . . . .. 2.50%
The Advisor has agreed to reduce its fees or reimburse the Fund for expenses to
insure that the expenses for the Fund will not exceed 2.5% of average net assets
annually. In the absence of the Advisor's undertaking, it is estimated that
"Other Expenses" would be 1.85% and "Total Fund Operating Expenses" would be
3.30%.
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Example
This table illustrates the net transaction and operating expenses that would be
incurred by an investment in the Fund over different time periods assuming a
$1,000 investment, a 5% annual return, and redemption at the end of each time
period.
1 Year 3 Years
$72 $122
The Example shown above should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown. In
addition, federal regulations require the Example to assume a 5% annual return,
but the Fund's actual return may be higher or lower. See "Management of the
Fund."
THE PERKINS DISCOVERY FUND (the "Fund") is a diversified series of
Professionally Managed Portfolios (the "Trust"), an open-end registered
management investment company offering redeemable shares of beneficial interest.
Shares may be purchased at a public offering price which includes a maximum
sales charge of 4.75% of the offering price, or less depending on the amount
invested. The minimum initial investment is $2,500, with subsequent minimum
investments of $100 or more ($1,000 and $100, respectively, for retirement
plans). Shares will be redeemed at net asset value per share.
Due to investment considerations, it is presently intended that the Fund will
close to new investors when the total assets of the Fund reach $50 million. If
the Fund closes at $50 million in total assets as currently expected, the
Trustees may determine to reopen the Fund at some point based on market
conditions and other factors.
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The investment objective of the Fund is capital appreciation. The primary
approach of the Fund is to purchase common stocks of companies with individual
market capitalizations of less than $100 million at the time of purchase, as
described below, which the Advisor believes to be attractive investments with
capital appreciation potential on an individual issuer basis. There is, of
course, no assurance that the Fund's objective will be achieved. Because prices
of common stocks and other securities fluctuate, the value of an investment in
the Fund will vary, as the market value of its investment portfolio changes. The
Fund is diversified, which under applicable federal law means that
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as to 75% of its total assets, no more than 5% may be invested in the securities
of a single issuer and it may hold no more than 10% of the voting securities of
another issuer. The Fund may make use of investment techniques which involve
higher than average risk, such as leveraging and short sales. As indicated
below, there are special risks associated with investing in smaller companies.
See pages____.
Investment Approach. The Advisor's approach to equity investments is to seek
growth by investing in companies which it believes will appreciate in
value. The Advisor seeks to discover investments primarily by searching
for companies which it believes to be undergoing some type of fundamental
change. Companies undergoing change may have new products, processes,
strategies, management or a combination of these. Stocks are purchased when it
is believed that change will result in higher earnings and/or a higher
price/earnings ratio, and thus a higher share price when that change is
discovered by others. In its investment selection process, the Advisor utilizes
computer programs to derive fundamental selection criteria, technical analysis
as an aid in selecting those industries which appear to offer the best
investment opportunities at a particular time, and chart analysis as an aid in
selecting the what it believes to be the best purchase or sale point for a
particular security. Companies selected for the Fund often are located in the
upper Midwest states, although the Fund is not limited in its investments to any
specific geographical region.
Smaller and Newer Companies. Under normal circumstances a substantial
portion of the Fund's assets will be invested in securities of companies with
individual market capitalizations of less than $100 million at the time of
purchase. The Advisor believes that such companies provide an opportunity for
superior returns because they are not as well-known to the investing public,
have less investor following and a limited dissemination of information
about them or their industry and therefore may provide the potential for
investment gains due to the inefficiencies in this sector of the
marketplace. These companies also may offer unique products, services or
technologies and often serve special or expanded market niches, that can
contribute to their gain potential. If the market capitalization of a
company held by the Fund increases to over $100 million, the Fund is not
required to dispose of such holding. The Fund invests principally in common
stocks. The Fund's investments may also include preferred stocks,
warrants, convertible debt obligations and other debt obligations that, in the
Advisor's opinion, offer the possibility of capital growth.
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During those times when equity securities cannot be found that meet the
Advisor's investment criteria, for temporary defensive purposes or pending
longer-term investment, the Fund may invest any amount of its assets in
short-term money market instruments, including securities issued by the U.S.
Government, its agencies and instrumentalities or other such instruments rated
in the top two grades by Moody's or S & P or, if unrated, instruments deemed to
be of comparable quality by the Fund's Advisor.
Risks of Investing in Smaller Companies
Investments in smaller companies may be speculative and volatile and involve
greater risks than are customarily associated with larger companies. Many
smaller companies are more vulnerable than larger companies to adverse business
or economic developments. They may have limited product lines, markets or
financial resources. New and improved products or methods of development may
have a substantial impact on the earnings and revenues of such companies and any
such positive or negative developments could have a corresponding positive or
negative impact on the value of their shares.
Small company shares, which trade on the over-the counter market, may have fewer
market makers, wider spreads between their quoted bid and asked prices and lower
trading volumes, resulting in comparatively greater price volatility and less
liquidity than the securities of companies that have larger market
capitalizations and/or that are traded on the major stock exchanges or than the
market averages in general. In addition, the Fund and other client accounts of
the Advisor, on a collective basis, may hold a significant percentage of a
company's outstanding shares. When making larger sales, the Fund might have to
sell assets at discounts from quoted prices or may have to make a series of
small sales over an extended period of time.
For these reasons, the Fund's net asset value may be very volatile and the Fund
is not be appropriate for short-term investors. The Fund should be considered
only for the aggressive portion of the portfolio of an investor who understands
and can bear the risks of investing in smaller companies. There can be no
assurance that the Fund's objective will be attained or that the value of its
portfolio will not decline.
Repurchase Agreements. The Fund may enter into repurchase agreements in order to
earn additional income on available cash, or as a defensive investment in
periods when the Fund is primarily in short-term maturities. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Fund)
acquires ownership of a U.S. Government security (which may be of any maturity)
and the seller agrees to repurchase the
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obligation at a future time at a set price, thereby determining the yield during
the purchaser's holding period (usually not more than seven days from the date
of purchase). Any repurchase transaction in which the Fund engages will require
full collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with banks with assets of $500 million or more that are insured
by the Federal Deposit Insurance Corporation and the most creditworthy
registered securities dealers pursuant to procedures adopted and regularly
reviewed by the Trust's Board of Trustees. The Advisor monitors the
creditworthiness of the banks and securities dealers with whom the Fund engages
in repurchase transactions, and the Fund will not invest more than 15% of its
total assets in illiquid securities, including repurchase agreements maturing in
more than seven days. Illiquid and Restricted Securities. The Fund may not
invest more than 15% of its net assets in illiquid securities, including (I)
securities for which there is no readily available market; (ii) securities the
disposition of which would be subject to legal restrictions (so-called
"restricted securities"); and (iii) repurchase agreements having more than seven
days to maturity. A considerable period of time may elapse between the Fund's
decision to dispose of such securities and the time when the Fund is able to
dispose of them, during which time the value of the securities could decline.
Securities which meet the requirements of Securities Act Rule 144A are
restricted, but may be determined to be liquid by the Trustees based on such
factors as trading activity and availability of reliable price information for
such securities.
Foreign Securities. The Fund may invest up to 10% of its assets in U.S. dollar
denominated securities of foreign issuers, including American Depositary
Receipts with respect to securities of foreign issuers. There may be less
publicly available information about these issuers than is available about
companies in the U.S. and foreign auditing requirements may not be comparable to
those in the U.S. In addition, the value of the foreign securities may be
adversely affected by movements in the exchange rates between foreign currencies
and the U.S. dollar, as well as other political and economic developments,
including the possibility of expropriation, confiscatory taxation, exchange
controls or other foreign governmental restrictions. The Fund may also invest
without limit in securities of foreign issuers which are listed and traded on a
domestic national securities exchange.
Short Sales. The Fund may engage in short sales of securities.
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In a short sale, the Fund sells stock which it does not own, making delivery
with securities "borrowed" from a broker. The Fund is then obligated to replace
the security borrowed by purchasing it at the market price at the time of
replacement. This price may or may not be less than the price at which the
security was sold by the Fund. Until the security is replaced, the Fund is
required to pay to the lender any dividends or interest which accrue during the
period of the loan. In order to borrow the security, the Fund may also have to
pay a premium which would increase the cost of the security sold. The proceeds
of the short sale will be retained by the broker, to the extent necessary to
meet margin requirements, until the short position is closed out.
The Fund also must segregate liquid assets equal to the difference between (a)
the market value of the securities sold short at the time they were sold short
and (b) the value of the collateral deposited with the broker in connection with
the short sale. While the short position is open, the Fund must maintain the
segregated assets at such a level that (1) the amount segregated plus the amount
deposited with the broker as collateral equals the current market value of the
securities sold short and (2) the amount segregated plus the amount deposited
with the broker as collateral is not less than the market value of the
securities at the time they were sold short.
The Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and date on which the Fund
replaces the borrowed security. The Fund will realize a gain if the security
declines in price between those dates. The amount of any gain will be decreased
and the amount of any loss will be increased by any interest the Fund may be
required to pay in connection with short sale.
Leverage Through Borrowing. The Fund may borrow for investment purposes. This
borrowing, which is known as leveraging, generally will be unsecured, except to
the extent the Fund enters into reverse repurchase agreements described below.
The Investment Company Act of 1940 (the "1940 Act") requires the Fund to
maintain continuous asset coverage (that is, total assets including borrowings,
less liabilities exclusive of borrowings) of 300% of the amount borrowed. If the
300% asset coverage should decline as a result of market fluctuations or other
reasons, the Fund may be required to sell some of its portfolio holdings within
three days to reduce the debt and restore the 300% asset coverage, even though
it may be disadvantageous from an investment standpoint to sell securities at
that time. Leveraging may exaggerate the effect on the net asset value of any
increase or decrease in the market value of the Fund's portfolio. Money borrowed
for leveraging will be
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subject to interest costs which may or may not be recovered by appreciation of
the securities purchased. The Fund also may be required to maintain minimum
average balances in connection with such borrowing or to pay a commitment or
other fee to maintain a line of credit; either of these requirements would
increase the cost of borrowing over the stated interest rate.
Options Transactions. The Fund may buy call and put options on individual
securities and write covered call and put options, and engage in related closing
transactions. A call option gives the purchaser of the option the right to buy,
and obligates the writer to sell, the underlying security at the exercise price
at any time during the option period. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying security at the exercise price at any time during the option period.
A covered call option sold by the Fund, which is a call option with respect to
which the Fund owns the underlying security, exposes the Fund during the term of
the option to possible loss of opportunity to realize appreciation in the market
price of the underlying security or to possible continued holding of a security
which might otherwise have been sold to protect against depreciation in the
market price of the security. A covered put option sold by the Fund exposes the
Fund during the term of the option to a decline in the price of the underlying
security. A put option sold by the Fund is covered when, among other things,
liquid assets are placed in a segregated account with the Fund's custodian to
fulfill the obligation undertaken.
To close out a position when writing covered options, the Fund may make a
"closing purchase transaction," which involves purchasing an option on the same
security with the same exercise price and expiration date as the option which it
has previously written on the security. To close out a position as a purchaser
of an option, the Fund may make a "closing sale transaction," which involves
liquidating the Fund's position by selling the option previously purchased. The
Fund will realize a profit or loss from a closing purchase or sale transaction
depending upon the difference between the amount paid to purchase an option and
the amount received from the sale thereof. See the Statement of Additional
Information.
Portfolio Turnover. The annual rate of portfolio turnover is not expected to
exceed 100%. In general, the Advisor will not consider the rate of portfolio
turnover to be a limiting factor in determining when or whether to purchase or
sell securities in order to achieve the Fund's objective.
The Fund has adopted certain investment restrictions, which are described fully
in the Statement of Additional Information. Like the Fund's investment
objective, certain of these
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restrictions are fundamental and may be changed only by a majority vote of the
Fund's outstanding shares.
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund. Perkins Capital Management,
Inc., 730 East Lake Street, Wayzata, MN 55391-1769, the Fund's Advisor, has been
in the investment advisory business since 1984. The Advisor provides investment
advisory services to individual and institutional accounts with a value in
excess of $350 million. The Fund's portfolio typically will contain many of the
same stocks that are owned by the Advisor's other accounts. However, investment
decisions for the Fund are made independently of investment decisions for the
Advisor's other accounts and reflect certain restrictions that apply to the
Fund. Mr. Richard W. Perkins and Mr. Daniel S. Perkins are principally
responsible for the management of the Fund's portfolio, and together with Mr.
Richard C. Perkins, control the Advisor.
Under an Investment Advisory Agreement, the Advisor provides the Fund with
advice on buying and selling securities, manages the investments of the Fund,
furnishes the Fund with office space and certain administrative services, and
provides most of the personnel needed by the Fund. As compensation, the Fund
pays the Advisor a monthly management fee (accrued daily) based upon the average
daily net assets of the Fund at the rate of 1.00% annually.
Under an Administration Agreement, Investment Company Administration Corporation
(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:
Assets Fee or Fee Rate
Less than $12 million $30,000
$12,000,000 to $50,000,000 0.25%
$50,000,000 to $100,000,000 0.20%
$100,000,000 to $200,000,00 0.15%
$200,000,000 and above 0.10%
The Fund pays a monthly shareholder service fee at the annual rate of 0.25 of 1%
of its average daily net assets to the Advisor, selected broker-dealers and
other agents for providing certain ongoing services to shareholders.
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The Fund is responsible for its own operating expenses. The Advisor has agreed
to reduce its fees or reimburse the Fund for its annual operating expenses which
exceed 2.50%. The Advisor also may reimburse additional amounts to the Fund at
any time in order to reduce the Fund's expenses. Reductions made by the Advisor
in its fees or payments or reimbursements of expenses which are the Fund's
obligation are subject to reimbursement within the following three years by the
Fund provided the Fund is able to do so and remain in compliance with any
applicable expense limitations then in effect.
The Advisor considers a number of factors in determining which brokers or
dealers to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional Information, the factors include, but
are not limited to, the reasonableness of commissions, quality of services and
execution, and the availability of research which the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive prices, the Advisor may also
consider the sale of Fund shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.
HOW TO INVEST IN THE FUND
The minimum initial investment is $2,500. Subsequent investments must be at
least $100. Investments in retirement plans may be for minimums of $1,000 and
$100, respectively. 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 the public offering price next determined after a purchase order is
received. The public offering price is effective for orders received by the Fund
or investment dealers prior to the time of the next determination of the Fund's
net asset value and, in the case of orders placed with dealers, transmitted
properly to the Transfer Agent. 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.
