September 7, 1998
Securities and Exchange Commission
Attn: Filing Desk, Stop 1-4
450 Fifth Street, N.W.
Washington, DC 20549
Re: Professionally Managed Portfolios
File No. 811-5037
CIK No. 811030
Dear Sir or Madam:
On behalf of the above Registrant and pursuant to Rule 30b-2 under the
Investment Company Act of 1940, I enclose for filing via EDGAR, a copy of the
Annual Report to shareholders of the Matrix Growth Fund and Matrix Emerging
Growth Fund series of the Registrant for the twelve month period ended June 30,
1998.
If you have any questions, please contact me at (602) 952-1100.
Sincerely yours,
Robert H. Wadsworth
<PAGE>
MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
Semi-Annual Report
June 30, 1998
<PAGE>
August 15, 1998
Dear Matrix Shareholder,
Riding on the strength of a very positive first quarter the stock market enjoyed
a solid advance for the first half of 1998. Gains of 17.63% by the S&P 500 and
5.3% by the Russell 2000 indexes indicate that large capitalization stocks
continue to provide market leadership. The Matrix Growth and Emerging Growth
Funds gained 15.24% and 9.92%, respectively for the period.
The footing under the continued advance of the stock market continues to be
almost perfect economic conditions. Producer prices remain stable and in some
cases are in mild decline, consumer prices have been rising at a very low and
decelerating rate, while consumers are enjoying modest increases in real income.
These conditions rate only "almost" perfect, on account of accumulating economic
and financial problems outside of the US.
In the second quarter the major stock market indexes produced minimal gains,
while the average mutual fund experienced a 2% decline as investors began to
factor in the effects of continued problems in Asia and Eastern Europe. Despite
the fact that small growth companies are less exposed to international
difficulties, have a stronger earnings outlook, and are at historically
attractive valuations, this group continues to under-perform large
capitalization issues. And though a large portion of earnings of the companies
in the S&P 500 are earned outside the US, these stocks retain their price
leadership because of their good liquidity and perceived higher quality. The
effect of these conditions is to increase the valuation differential between
large and small capitalization issues which has existed for some time.
Valuations alone do not cause shifts in capital flows on investor preferences.
Until a change in fundamentals occurs investor preferences will not likely
change, and hence an improvement in foreign conditions is the likely
prerequisite to improved performance for small capitalization stocks.
Overall, we believe a modest slowdown in earnings growth for the S&P 500 stocks
will slow the pace of market gains in the second half of 1998. It is also
unlikely that merger and acquisition activity will sustain its recent pace,
reducing another stimulus which drove prices in the first half.
<PAGE>
Looking ahead, the outlook for US financial assets remains positive. Recent and
potential devaluations of foreign currencies improve the purchasing power of US
corporations, while a stable political environment improves the appetite of
foreign investors for US stocks. Continued stability of inflation, wage, and
interest rates should allow the US economy to sustain moderate growth.
About the Funds
Matrix Emerging Growth Fund focuses on companies which the managers believe can
produce superior three-to-five year revenue and profit growth. These attributes
are typically found in companies concentrating their efforts on a single
product, service, or technology. Matrix Growth Fund focuses on companies which
have attained leadership in developed markets or diversified lines of business.
Price and shareholder information for both funds is available via internet at
http://www.firstfund.com.
