MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
Dear Matrix Shareholder,
Following in the footsteps of four consecutive years of rising stock prices, the
S&P 500 posted a very respectable 12.3% gain in the first half of 1999, while
the Russell 2000 advanced an equally respectable 9.2%. The Matrix Growth and
Emerging Growth Funds returned 8.1% and -5.0%, respectively, in the first half.
Conditions fueling rising stock prices have remained firmly in place but with an
unexpected twist. While the key to gains in 1998 were slowing growth with benign
inflation, 1999 has benefited from accelerating growth accompanied by virtual
price stability. The prospect that we might attain the longest peacetime
expansion in history has now come to pass, as the cumulative gains in
production, capital investment, and real income have now eclipsed every period
on the books. About the only looming shortage is the rapidly dwindling supply of
unemployed workers to fill the rising supply of new jobs, while increasing
stability in the Pacific Rim has rapidly dissipated fears economic contraction
there would precipitate global deflation.
Even more remarkable has been the ability of the largest corporations to enhance
their growth so long into an economic expansion. Though certain economic sectors
like steel and utilities continue to languish, large diversified companies like
GE and industry leaders like Intel continue to rack up superb earnings gains,
while up-and-coming companies like Worldcom and BMC Software have sustained
almost spectacular growth. And new arrivals on the corporate scene like AOL and
At Home have quickly grown substantial enough to break into the ranks of blue
chip portfolios like Matrix Growth Fund. By almost every measure corporate
managers today are performing extrememly well.
Stocks of small companies have not kept pace with the highflying large
capitalization stocks, and Matrix Emerging Growth performance was inpeded in the
first half by several specific factors. The portfolio experienced an uncommonly
high number of first quarter earnings disappointments which resulted in sharp
price declines ranging from 30 to 50% for the respective stocks, and the second
quarter presented a sudden rotation into value oriented issues which was to the
disadvantage of the Fund's growth style. Relative performance of the benchmark
Russell 2000 index was inflated on the upside by several surging internet issues
which were removed from the index at the end of the period. Stocks which failed
to meet earnings expectations have been eliminated and new portfolio additions
have been selected with strong growth attributes, a number of which have already
produced excellent gains.
<PAGE>
Viewing the outlook from here, investors are presented with some pretty
conspicuous contrasts. Second quarter earnings announcements suggest corporate
earnings are again accelerating, and economists are raising estimates of future
economic growth from below 3% to 4% and higher. It is widely known, however,
that Fed Chairman Alan Greenspan's pet stock evaluation model indicates stock
prices are 30-40% overvalued, and newly installed Treasury Secretary Larry
Summers recently stated, "The only thing investors have to fear is the lack of
fear itself". Though Mr. Greenspan has not repeated his remarks about
"irrational exuberance" it doesn't appear policy makers are of a mind to do the
stock market any favors in the near future, and after the trade and currency
disruptions of 1998 it is hard to imagine the global economy can remain worry
free indefinitely.
The managers of the Matrix Growth and Emerging Growth Funds will spare no effort
to attain the best possible performance for our shareholders in this rewarding
but extraordinary environment. We look forward to maintaing Matrix Funds as
top-notch holding for our current and future shareholders.
Sincerely,
SENA-WELLER-ROHS-WILLIAMS-INC
<PAGE>
MATRIX GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 99.2% Value
- --------------------------------------------------------------------------------
AIRLINES: 1.7%
10,000 Comair Holdings, Inc.................................... $ 208,125
-----------
CONGLOMERATES: 9.9%
11,000 General Electric Company................................ 1,243,000
-----------
CONSUMER CYCLICAL: 3.3%
10,000 McDonald's Corp......................................... 413,125
-----------
CONSUMER NON-CYCLICAL: 15.4%
12,000 Albertson's Inc......................................... 618,750
7,000 Colgate-Palmolive Company............................... 691,250
12,000 Schering-Plough Corp.................................... 636,000
-----------
1,946,000
-----------
COMPUTER AND SOFTWARE: 2.1%
5,000 BMC Software, Inc....................................... 270,000
-----------
ENERGY: 14.5%
2,000 BP Amoco PLC ADR........................................ 217,000
10,000 Enron Corp.............................................. 817,500
8,000 Mobil Corp.............................................. 792,000
-----------
1,826,500
-----------
FINANCIAL: 16.1%
8,000 American Express Company................................ 1,041,000
23,000 Wells Fargo & Company................................... 983,250
-----------
2,024,250
-----------
INDUSTRIALS: 5.0%
10,000 Allied Signal Inc....................................... 630,000
-----------
INTERNET CONTENT: 6.9%
3,000 America Online, Inc..................................... 331,500
10,000 Excite@Home Corp.*...................................... 539,375
-----------
870,875
-----------
3
<PAGE>
MATRIX GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1999 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
MEDICAL - DRUGS: 2.8%
5,000 Warner-Lambert Company.................................. $ 346,875
-----------
SEMICONDUCTOR: 2.8%
6,000 Intel Corp.............................................. 357,000
-----------
TECHNOLOGY: 5.7%
16,400 Automatic Data Processing............................... 721,600
-----------
UTILITIES: 13.0%
13,000 Ameritech Corp.......................................... 955,500
8,000 MCI WorldCom Inc........................................ 690,000
-----------
1,645,500
-----------
Total Common Stocks (cost $4,322,048)................... 12,502,850
-----------
Total Investments in Securities (cost $4,322,048): 99.2% 12,502,850
Other Assets Less Liabilities: 0.8%..................... 103,025
-----------
Total Net Assets: 100.0%................................ $12,605,875
===========
* Non-income producing security.