The public offering price per share is equal to the net asset value per share,
plus a sales charge, which is reduced on purchases involving amounts of $50,000
or more, as set forth in the table below. The reduced sales charges apply to
quantity purchases made at one time by (I) an individual, (ii) members of a
family (i.e., an individual, spouse and children under age 21), or (iii) a
trustee or fiduciary of a single trust estate or a single fiduciary account. In
addition, purchases of shares made during a thirteen month period pursuant to a
written Letter of Intent are eligible for a reduced sales charge. Reduced
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charges are also applicable to subsequent purchases by a "person," based on the
aggregate of the amount being purchased and the value, at offering price, of
shares owned at the time of investment.
Sales Charge Portion
as of sales
percent of charge
net retained
offering asset by
Amount of Purchase price value dealers
- ------------------ ----- ----- -------
Less than $50,000 . . . . . 4.75% 4.99% 4.50%
$50,000 but less than $100,000... 4.00% 4.17% 3.75%
$100,000 but less than $250,000.. 3.00% 3.09% 2.80%
$250,000 but less than $500,000.. 2.00% 2.04% 1.85%
$500,000 but less than $1,000,000. 1.00% 1.01% 0.90%
$1,000,000 or more . . . . . .. .. None None None
Purchase Order Placed with Investment Dealers
Dealers who have a sales agreement with the Distributor may place orders for
shares of the Fund on behalf of clients at the offering price next determined
after receipt of the client's order by calling the Transfer Agent, at (800)
_________. Shares are also available for purchase by financial intermediaries
through brokers or dealers which have service or sales agreements with the Fund
or the Distributor. The Distributor or its affiliates, at their expense may
provide additional compensation to dealers in connection with sales of shares of
the Fund. If the order is placed with the dealer by 4:00 p.m. New York City time
and forwarded promptly to the Transfer Agent or other service agent, it will be
confirmed at the applicable offering price on that day. The dealer is
responsible for placing orders promptly with the Transfer Agent and for
forwarding payment promptly.
Purchases Sent to the Transfer Agent
Investors may purchase shares by sending an Application Form directly to the
Transfer Agent, with payment made either by check or by wire.
By Check: For initial investments, an investor should complete the Fund's
Account Application (included with this Prospectus). The completed Application,
together with a check payable to "The Perkins Discovery Fund" should be mailed
to the Fund's Transfer Agent: P.O. Box ____, Wilmington, DE 19899_____. A
purchase order sent by overnight mail should be sent to The Perkins Discovery
Fund, [________________________] Wilmington, DE 19890.
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For subsequent investments, a stub is attached to the account statement sent to
shareholders after each transaction. The stub should be detached from the
statement and, together with a check payable to "The Perkins Discovery Fund,"
mailed to the Transfer Agent 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) _________ between the hours of 9:00 a.m. and 4:00 p.m.
Eastern time, on a day when the New York Stock Exchange is open for trading in
order to receive an account number. The Transfer Agent will request the
investor's name, address, tax identification number, amount being wired and
wiring bank. The investor should then instruct the wiring bank to transfer funds
by wire to: [________________], ABA #__________ DDA #___________ for credit to
The Perkins Discovery Fund, for further credit to [investor's name and account
number]. The investor should also insure 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
complete and mail the Form promptly to the Transfer Agent.
For all wire investments, the investor must call the Transfer Agent at (800)
____________ when the wire is sent. Failure to do so may cause the purchase not
to be credited. 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.
Purchase at Net Asset Value. Shares of the Fund may be purchased at net asset
value by officers, trustees, directors and full time employees of the Trust, the
Advisor, the Distributor and affiliates of such companies, by their family
members, by persons and their family members who are direct investment advisory
clients of the Advisor under investment advisory agreements, registered
representatives and employees of firms which have sales agreements with the
Distributor, investment advisors, financial planners or other intermediaries who
placed trades for their own accounts or the accounts of their clients and who
charge a management, consulting or other fee for their services, clients of such
investment advisors, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment advisor, financial planner or other intermediaries on the books and
records of the broker or agent,
13
<PAGE>
retirement and deferred compensation plans and trusts used to fund such plans,
including, but not limited to, those defined in Section 401(a), 403(b) or 457 of
the Internal Revenue Code and "rabbi trusts" and by such other persons who are
determined to have acquired shares under circumstances not involving any sales
expense to the Fund or Distributor. Investors may be charged a fee if they
effect transactions in fund shares through a broker or agent.
Investors also may purchase shares of the Fund at net asset value to the extent
that the investment represents the proceeds from the redemption, within the
previous sixty days, of shares (the purchase price of which included a sales
charge) of another mutual fund. When making a purchase at net asset value under
this provision, the investor should forward to the Transfer Agent either (I) the
redemption check representing the proceeds of shares redeemed, endorsed to the
order of The Perkins Discovery Fund, or (ii) a copy of the confirmation from the
other fund, showing the redemption transaction.
General. Payment of proceeds from redemption of shares purchased with an initial
investment made by wire may be delayed 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 New York Stock Exchange (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
New York Stock Exchange on the next business day. Federal tax regulations
require 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 held in non-certificated form registered on
the books of the Fund and the Fund's Transfer Agent for the account of the
shareholder.
14
<PAGE>
HOW TO REDEEM AN INVESTMENT IN THE FUND
A shareholder has the right to have the Fund redeem all or any portion of his
outstanding shares at their current net asset value on each day the New York
Stock Exchange 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 (a) state the number of shares to be redeemed, (b)
identify the shareholder's account number and ( c) be signed by each registered
owner exactly as recorded on the account registration. 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, broker-dealers, credit unions and
savings institutions. A broker-dealer guaranteeing a signature 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.
Telephone Redemption. Shareholders who complete the Redemption by Telephone
portion of the Fund's Account Application may redeem shares on any business day
the New York Stock Exchange is open by calling the Fund's Transfer Agent at
(800) ___________ before 4:00 p.m. Eastern time. Redemption proceeds will be
mailed 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 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 normal identification procedures are followed, neither
the Fund nor the Transfer Agent will be liable for any loss, liability, or cost
which results from acting upon instructions of a person believed
15
<PAGE>
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 during periods of abnormal market activity.
Exchange Privilege. You may exchange shares of the Fund for shares of the
Perkins Opportunity Fund without additional sales charges by mailing or
delivering written instructions to the Transfer Agent at the address set forth
above. Please specify the number of shares or dollar amount to be exchanged, and
your name and account number. You may also exchange shares by telephoning the
Transfer Agent at (800) ___________. Between the hours of 9:00 AM and 4:00 PM
Eastern time on a day when the New York Stock Exchange is open for normal
trading. The Fund reserves the right to limit the number of exchanges a
shareholder may make in any year to avoid excessive Fund expenses, and may
terminate or modify the exchange privilege upon notice to shareholders.
General. Payment of the 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 Securities and Exchange Commission. 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 $1,000. If the Fund determines to
make such an involuntary redemption, the shareholder will first be notified that
the value of his account is less than $1,000 and will be allowed 30 days to make
an additional investment to bring the value of his account to at least $1,000
before the Fund takes
16
<PAGE>
any action.
Distribution Plan; Shareholder Servicing Plan. The Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") under
which the Fund pays the Advisor as Distribution Coordinator an amount which is
accrued daily and paid monthly, at an annual rate of up to 0.25% of the average
daily net assets of the Fund. Amounts paid under the Plan by the Fund are paid
to the Distribution Coordinator to pay for the services it provides and the
expenses it bears in the distribution of the Fund's shares, including overhead
and telephone expenses; printing and distribution of prospectuses and reports
used in connection with the offering of the Fund's shares to prospective
investors; and preparation, printing and distribution of sales literature and
advertising materials.
Plan payments will be reviewed by the Trustees. However, it is possible that at
times the amount of the Distribution Coordinator's compensation could exceed its
Distribution Expenses, resulting in a profit. If the Plan is terminated, the
Fund will not be required to make payments for expenses incurred after the
termination.
In addition, the Fund has entered into a Shareholder Servicing Agreement with
the Distribution Coordinator, 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 reimburse the Distribution
Coordinator for payments it makes to selected brokers, dealers and
administrators 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 records, processing purchase and redemption transactions, answering
routine client inquiries regarding the Fund, and providing such other services
to the Fund as the Fund may reasonably request.
SERVICES AVAILABLE TO THE FUND'S SHAREHOLDERS
Retirement Plans. The minimum initial investment for such plans is $1,000, with
minimum subsequent investments of $100. The Fund offers a prototype Individual
Retirement Account ("IRA") plan and information is available from the
Distributor or from securities dealers with respect to Keogh, Section 403(b) and
other retirement plans offered. Investors should consult a tax
17
<PAGE>
adviser before establishing any retirement plan. Automatic Check Investment
Plan. For the convenience of shareholders, the Fund offers a preauthorized check
service under which a check is automatically drawn on the shareholder's personal
checking account each month for a predetermined amount (but not less than $100),
as if the shareholder had written it directly. Upon receipt of the withdrawn
funds, the Fund automatically invests the money in additional shares of the Fund
at the current offering price. Applications for this service are available from
the Distributor. There is no charge by the Fund for this service. The
Distributor may terminate or modify this privilege at any time, and shareholders
may terminate their participation by notifying the Transfer Agent in writing,
sufficiently in advance of the next withdrawal. Systematic Withdrawal Program.
As another convenience, the Fund offers a Systematic Withdrawal Program whereby
shareholders may request that a check drawn in a predetermined amount be sent to
them each month or calendar quarter. A shareholder's account must have Fund
shares with a value of at least $10,000 in order to start a Systematic
Withdrawal Program, and the minimum amount that may be withdrawn each month or
quarter under the Systematic Withdrawal Program is $100. This Program may be
terminated or modified by a shareholder or the Fund at any time without charge
or penalty. A withdrawal under the Systematic Withdrawal Program involves a
redemption of shares, and may result in a gain or loss for federal income tax
purposes. In addition, if the amount withdrawn exceed the dividends credited to
the shareholder's account, the account ultimately may be depleted.
HOW THE FUND'S PER SHARE VALUE IS DETERMINED
The net asset value of a Fund share is determined once daily as of the close of
public trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time)
on each day the New York Stock Exchange is open for trading. Net asset value per
share is calculated by dividing the value of the Fund's total assets, less its
liabilities, by the number of Fund shares outstanding.
Portfolio securities are valued using current market values, if available.
Securities for which market quotations are not readily available are valued at
fair values as determined in good faith by or under the supervision of the
Trust's officers in accordance with methods which are specifically authorized by
the Board of Trustees. Short-term obligations with remaining maturities of sixty
days or less are valued at amortized cost as reflecting fair value.
18
<PAGE>
DISTRIBUTIONS AND TAXES
Dividends and Distributions. Dividends from net investment income are expected
to be paid in June and December. Any net capital gains realized during the
Fund's fiscal year will also be distributed to shareholders in June, with a
supplemental distribution in December of any undistributed capital gains earned
during the 12-month period ended each October 31. Dividends and capital gain
distributions (net of any required tax withholding) are automatically reinvested
in additional shares of the Fund at the net asset value per share on the
reinvestment date unless the shareholder has previously requested in writing to
the Transfer Agent that payment be made in cash. Any dividend or distribution
paid by the Fund has the effect of reducing the net asset value per share on the
reinvestment date by the amount of the dividend or distribution. Investors
should note that a dividend or distribution paid on shares purchased shortly
before such dividend or distribution was declared will be subject to income
taxes as discussed below even though the dividend or distribution represents, in
substance, a partial return of capital to the shareholder.
Taxes. The Fund intends 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"). As long as the fund continues to qualify, and as long as
the Fund distributes all of its income each year to the shareholders, the Fund
will not be subject to any federal or excise taxes. The distributions made by
the Fund will be taxable to shareholders whether received in shares (through
dividend reinvestment ) or in cash. Distributions derived from net investment
income, including net short-term capital gains, are taxable to shareholders as
ordinary income. A portion of these distributions may qualify for the
intercorporate dividends-received deduction. Distributions designated as capital
gains dividends are taxable as long-term capital gains regardless of the length
of time shares of the Fund have been held. Although distributions are generally
taxable when received, certain distributions made in January are taxable as if
received the prior December. Shareholders will be informed annually of the
amount and nature of the Fund's distributions. Additional information about
taxes is set forth in the Statement of Additional Information. Shareholders
should consult their own advisers concerning federal, state and local taxation
of distributions from the Fund.
GENERAL INFORMATION
19
<PAGE>
The Trust. The Trust was organized as a Massachusetts business trust on February
17, 1987. The Agreement and Declaration of Trust permits the Board of Trustees
to issue an unlimited number of full and fractional shares of beneficial
interest, without par value, which may be issued in any number of series. 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. The
fiscal year of the Fund ends on March 31.
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 Investment 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.
Performance Information. From time to time, the Fund may publish its total
return in advertisements and communications to investors. Total return
information will include the Fund's average annual compounded rate of return
over the most recent four calendar quarters and over the period from the Fund's
inception of operations. The Fund may also advertise aggregate and average total
return information over different periods of time. The Fund's total return will
be based upon the value of the shares acquired through a hypothetical $1,000
investment (at the maximum public offering price) at the beginning of the
specified period and the net asset value of such shares at the end of the
period, assuming reinvestment of all distributions and after giving effect to
the maximum applicable sales charge. Total return figures will reflect all
recurring charges against Fund income. Investors should note that the investment
results of the Fund will fluctuate over time, and any presentation of the Fund's
total return for any prior period should not be considered as a representation
of what an investor's total return may be in any future period. Shareholder
Inquiries. Shareholder inquiries should be directed
20
<PAGE>
to the Transfer Agent at (800) ____________.
Investment Advisor
Perkins Capital Management, Inc.
730 East Lake Street
Wayzata, MN 55391-1769
(612) 473-8367
(800) 998-3190
Distributor
First Fund Distributors, Inc.
4455 E. Camelback Rd., Ste. 261-E
Phoenix, AZ 85018
Custodian
Star Bank, N.A.
425 Walnut St.
Cincinnati, Ohio 45202
Transfer and Dividend Disbursing Agent
Provident Financial Processing Corp.