Sincerely,
SENA o WELLER o ROHS o WILLIAMS o INC
<PAGE>
MATRIX GROWTH FUND
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at June 30, 1998 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 96.9% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Conglomerates: 7.0%
<S> <C> <C>
11,000 General Electric Company................................................ $ 1,001,000
-----------
Consumer Cyclical: 10.0%
17,088 Mattel, Inc............................................................. 723,036
10,000 McDonald's Corp......................................................... 690,000
-------
1,413,036
---------
Consumer Non-Cyclical: 19.3%
12,000 Albertson's, Inc........................................................ 621,750
9,000 Colgate-Palmolive Company............................................... 792,000
8,000 Health Care and Retirement Corp.*....................................... 315,500
11,000 Schering-Plough Corp.................................................... 1,007,875
---------
2,737,125
---------
Energy: 11.8%
4,000 British Petroleum Company, ADR.......................................... 353,000
13,000 Enron Corp.............................................................. 702,813
8,000 Mobil Corp.............................................................. 613,000
-------
1,668,813
---------
Financial: 14.3%
8,000 American Express Company................................................ 912,000
30,000 Norwest Corp............................................................ 1,121,250
---------
2,033,250
---------
Industrials: 7.0%
10,000 AlliedSignal, Inc....................................................... 443,750
16,125 Thermo Electron Corp.*.................................................. 551,273
-------
995,023
-------
Technology: 15.2%
11,200 Automatic Data Processing, Inc.......................................... 816,200
10,125 Computer Associates International, Inc.................................. 562,570
3,000 Motorola, Inc........................................................... 157,688
16,000 Stryker Corp.*.......................................................... 614,000
-------
2,150,458
---------
<PAGE>
MATRIX GROWTH FUND
SCHEDULE OF INVESTMENTS at June 30, 1998 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities: 12.3%
13,000 Ameritech Corp.......................................................... $ 583,375
24,000 WorldCom, Inc.*......................................................... 1,162,500
---------
1,745,875
---------
Total Common Stocks (cost $3,842,656)................................... 13,744,580
----------
Principal Amount REPURCHASE AGREEMENT: 3.2%
- ------------------------------------------------------------------------------------------------------------------------------------
$456,000 Star Bank Repurchase Agreement, 5.20%, dated 6/30/1998,
due 7/1/1998, collateralized by $460,000 GNMA, 5.20%,
due 5/20/2024 (proceeds $456,066) (cost $456,000)....................... 456,000
-------
Total Investment in Securities (cost $4,298,656+): 100.1%............... 14,200,580
Liabilities in excess of Other Assets: (0.01)%.......................... (9,492)
------
Total Net Assets: 100.00% .............................................. $14,191,088
===========
<FN>
* Non-income producing security.
+ At June 30, 1998, the cost of investments for Federal tax purposes was the
same as the basis for financial reporting. Unrealized appreciation and
depreciation of securities were as follows:
Gross unrealized appreciation........................................... $ 9,927,851
Gross unrealized depreciation........................................... (25,927)
-------
Net unrealized appreciation...................................... $ 9,901,924
===========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
MATRIX GROWTH FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at June 30, 1998 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (cost $4,298,656) ................................. $14,200,580
Cash................................................................................... 248
Receivables:
Fund shares sold................................................................. 1,948
Dividends and interest........................................................... 11,827
Deferred organization costs............................................................ 7,505
Prepaid expenses....................................................................... 639
---
Total assets .............................................................. 14,222,747
----------
LIABILITIES
Payables:
Advisory fees.................................................................... 8,126
Administration fee............................................................... 2,589
Distribution fees................................................................ 8,677
Accrued expenses ...................................................................... 12,267
------
Total liabilities.......................................................... 31,659
------
NET ASSETS $14,191,088
===========
Net asset value, offering and redemption price per share
($14,191,088/660,701 shares outstanding;
unlimited number of shares authorized without par value) ........................ $21.48
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $ 4,030,844
Undistributed net realized gain on investments......................................... 258,320
Net unrealized appreciation on investments............................................. 9,901,924
---------
Net assets ...................................................................... $14,191,088
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
MATRIX GROWTH FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Six Months Ended June 30, 1998 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Dividends........................................................................ $ 69,536