See accompanying Notes to Financial Statements.
4
<PAGE>
MATRIX GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $4,322,048).......... $12,502,850
Cash........................................................... 117,081
Receivables:
Fund shares sold............................................. 9,671
Dividends.................................................... 3,050
Deferred organization costs ................................... 2,505
Other assets................................................... 1,276
-----------
Total assets................................................. 12,636,433
-----------
LIABILITIES
Payables:
Advisory fees................................................ 2,846
Administration fee........................................... 2,753
Distribution fees............................................ 7,912
Accrued expenses............................................... 17,047
-----------
Total liabilities............................................ 30,558
-----------
NET ASSETS....................................................... $12,605,875
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($12,605,875/578,670 shares outstanding; unlimited
number of shares authorized without par value)............... $ 21.78
===========
COMPONENTS OF NET ASSETS
Paid-in capital................................................ $ 2,283,733
Undistributed net investment loss.............................. (34,169)
Undistributed net realized gain on investments................. 2,175,509
Net unrealized appreciation on investments..................... 8,180,802
-----------
Net assets................................................... $12,605,875
===========
See accompanying Notes to Financial Statements.
5
<PAGE>
MATRIX GROWTH FUND
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends.................................................... $ 66,648
Interest..................................................... 11,993
-----------
Total income........................................... 78,641
-----------
Expenses
Advisory fees................................................ 58,017
Distribution fees............................................ 16,116
Administration fee........................................... 14,876
Fund accounting fees......................................... 9,782
Transfer agent fees.......................................... 7,220
Audit fee.................................................... 7,039
Custody fees................................................. 4,661
Legal fees................................................... 2,559
Amortization of deferred organization costs.................. 2,480
Trustee fees................................................. 2,275
Miscellaneous................................................ 1,759
Reports to shareholders...................................... 1,759
Registration fees............................................ 1,035
Insurance.................................................... 344
-----------
Total expenses............................................. 129,922
Less: expenses waived and reimbursed....................... (17,112)
-----------
Net expenses............................................... 112,810
-----------
NET INVESTMENT LOSS........................................ (34,169)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from security transactions................... 2,069,346
Net unrealized depreciation on investments..................... (1,021,545)
-----------
Net realized and unrealized gain on investments.............. 1,047,801
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $ 1,013,632
===========
See accompanying Notes to Financial Statements.
6
<PAGE>
MATRIX GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
June 30, 1999# December 31, 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss............................................ $ (34,169) $ (49,739)
Net realized gain from security transactions................... 2,069,346 1,156,986
Net unrealized appreciation (depreciation) on investments...... (1,021,545) 1,233,028
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... 1,013,632 2,340,275
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From realized gain on investments.............................. -- (1,309,143)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets resulting from net change in
outstanding shares (a)....................................... (1,953,227) (53,812)
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................... (939,595) 977,320
NET ASSETS
Beginning of period.............................................. 13,545,470 12,568,150
----------- -----------
END OF PERIOD.................................................... $12,605,875 $13,545,470
=========== ===========
</TABLE>
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999# December 31, 1998
-------------------------- --------------------------
Shares Value Shares Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold..................................... 10,174 $ 205,673 18,675 $ 375,201
Shares issued in reinvestment of distribution... -- -- 64,225 1,203,586
Shares redeemed................................. (103,905) (2,158,900) (84,711) (1,632,599)
----------- ----------- ----------- -----------
Net decrease.................................... (93,731) $(1,953,227) (1,811) $ (53,812)
=========== =========== =========== ===========
</TABLE>
# Unaudited.
See accompanying Notes to Financial Statements.