P.O. Box _____
Wilmington, DE 19899
(800) ___________
Auditors
Tait, Weller & Baker
2 Penn Center Plaza
Philadelphia, PA 19107
Legal Counsel
Paul, Hastings, Janofsky & Walker
345 California Street
San Francisco, CA 94104
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
April , 1998
PERKINS DISCOVERY FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
730 East Lake Street
Wayzata, MN 55391-1713
(800) 366-8361
(612) 473-8367
This Statement of Additional Information is not a prospectus and it
should be read in conjunction with the prospectus of the Perkins Discovery Fund
(the "Fund"). A copy of the prospectus of the Fund dated April __, 1998 is
available by calling either of the numbers listed above.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
The Trust.......................................................................................................B-2
Investment Objective and Policies...............................................................................B-2
Investment Restrictions.........................................................................................B-7
Distributions and Tax Information...............................................................................B-9
Trustees and Executive Officers................................................................................B-11
The Fund's Investment Advisor..................................................................................B-13
The Fund's Administrator.......................................................................................B-13
The Fund's Distributor.........................................................................................B-14
Execution of Portfolio Transactions............................................................................B-15
Additional Purchase and Redemption Information.................................................................B-16
Determination of Share Price...................................................................................B-17
Performance Information........................................................................................B-18
General Information............................................................................................B-19
Financial Statements...........................................................................................B-20
</TABLE>
Perkins SAI B-1
<PAGE>
THE TRUST
Professionally Managed Portfolios (the "Trust") is an open-end
management investment company organized as a Massachusetts business trust. The
Trust consists of various series which represent separate investment portfolios.
This Statement of Additional Information relates only to the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The Perkins Discovery Fund (the "Fund") is a mutual fund with the
investment objective of seeking capital appreciation. The following discussion
supplements the discussion of the Fund's investment objective and policies as
set forth in the Prospectus. There can be no assurance the objective of the Fund
will be attained.
Repurchase Agreements
The Fund may enter into repurchase agreements as discussed in the
Prospectus. Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price. The repurchase price may
be higher than the purchase price, the difference being income to the Fund, or
the purchase and repurchase prices may be the same, with interest at a stated
rate due to the Fund together with the repurchase price on repurchase. In either
case, the income to the Fund is unrelated to the interest rate on the U.S.
Government security itself. Such repurchase agreements will be made only with
banks with assets of $500 million or more that are insured by the Federal
Deposit Insurance Corporation or with Government securities dealers recognized
by the Federal Reserve Board and registered as broker-dealers with the
Securities and Exchange Commission ("SEC") or exempt from such registration. The
Fund will generally enter into repurchase agreements of short durations, from
overnight to one week, although the underlying securities generally have longer
maturities. The Fund may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 15% of the value of the Fund's
total assets would be invested in illiquid securities including such repurchase
agreements.
For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from the Fund to the seller of the
U.S. Government security subject to the repurchase agreement. It is not clear
whether a court would consider the U.S. Government security acquired by the Fund
subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, the Fund may encounter delays and incur costs before being able to
sell the security. Delays may involve loss of interest or a decline in price of
the U.S. Government security. If a court characterizes the transaction as a loan
and the Fund has not perfected a security interest in the U.S. Government
security, the Fund may be required to return the security to the seller's estate
and be treated as an unsecured creditor of the seller. As an unsecured
Perkins SAI B-2
<PAGE>
creditor, the Fund would be at the risk of losing some or all of the principal
and income involved in the transaction. As with any unsecured debt instrument
purchased for the Fund, the investment advisor seeks to minimize the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
obligor, in this case the seller of the U.S. Government security.
Apart from the risk of bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security. However, the
Fund will always receive as collateral for any repurchase agreement to which it
is a party securities acceptable to it, the market value of which is equal to at
least 100% of the amount invested by the Fund plus accrued interest, and the
Fund will make payment against such securities only upon physical delivery or
evidence of book entry transfer to the account of its Custodian. If the market
value of the U.S. Government security subject to the repurchase agreement
becomes less than the repurchase price (including interest), the Fund will
direct the seller of the U.S. Government security to deliver additional
securities so that the market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price. It is possible that the
Fund will be unsuccessful in seeking to impose on the seller a contractual
obligation to deliver additional securities.
When-Issued Securities
The Fund may from time to time purchase securities on a "when-issued"
basis. The price of such securities, which may be expressed in yield terms, is
fixed at the time the commitment to purchase is made, but delivery and payment
for the when-issued securities take place at a later date. Normally, the
settlement date occurs within one month of the purchase; during the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. To the extent that assets of the Fund are
held in cash pending the settlement of a purchase of securities, the Fund would
earn no income; however, it is the Fund's intention to be fully invested to the
extent practicable and subject to the policies stated above. While when-issued
securities may be sold prior to the settlement date, the Fund intends to
purchase such securities with the purpose of actually acquiring them unless a
sale appears desirable for investment reasons. At the time the Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the value of the security in determining its net asset
value. The market value of the when-issued securities may be more or less than
the purchase price. The Fund does not believe that its net asset value or income
will be adversely affected by its purchase of securities on a when-issued basis.
The Fund will segregate liquid assets with its Custodian equal in value to
commitments for when-issued securities. Such segregated assets either will
mature or, if necessary, be sold on or before the settlement date.
Securities Lending
Although the Fund's objective is capital appreciation, the Fund
reserves the right to lend its portfolio securities in order to generate
additional income. Securities may be loaned to broker-dealers, major banks or
other recognized domestic institutional borrowers of securities who are not
Perkins SAI B-3
<PAGE>
affiliated with the Advisor or Distributor and whose creditworthiness is
acceptable to the Advisor. The borrower must deliver to the Fund cash or cash
equivalent collateral, or provide to the Fund an irrevocable letter of credit
equal in value to at least 100% of the value of the loaned securities at all
times during the loan, marked to market daily. During the time the portfolio
securities are on loan, the borrower pays the Fund any interest paid on such
securities. The Fund may invest the cash collateral and earn additional income,
or it may receive an agreed-upon amount of interest income if the borrower has
delivered equivalent collateral or a letter of credit. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and may
pay a negotiated portion of the income earned on the cash to the borrower or
placing broker. Loans are subject to termination at the option of the Fund or
the borrower at any time. It is not anticipated that more than 5% of the value
of the Fund's portfolio securities will be subject to lending.
Foreign Investments
The Fund has reserved the right to invest in foreign securities.
Foreign investments can involve significant risks in addition to the risks
inherent in U.S. investments. The value of securities denominated in or indexed
to foreign currencies, and of dividends and interest from such securities, can
change significantly when foreign currencies strengthen or weaken relative to
the U.S. dollar. Foreign securities markets generally have less trading volume
and less liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial costs, generally are
higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may invoke increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It also may be difficult to enforce legal rights
in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that an Adviser will be able to
anticipate or counter these potential events and their impacts on the Fund's
share price.
American Depositary Receipts and European Depositary Receipts ("ADRs"
and "EDRs") are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or
Perkins SAI B-4
<PAGE>
similar financial institution. Designed for use in U.S. and European securities
markets, respectively, ADRs and EDRs are alternatives to the purchase of the
underlying securities in their national market and currencies.
Options on Securities
The Fund reserves the right to engage in certain purchases and sales of
options on securities. The Fund may write (i.e., sell) call options ("calls") on
equity securities if the calls are "covered" throughout the life of the option.
A call is "covered" if the Fund owns the optioned securities. When the Fund
writes a call, it receives a premium and gives the purchaser the right to buy
the underlying security at any time during the call period at a fixed exercise
price regardless of market price changes during the call period. If the call is
exercised, the Fund will forgo any gain from an increase in the market price of
the underlying security over the exercise price.
The Fund may purchase a call on securities to effect a "closing
purchase transaction" which is the purchase of a call covering the same
underlying security and having the same exercise price and expiration date as a
call previously written by the Fund on which it wishes to terminate its
obligation. If the Fund is unable to effect a closing purchase transaction, it
will not be able to sell the underlying security until the call previously
written by the Fund expires (or until the call is exercised and the Fund
delivers the underlying security).
The Fund also may write and purchase put options ("puts"). When the
Fund writes a put, it receives a premium and gives the purchaser of the put the
right to sell the underlying security to the Fund at the exercise price at any
time during the option period. When the Fund purchases a put, it pays a premium
in return for the right to sell the underlying security at the exercise price at
any time during the option period. If any put is not exercised or sold, it will
become worthless on its expiration date. When the Fund writes a put, it will
maintain at all times during the option period, in a segregated account, liquid
assets equal in value to the exercise price of the put.
The Fund's option positions may be closed out only on an exchange which
provides a secondary market for options of the same series, but there can be no
assurance that a liquid secondary market will exist at a given time for any
particular option.
The Fund's custodian, or a securities depository acting for it,
generally acts as escrow agent as to the securities on which the Fund as written
puts or calls, or as to other securities acceptable for such escrow so that no
margin deposit is required of the Fund. Until the underlying securities are
released from escrow, they cannot be sold by the Fund.
In the event of a shortage of the underlying securities deliverable on
exercise of an option, the Options Clearing Corporation has the authority to
permit other, generally comparable securities to be delivered in fulfillment of
option exercise obligations. If the Options Clearing Corporation exercises its
discretionary authority to allow such other securities to be delivered, it may
also adjust the exercise prices of the affected options by setting different
prices at which otherwise ineligible
Perkins SAI B-5
<PAGE>
securities may be delivered. As an alternative to permitting such substitute
deliveries, the Options Clearing Corporation may impose special exercise
settlement procedures.
The hours of trading for options may not conform to the hours during which
the underlying securities are traded. To the extent that the options markets
close before the markets for the underlying securities, significant price and
rate movements may take place in the underlying markets that cannot be reflected
in the options markets. The purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions.
Short Sales
The Fund may seek to hedge investments or realize additional gains
through short sales. The Fund may make short sales, which are transactions in
which the Fund sells a security it does not own, in anticipation of a decline in
the market value of that security. To complete such a transaction, the Fund must
borrow the security to make delivery to the buyer. The Fund then is obligated to
replace the security borrowed by purchasing it at the market price at or prior
to the time of replacement. The price at such time may be more or less than the
price at which the security was sold by the Fund. Until the security is
replaced, the Fund is required to repay the lender any dividends or interest
that accrue during the period of the loan. To borrow the security, the Fund also
may be required to pay a premium, which would increase the cost of the security
sold. The net proceeds of the short sale will be retained by the broker, to the
extent necessary to meet margin requirements, until the short position is closed
out. The Fund also will incur transaction costs in effecting short sales.
The Fund will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and the date on
which the Fund replaces the borrowed security. The Fund will realize a gain if
the security declines in price between those dates. The amount of any gain will
be decreased, and the amount of any loss increased by the amount of the premium,
dividends, interest, or expenses the Fund may be required to pay in connection
with a short sale.
Whenever the Fund engages in short sales, its custodian will segregate
liquid assets equal to the difference between (a) the market value of the
securities sold short at the time they were sold short and (b) any cash or U.S.
Government securities required to be deposited with the broker in connection
with the short sale. The segregated assets are marked to market daily, provided
that at no time will the amount deposited in it plus the amount deposited with
the broker be less than the market value of the securities at the time they were
sold short.
Leverage Through Borrowing
The Fund may borrow money for leveraging purposes. Leveraging creates
an opportunity for increased net income but, at the same time, creates special
risk considerations. For example, leveraging may exaggerate changes in the net
asset value of Fund shares and in the yield on the Fund's portfolio. Although
the principal of such borrowings will be fixed, the Fund's assets may
Perkins SAI B-6
<PAGE>
change in value during the time the borrowing is outstanding. Leveraging will
create interest expenses for the Fund which can exceed the income from the
assets retained. To the extent the income derived from securities purchased with
borrowed funds exceeds the interest the Fund will have to pay, the Fund's net
income will be greater than if leveraging were not used. Conversely, if the
income from the assets retained with borrowed funds is not sufficient to cover
the cost of leveraging, the net income of the Fund will be less than if
leveraging were not used, and therefore the amount available for distribution to
stockholders as dividends will be reduced.
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been adopted by
the Fund and (unless otherwise noted) are fundamental and cannot be changed
without the affirmative vote of a majority of the Fund's outstanding voting
securities as defined in the 1940 Act. The Fund may not:
1. Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objectives and policies, (b)
through the lending of its portfolio securities as described above and in its
Prospectus, or (c) to the extent the entry into a repurchase agreement is deemed
to be a loan.
2. (a) Borrow money, except as stated in the Prospectus and this
Statement of Additional Information. Any such borrowing will be made only if
immediately thereafter there is an asset coverage of at least 300% of all
borrowings.
(b) Mortgage, pledge or hypothecate any of its assets except in
connection with any such borrowings.
3. Purchase securities on margin, participate on a joint or joint and
several basis in any securities trading account, or underwrite securities. (Does
not preclude the Fund from obtaining such short-term credit as may be necessary
for the clearance of purchases and sales of its portfolio securities.)
4. Purchase real estate, commodities or commodity contracts (As a
matter of operating policy, the Board of Trustees may authorize the Fund to
engage in certain activities regarding futures contracts for bona fide hedging
purposes; any such authorization will be accompanied by appropriate notification
to shareholders).
5. Invest 25% or more of the market value of its assets in the
securities of companies engaged in any one industry. (Does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities.)
Perkins SAI B-7
<PAGE>
6. Issue senior securities, as defined in the 1940 Act, except that
this restriction shall not be deemed to prohibit the Fund from (a) making any
permitted borrowings, mortgages or pledges, or (b) entering into options,
futures or repurchase transactions.
The Fund observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote. The Fund may not:
7. Invest in any issuer for purposes of exercising control or
management
8. Invest in securities of other investment companies which would
result in the Fund owning more than 3% of the outstanding voting securities of
any one such investment company, the Fund owning securities of another
investment company having an aggregate value in excess of 5% of the value of the
Fund's total assets, or the Fund owning securities of investment companies in
the aggregate which would exceed 10% of the value of the Fund's total assets.
9. Invest, in the aggregate, more than 15% of its total assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable and repurchase agreements with more than seven days
to maturity.
If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in the
values of assets will not constitute a violation of that restriction, except as
otherwise noted.
DISTRIBUTIONS AND TAX INFORMATION
Distributions
Dividends from net investment income and distributions from net profits
from the sale of securities are generally made annually, as described in the
Prospectus after the conclusion of the Fund's fiscal year (March 31). Also, the
Fund expects to distribute any undistributed net investment income on or about
December 31 of each year. Any net capital gains realized through the period
ended October 31 of each year will also be distributed by December 31 of each
year.
Each distribution by the Fund is accompanied by a brief explanation of
the form and character of the distribution. In January of each year the Fund
will issue to each shareholder a statement of the federal income tax status of
all distributions.
Tax Information
Each series of the Trust is treated as a separate entity for federal
income tax purposes. 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
Perkins SAI B-8
<PAGE>
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.