Interest......................................................................... 15,168
------
Total income .............................................................. 84,704
------
Expenses
Advisory fees ................................................................... 60,286
Distribution fees................................................................ 16,746
Administration fee............................................................... 14,876
Fund accounting fees............................................................. 8,223
Transfer agent fees.............................................................. 8,115
Audit fee........................................................................ 6,952
Custody fees..................................................................... 3,856
Registration fees................................................................ 3,333
Amortization of deferred organization costs...................................... 2,480
Trustee fees..................................................................... 2,310
Reports to shareholders.......................................................... 1,860
Miscellaneous.................................................................... 1,842
Legal fees....................................................................... 1,769
Insurance........................................................................ 344
---
Total expenses............................................................. 132,992
Less: expenses waived and reimbursed....................................... (15,770)
-------
Net expenses............................................................... 117,222
-------
Net investment loss ............................................... (32,518)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net change in unrealized appreciation on investments .................................. 1,932,605
---------
Net unrealized gain on investments .............................................. 1,932,605
---------
Net increase in net assets resulting from operations ...................... $ 1,900,087
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
MATRIX GROWTH FUND
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
June 30, 1998* December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment loss..................................................... $ (32,518) $ (39,120)
Net realized gain from security transactions ........................... -0- 1,292,345
Net change in unrealized appreciation on investments.................... 1,932,605 2,104,427
--------- ---------
Net increase in net assets resulting from operations ................ 1,900,087 3,357,652
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain on investments..................................... -0- (1,034,432)
- ----------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets derived from net change in
outstanding shares (a) .............................................. (277,149) (1,829,826)
-------- ----------
Total increase (decrease) in net assets ............................. 1,622,938 493,394
NET ASSETS
Beginning of period........................................................ 12,568,150 12,074,756
---------- ----------
End of period ............................................................. $14,191,088 $12,568,150
=========== ===========
<FN>
(a) A summary of capital shares transactions is as follows:
Six Months Ended Year Ended
June 30, 1998* December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ...................................... 13,819 $ 276,427 35,928 $ 673,028
Shares issued in reinvestment of distributions.... -0- -0- 49,749 907,913
Shares redeemed .................................. (27,330) (553,576) (211,493) (3,410,767)
------- -------- -------- ----------
Net decrease ..................................... (13,511) $ (277,149) (125,816) $(1,829,826)
======= ========== ======== ===========
*Unaudited.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
MATRIX GROWTH FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, 1998# 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $18.64 $15.09 $14.96 $13.45 $14.51 $14.05
Income from investment operations:
Net investment (loss) income................ (0.05) (0.06) (0.01) 0.10 0.05 0.06
Net realized and unrealized gain (loss)
on investments .......................... 2.89 5.24 2.69 3.06 (0.75) 1.25
---- ---- ---- ---- ----- ----
Total from investment operations.................. 2.84 5.18 2.68 3.16 (0.70) 1.31
---- ---- ---- ---- ----- ----
Less distributions:
From net investment income.................. 0.00 0.00 0.00 (0.10) (0.05) (0.06)
From net capital gains ..................... 0.00 (1.63) (2.55) (1.55) (0.31) (0.79)
---- ----- ----- ----- ----- -----
Total distributions............................... 0.00 (1.63) (2.55) (1.65) (0.36) (0.85)
---- ----- ----- ----- ----- -----
Net asset value, end of period.................... $21.48 $18.64 $15.09 $14.96 $13.45 $14.51
====== ====== ====== ====== ====== ======
Total return ..................................... 15.24% 34.57% 17.93% 23.52% (4.82)% 9.32%
Ratios/supplemental data:
Net assets, end of period (millions).............. $ 14.2 $ 12.6 $ 12.1 $ 12.3 $ 15.5 $ 19.1
Ratio of expenses to average net assets:
Before expense reimbursement ............... 1.98%+ 1.98% 1.99% 1.76% 1.84% 1.67%
After expense reimbursement................. 1.75%+ 1.75% 1.75% 1.75% 1.84% 1.67%
Ratio of net investment (loss) income to average net assets:
Before expense reimbursement ............... (0.72)%+ (0.57)% (0.33)% 0.47% 0.29% 0.40%
After expense reimbursement ................ (0.49)%+ (0.34)% (0.08)% 0.48% 0.29% 0.40%
Portfolio turnover rate .......................... 0% 0% 0% 27% 25% 30%
<FN>
#Unaudited.