7
<PAGE>
MATRIX GROWTH FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Six Months Year Ended December 31,
Ended --------------------------------------------------
June 30, 1999* 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $20.14 $18.64 $15.09 $14.96 $13.45 $14.51
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment (loss) income ....... (0.06) (0.07) (0.06) (0.01) 0.10 0.05
Net realized and unrealized gain
(loss) on investments ............ 1.70 3.72 5.24 2.69 3.06 (0.75)
------ ------ ------ ------ ------ ------
Total from investment operations ....... 1.64 3.65 5.18 2.68 3.16 (0.70)
------ ------ ------ ------ ------ ------
Less distributions:
From net investment income ......... -- -- -- -- (0.10) (0.05)
From net realized gains ............ -- (2.15) (1.63) (2.55) (1.55) (0.31)
------ ------ ------ ------ ------ ------
Total distributions .................... -- (2.15) (1.63) (2.55) (1.65) (0.36)
------ ------ ------ ------ ------ ------
Net asset value, end of period ......... $21.78 $20.14 $18.64 $15.09 $14.96 $13.45
====== ====== ====== ====== ====== ======
Total return ........................... 8.14%+ 20.44% 34.57% 17.93% 23.52% (4.82)%
Ratios/supplemental data:
Net assets, end of year (millions) ..... $ 12.6 $ 13.5 $ 12.6 $ 12.1 $ 12.3 $ 15.5
Ratio of expenses to average net assets:
Before expense reimbursement ....... 2.02%++ 2.00% 1.98% 1.99% 1.76% 1.84%
After expense reimbursement ........ 1.75%++ 1.75% 1.75% 1.75% 1.75% 1.84%
Ratio of net investment income (loss)
to average net assets:
Before expense reimbursement ....... (0.80)%++ (0.63)% (0.57)% (0.33)% 0.47% 0.29%
After expense reimbursement ........ (0.53)%++ (0.38)% (0.34)% (0.08)% 0.48% 0.29%
Portfolio turnover rate ................ --% 1% --% --% 27% 25%
</TABLE>
* Unaudited.
+ Not annualized.
++ Annualized.
See accompanying Notes to Financial Statements.
8
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 98.3% Value
- --------------------------------------------------------------------------------
ADVERTISING SERVICES: 3.3%
8,000 Access Worldwide Communication, Inc.*................... $ 50,000
1,500 Modem Media Pope Tyson, Inc.*........................... 34,312
3,500 Snyder Communications, Inc.*............................ 114,625
-----------
198,937
-----------
BROADCASTING RADIO/TV: 2.7%
1,800 Citadel Communications Corp.*........................... 65,137
2,300 Young Broadcasting Corp., Class A*...................... 97,894
-----------
163,031
-----------
BUILDING AND CONSTRUCTION: 1.6%
3,906 Palm Harbor Homes, Inc.*................................ 97,894
-----------
BUSINESS SERVICES: 1.5%
3,000 HNC Software, Inc.*..................................... 92,437
-----------
CHEMICALS: 2.3%
3,000 Cambrex Corp............................................ 78,750
1,700 OM Group, Inc........................................... 58,650
-----------
137,400
-----------
COMMERCIAL SERVICES: 4.7%
1,200 Lason, Inc.*............................................ 59,550
3,575 NOVA Corp.*............................................. 89,375
3,000 Prepaid Legal Service, Inc.*............................ 81,563
4,000 RCM Technologies, Inc.*................................. 53,000
-----------
283,488
-----------
COMPUTERS AND SOFTWARE: 13.6%
2,250 Advent Software, Inc.*.................................. 150,750
3,500 Cisco Systems, Inc.*.................................... 225,750
3,000 Comverse Technology, Inc.*.............................. 226,500
5,887 Oracle Corp.*........................................... 218,555
-----------
821,555
-----------
CONSULTING SERVICES: 1.0%
2,500 Professional Detailing, Inc.*........................... 58,750
-----------
9
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1999 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
DAY CARE: 1.2%
4,000 Bright Horizons Family Solutions*....................... $ 75,500
-----------
EDUCATIONAL SOFTWARE: 1.1%
4,000 CBT Group Public Ltd. Sponsored ADR*.................... 66,000
-----------
ELECTRONICS: 4.4%
1,500 Applied Micro Circuits Corp.*........................... 123,375
1,000 Broadcom Corp., Class A*................................ 144,562
-----------
267,937