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 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 or exchange of Fund shares may result in recognition of a
taxable gain or loss. Any loss realized upon a redemption or exchange 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
Perkins SAI B-9
<PAGE>
distributions of long-term capital gains during such six-month period. In
determining gain or loss from an exchange of Fund shares for shares of another
mutual fund, the sales charge incurred in purchasing the shares that are
surrendered will be excluded from their tax basis to the extent that a sales
charge that would otherwise be imposed in the purchase of the shares received in
the exchange is reduced. Any portion of a sales charge excluded from the basis
of the shares surrendered will be added to the basis of the shares received. Any
loss realized upon a redemption or exchange may be disallowed under certain wash
sale rules to the extent shares of the same Fund are purchased (through
reinvestment of distributions or otherwise) within 30 days before or after the
redemption or exchange.
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 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.
Perkins SAI B-10
<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 and their
affiliations and principal occupations for the past five years are set forth
below.
Steven J. Paggioli,* 47 President and Trustee
479 West 22nd Street, New York, New York 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, 53 Trustee
14 Five Roses East, Ancram, NY 12502. 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, 57 Trustee
One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.
Carl A. Froebel, 59 Trustee
2 Crown Cove Lane, Savannah, GA 31411. Private Investor. Formerly Managing
Director, Premier Solutions, Ltd. Formerly President and Founder, National
Investor Data Services, Inc. (investment related computer software).
Rowley W.P. Redington, 53 Trustee
1191 Valley Road, Clifton, New Jersey 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*, 40 Treasurer
Perkins SAI B-11
<PAGE>
2025 E. Financial Way, Suite 101, Glendora, California 91741. Senior Vice
President, The Wadsworth Group, Senior Vice President of ICAC and Vice President
of FFD since 1990.
Robin Berger*, 40 Secretary
479 West 22nd St., New York, New York 10011. Vice President, The Wadsworth Group
since June, 1993; formerly Regulatory and Compliance Coordinator, Equitable
Capital Management, Inc. (1991-93).
Robert H. Wadsworth*, 58 Vice President
4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 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 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
It is estimated that during the first fiscal year of the Fund, trustees
fees and expenses to be allocated to it should not exceed $3,000. 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'S INVESTMENT ADVISOR
As stated in the Prospectus, investment advisory services are provided
to the Fund by Perkins Capital Management, Inc., the Advisor, pursuant to an
Investment Advisory Agreement. The Advisor is controlled by Richard Perkins,
Sr., Richard C. Perkins and Daniel Perkins.
Perkins SAI B-12
<PAGE>
The use of the name "Perkins" by the Fund is pursuant to a license
granted by the Advisor, and in the event the Investment Advisory Agreement with
the Fund is terminated, the Advisor has reserved the right to require the Fund
to remove any references to the name "Perkins."
The Investment Advisory Agreement 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 agreement may be terminated at any time, without penalty, by
either party to the agreement upon sixty days' written notice and is
automatically terminated in the event of its "assignment," as defined in the
1940 Act.
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, the Administrator receives an monthly fee at the following annual
rate:
Less than $12,000,000 $30,000
$12 million to $50 million 0.25%
$50 million to $100 million 0.20%
$100 million to $200 million 0.15%
Over $200 million 0.10%
Perkins SAI B-13
<PAGE>
THE FUND'S DISTRIBUTOR
First Fund Distributors, Inc., (the "Distributor"), a corporation owned
by Mr. Banhazl, Mr. Paggioli and Mr. Wadsworth, acts as the Fund's principal
underwriter in a continuous public offering of the Fund's shares. The
Distribution Agreement between the Fund and the Distributor continues in effect
for periods not exceeding one year if approved at least annually by (I) the
Board of Trustees or the vote of a majority of the outstanding shares of the
Fund (as defined in the 1940 Act) and (ii) a majority of the Trustees who are
not interested persons of any such party, in each case cast in person at a
meeting called for the purpose of voting on such approval. The Distributing
Agreement may be terminated without penalty by the parties thereto upon sixty
days' written notice, and is automatically terminated in the event of its
assignment as defined in the 1940 Act.
The Fund has adopted a Distribution Plan in accordance with Rule 12b-1
under the 1940 Act. The Plan provides that the Fund will pay a fee to the
Advisor as Distribution Coordinator at an annual rate of up to 0.25% of the
average daily net assets of the Fund (currently 0.20%). The fee is paid to the
Advisor as reimbursement for, or in anticipation of, expenses incurred for
distribution related activity. The Fund also has a Shareholder Service Plan
pursuant to which payments or reimbursements of payments may be made to selected
brokers, dealers or administrators which have enetered into agreements for
services provided to shareholders of the Fund.
EXECUTION OF PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Agreement, the Adviser determines
which securities are to be purchased and sold by the Fund and which
broker-dealers will be used to execute the Fund's portfolio transactions.
Purchases and sales of securities in the over-the-counter market will be
executed directly with a "market-maker" unless, in the opinion of the Adviser, a
better price and execution can otherwise be obtained by using a broker for the
transaction.
Purchases of portfolio securities for the Fund also may be made
directly from issuers or from underwriters. Where possible, purchase and sale
transactions will be effected through dealers (including banks) which specialize
in the types of securities which the Fund will be holding, unless better
executions are available elsewhere. Dealers and underwriters usually act as
principal for their own account. Purchases from underwriters will include a
concession paid by the issuer to the underwriter and purchases from dealers will
include the spread between the bid and the asked price. If the execution and
price offered by more than one broker, dealer or underwriter are comparable, the
order may be allocated to a broker, dealer or underwriter that has provided
research or other services as discussed below.
In placing portfolio transactions, the Adviser will use its best
efforts to choose a broker-dealer capable of providing the services necessary to
obtain the most favorable price and execution available. The full range and
quality of services available will be considered in making these determinations,
such as the size of the order, the difficulty of execution, the operational
facilities of
Perkins SAI B-14
<PAGE>
the firm involved, the firm's risk in positioning a block of securities, and
other factors. In those instances where it is reasonably determined that more
than one broker-dealer can offer the most favorable price and execution
available, consideration may be given to those broker-dealers which furnish or
supply research and statistical information to the Adviser that it may lawfully
and appropriately use in its investment advisory capacities, as well as provide
other services in addition to execution services. The Adviser considers such
information, which is in addition to and not in lieu of the services required to
be performed by it under its Agreement with the Fund, to be useful in varying
degrees, but of indeterminable value. Portfolio transactions may be placed with
broker-dealers who sell shares of the Fund subject to rules adopted by the
National Association of Securities Dealers, Inc.
While it is the Fund's general policy to seek first to obtain the most
favorable price and execution available, in selecting a broker-dealer to execute
portfolio transactions for the Fund, weight is also given to the ability of a
broker-dealer to furnish brokerage and research services to the Fund or to the
Adviser, even if the specific services are not directly useful to the Fund and
may be useful to the Adviser in advising other clients. In negotiating
commissions with a broker or evaluating the spread to be paid to a dealer, the
Fund may therefore pay a higher commission or spread than would be the case if
no weight were given to the furnishing of these supplemental services, provided
that the amount of such commission or spread has been determined in good faith
by the Adviser to be reasonable in relation to the value of the brokerage and/or
research services provided by such broker-dealer. The standard of reasonableness
is to be measured in light of the Adviser's overall responsibilities to the
Fund.
Investment decisions for the Fund are made independently from those of
other client accounts or mutual funds managed or advised by the Adviser.
Nevertheless, it is possible that at times identical securities will be
acceptable for both the Fund and one or more of such client accounts. In such
event, the position of the Fund and such client account(s) in the same issuer
may vary and the length of time that each may choose to hold its investment in
the same issuer may likewise vary. However, to the extent any of these client
accounts seeks to acquire the same security as the Fund at the same time, the
Fund may not be able to acquire as large a portion of such security as it
desires, or it may have to pay a higher price or obtain a lower yield for such
security. Similarly, the Fund may not be able to obtain as high a price for, or
as large an execution of, an order to sell any particular security at the same
time. If one or more of such client accounts simultaneously purchases or sells
the same security that the Fund is purchasing or selling, each day's
transactions in such security will be allocated between the Fund and all such
client accounts in a manner deemed equitable by the Adviser, taking into account
the respective sizes of the accounts and the amount being purchased or sold. It
is recognized that in some cases this system could have a detrimental effect on
the price or value of the security insofar as the Fund is concerned. In other
cases, however, it is believed that the ability of the Fund to participate in
volume transactions may produce better executions for the Fund.
The Fund does not effect securities transactions through brokers solely
for selling shares of the Fund, although the Fund may consider the sale of
shares as a factor in allocating brokerage.
Perkins SAI B-15
<PAGE>
However, as stated above, broker-dealers who execute brokerage transactions may
effect purchases of shares of the Fund for their customers.
The Fund does not use the Distributor to execute its portfolio
transactions.
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 Advisor or the Distributor such rejection
is in the best interest of the Fund, and (iii) to reduce or waive the 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.
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.
Perkins SAI B-16
<PAGE>
Check-A-Matic
As discussed in the Prospectus, the Fund provides a Check-A-Matic Plan
for the convenience of investors who wish to purchase shares of the Fund on a
regular basis. All record keeping and custodial costs of the Check-A-Matic Plan
are paid by the Fund. The market value of the Fund's shares is subject to
fluctuation, so before undertaking any plan for systematic investment, the
investor should keep in mind that this plan does not assure a profit nor protect
against depreciation in declining markets.
DETERMINATION OF SHARE PRICE
As noted in the Prospectus, the net asset value and offering price of
shares of the Fund will be determined once daily as of the close of public
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time) on
each day that the Exchange is open for trading. It is expected that the Exchange
will be closed on Saturdays and Sundays and on New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas. The Fund does not expect to determine the net asset value of its
shares on any day when the Exchange is not open for trading even if there is
sufficient trading in its portfolio securities on such days to materially affect
the net asset value per share.
In valuing the Fund's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust shall determine in good faith to reflect the security's fair value. All
other assets of each Fund are valued in such manner as the Board of Trustees in
good faith deems appropriate to reflect their fair value.
The net asset value per share of the Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
PERFORMANCE INFORMATION
From time to time, the Fund may state its total return in
advertisements and investor communications. Total return may be stated for any
relevant period as specified in the advertisement or communication. Any
statements of total return will be accompanied by information on the Fund's
average annual compounded rate of return over the most recent four calendar
quarters and the period
Perkins SAI B-17
<PAGE>
from the Fund's inception of operations. The Fund may also advertise aggregate
and average total return information over different periods of time.
The Fund's total return may be compared to relevant indices, including
Standard & Poor's 500 Composite Stock Index and indices published by Lipper
Analytical Services, Inc. From time to time, evaluations of a Fund's performance
by independent sources may also be used in advertisements and in information
furnished to present or prospective investors in the Funds.
Investors should note that the investment results of the Fund will
fluctuate over time, and any presentation of the Fund's total return for any
period should not be considered as a representation of what an investment may
earn or what an investor's total return may be in any future period.
The Fund's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial purchase order of $1,000 from which the
maximum sales load is deducted
T = average annual total return n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase at
the end of the period
Aggregate total return is calculated in a similar manner, except that
the results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period and gives effect to the maximum applicable sales charge.
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, 425 Walnut Street, Cincinnati, OH 45202 acts as Custodian of
the securities and other assets of the Fund. Provident Financial Processing
Corporation, Wilmington, DE 19809, acts as the Fund's transfer and shareholder
service agent. The Custodian and Transfer Agent do not participate in decisions
relating to the purchase and sale of securities by the Fund.
Perkins SAI B-18
<PAGE>
Tait, Weller & Baker, 121 South Broad Street, Philadelphia, PA 19107,
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.
The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Trust's Agreement and Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust. The
Agreement and Declaration of Trust also provides for indemnification and
reimbursement of expenses out of the Fund's assets for any shareholder held
personally liable for obligations of the Fund or Trust. The Agreement and
Declaration of Trust provides that the Trust shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the Fund or Trust and satisfy any judgment thereon. All such rights are limited
to the assets of the Fund. The Agreement and Declaration of Trust further
provides that the Trust may maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Trust, its shareholders, trustees, officers, employees and agents to cover
possible tort and other liabilities. Furthermore, the activities of the Trust as
an investment company would not likely give rise to liabilities in excess of the
Trust's total assets. Thus, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Fund itself is unable to meet its
obligations.
The Trust is registered with the SEC as a management investment
company. Such a registration does not involve supervision of the management or
policies of the Fund. The Prospectus of the Fund and this Statement of
Additional Information omit certain of the information contained in the
Registration Statement filed with the SEC. Copies of such information may be
obtained from the SEC upon payment of the prescribed fee.
FINANCIAL STATEMENTS
The annual report to shareholders for the Fund for its first fiscal
year will be a separate document supplied with this Statement of Additional
Information and the financial statements, accompanying notes and report of
independent accountants appearing therein will be incorporated by reference in
future Statements of Additional Information.
Perkins SAI B-19
<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 and Women's Equity Mutual Fund Series).
Financial Statements for the fiscal year ended April 30, 1997:
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended April 30, 1997 (Pzena Focused Value Fund and
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, 1996;
Incorporated by Reference from the annual reports to shareholders for
the fiscal year ended December 31, 1996 (Matrix Growth Fund Series,
Matrix Emerging Growth Fund Series)
(b) Exhibits:
(1) Agreement and Declaration of Trust--1
(2) By-Laws--1
(3) Voting Trust Agreement -- Not applicable
(4) Specimen Share Certificate-2
(5) Form of Investment Advisory Agreement
(6) Form of Distribution Agreement
(7) Benefit Plan -- Not applicable
(8) Form of Custodian and Transfer Agent
Agreements--to be filed by amendment
(9) Form of Administration Agreement
(10) Consent and Opinion of Counsel as to legality of
shares
(11) Consent of Accountants--not applicable
(12) All Financial Statements omitted from Item 23 --
Not applicable
(13) Letter of Understanding relating to initial
capital--2
(14) Model Retirement Plan Documents - Not applicable
(15)(a) Form of Plan pursuant to Rule 12b-1
(b) Form of Shareholder Service Plan
(16) Schedule for Computation of Performance
Quotations--3
1 Incorporated by reference from Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A, filed on December 29, 1995.
2 Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on April 13, 1987.
3 Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A filed on June 17, 1992.