+Annualized.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
MATRIX EMERGING GROWTH FUND
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at June 30, 1998 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 94.7% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals: 1.9%
<S> <C> <C>
3,000 Cambrex Corp............................................................ $ 78,750
1,700 OM Group, Inc.*......................................................... 70,125
- ------
148,875
-------
Computer Data Security: 0.2%
500 VeriSign, Inc.*......................................................... 18,688
------
Computer Networking: 2.6%
2,250 Cisco Systems, Inc.*.................................................... 207,141
-------
Computer Services: 0.1%
500 AnswerThink Consulting Group, Inc.*..................................... 10,750
------
Consulting Services: 1.9%
3,500 Hagler Bailly, Inc.*.................................................... 90,562
2,500 Professional Detailing, Inc.*........................................... 62,188
------
152,750
-------
Distribution/Wholesale: 1.4%
7,500 Brightpoint, Inc.*...................................................... 108,750
-------
Energy: 5.0%
7,000 Comstock Resources, Inc.*............................................... 52,062
4,500 Cross Timbers Oil Company............................................... 85,781
3,500 Marine Drilling Companies, Inc.*........................................ 56,000
3,250 Ocean Energy, Inc.*..................................................... 63,578
6,000 R&B Falcon Corp.*....................................................... 135,750
-------
393,171
-------
Financial Services: 10.5%
3,500 Amerin Corp.*........................................................... 102,156
5,000 FIRSTPLUS Financial Group, Inc.*........................................ 180,000
3,500 Freedom Securities Corp.*............................................... 63,437
2,756 Litchfield Financial Corp.*............................................. 57,876
2,666 Mutual Risk Management, Ltd.*........................................... 97,142
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS at June 30, 1998 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Services, continued
2,100 PartnerRe, Ltd.......................................................... $ 107,100
5,000 PMT Services, Inc.*..................................................... 127,188
5,000 UniCapital Corp.*....................................................... 95,625
------
830,524
-------
Health Care Services: 4.2%
3,500 Healthcare Recoveries, Inc.*............................................ 69,125
4,000 HEALTHSOUTH Corp.*...................................................... 106,750
4,500 Res-Care, Inc.*......................................................... 82,969
1,200 United Healthcare Corp.................................................. 76,200
------
335,044
-------
Hotels and Motels: 1.0%
6,500 Execustay Corp.*........................................................ 76,375
------
Industrial and Commercial Services: 8.4%
2,500 AccuStaff, Inc.*........................................................ 78,125
5,000 ACSYS, Inc.*............................................................ 68,750
6,000 CulturalAccessWorldwide, Inc.*.......................................... 58,500
2,500 RCM Technologies, Inc.*................................................. 50,781
2,000 Snyder Communications, Inc.*............................................ 88,000
5,000 StaffMark, Inc.*........................................................ 183,125
2,400 Sylvan Learning Systems, Inc.*.......................................... 78,600
2,500 Wackenhut Corrections Corp.*............................................ 58,438
------
664,319
-------
Internet Content: 1.0%
1,750 At Home Corp.*.......................................................... 82,797
------
Manufactured Housing: 2.8%
3,750 American Homestar Corp.*................................................ 89,766
3,125 Palm Harbor Homes, Inc.*................................................ 133,203
-------
222,969
-------
Media Broadcasting: 1.9%
2,300 Young Broadcasting Corp., Class A*...................................... 149,500
-------
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS at June 30, 1998 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Medical - Advance Devices: 2.7%
3,000 Guidant Corp............................................................ $ 213,937
---------
Medical - Hospitals: 1.3%
3,375 Tenet Healthcare Corp.*................................................. 105,469
-------
Medical and Dental Practices Management: 4.6%
5,000 American Oncology Resources, Inc.*...................................... 61,094
5,000 AmeriPath, Inc.*........................................................ 59,063
6,000 Castle Dental Centers, Inc.*............................................ 58,500
3,500 Medirisk, Inc.*......................................................... 70,875
1,000 OrthAlliance, Inc., Class A*............................................ 14,500
6,000 PhyCor, Inc.*........................................................... 99,375
------
363,407
-------
Medical Labs and Testing: 2.4%
3,000 Covance, Inc.*.......................................................... 67,500
4,200 Kendle International, Inc.*............................................. 127,050
-------
194,550
-------
Medical and Optical Supplies: 2.2%
3,400 Ocular Sciences, Inc.*.................................................. 110,500
4,250 PSS World Medical, Inc.*................................................ 62,156
------
172,656
-------
Pharmaceuticals: 6.8%
2,300 Elan Corp., PLC - ADR*.................................................. 147,919
2,000 Express Scripts, Inc., Class A*......................................... 161,250
2,600 Transkaryotic Therapies, Inc.*.......................................... 66,950
3,478 Watson Pharmaceuticals, Inc.*........................................... 162,379
-------
538,498
-------
Restaurants: 0.4%
4,000 Star Buffet, Inc.*...................................................... 33,000
------
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS at June 30, 1998 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Retailers - Specialty: 3.4%
2,500 99 Cents Only Stores.................................................... $ 103,750
3,000 General Nutrition Companies, Inc........................................ 93,375
4,562 OfficeMax, Inc.......................................................... 75,273
------
272,398
-------
Retirement/Aged Care: 0.9%
2,000 Sunrise Assisted Living, Inc.*.......................................... 68,750