-----------
FINANCIAL SERVICES: 3.5%
500 Donaldson, Lufkin Jenrette, Inc.*....................... 14,750
3,500 Freedom Securities Corp................................. 59,938
2,756 Litchfield Financial Corp............................... 46,680
1,866 Radian Group, Inc....................................... 91,111
-----------
212,479
-----------
HEALTH PRODUCTS/CARE: 2.0%
1,200 United Healthcare Corp. ................................ 75,150
-----------
INDUSTRIALS: 4.0%
3,000 Covance, Inc.*.......................................... 71,812
4,200 Kendle International, Inc.*............................. 67,200
4,500 Res-Care, Inc.*......................................... 102,375
-----------
241,387
-----------
INSURANCE: 1.5%
2,666 Mutual Risk Management, Ltd............................. 88,978
-----------
INTERNET CONTENT: 4.4%
3,500 Excite@Home Corp.*...................................... 188,781
1,500 Covad Communications Group*............................. 79,969
-----------
268,750
-----------
LASER SYSTEMS: 4.1%
1,500 Uniphase Corp.*......................................... 249,000
-----------
10
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1999 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
MEDICAL SERVICES AND SUPPLIES: 5.0%
4,000 Express Scripts, Inc., Class A*......................... $ 240,750
5,000 US Oncology, Inc.*...................................... 60,000
-----------
300,750
-----------
MEDICAL SUPPLIES: 5.9%
4,500 Guidant Corp............................................ 231,469
3,400 Ocular Sciences, Inc.*.................................. 59,075
6,000 PSS World Medical, Inc.*................................ 67,125
-----------
357,669
-----------
OIL AND GAS PRODUCERS: 2.3%
7,000 Comstock Resources, Inc.*............................... 23,187
4,500 Cross Timbers Oil Company............................... 66,938
5,000 Ocean Energy, Inc.*..................................... 48,125
-----------
138,250
-----------
OIL EQUIPMENT, WELLS AND SERVICES: 0.9%
6,000 R&B Falcon Corp.*....................................... 56,250
-----------
OTHER RETAIL: 2.6%
3,125 99 Cents Only Stores*................................... 156,055
-----------
PHARMACEUTICALS: 4.8%
4,600 Elan Corp. PLC ADR*..................................... 127,650
2,600 Transkaryotic Therapies, Inc.*.......................... 85,800
3,478 Watson Pharmaceuticals, Inc............................. 121,947
-----------
335,397
-----------
PHYSICAL THERAPY/REHAB CENTER: 1.0%
4,000 HealthSouth Corp.*...................................... 59,750
-----------
SAVINGS AND LOANS/THRIFTS: 2.4%
3,000 Net B@nk, Inc.*......................................... 114,000
800 Telebank Financial Corp.*............................... 31,000
-----------
145,000
-----------
11
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1999 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SCHOOLS: 2.2%
2,000 Apollo Group, Inc.*..................................... $ 53,125
3,000 Sylvan Learning Systems, Inc.*.......................... 81,563
-----------
134,688
-----------
TELECOMMUNICATIONS: 11.8%
3,625 Excel Switching Corp.*.................................. 108,523
1,637 Global Crossing Ltd.*................................... 69,675
3,000 MCI Worldcom, Inc.*..................................... 258,750
2,300 Pacific Gateway Exchange, Inc.*......................... 66,988
5,987 Star Telecommunications, Inc.*.......................... 46,773
1,000 Teligent, Inc.*......................................... 59,813
1,000 Terayon Communication System*........................... 55,875
1,000 Tut Systems, Inc.*...................................... 48,937
-----------
715,334
-----------
TRAVEL SERVICES: 2.5%
2,800 Galileo International, Inc.............................. 149,625
-----------
Total Common Stocks (cost $3,493,877)................... 5,947,441
-----------
Total Investments in Securities (cost $3,493,877): 98.3% 5,947,441
Other Assets Less Liabilities: 1.7%..................... 105,588
-----------
Total Net Assets: 100.0%................................ $ 6,053,029
===========
* Non-income producing security.
See accompanying Notes to Financial Statements.