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 February 4, 1998
Shares of Beneficial Interest, no par value:
Academy Value Fund 189
Avondale Total Return Fund 147
Boston Balalced Fund 212
Hodges Fund 1123
Osterweis Fund 127
Perkins Opportunity Fund 6,781
ProConscience Womens Equity Fund 506
Trent Equity Fund 123
Matrix Growth Fund 392
Matrix Emerging Growth Fund 71
Leonetti Balanced Fund 329
Lighthouse Contrarian Fund 404
U.S.Global Leaders Growth Fund 337
Harris, Bretall, Sullivan & Smith
Growth Equity Fund 77
Pzena Focused Value Fund 183
Titan Financial Services Fund 792
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
Guinness Flight Investment Funds
Fremont Mutual Funds, Inc.
Fleming Capital Mutual Fund Group, Inc.
The Purisima Funds
Jurika & Voyles Fund Group
Kayne Anderson Mutual Funds
Masters' Select Investment Trust
O'Shaughnessy Funds, Inc.
PIC Investment Trust
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group, Inc.
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 2025 E. Financial Way, Ste. 101, Glendora,
CA 91741.
Item 31. Management Services.
There are no management-related service contracts not discussed in
Parts A and B.
Item 32. Undertakings
(a) File a post-effective amendment for the Perkins Discovery
Fund series, using financial statements which may not be
certified, within four to six months of the effective date of
this Registration Statement as such requirement is interpreted
by the staff of the Commission; and
(b) Furnish each person to whom a Prospectus is delivered a copy
of Registrant's latest annual report to shareholders, upon
request and without charge.
(c) If requested to do so by the holders of at least 10% of the
Trust's outstanding shares, 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 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
February 4, 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 February 4, 1998
Steven J. Paggioli
/S/ Eric M. Banhazl Principal February 4, 1998
Eric M. Banhazl Financial
Officer
Dorothy A. Berry Trustee February 4, 1998
*Dorothy A. Berry
Wallace L. Cook Trustee February 4, 1998
*Wallace L. Cook
Carl A. Froebel Trustee February 4, 1998
*Carl A. Froebel
Rowley W. P. Redington Trustee February 4, 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
EXHIBIT 5
PROFESSIONALLY MANAGED PORTFOLIOS
INVESTMENT ADVISORY AGREEMENT
Perkins Discovery Fund
THIS INVESTMENT ADVISORY AGREEMENT is made as of the __th day of April,
1998, by and between PROFESSIONALLY MANAGED PORTFOLIOS, a Massachusetts business
trust (hereinafter called the "Trust"), on behalf of the following series of the
Trust, the Perkins Discovery Fund (the "Fund") and Perkins Capital Management,
Inc., a Minnesota Corporation (hereinafter called the "Advisor").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940, as amended
(the "Investment Company Act"); and
WHEREAS, the Fund is a series of the Trust having
separate assets and liabilities; and
WHEREAS, the Advisor is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, and is engaged in the
business of supplying investment advice as an independent contractor; and
WHEREAS, the Trust desires to retain the Advisor to render
advice and services to the Fund pursuant to the terms and provisions of this
Agreement, and the Advisor desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the
mutual promises hereinafter set forth, the parties to this Agreement, intending
to be legally bound hereby, mutually agree as follows:
1. Appointment of Advisor. The Trust hereby employs the
Advisor and the Advisor hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Fund for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Trust's Board of Trustees.
2. Duties of Advisor.
(a) General Duties. The Advisor shall act as
investment adviser to the Fund and shall supervise investments of the Fund on
behalf of the Fund in accordance with the investment objectives, policies and
restrictions of the Fund as set forth in the Fund' and Trust's governing
documents, including, without limitation, the Trust's Agreement and Declaration
of Trust and By-Laws; the Fund's prospectus, statement of additional
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information and undertakings; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Advisor. In providing such services, the Advisor shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Advisor
shall: ( I) furnish the Fund with advice and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such steps as may be necessary
to implement such advice and recommendations (i.e., placing the orders); (ii)
manage and oversee the investments of the Fund, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iii) vote proxies
for the Fund, file ownership reports under Section 13 of the Securities Exchange
Act of 1934 for the Fund, and take other actions on behalf of the Fund; (iv)
maintain the books and records required to be maintained by the Fund except to
the extent arrangements have been made for such books and records to be
maintained by the administrator or another agent of the Fund; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the Fund's
administrator or distributor or the officers of the Trust may reasonably
request; and (vi) render to the Trust's Board of Trustees such periodic and
special reports with respect to each Fund's investment activities as the Board
may reasonably request, including at least one in-person appearance annually
before the Board of Trustees.
(b) Brokerage. The Advisor shall be responsible
for decisions to buy and sell securities for the Fund, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Advisor shall not direct order to an affiliated person of the Advisor without
general prior authorization to use such affiliated broker or dealer for the
Trust's Board of Trustees. The Advisor's primary consideration in effecting a
securities transaction will be execution at the most favorable price. In
selecting a broker-dealer to execute each particular transaction, the Advisor
may take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the size of
and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the Fund on a
continuing basis. The price to the Fund in any transaction may be less favorable
than that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees of
the Trust may determine, the Advisor shall not be deemed to have
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<PAGE>
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Advisor an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Advisor determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Advisor's overall
responsibilities with respect to the Trust. The Advisor is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Advisor, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Advisor shall determine, and the Advisor
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The Advisor is also authorized to consider sales of shares as a factor in the
selection of brokers or dealers to execute portfolio transactions, subject to
the requirements of best execution, i.e., that such brokers or dealers are able
to execute the order promptly and at the best obtainable securities price.
On occasions when the Advisor deems the purchase or sale of a
security to be in the best interest of one or more of the Fund as well as of
other clients, the Advisor, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be so purchased or sold in order to
obtain the most favorable price or lower brokerage commissions and the most
efficient execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by the
Advisor in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Fund and to such other clients.
3. Representations of the Advisor.
(a) The Advisor shall use its best judgment and
efforts in rendering the advice and services to the Fund as
contemplated by this Agreement.
(b) The Advisor shall maintain all licenses and
registrations necessary to perform its duties hereunder in good
order.
( c) The Advisor shall conduct its operations at
all times in conformance with the Investment Advisers Act of 1940, the
Investment Company Act of 1940, and any other applicable state and/or
self-regulatory organization regulations.
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(d) The Advisor shall maintain errors and
omissions insurance in an amount at least equal to that disclosed to the Board
of Trustees in connection with their approval of this Agreement.
4. Independent Contractor. The Advisor shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Trust or the Fund in any way, or in any way be deemed an agent for
the Trust or for the Fund. It is expressly understood and agreed that the
services to be rendered by the Advisor to the Fund under the provisions of this
Agreement are not to be deemed exclusive, and the Advisor shall be free to
render similar or different services to others so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby.
5. Advisor's Personnel. The Advisor shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Advisor shall be
deemed to include persons employed or retained by the Advisor to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Advisor or the Trust's Board of Trustees may desire and reasonably request.
6. Expenses.
(a) With respect to the operation of the Fund,
the Advisor shall be responsible for ( I) providing the personnel, office space
and equipment reasonably necessary for the operation of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Advisor. If the Advisor has agreed to limit the operating
expenses of the Fund, the Advisor shall also be responsible on a monthly basis
for any operating expenses that exceed the agreed upon expense limit.
(b) Each Fund is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: fees and expenses
incurred in connection with the issuance, registration and transfer of its
shares; brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
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<PAGE>
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest charges on any borrowings; costs and expenses of pricing and
calculating its daily net asset value and of maintaining its books of account
required under the Investment Company Act; taxes, if any; a pro rata portion of
expenditures in connection with meetings of the Fund's shareholders and the
Trust's Board of Trustees that are properly payable by the Fund; salaries and
expenses of officers and fees and expenses of members of the Trust's Board of
Trustees or members of any advisory board or committee who are not members of,
affiliated with or interested persons of the Advisor; insurance premiums on
property or personnel of each Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of its operation plus any extraordinary and non-recurring
expenses, except as herein otherwise prescribed.
( c) The Advisor may voluntarily absorb certain
Fund expenses or waive the Advisor's own advisory fee.
(d) To the extent the Advisor incurs any costs by
assuming expenses which are an obligation of the Fund as set forth herein, the
Fund shall promptly reimburse the Advisor for such costs and expenses, except to
the extent the Advisor has otherwise agreed to bear such expenses. To the extent
the services for which a Fund is obligated to pay are performed by the Advisor,
the Advisor shall be entitled to recover from such Fund to the extent of the
Advisor's actual costs for providing such services. In determining the Advisor's
actual costs, the Advisor may take into account an allocated portion of the
salaries and overhead of personnel performing such services.
7. Investment Advisory and Management Fee.
(a) The Fund shall pay to the Advisor, and the
Advisor agrees to accept, as full compensation for all investment management and
advisory services furnished or provided to the Fund pursuant to this Agreement,
an annual management fee equal to 1.00% of the Fund's daily net assets, computed
on the value of the net assets of the Fund as of the close of business each day.
(b) The management fee shall be accrued daily by
each Fund and paid to the Advisor on the first business day of
the succeeding month.
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( c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Advisor
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Advisor under this
Agreement will be reduced to the extent of any receivable owed by the Advisor to
the Fund and as required under any expense limitation applicable to the Fund.
(e) The Advisor voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant to
this Agreement and may agree to make payments to limit the expenses which are
the responsibility of a Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Advisor hereunder or to continue future payments. Any such reduction will
be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and
any Fund expense absorbed by the Advisor voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Fund to the Advisor, if so requested
by the Advisor, in the first, second or third (or any combination thereof)
fiscal year next succeeding the fiscal year of the withholding, reduction or
absorption if the aggregate amount actually paid by the Fund toward the
operating expenses for such fiscal year (taking into account the reimbursement)
do not exceed the applicable limitation on Fund expenses. Such reimbursement may
be paid prior to the Fund's payment of current expenses if so requested by the
Advisor even if such practice may require the Advisor to waive, reduce or absorb
current Fund expenses.
(g) The Advisor may agree not to require payment
of any portion of the compensation or reimbursement of expenses otherwise due to
it pursuant to this Agreement. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Advisor hereunder.
8. No Shorting; No Borrowing. The Advisor agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Fund. This prohibition shall not prevent the purchase of such
shares by any of the
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officers or employees of the Advisor or any trust, pension, profit-sharing or
other benefit plan for such persons or affiliates thereof, at a price not less
than the net asset value thereof at the time of purchase, as allowed pursuant to
rules promulgated under the Investment Company Act. The Advisor agrees that
neither it nor any of its officers or employees shall borrow from the Fund or
pledge or use the Fund's assets in connection with any borrowing not directly
for the Fund's benefit. For this purpose, failure to pay any amount due and
payable to the Fund for a period of more than thirty (30) days shall constitute
a borrowing.
9. Conflicts with Trust's Governing Documents and Applicable
Laws. Nothing herein contained shall be deemed to require the Trust or the Fund
to take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust and Fund. In this connection, the Advisor
acknowledges that the Trustees retain ultimate plenary authority over the Fund
and may take any and all actions necessary and reasonable to protect the
interests of shareholders.
10. Reports and Access. The Advisor agrees to supply such
information to the Fund's administrator and to permit such compliance
inspections by the Fund's administrator as shall be reasonably necessary to
permit the administrator to satisfy its obligations and respond to the
reasonable requests of the Trustees.
11. Advisor's Liabilities and Indemnification.
(a) The Advisor shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the statements
in the Fund's offering materials (including the prospectus, the statement of
additional information, advertising and sales materials), except for information
supplied by the administrator or the Trust or another third party for inclusion
therein.
(b) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Advisor, the Advisor shall not be subject to
liability to the Trust or the Fund or to any shareholder of the Fund for any act
or omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Fund.
( c) Each party to this Agreement shall indemnify
and hold harmless the other party and the shareholders, directors, officers and
employees of the other party (any such person, an "Indemnified Party") against
any loss, liability, claim, damage or expense (including the reasonable cost of
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investigating and defending any alleged loss, liability, claim, damage or
expenses and reasonable counsel fees incurred in connection therewith) arising
out of the Indemnified Party's performance or non-performance of any duties
under this Agreement provided, however, that nothing herein shall be deemed to
protect any Indemnified Party against any liability to which such Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust, or officer of the
Advisor, from liability in violation of Sections 17(h) and (I) of the Investment
Company Act.
12. Non-Exclusivity; Trading for Advisor's Own Account. The
Trust's employment of the Advisor is not an exclusive arrangement. The Trust may
from time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Advisor may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from buying, selling or trading any securities for its or their own accounts or
the accounts of others for whom it or they may be acting, provided, however,
that the Advisor expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Advisor will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms to
the requirements of the Investment Company Act and the Investment Advisers Act
of 1940 and has been approved by the Trust' Board of Trustees.
13. Term.
(a) This Agreement shall become effective at the
time the Fund commences operations pursuant to an effective amendment to the
Trust's Registration Statement under the Securities Act of 1933 and shall remain
in effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (l) year so long as such continuation is approved for
the Fund at least annually by (I) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
(b) The Fund may use the name "Perkins" or any
name derived from or using the name "Perkins Capital Management"
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only for so long as this Agreement or any extension, renewal or amendment hereof
remains in effect. Within sixty (60) days from such time as this Agreement shall
no longer be in effect, the Fund shall cease to use such a name or any other
name connected with the Advisor.
14. Termination; No Assignment.
(a) This Agreement may be terminated by the Trust
on behalf of the Fund at any time without payment of any penalty, by the Board
of Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund, upon sixty (60) days' written notice to the Advisor, and
by the Advisor upon sixty (60) days' written notice to the Fund. In the event of
a termination, the Advisor shall cooperate in the orderly transfer of the Fund's
affairs and, at the request of the Board of Trustees, transfer any and all books
and records of the Fund maintained by the Advisor on behalf of the Fund.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in
the Investment Company Act.
15. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
16. Notice of Declaration of Trust. The Advisor agrees that
the Trust's obligations under this Agreement shall be limited to the Fund and to
its assets, and that the Advisor shall not seek satisfaction of any such
obligation from the shareholders of the Fund nor from any trustee, officer,
employee or agent of the Trust or the Fund.
17. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
18. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisors Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
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PROFESSIONALLY MANAGED PERKINS CAPITAL MANAGEMENT,INC.