------
Semiconductors and Related: 1.7%
500 Broadcom Corp., Class A*................................................ 36,812
1,500 Uniphase Corp.*......................................................... 94,172
------
130,984
-------
Software and Processing: 13.6%
2,250 Advent Software, Inc.*.................................................. 94,500
2,000 Arbor Software Corp.*................................................... 62,875
4,500 Cadence Design Systems, Inc.*........................................... 140,625
1,600 Cambridge Technology Partners, Inc.*.................................... 87,400
2,400 HNC Software, Inc.*..................................................... 97,950
2,350 Hyperion Software Corp.*................................................ 66,975
6,100 Infinium Software, Inc.*................................................ 84,637
2,000 J.D. Edwards & Company*................................................. 85,875
3,925 Oracle Corp.*........................................................... 96,408
3,000 Parametric Technology Company*.......................................... 81,375
7,500 Phoenix International Ltd., Inc.*....................................... 121,875
2,500 Structural Dynamics Research Corp.*..................................... 57,812
------
1,078,307
---------
Telecommunications Equipment: 6.3%
3,000 Advanced Fibre Communications, Inc.*.................................... 120,188
2,275 Comverse Technology, Inc.*.............................................. 118,016
3,625 Excel Switching Corp.*.................................................. 90,172
4,000 MRV Communications, Inc.*............................................... 83,000
1,250 Tellabs, Inc.*.......................................................... 89,531
------
500,907
-------
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS at June 30, 1998 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Telephone Systems: 3.9%
1,300 Pacific Gateway Exchange, Inc.*......................................... $ 52,081
4,987 Star Telecommunications, Inc.*.......................................... 111,584
3,000 WorldCom, Inc.*......................................................... 145,313
-------
308,978
-------
Travel Services: 1.6%
2,800 Galileo International, Inc.*............................................ 126,175
-------
Total Common Stocks (cost $4,609,060)................................... 7,509,669
---------
Principal Amount REPURCHASE AGREEMENT: 5.4%
- ------------------------------------------------------------------------------------------------------------------------------------
$428,000 Star Bank Repurchase Agreement, 5.20%, dated 6/30/1998,
due 7/1/1998, collateralized by $430,000 GNMA, 5.20%,
due 5/20/2024 (proceeds $428,062) (cost $428,000)....................... 428,000
-------
Total Investment in Securities (cost $5,037,060+): 100.1%............... 7,937,669
Liabilities in excess of Other Assets: (0.1)%........................... (9,012)
------
Total Net Assets: 100.00% .............................................. $ 7,928,657
===========
<FN>
* Non-income producing security.
+ At June 30, 1998, the cost of investments for Federal income tax purposes was
the same as the basis for financial reporting. Unrealized appreciation and
depreciation of securities were as follows:
Gross unrealized appreciation........................................... $ 3,190,996
Gross unrealized depreciation........................................... (290,387)
--------
Net unrealized appreciation...................................... $ 2,900,609
===========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
MATRIX EMERGING GROWTH FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at June 30, 1998 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (cost $5,037,060) ................................. $ 7,937,669
Cash .................................................................................. 731
Receivables:
Fund shares sold................................................................. 957
Dividends and interest........................................................... 242
Deferred organization costs............................................................ 10,804
Prepaid expenses....................................................................... 350
---
Total assets .............................................................. 7,950,753
---------
LIABILITIES
Payables:
Advisory fees.................................................................... 2,004
Administration fee............................................................... 2,471
Distribution fees................................................................ 5,166
Accrued expenses ...................................................................... 12,455
------
Total liabilities.......................................................... 22,096
------
NET ASSETS $ 7,928,657
===========
Net asset value, offering and redemption price per share
($7,928,657/441,632 shares outstanding; unlimited number
of shares authorized without par value) ......................................... $17.95
======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $ 4,951,954
Undistributed net realized gain on investments......................................... 76,094
Net unrealized appreciation on investments............................................. 2,900,609
---------
Net assets ...................................................................... $ 7,928,657
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
MATRIX EMERGING GROWTH FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Six Months Ended June 30, 1998 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Interest ........................................................................ $ 12,283
Dividends........................................................................ 3,918
-----
Total income .............................................................. 16,201
------
Expenses
Advisory fees ................................................................... 35,160
Administration fee............................................................... 14,882
Distribution fees................................................................ 9,767
Fund accounting fees............................................................. 7,671
Transfer agent fees.............................................................. 6,999
Audit fee........................................................................ 6,552
Custody fees..................................................................... 4,051