12
<PAGE>
MATRIX EMERGING GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $3,493,877).......... $ 5,947,441
Cash........................................................... 98,901
Receivables:
Securities sold.............................................. 23,974
Fund shares sold............................................. 5,746
Dividends and interest....................................... 45
Due from Advisor............................................. 1,644
Deferred organization costs.................................... 4,803
-----------
Total assets................................................. 6,082,554
-----------
LIABILITIES
Payables:
Administration fee........................................... 2,636
Distribution fees............................................ 3,761
Accrued expenses............................................... 23,128
-----------
Total liabilities............................................ 29,525
-----------
NET ASSETS....................................................... $ 6,053,029
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($6,053,029/407,901 shares outstanding; unlimited
number of shares authorized without par value)............... $ 14.84
===========
COMPONENTS OF NET ASSETS
Paid-in capital................................................ $ 4,417,205
Undistributed net investment loss ............................. (56,408)
Undistributed net realized loss on investments................. (761,332)
Net unrealized appreciation on investments..................... 2,453,564
-----------
Net assets................................................... $ 6,053,029
===========
See accompanying Notes to Financial Statements.
13
<PAGE>
MATRIX EMERGING GROWTH FUND
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Interest..................................................... $ 4,196
Dividends.................................................... 2,280
-----------
Total income............................................... 6,476
-----------
Expenses
Advisory fees................................................ 28,298
Administration fee........................................... 14,876
Fund accounting fees......................................... 10,159
Distribution fees............................................ 7,861
Audit fee.................................................... 7,039
Transfer agent fees.......................................... 5,532
Registration fees............................................ 4,209
Custody fees................................................. 3,145
Amortization of deferred organization costs.................. 2,976
Legal fees................................................... 2,208
Trustee fees................................................. 1,797
Miscellaneous................................................ 1,759
Reports to shareholders...................................... 1,257
Insurance.................................................... 650
-----------
Total expenses............................................. 91,766
Less: expenses waived and reimbursed....................... (28,882)
-----------
Net expenses............................................... 62,884
-----------
NET INVESTMENT LOSS........................................ (56,408)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss from security transactions................... (478,190)
Net unrealized appreciation on investments.................... 175,582
-----------
Net realized and unrealized loss on investments.............. (302,608)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $ (359,016)
===========
See accompanying Notes to Financial Statements.
14
<PAGE>
MATRIX EMERGING GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
June 30, 1999* December 31, 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss.................................. $ (56,408) $ (114,307)
Net realized loss from security transactions......... (478,190) (195,449)
Net unrealized appreciation on investments.......... 175,582 58,539
----------- -----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS................................ (359,016) (251,217)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains.............................. -- (103,792)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Net increase (decrease) in net assets derived
from net change in outstanding shares (a).......... (412,735) 215,079
----------- -----------
TOTAL DECREASE IN NET ASSETS .................... (771,751) (139,930)
NET ASSETS
Beginning of period.................................. 6,824,780 6,964,710
----------- -----------
END OF PERIOD ....................................... $ 6,053,029 $ 6,824,780
=========== ===========
</TABLE>
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999# December 31, 1998
-------------------------- --------------------------
Shares Value Shares Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold..................................... 17,681 $ 269,510 59,862 $ 1,031,630
Shares issued in reinvestment of distribution... -- -- 3,755 53,016
Shares redeemed................................. (46,696) (682,245) (53,153) (869,567)
----------- ----------- ----------- -----------
Net decrease.................................. (29,015) $ (412,735) 10,464 $ 215,079
=========== =========== =========== ===========
</TABLE>
* Unaudited.
See accompanying Notes to Financial Statements.
15
<PAGE>
MATRIX EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Six Months Year Ended December 31, April 4, 1995*
Ended ---------------------------- through
June 30, 1999# 1998 1997 1996 December 31,1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $15.62 $16.33 $14.24 $12.98 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment loss................. (0.14) (0.26) (0.21) (0.18) (0.03)
Net realized and unrealized gain
(loss) on investments............. (0.64) (0.21) 2.56 1.54 3.01
------ ------ ------ ------ ------
Total from investment operations........ (0.78) (0.47) 2.35 1.36 2.98
------ ------ ------ ------ ------
Less distributions:
From net realized gains............. -- (0.24) (0.26) (0.10) --
------ ------ ------ ------ ------
Net asset value, end of period.......... $14.84 $15.62 $16.33 $14.24 $12.98
====== ====== ====== ====== ======
Total return............................ (4.99)%** (2.72)% 16.58% 10.47% 42.09%**
Ratios/supplemental data:
Net assets, end of period (millions).... $ 6.1 $ 6.8 $ 7.0 $ 5.7 $ 4.3
Ratio of expenses to average net assets:
Before expense waiver/
reimbursement..................... 2.92%+ 2.70% 2.71% 3.13% 3.43%+
After expense waiver/
reimbursement..................... 2.00%+ 2.00% 2.00% 2.00% 2.00%+
Ratio of net investment loss to
average net assets:
Before expense waiver/
reimbursement...................... (2.71)%+ (2.29)% (2.19)% (2.53)% (1.87)%+
After expense waiver/
reimbursement...................... (1.80)%+ (1.59)% (1.48)% (1.40)% (0.43)%+
Portfolio turnover rate.................. 13% 25% 41% 30% 10%
</TABLE>
* Commencement of operations.