PORTFOLIOS on behalf of
the Perkins Discovery Fund
By: By:
EXHIBIT 6
PROFESSIONALLY MANAGED PORTFOLIOS
DISTRIBUTION AGREEMENT
This Agreement, made as of the 9th day of February, 1998 between
PROFESSIONALLY MANAGED PORTFOLIOS, a Massachusetts business trust (the "Trust"),
and FIRST FUND DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
l940 (the "1940 Act"), and it is in the interest of the Trust to offer its
classes of shares entitled the PERKINS DISCOVERY FUND (the "Fund") for sale
continuously; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of l934 (the "1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and
WHEREAS, the Trust and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the shares of
beneficial interest of the Fund (the "Shares"), to commence after the
effectiveness of amendment to the registration statement filed pursuant to the
Securities Act of 1933 (the "1933 Act") and the 1940 Act relating to the Fund.
NOW, THEREFORE, the parties agree as follows:
l. Appointment of Distributor. The Trust hereby appoints the
Distributor as its exclusive agent to sell and to arrange for the sale of the
Shares, on the terms and for the period set forth in this Agreement, and the
Distributor hereby accepts such appointment and agrees to act hereunder directly
and/or through the Trust's transfer agent in the manner set forth in the
Prospectuses (as defined below). It is understood and agreed that the services
of the Distributor hereunder are not exclusive, and the Distributor may act as
principal underwriter for the shares of any other registered investment company.
2. Services and Duties of the Distributor
(a) The Distributor agrees to sell the Shares, as agent for the Trust,
from time to time during the term of this Agreement upon the terms described in
the Fund's Prospectus. As used in this Agreement, the term "Prospectus" shall
mean the prospectus and statement of additional information of the Fund included
as part of the Trust's Registration Statement, as such prospectus and statement
of additional information may be amended or supplemented from time to time, and
the term "Registration Statement" shall mean the Registration Statement most
recently filed from time to time by the Trust with the Securities and Exchange
Commission and effective under the 1933 Act and the 1940 Act, as such
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Registration Statement is amended by any amendments thereto at the time in
effect. The Distributor shall not be obligated to sell any certain number of
Shares.
(b) Upon commencement of the Fund's operations, the Distributor will
hold itself available to receive orders, satisfactory to the Distributor, for
the purchase of the Shares and will accept such orders and will transmit such
orders and Fund received by it in payment for such Shares as are so accepted to
the Trust's transfer agent or custodian, as appropriate, as promptly as
practicable. Purchase orders shall be deemed effective at the time and in the
manner set forth in the Prospectus. The Distributor shall not make any short
sales of Shares.
(c) The offering price of the Shares shall be the net asset value per
share of the Shares (as defined in the Declaration of Trust), plus the sales
charge, if any, (determined as set forth in the prospectus). The Trust shall
furnish the Distributor, with all possible promptness, an advice of each
computation of net asset value and offering price.
3. Duties of the Trust.
(a) Maintenance of Federal Registration. The Trust shall, at its
expense, take, from time to time, all necessary action and such steps, including
payment of the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 1933 Act. The Trust
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a registration statement or prospectus, or necessary in order that there
may be no omission to state a material fact in the registration statement or
prospectus which omission would make the statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Trust shall, at its
expense, use its best efforts to qualify and maintain the qualification of an
appropriate number of Shares for sale under the securities laws of such states
as the Distributor and the Trust may approve, and, if necessary or appropriate
in connection therewith, to qualify and maintain the qualification of the Trust
as a broker or dealer in such states; provided that the Trust shall not be
required to amend its Declaration of Trust or By-Laws to comply with the laws of
any state, to maintain an office in any state, to change the terms of the
offering of the Shares in any state, to change the terms of the offering of the
Shares in any state from the terms set forth in its Prospectuses, to qualify as
a foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering and sale of
the Shares. The Distributor shall furnish such information and other material
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<PAGE>
relating to its affairs and activities as may be required by the
Trust in connection with such qualifications.
(c) Copies of Reports and Prospectuses. The Trust shall, at its
expense, keep the Distributor fully informed with regard to its affairs and in
connection therewith shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares, including such
reasonable number of copies of its Prospectuses and annual and interim reports
as the Distributor may request and shall cooperate fully in the efforts of the
Distributor to sell and arrange for the sale of the Shares and in the
performance of the Distributor under this Agreement.
4. Conformity with Applicable Law and Rules. The Distributor agrees
that in selling Shares hereunder it shall conform in all respects with the laws
of the United States and of any state in which Shares may be offered, and with
applicable rules and regulations of NASD Regulation, Inc.
5. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Trust in the performance of the Distributor's duties hereunder.
The Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
6. Indemnification.
(a) Indemnification of Trust. The Distributor agrees to indemnify and
hold harmless the Trust and each of its present or former trustees, officers,
employees, representatives and each person, if any, who controls or previously
controlled the Trust within the meaning of Section l5 of the 1933 Act against
any and all losses, liabilities, damages, claims or expenses (including the
reasonable costs of investigating or defending any alleged loss, liability,
damage, claims or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Trust or any such person may become subject
under the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (I) may be
based upon any wrongful act by the Distributor or any of the Distributor's
directors, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
3
<PAGE>
covering Shares filed or made public by the Trust or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to the Trust by the Distributor. In no case (I) is the
Distributor's indemnity in favor of the Trust, or any person indemnified to be
deemed to protect the Trust or such indemnified person against any liability to
which the Trust or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of his obligations and duties under this
Agreement or (ii) is the Distributor to be liable under its indemnity agreement
contained in this Paragraph with respect to any claim made against the Trust or
any person indemnified unless the Trust or such person, as the case may be,
shall have notified the Distributor in writing of the claim within a reasonable
time after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Trust or upon such
person (or after the Trust or such person shall have received notice to such
service on any designated agent). However, failure to notify the Distributor of
any such claim shall not relieve the Distributor from any liability which the
Distributor may have to the Trust or any person against whom such action is
brought otherwise than on account of the Distributor's indemnity agreement
contained in this Paragraph.
The Distributor shall be entitled to participate, at its own expense,
in the defense, or, if the Distributor so elects, to assume the defense of any
suit brought to enforce any such claim, but, if the Distributor elects to assume
the defense, such defense shall be conducted by legal counsel chosen by the
Distributor and satisfactory to the Trust, to the persons indemnified defendant
or defendants, in the suit. In the event that the Distributor elects to assume
the defense of any such suit and retain such legal counsel, the Trust, the
persons indemnified defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If the Distributor
does not elect to assume the defense of any such suit, the Distributor will
reimburse the Trust and the persons indemnified defendant or defendants in such
suit for the reasonable fees and expenses of any legal counsel retained by them.
The Distributor agrees to promptly notify the Trust of the commencement of any
litigation of proceedings against it or any of its officers, employees or
representatives in connection with the issue or sale of any Shares.
(b) Indemnification of the Distributor. The Trust agrees to indemnify and hold
harmless the Distributor and each of its present or former directors, officers,
employees, representatives and each person, if any, who controls or previously
controlled the
4
<PAGE>
Distributor within the meaning of Section l5 of the 1933 Act against any and all
losses, liabilities, damages, claims or expenses (including the reasonable costs
of investigating or defending any alleged loss, liability, damage, claim or
expense and reasonable legal counsel fees incurred in connection therewith) to
which the Distributor or any such person may become subject under the 1933 Act,
under any other statute, at common law, or otherwise, arising out of the
acquisition of any Shares by any person which (I) may be based upon any wrongful
act by the Trust or any of the Trust's trustees, officers, employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, shareholder report or other information covering Shares filed or
made public by the Trust or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading unless
such statement or omission was made in reliance upon information furnished to
the Trust by the Distributor. In no case (I) is the Trust's indemnity in favor
of the Distributor, or any person indemnified to be deemed to protect the
Distributor or such indemnified person against any liability to which the
Distributor or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of his obligations and duties under this
Agreement, or (ii) is the Trust to be liable under its indemnity agreement
contained in this Paragraph with respect to any claim made against Distributor,
or person indemnified unless the Distributor, or such person, as the case may
be, shall have notified the Trust in writing of the claim within a reasonable
time after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Distributor or upon such
person (or after the Distributor or such person shall have received notice of
such service on any designated agent). However, failure to notify the Trust of
any such claim shall not relieve the Trust from any liability which the Trust
may have to the Distributor or any person against whom such action is brought
otherwise than on account of the Trust's indemnity agreement contained in this
Paragraph.
The Trust shall be entitled to participate, at its own expense, in the
defense, or, if the Trust so elects, to assume the defense of any suit brought
to enforce any such claim, but if the Trust elects to assume the defense, such
defense shall be conducted by legal counsel chosen by the Trust and satisfactory
to the Distributor, to the persons indemnified defendant or defendants, in the
suit. In the event that the Trust elects to assume the defense of any such suit
and retain such legal counsel, the Distributor, the persons indemnified
defendant or defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Trust does not elect to
5
<PAGE>
assume the defense of any such suit, the Trust will reimburse the Distributor
and the persons indemnified defendant or defendants in such suit for the
reasonable fees and expenses of any legal counsel retained by them. The Trust
agrees to promptly notify the Distributor of the commencement of any litigation
or proceedings against it or any of its trustees, officers, employees or
representatives in connection with the issue or sale of any Shares.
7. Authorized Representations. The Distributor is not authorized by the
Trust to give on behalf of the Trust any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a registration statement or prospectus filed
with the Securities and Exchange Commission ("SEC") under the 1933 Act and/or
the 1940 Act, covering Shares, as such registration statement and prospectus may
be amended or supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of the Trust for
the Distributor's use. This shall not be construed to prevent the Distributor
from preparing and distributing tombstone ads and sales literature or other
material as it may deem appropriate. No person other than the Distributor is
authorized to act as principal underwriter (as such term is defined in the 1940
Act) for the Fund.
8. Term of Agreement. The term of this Agreement shall begin on the
date first above written, and unless sooner terminated as hereinafter provided,
this Agreement shall remain in effect for a period of two years from the date
first above written. Thereafter, this Agreement shall continue in effect from
year to year, subject to the termination provisions and all other terms and
conditions thereof, so long as such continuation shall be specifically approved
at least annually by the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund and, concurrently with such approval
by the Board of Trustees or prior to such approval by the holders of the
outstanding voting securities of the Fund, as the case may be, by the vote, cast
in person at a meeting called for the purpose of voting on such approval, of a
majority of the trustees of the Trust who are not parties to this Agreement or
interested persons of any such party. The Distributor shall furnish to the
Trust, promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal or
amendment hereof.
9. Amendment or Assignment of Agreement. This Agreement may not be
amended or assigned except as permitted by the 1940 Act, and this Agreement
shall automatically and immediately terminate in the event of its assignment.
6
<PAGE>
10. Termination of Agreement. This Agreement may be terminated by
either party hereto, without the payment of any penalty, on not more than upon
60 days' nor less than 30 days' prior notice in writing to the other party;
provided, that in the case of termination by the Trust such action shall have
been authorized by resolution of a majority of the trustees of the Trust who are
not parties to this Agreement or interested persons of any such party, or by
vote of a majority of the outstanding voting securities of the Fund.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Trust of
responsibility for and control of the conduct of the affairs of the Trust.
12. Definition of Terms. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission
validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a
majority of the outstanding voting securities", "interested persons",
"assignment", and "affiliated person", as used in Paragraphs 8, 9 and 10 hereof,
shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In
addition, where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is relaxed by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
13. Compliance with Securities Laws. The Trust represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all the provisions of the 1940 Act and of the
rules and regulations thereunder. The Trust and the Distributor each agree to
comply with all of the applicable terms and provisions of the 1940 Act, the 1933
Act and, subject to the provisions of Section 4(d), all
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<PAGE>
applicable "Blue Sky" laws. The Distributor agrees to comply with all of the
applicable terms and provisions of the Securities Exchange Act of 1934.
14. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to the Distributor at 4455 E. Camelback Rd., Ste. 261-E, Phoenix, AZ
85018 or to the Fund on behalf of the Trust at 730 East Lake St., Wayzata, MN
55391-1769.
15. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
16. No Shareholder Liability. The Distributor understands that the
obligations of this Agreement are not binding upon any shareholder of the Trust
personally, but bind only the Trust's property; the Distributor represents that
it has notice of the provisions of the Declaration of Trust disclaiming
shareholder liability for acts or obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized representatives and their
respective corporate seals to be hereunto affixed, as of the day and year first
above written.
PROFESSIONALLY MANAGED PORTFOLIOS
By:
Attest:
FIRST FUND DISTRIBUTORS, INC.
By: ______________________
Attest:
EXHIBIT 9
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of the 8th day of March, 1996 by and between
PROFESSIONALLY MANAGED PORTFOLIOS (the "Trust")a Massachusetts Business Trust
and INVESTMENT COMPANY ADMINISTRATION CORPORATION, a Delaware Corporation (the
"Administrator").
WITNESSETH
WHEREAS, the Trust is an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), with shares of
beneficial interest organized into separate series ("series" or "portfolios");
and
WHEREAS, the Trust wishes to retain the Administrator to provide certain
administrative services in connection with the management of the operations of
the various portfolio series of the Trust and the Administrator is willing to
furnish such services:
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Administrator to provide
certain administrative services, hereinafter enumerated, in connection with the
management of the portfolios' operations for the period and on the terms set
forth in this Agreement. The Administrator agrees to comply with all relevant
provisions of the 1940 Act, applicable rules and regulations thereunder, and
other applicable law.
2. Services on a Continuing Basis. The Administrator will perform the
following services on a regular basis which would be daily weekly or as
otherwise appropriate:
(A) prepare and coordinate reports and other materials to be supplied to
the Board of Trustees of the Trust;
(B) 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 Trust and the portfolios.
(C) prepare all required filings necessary to maintain the Trust's and
portfolios' qualification and/or registration to sell shares in all states where
the Trust and portfolios currently do, or intend to do business;
<PAGE>
(D) coordinate the preparation, printing and mailing of all materials
(e.g., Annual Reports) required to be sent to shareholders;
(E) coordinate the preparation and payment of Trust and portfolio related
expenses;
(F) monitor and oversee the activities of the Trust's and the portfolios'
servicing agents (i.e., transfer agent, custodian, fund accountants, etc.);
(G) review and adjust as necessary the portfolios' daily expense
accruals; and
(H) perform such additional services as may be agreed upon by the Trust
and the Administrator.
3. Responsibility of the Administrator. The Administrator shall be under no
duty to take any action on behalf of the Trust or the portfolios except as set
forth herein or as may be agreed to by the Administrator in writing. In the
performance of its duties hereunder, the Administrator shall be obligated to
exercise reasonable care and diligence and to act in good faith and to use its
best efforts. Without limiting the generality of the foregoing or any other
provision of this Agreement, the Administrator shall not be liable for delays or
errors or loss of data occurring by reason of circumstances beyond the
Administrator's control.