Registration fees................................................................ 3,967
Amortization of deferred organization costs...................................... 2,976
Trustee fees..................................................................... 1,937
Miscellaneous.................................................................... 1,824
Legal fees....................................................................... 1,538
Reports to shareholders.......................................................... 1,247
Insurance........................................................................ 650
---
Total expenses............................................................. 99,221
Less: expenses waived and reimbursed....................................... (20,961)
-------
Net expenses............................................................... 78,260
------
Net investment loss.................................................. (62,059)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions .......................................... 59,995
Net change in unrealized appreciation on investments .................................. 681,166
-------
Net realized and unrealized gain on investments ................................. 741,161
-------
Net increase in net assets resulting from operations ...................... $ 679,102
=========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
MATRIX EMERGING GROWTH FUND
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
June 30, 1998* December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment loss..................................................... $ (62,059) $ (95,357)
Net realized gain from security transactions ........................... 59,995 245,027
Net change in unrealized appreciation on investments.................... 681,166 804,993
------- -------
Net increase in net assets resulting from operations ................ 679,102 954,663
------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain from security transactions......................... -0- (108,341)
- --------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding
shares (a) .......................................................... 284,845 456,780
------- -------
Total increase in net assets ........................................ 963,947 1,303,102
NET ASSETS
Beginning of period..................................................... 6,964,710 5,661,608
--------- ---------
End of period ............................................................. $ 7,928,657 $ 6,964,710
=========== ===========
<FN>
(a) A summary of capital shares transactions is as follows:
Six Months Ended Year Ended
June 30, 1998* December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ...................................... 34,470 $ 632,572 49,723 $ 772,800
Shares issued in reinvestment of distributions... -0- -0- 3,456 53,845
Shares redeemed .................................. (19,290) (347,727) (24,207) (369,865)
------- -------- ------- --------
Net increase ..................................... 15,180 $ 284,845 28,972 $ 456,780
====== ========= ====== =========
*Unaudited.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
MATRIX EMERGING GROWTH FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
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Six Months Year Ended December 31, April 4, 1995*
Ended through
June 30, 1998# 1997 1996 December 31,1995
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<S> <C> <C> <C> <C>
Net asset value, beginning of period................... $16.33 $14.24 $12.98 $10.00
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Income from investment operations:
Net investment loss.............................. (0.14) (0.21) (0.18) (0.03)
Net realized and unrealized gain on
investments.................................... 1.76 2.56 1.54 3.01
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Total from investment operations....................... 1.62 2.35 1.36 2.98
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Less distributions:
From net capital gains........................... 0.00 (0.26) (0.10) 0.00
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Net asset value, end of period......................... $17.95 $16.33 $14.24 $12.98
====== ====== ====== ======
Total return........................................... 9.92% 16.58% 10.47% 42.09%
Ratios/supplemental data:
Net assets, end of period (millions)................... $ 7.9 $ 7.0 $ 5.7 $ 4.3
Ratio of expenses to average net assets:
Before expense reimbursement..................... 2.54%+ 2.71% 3.13% 3.43%+
After expense reimbursement...................... 2.00%+ 2.00% 2.00% 2.00%+
Ratio of net investment loss to average net assets:
Before expense reimbursement..................... (2.12)%+ (2.19)% (2.53)% (1.87)%+
After expense reimbursement...................... (1.59)%+ (1.48)% (1.40)% (0.43)%+
Portfolio turnover rate................................ 13.79% 41.11% 29.54% 9.95%
<FN>
*Commencement of operations.
#Unaudited.
+Annualized.
</FN>
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See accompanying Notes to Financial Statements.
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MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS at June 30, 1998 (Unaudited)
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NOTE 1 - ORGANIZATION
The Matrix Growth Fund and the Matrix Emerging Growth Fund (the "Funds")
are each a series of shares of beneficial interest of Professionally Managed
Portfolios (the "Trust"), which is registered under the Investment Company Act
of 1940 (the "1940 Act") as a diversified, open-end management investment
company. The Funds began operations on May 14, 1986 and April 4, 1995,
respectively. Prior to January 1, 1995, Matrix Growth Fund was a series of
shares in the Gateway Trust, a family of four no-load, diversified mutual funds
registered under the 1940 Act. The investment objectives of the Funds are
long-term growth of capital and long-term capital appreciation, respectively.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. These policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities traded on a national
securities exchange or included in the NASDAQ National Market System
are valued at the last reported sales price at the close of regular
trading on the last business day of the period; securities traded on
an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the last reported bid
price. Securities for which quotations are not readily available are
valued at their respective fair values as determined in good faith by
the Board of Trustees. Short-term investments are stated at cost,
which when combined with accrued interest, approximates market value.