+ Annualized.
# Unaudited.
** Not annualized.
See accompanying Notes to Financial Statements.
16
<PAGE>
MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS AT JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
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"), and are registered under the Investment Company Act of
1940 (the "1940 Act") as diversified, open-end management investment companies.
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 the Gateway Trust,
a family of four no-load, diversified mutual funds. 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 reporting 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, DIVIDEND INCOME AND DISTRIBUTIONS. Security
transactions are accounted for on the trade date. The cost of
securities sold is determined 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 Matrix 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 Matrix Growth and April 4, 1995
for Matrix 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.
17
<PAGE>
MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS AT JUNE 30, 1999 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
Sena-Weller-Rohs-Williams, Inc. (the "Advisor") provides the Funds with
investment management services under an Investment Advisory Agreement. The
Advisor furnishes all investment advice, office space, certain administrative
services and most of the personnel needed by the Funds. As compensation for its
services, the Advisor receives 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. For the
six months ended June 30, 1999, the advisory fees incurred were $58,017 for
Matrix Growth and $28,298 for Matrix Emerging Growth.
The Advisor 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
transactions expenses, interest, taxes, capital expenditures and extraordinary
expenses, to 1.75% and 2.00% of average daily net assets for the Matrix Growth
and the Matrix Emerging Growth, respectively, through June 30, 1999. As a
result, the Advisor has reimbursed the Funds for expenses in excess of the limit
in the amounts of $17,112 for Matrix Growth and $28,882 for Matrix Emerging
Growth for the six months ended June 30, 1999.
Investment Company Administration, L.L.C. (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 rates:
Under $15 million $30,000
$15 to $50 million 0.20% of average daily net assets
$50 to $100 million 0.15% of average daily net assets
$100 to $150 million 0.10% of average daily net assets
Over $150 million 0.05% of average daily net assets
For the six months ended June 30, 1999, Matrix Growth and Matrix Emerging
Growth each incurred $14,876 in administration fees.
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 Advisor.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator.
NOTE 4 - DISTRIBUTION PLAN
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 Advisor as Distribution Coordinator at an annual rate of up
18
<PAGE>
MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS AT JUNE 30, 1999 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
to 0.25% of the average daily net assets of the Funds. The fee is paid to the
Advisor as reimbursement for, or in anticipation of, expenses incurred for
distribution related activity. For the six months ended June 30, 1999, Matrix
Growth and Matrix Emerging Growth incurred distribution fees of $16,116 and
$7,861, respectively.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, other than
short-term investments, were $2,599,727 and $3,639,981, respectively, for Matrix
Growth and $819,054 and $990,441, respectively, for Matrix Emerging Growth.
NOTE 6 - TAX BASIS APPRECIATION
At June 30, 1999, the basis of securities for federal tax purposes was the
same as their cost for financial reporting purposes. Unrealized appreciation and
depreciation of securities were as follows:
Matrix Growth Matrix Emerging
Fund Growth Fund
----------- -----------
Gross unrealized appreciation............. $ 8,229,327 $ 2,846,865
Gross unrealized depreciation............. (48,525) (393,301)
----------- -----------
Net unrealized appreciation............. $ 8,180,802 $ 2,453,564
=========== ===========
19
<PAGE>
ADVISOR
Sena Weller Rohs Williams, Inc.
300 Main Street
Cincinnati, Ohio 45202
(513) 621-2875
(800) 877-3344
*
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
*
CUSTODIAN
Firstar Institutional Custody Services
425 Walnut Street
Cincinnati, Ohio 45202
*
TRANSFER AGENT
American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
*
AUDITORS
Tait, Weller & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
*
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.