4. Reliance Upon Instructions. The Trust agrees that the Administrator
shall be entitled to rely upon any instructions, oral or written, actually
received by the Administrator from the Board of Trustees of the Trust and shall
incur no liability to the Trust or the investment adviser to any portfolio in
acting upon such oral or written instructions, provided such instructions
reasonably appear to have been received from a person duly authorized by the
Board of Trustees of the Trust to give oral or written instructions on behalf of
the Trust or any portfolio.
5. Confidentiality; Maintenance of Records. The Administrator agrees on
behalf of itself and its employees to treat confidentially all records and other
information relative to the Trust and portfolios and all prior, present or
potential shareholders of any and all portfolios, except after prior
notification to, and approval of release of information in writing by, the
Trust, which approval shall not be unreasonably withheld where the Administrator
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust or by a portfolio. Any records required to be
maintained and preserved by the Trust or any of its portfolios which are
maintained or preserved by the Administrator under this Agreement are property
of the Trust and
<PAGE>
its portfolios and will be surrendered to the Trust or its
portfolios promptly upon request.
6. Equipment Failures. In the event of equipment failures or the occurrence
of events beyond the Administrator's control which render the performance of the
Administrator's functions under this agreement impossible, the Administrator
shall take reasonable steps to minimize service interruptions and is authorized
to engage the services of third parties to prevent or remedy such service
interruptions.
7. Compensation. As compensation for services rendered by the Administrator
during the term of this agreement, each portfolio of the Trust will pay to the
Administrator a monthly fee at the annual rate determined on Schedule A to this
agreement.
8. Indemnification. The Trust and portfolios agree to indemnify and hold
harmless the Administrator from all taxes, filing fees, charges, expenses,
assessments, claims and liabilities (including without limitation, liabilities
arising under the Securities Act of 1933, the Securities Exchange Act of 1934,
the 1940 Act, and any state and foreign securities laws, all as amended from
time to time) and expenses, including (without limitation) reasonable attorneys
fees and disbursements, arising directly or indirectly from any action or thing
which the Administrator takes or does or omits to take or do at the request of
or in reliance upon the advice of the Board of Trustees of the Trust, provided
that the Administrator will not be indemnified against any liability to a
Portfolio or to shareholders (or any expenses incident to such liability)
arising out of the Administrator's own willful misfeasance, bad faith,
negligence or reckless disregard of its duties and obligations under this
Agreement. The Administrator agrees to indemnify and hold harmless the Trust and
each of its Trustees from all claims and liabilities (including without
limitation, liabilities under the Securities Act of 1933, the Securities
Exchange Act of 1934, the 1940 Act, and any state and foreign securities laws,
all as amended from time to time) and expenses, including (without limitation)
reasonable attorneys fees and disbursements, arising directly or indirectly from
any action or thing which the Administrator takes or does or omits to take or do
which is in violation of this Agreement or not in accordance with instructions
properly given to the Administrator, or arising out of the Administrator's own
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties and obligations under this Agreement.
9. Duration and termination. This Agreement shall continue until
termination by the Trust on behalf of any portfolio (through the Board of
Trustees) or the Administrator on 60 days' written notice to the other. All
notices and other communications hereunder shall be in writing.
<PAGE>
10. Amendments. This Agreement or any part hereof may be changed or waived
only by instrument in writing signed by the party against which enforcement of
such change or waiver is sought.
11. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties thereto with respect to the services to be
performed hereunder, and supersedes all prior agreements and understandings,
relating to the subject matter hereof. The captions in this Agreement are
included for convenience of reference only and in no way define or limit any of
the provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in New York and governed by New
York law. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first written
above.
By:________________________________________
Title:____________________________________
PROFESSIONALLY MANAGED PORTFOLIOS
By:________________________________________
Title:_____________________________________
INVESTMENT COMPANY ADMINISTRATION CORPORATION
<PAGE>
Schedule A
FEE RATES APPLICABLE TO PORTFOLIOS OF PROFESSIONALLY MANAGED
PORTFOLIOS
I.
Academy Value Fund Leonetti Balanced Fund
Hodges Fund Matrix Growth Fund
Matrix Emerging Growth Fund Pro-Conscience Womens Equity
Lighthouse Growth Fund Mutual Fund
Osterweis Fund Titan Financial Services Fund
U.S. Global Leaders Growth Fund Pzena Focused Value Fund
PGP Korea Growth Fund PGP Asia Growth Fund
Administration fee paid monthly at the following annual rate:
Average net assets of 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
II. Avondale Total Return Fund
0.15% of average net assets or $30,000, whichever is greater
III. Perkins Opportunity Fund
Perkins Discovery Fund
Under $12 million $30,000
$12 million to $50 million 0.25% of average net assets
$50 million to $100 million 0.20% of average net assets
$100 million to $200 million 0.15% of average net assets
Over $200 million 0.10% of average net assets
<PAGE>
IV. Trent Equity Fund
0.25% of average net assets or $15,000, whichever is greater
V. Harris, Bretall, Sullivan & Smith Growth Equity Fund
Under $25 million 0.12% of average net assets
$25 million to $50 million 0.07% of average net assets
$50 million to $100 million 0.05% of average net assets
Over $100 million 0.05% of average net assets
Minimum fee of $30,000 annually
VI. Boston Managed Growth Fund
0.10% of average net assets or $30,000, whichever is greater
January, 1998
EXHIBIT 10
DRAFT
PAUL, HASTINGS, JANOFSKY & WALKER, LLP
345 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104
Telephone (415) 835-1600
Facsimile (415) 217-5333
April __, 1998
Professionally Managed Portfolios
479 West 22nd Street
New York, New York 10011
Re: Perkins Discovery Fund
Ladies and Gentlemen:
We have acted as counsel to Professionally Managed Portfolios,
a Massachusetts business trust (the "Trust"), in connection with Post-Effective
Amendments to the Trust's Registration Statement on Form N-1A filed with the
Securities and Exchange Commission (the "Post-Effective Amendments") and
relating to the issuance by the Trust of an indefinite number of no par value
shares of beneficial interest (the "Shares") of a series of the Trust, the
Perkins Discovery Fund (the "Fund").
In connection with this opinion, we have assumed the
authenticity of all records, documents and instruments submitted to us as
originals, the genuineness of all signatures, the legal capacity of all natural
persons, and the conformity to the originals of all records, documents, and
instruments submitted to us as copies. We have based our opinion on the
following:
(a) the Trust's Agreement and Declaration of Trust dated
February 17, 1987 (filed with the Massachusetts Secretary of State on February
24, 1987), as amended on May 20, 1988 (filed on September 16, 1988) and April
12, 1991 (filed on May 31, 1991) (as so amended, the "Declaration of Trust"), as
certified to us by an officer of the Trust as being true and complete and in
effect on the date hereof;
(b) the By-laws of the Trust certified to us by an officer of
the Trust as being true and complete and in effect on the date hereof ;
SF\opinion.wpd
<PAGE>
(c) resolutions of the Trustees of the Trust adopted at a
meeting on _____________ authorizing the establishment of the Fund and the
issuance of the Shares;
SF\opinion.wpd
<PAGE>
(d) the Post-Effective Amendment; and
(e) a certificate of an officer of the Trust as to certain
factual matters relevant to this opinion.
Our opinion below is limited to the federal law of the United
States of America and the business trust law of the State of Massachusetts. We
are not licensed to practice law in the State of Massachusetts, and we have
based our opinion below solely on our review of Chapter 182 of the General Laws
of the Commonwealth of Massachusetts and the case law interpreting such Chapter
as reported in Annotated Laws of Massachusetts (Law. Co-op. 1987 & Supp. 1996).
We have not undertaken a review of other Massachusetts law or of any
administrative or court decisions in connection with rendering this opinion. We
disclaim any opinion as to any law other than that of the United States of
America and the business trust law of the State of Massachusetts as described
above, and we disclaim any opinion as to any statute, rule, regulation,
ordinance, order or other promulgation of any regional or local governmental
authority.
Based on the foregoing and our examination of such questions
of law as we have deemed necessary and appropriate for the purpose of this
opinion, and assuming that (i) all of the Shares will be issued and sold for
cash at the per-share public offering price on the date of their issuance in
accordance with statements in the Trust's Prospectus included in the
Post-Effective Amendments and in accordance with the Declaration of Trust, (ii)
all consideration for the Shares will be actually received by the Trust, and
(iii) all applicable securities laws will be complied with, it is our opinion
that, when issued and sold by the Trust, the Shares will be legally issued,
fully paid and nonassessable.
This opinion is rendered to you in connection with the
Post-Effective Amendment and is solely for your benefit. This opinion may not be
relied upon by you for any other purpose or relied upon by any other person,
firm, corporation or other entity for any purpose, without our prior written
consent. We disclaim any obligation to advise you of any developments in areas
covered by this opinion that occur after the date of this opinion.
SF\opinion.wpd
<PAGE>
We hereby consent to (i) the reference to our firm as Legal
Counsel in the Prospectus included in the Post-Effective Amendment, and (ii) the
filing of this opinion as an exhibit to a Post-Effective Amendment.
Very truly yours,
/s/ PAUL, HASTINGS, JANOFSKY & WALKER, LLP
EXHIBIT 15(a)
EXHIBIT 15
PROFESSIONALLY MANAGED PORTFOLIOS
Perkins Discovery Fund
SHARE MARKETING PLAN
(Rule 12b-1 Plan)
(Fixed Compensation Plan)
This Share Marketing Plan (the "Plan") is adopted in
accordance with Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "Act"), by Professionally Managed Portfolios., a
Massachusetts Business Trust (the "Trust") with respect to certain series of its
shares as listed in Exhibit A (each such series, a "Fund"). The Plan has been
approved by a majority of the Trust's Board of Trustees, including a majority of
the Trustees who are not interested persons of the Trust and who have no direct
or indirect financial interest in the operation of the Plan (the "independent
Trustees"), cast in person at a meeting called for the purpose of voting on the
Plan.
In reviewing the Plan, the Board of Trustees considered the
proposed range and nature of payments and terms of the Investment Advisory
Agreement between the Trust on behalf of the Fund and Perkins Capital
Management, Inc., (the "Advisor") and the nature and amount of other payments,
fees and commissions that may be paid to the Advisor, its affiliates and other
agents of the Trust. The Board of Trustees, including the independent Trustees,
concluded that the proposed overall compensation of the Advisor and its
affiliates was fair and not excessive.
In its considerations, the Board of Trustees also recognized
that uncertainty may exist from time to time with respect to whether payments to
be made by the Fund to the Advisor, as the initial "distribution coordinator,"
or other firms under agreements with respect to the Fund may be deemed to
constitute impermissible distribution expenses. As a general rule, an investment
company may not finance any activity primarily intended to result in the sale of
its shares, except pursuant to the Rule. Accordingly, the Board of Trustees
determined that the Plan also should provide that payments by the Trust and
expenditures made by others out of monies received from the Trust which are
later deemed to be for the financing of any activity primarily intended to
result in the sale of Fund shares shall be deemed to have been made pursuant to
the Plan.
The approval of the Board of Trustees included a determination
that in the exercise of the Trustees' reasonable business judgment and in light
of their fiduciary duties, there is a reasonable likelihood that the Plan will
benefit the Trust, the Fund to which the Plan applies and its shareholders.
SAN FRANCISCO\9812B1.
<PAGE>
The provisions of the Plan are:
1. Annual Fee. The Trust will pay to Advisor, as the Fund's
distribution coordinator, an annual fee for the Advisor's services in connection
with the promotion and distribution of the Fund's shares and related shareholder
servicing. The annual fee paid to Advisor under the Plan will be calculated
daily and paid monthly by the Fund on the first day of each month based on the
average daily net assets of the Fund, as follows: an annual rate of up to 0.25%.
This fee is not tied exclusively to actual distribution and service expenses,
and the fee may exceed the expenses actually incurred.
2. Services Covered by the Plan. The fee paid under Section 1
of the Plan is intended to compensate the Advisor for performing the following
kinds of services: services primarily intended to result in the sale of the
Fund'ss shares ("distribution services"), including, but not limited to: (a)
making payments, including incentive compensation, to agents for and consultants
to Advisor, any affiliate of the Advisor or the Trust, including pension
administration firms that provide distribution and shareholder related services
and broker-dealers that engage in the distribution of the Fund'ss shares; (b)
making payments to persons who provide support services in connection with the
distribution of a Fund's shares and servicing of the Fund's shareholders,
including, but not limited to, personnel of Advisor, office space and equipment,
telephone facilities, answering routine inquiries regarding a Fund, processing
shareholder transactions and providing any other shareholder services not
otherwise provided by the Trust's transfer agency or other servicing
arrangements; (c) making payments pursuant to the form of Distribution Agreement
attached hereto as an exhibit; (d) formulating and implementing marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (e)
printing and distributing prospectuses, statements of additional information and
reports of the Fund to prospective shareholders of the Fund; (f) preparing,
printing and distributing sales literature pertaining to the Fund; and (g)
obtaining whatever information, analysis and reports with respect to marketing
and promotional activities that the Trust may, from time to time, deem
advisable. Such services and activities shall be deemed to be covered by this
Plan whether performed directly by the Advisor or by a third party.
3. Written Reports. Advisor shall furnish to the Board of
Trustees of the Trust, for its review, on a quarterly basis, a written report of
the monies paid to it under the Plan with respect to the Fund, and shall furnish
the Board of Trustees of the Trust with such other information as the Board of
Trustees may reasonably request in connection with the payments made under the
Plan in order to enable the Board of Trustees to make an informed determination
of whether the Plan should be continued as to the Fund.
4. Termination. The Plan may be terminated as to the Fund at
any time, without penalty, by vote of a majority of the outstanding voting
securities of the Fund, and any Distribution Agreement under the Plan may be
likewise terminated on not more than sixty (60) days' written notice. Once
terminated, no further payments shall be made under the Plan notwithstanding the
existence of any unreimbursed current or carried forward Distribution Expenses.
SAN FRANCISCO\9812B1.
<PAGE>
5. Amendments. The Plan and any Distribution Agreement may not
be amended to increase materially the amount to be spent for distribution and
servicing of Fund shares pursuant to Section 1 hereof without approval by a
majority of the outstanding voting securities of the Fund. All material
amendments to the Plan and any Distribution Agreement entered into with third
parties shall be approved by the independent Trustees cast in person at a
meeting called for the purpose of voting on any such amendment. The Advisor may
assign its responsibilities and liabilities under the Plan to another party who
agrees to act as "distribution coordinator" for the Trust with the consent of a
majority of the independent Trustees.