B. Federal Income Taxes. The Funds intend to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of their taxable income
to their shareholders. Therefore, no federal income tax provision is
required.
C. Security Transactions, Investment Income and Distributions. As is
common in the industry, security transactions are accounted for on
the trade date. The cost of securities owned on realized
transactions is relieved on a first-in, first-out basis. Dividend
income and distributions to shareholders are recorded on the
ex-dividend date.
D. Deferred Organization Costs. The costs incurred by the Funds with
respect to adopting their current management and trust agreements,
and initial organization for Emerging Growth, have been deferred and
are being amortized using the straight-line method over a period of
five years from January 1, 1995 for Growth and April 4, 1995
(commencement of operations) for Emerging Growth.
E. Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
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MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS at June 30, 1998 (Unaudited), Continued
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NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the six months ended June 30, 1998, Sena Weller Rohs Williams, Inc.
(the "Adviser") provided the Funds with investment management services under an
Investment Advisory Agreement. The Adviser furnished all investment advice,
office space and certain administrative services, and most of the personnel
needed by the Funds. As compensation for its services, the Adviser was entitled
to a monthly fee at the annual rate of 0.90% based upon the average daily net
assets of the Funds up to $50 million per Fund, 0.70% of the next $50 million
and 0.60% of all such assets over $100 million.
The Adviser has agreed to reduce fees payable to it by the Funds and
reimburse other expenses to the extent necessary to limit the Funds' aggregate
annual operating expenses, excluding brokerage commissions and other portfolio
transaction expenses, interest, taxes, capital expenditures and extraordinary
expenses, to 1.75% and 2.00%, respectively, of average daily net assets through
June 30, 1998. As a result, the Adviser will reimburse the Funds for expenses in
excess of the limit in the amounts of $15,770 for Matrix Growth and $20,961 for
Matrix Emerging Growth, respectively.
Investment Company Administration Corporation (the "Administrator") acts
as the Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Funds; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Funds' custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Funds'
expense accruals. For its services, the Administrator receives a monthly fee
from each Fund at the following annual rate:
Under $15 million $30,000
$15 to $50 million 0.20% of average daily net assets
$50 to $100 millio 0.15% of average daily net assets
$100 to $150 million 0.10% of average daily net assets
Over $150 million 0.05% of average daily net assets
For the six months ended June 30, 1998, Matrix Growth Fund and Matrix
Emerging Growth Fund incurred $14,876 and $14,882 in Administration fees,
respectively.
Reynolds DeWitt Securities Company (the "Distributor") acts as the Funds'
principal underwriter in a continuous public offering of the Funds' shares. The
Distributor is an affiliate of the Adviser.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator.
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MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS at June 30, 1998 (Unaudited), Continued
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NOTE 4 - DISTRIBUTION COSTS
The Funds have adopted a Distribution Plan (the "Plan") in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that the Funds will pay a fee
to the Adviser as Distribution Coordinator at an annual rate of up to 0.25% of
the average daily net assets of the Funds. The fee is paid to the Adviser as
reimbursement for, or in anticipation of, expenses incurred for
distribution-related activity. For the six months ended June 30, 1998, the
Matrix Growth Fund and the Matrix Emerging Growth Fund, paid fees of $16,746 and
$9,767, respectively, to the Adviser.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, other
than short-term investments, were $0 and $0, respectively, for the Matrix Growth
Fund and $1,192,152 and $1,087,524, respectively, for the Matrix Emerging Growth
Fund.
<PAGE>
Adviser
Sena Weller Rohs Williams, Inc.
300 Main Street
Cincinnati, Ohio 45202
(513) 621-2875
(800) 877-3344
o
Distributor
Reynolds DeWitt Securities Company
a division of Sena Weller Rohs Williams, Inc.
300 Main Street
Cincinnati, Ohio 45202
(513) 621-2875
(800) 877-3344
o
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
o
Transfer Agent
American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
o
Auditors
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
o
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, California 94104
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate
so that shares, when redeemed, may be worth more or less than their original
cost. Statements and other information herein are dated and are subject to
change.