6. Selection of Independent Trustees. So long as the Plan is
in effect, the selection and nomination of the Trust's independent Trustees
shall be committed to the discretion of such independent Board of Trustees.
7. Effective Date of Plan. The Plan shall take effect at such
time as it has received requisite Trustee approval and, unless sooner
terminated, shall continue in effect for a period of more than one year from the
date of its execution only so long as such continuance is specifically approved
at least annually by the Board of Trustees of the Trust, including the
independent Trustees, cast in person at a meeting called for the purpose of
voting on such continuance.
8. Preservation of Materials. The Trust will preserve copies
of the Plan, any agreements relating to the Plan and any report made pursuant to
Section 5 above, for a period of not less than six years (the first two years in
an easily accessible place) from the date of the Plan, agreement or report.
9. Meanings of Certain Terms. As used in the Plan, the terms
"interested person" and "majority of the outstanding voting securities" will be
deemed to have the same meaning that those terms have under the Act and the
rules and regulations under the Act, subject to any exemption that may be
granted to the Trust under the Act by the Securities and Exchange Commission.
SAN FRANCISCO\9812B1.
<PAGE>
This Plan and the terms and provisions thereof are hereby
accepted and agreed to by the Trust and Advisor, as distribution coordinator, as
evidenced by their execution hereof, as of this ____ day of ___________ 1998.
PROFESSIONALLY MANAGED PORTFOLIOS
By:
Title: ___________________________
PERKINS CAPITAL MANAGEMENT, INC.
as Distribution Coordinator
By:
Title: ___________________________
SAN FRANCISCO\9812B1.
<PAGE>
PROFESSIONALLY MANAGED PORTFOLIOS.
EXHIBIT A TO SHARE MARKETING PLAN
The following Series of Professionally Managed Portfolios have
adopted the Share Marketing Plan:
Fund Date Adopted
Perkins Discovery Time April , 1998
SAN FRANCISCO\9812B1.
<PAGE>
PERKINS DISCOVERY FUND
Share Marketing Agreement
EXHIBIT ONLY
- -----------------------------------
- -----------------------------------
- -----------------------------------
- -----------------------------------
Ladies and Gentlemen:
This Share Marketing Agreement has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Company
Act"), by Professionally Managed Portfolios., a Massachusetts business Trust
(the "Trust"), on behalf of various series of the Trust (each series, a "Fund"),
as governed by the terms of a Share Marketing Plan (Rule 12b-1 Plan) (the
"Plan").
The Plan has been approved by a majority of the Trustees who
are not interested persons of the Trust or the Fund and who have no direct or
indirect financial interest in the operation of the Plan (the "independent
Trustees"), cast in person at a meeting called for the purpose of voting on such
Plan. Such approval included a determination that in the exercise of the
reasonable business judgment of the Board of Trustees and in light of the
Trustees' fiduciary duties, there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders.
1. To the extent you provide eligible shareholder services of
the type identified in the Plan to the Fund identified in the attached Schedule
(the "Schedule"), we shall pay you a monthly fee based on the average net asset
value of Fund shares during any month which are attributable to customers of
your firm, at the rate set forth on the Schedule.
2. In no event may the aggregate annual fee paid to you
pursuant to the Schedule exceed ____ percent of the value of the net assets of
the Fund held in your customers' accounts which are eligible for payment
pursuant to this Agreement (determined in the same manner as the
SAN FRANCISCO\9812B1.
<PAGE>
Fund uses to compute its net assets as set forth in its then effective
Prospectus), without approval by a majority of the outstanding shares of the
Fund.
3. You shall furnish us and the Trust with such information as
shall reasonably be requested by the Trust's Board of Trustees with respect to
the services performed by you and the fees paid to you pursuant to the Schedule.
4. We shall furnish to the Board of Trustees of the Trust, for
its review, on a quarterly basis, a written report of the amounts expended under
the Plan by us with respect to the Fund and the purposes for which such
expenditures were made.
5. You agree to make shares of the Fund available only (a) to
your customers or entities that you service at the net asset value per share
next determined after receipt of the relevant purchase instruction or (b) to
each such Fund itself at the redemption price for shares, as described in the
Fund'ss then-effective Prospectus.
6. No person is authorized to make any representations
concerning the Fund or shares of the Fund except those contained in the Fund'ss
then-effective Prospectus or Statement of Additional Information and any such
information as may be released by the Fund as information supplemental to such
Prospectus or Statement of Additional Information.
7. Additional copies of each such Prospectus or Statement of
Additional Information and any printed information issued as supplemental to
each such Prospectus or Statement of Additional Information will be supplied by
the Fund to you in reasonable quantities upon request.
8. In no transaction shall you have any authority whatever to
act as agent of the Fund and nothing in this Agreement shall constitute you or
the Fund the agent of the other. You are not authorized to act as an underwriter
of shares of the Fund or as a dealer in shares of the Fund.
9. All communications to the Fund shall be sent to: Mr. Daniel
Perkins, Perkins Capital Management, Inc., 730 East Lake St., Wayzata, MN
55391-1769 . Any notice to you shall be duly given if mailed or telegraphed to
you at your address as indicated in this Agreement.
10. This Agreement may be terminated by us or by you, by the
vote of a majority of the Trustees of the Trust who are independent Trustees, or
by a vote of a majority of the outstanding shares of the Fund, on sixty (60)
days' written notice, all without payment of any penalty. It shall also be
terminated automatically by any act that terminates the Plan.
11. The provisions of the Plan between the Trust and us,
insofar as they relate to you, are incorporated herein by reference.
This Agreement shall take effect on the date indicated below,
and the terms and
SAN FRANCISCO\9812B1.
<PAGE>
provisions thereof are hereby accepted and agreed to by us as evidenced by our
execution hereof.
PERKINS CAPITAL MANAGEMENT, INC.
Distribution Coordinator
By: EXHIBIT ONLY
Authorized Officer
Dated: ________________________
Agreed and Accepted:
- ----------------------------
(Name)
By: ________________________
(Authorized Officer)
SAN FRANCISCO\9812B1.
<PAGE>
PERKINS DISCOVERY FUND
SCHEDULE TO SHARE MARKETING AGREEMENT
BETWEEN _____________________.
AND
PERKINS CAPITAL MANAGEMENT, INC.
as distribution coordinator
Pursuant to the provisions of the Share Marketing Agreement
between the above parties with respect to Perkins Capital Management, Inc. as
Distribution Coordinator, shall pay a monthly fee to the above-named party based
on the average net asset value of shares of the Fund during the previous
calendar month the sales of which are attributable to the above-named party, as
follows:
Fund Fee
EXHIBIT 15(b)
SERVICES AGREEMENT
THIS SERVICES AGREEMENT is made as of the _____ day of April,
199 by and between PERKINS DISCOVERY FUND (the "Fund"), a series of
Professionally Managed Portfolios, a Massachusetts business trust (the "Trust"),
and PERKINS CAPITAL MANAGEMENT, INC. ("Perkins").
WITNESSETH
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund wishes to retain Perkins to provide services
to shareholders of the Fund, and to clients of certain broker-dealers who have
entered, or will enter, into dealer agreements respecting the sale of shares of
the Fund ("Service Providers"), who are shareholders of the Fund, and Perkins is
willing to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints Perkins to provide to
the Fund the shareholder services specified in Section 2 of this Agreement to
all shareholders of the Fund and to clients of the Service Providers that are
shareholders of the Fund. Perkins accepts such appointment and agrees to furnish
through its own organization, or through the Service Providers, as the case may
be, such shareholder services in return for compensation as provided in Section
6 of this Agreement. Perkins agrees that the shareholder services required to be
furnished hereunder shall be furnished in compliance with all relevant
provisions of state, federal and foreign law and with all applicable rules and
regulations of all relevant regulatory agencies, including, without limitation,
the 1940 Act, the Securities Exchange Act of 1934, as amended, the applicable
rules and regulations promulgated thereunder, and the Rules of Fair Practice of
the National Association of Securities Dealers, Inc.
2. Services and Responsibilities on a Continuing Basis.
Perkins will provide for the following shareholder services on a regular basis
which shall be daily, weekly or as otherwise appropriate, unless otherwise
specified by the Fund:
(a) responding to shareholder inquiries;
(b) processing purchases and redemptions of the Fund's
shares, including reinvestment of dividends;
E:\DAH\19306\0007\SERV2.DOC
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<PAGE>
(c) assisting shareholders in changing dividend
options, account designations and addresses;
(d) transmitting proxy statements, annual reports,
prospectuses and other correspondence from the
Fund to shareholders (including, upon request,
copies, but not originals, of regular
correspondence, confirmations or regular
statements of account) where such shareholders
hold shares of the Fund registered in the name of
Perkins, a Service Provider, or their nominees;
and
(e) providing such other information and assistance to
shareholders as may be reasonably requested by such
shareholders.
Perkins and the Service Providers are under no obligation to, and shall not,
provide pursuant to this Agreement any services with respect to the sale or
distribution of shares of the Fund.
3. Standard of Care. Perkins and the Service Providers shall
be under no duty to take any action on behalf of the Fund except as specifically
set forth herein or as may be specifically agreed to by Perkins or the Service
Providers with the Fund in writing. In the performance of the duties hereunder,
Perkins and the Service Providers shall be obligated to exercise due care and
diligence and to act in good faith and to use their best efforts. Without
limiting the generality of the foregoing or of any other provision of this
Agreement, neither Perkins nor any Service Provider shall be liable for delays
or errors or loss of data occurring by reason of circumstances beyond Perkins'
or the Service Provider's control.
4. Confidentiality. Perkins agrees, on behalf of itself and
its employees, to treat confidentially all records and other information
relative to the Fund and the Trust, and all prior, present or potential
shareholders of the Fund, except after prior notification to, and approval of
release of information in writing by, the Fund, which approval shall not be
unreasonably withheld, and may not be withheld where Perkins or a Service
Provider may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund.
5. Independent Contractor. Perkins shall, for all purposes
herein, be deemed to be an independent contractor, and Perkins and the Service
Providers shall, unless otherwise expressly provided and authorized to do so,
have no authority to act for or represent the Trust or the Fund in any way, or
in any way be deemed an agent for the Trust or for the Fund. It is expressly
understood and agreed that the services to be rendered by Perkins under the
provisions of this Agreement are not to be deemed exclusive, and Perkins shall
be free to render similar or
E:\DAH\19306\0007\SERV2.DOC
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<PAGE>
different services to others so long as its ability to render the services
provided for in this Agreement shall not materially be impaired thereby.
6. Compensation. As compensation for the services rendered by,
and responsibilities assumed by, Perkins during the term of this Agreement, the
Fund will pay to Perkins a service fee in an amount up to 0.25% (25 basis
points) per annum of the average daily net asset value of the Fund's shares.
Perkins will collect such fee applicable to clients of the Service Providers
that furnish the shareholder services specified in Section 2 above for the
separate account of each such Service Provider. The service fee shall be accrued
daily by the Fund and paid to Perkins on a monthly basis.
7. Indemnification.
(a) The Fund agrees to indemnify and hold harmless Perkins
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the Securities Act of
1933, the Securities Exchange Act of 1934, the 1940 Act, and any state and
foreign securities laws, all as amended from time to time) and expenses,
including (without limitation) reasonable attorneys' fees and disbursements,
arising directly or indirectly from any action or thing which Perkins takes or
does or omits to take or do (i) at the request or on the direction of or in
reliance on the advice of the Fund or (ii) upon oral or written instructions
from an officer of the Fund, provided that Perkins shall not be indemnified
against any liability to the Fund or to the Fund's shareholders (or any expenses
incident to such liability) arising out of Perkins' or any Service Provider's
own willful misfeasance, bad faith, negligence or reckless disregard of its
duties and obligations under this Agreement. Perkins agrees to indemnify and
hold harmless the Fund, the Trust and its officers and Trustees from all claims
and liabilities (including, without limitation, liabilities arising under the
Securities Act of 1933, the Securities Exchange Act of 1934, the 1940 Act, and
any state and foreign securities laws, all as amended from time to time) and
expenses, including (without limitation) reasonable attorneys' fees and
disbursements, arising directly or indirectly from any action or thing which
Perkins or any Service Provider takes or does or omits to take or do which is in
violation of this Agreement or not in accordance with instructions properly
given by an officer of the Fund or arising out of Perkins' or the Service
Provider's own willful misfeasance, bad faith, negligence or reckless disregard
of the duties and obligations under this Agreement.
(b) Perkins shall provide such security as is necessary to
prevent unauthorized use of any on-line computer facilities. Perkins agrees to
release, indemnify and hold harmless the Trust and the Fund from any and all
direct or indirect liabilities or losses resulting from requests, directions,
actions or inactions of or by Perkins or any Service
E:\DAH\19306\0007\SERV2.DOC
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<PAGE>
Provider, its officers, employees or agents regarding the redemption, transfer
or registration of the Fund's shares for accounts of shareholders or the Service
Provider, its clients and other shareholders. Principals of Perkins will be
available to consult from time to time with officers of the Trust and the
Trustees concerning performance of the services contemplated by this Agreement.
8. Fund Information. No person is authorized to make any
representations concerning the Fund, or shares of the Fund or shareholder
services except in accordance with the terms of this Agreement. Neither Perkins
or any Service Provider, nor any of their respective agents will use or
distribute, or authorize the use or distribution of, any statements other than
those contained in the Fund's current Prospectus or Statement of Additional
Information or in such supplemental literature as may be authorized by the Fund.
9. Duration and Termination. This Agreement shall continue
until termination by the Fund or Perkins on 60 days' written notice to the
other. All notices and other communications hereunder shall be in writing.
10. Amendments. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such charge or waiver is sought.
11. Miscellaneous.
(a) This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings, relating to the subject matter hereof.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota as applicable to contracts
between Minnesota residents entered into and to be performed entirely within
Minnesota.
(d) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
(e) Perkins acknowledges that it has received notice of and
accepts the limitations of the Fund's liability set forth in the Trust's
Agreement and Declaration of Trust. Perkins agrees that the Fund's obligations
under this Agreement shall be limited to the Fund and to its assets, and that
neither Perkins nor any Service Provider shall seek satisfaction of any such
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<PAGE>
obligation from the shareholders of the Fund or from any trustee, officer,
employee or agent of the Trust or the Fund.
(f) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors.
(g) This Agreement may not be assigned without the mutual
consent of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on the day and year
first above written.
PERKINS DISCOVERY FUND
By:
Title:
PERKINS CAPITAL MANAGEMENT, INC.
By:
Title:
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