[LOGO]
THE PERKINS FUNDS
--------------------------------------------------------------------------------
ANNUAL REPORT
--------------------------------------------------------------------------------
For the Year Ended
March 31, 2000
<PAGE>
[LOGO]
April 12, 2000
Dear Shareholders:
We are pleased to report a year of very strong performance for both The Perkins
Discovery Fund and The Perkins Opportunity Fund. Both Funds outperformed the
Russell 2000 Index by a wide margin during calendar 1999 and through the Funds'
fiscal year ended March 31, 2000 (see table page 3). For several years now we
have written, in our shareholder letters, about the under performance of small
capitalization stocks and the inevitable change in that trend. We believe that
trend change took place during 1999 and that small company stocks should now
have better relative performance for a number of years to come. This cycle
usually averages about 7 years. Looking at the graph below, which is a relative
strength line between the large cap S&P 500 and the smaller cap Russell 2000,
you can see that the small cap rally that started in 1990 was cut short after
only 3-4 years. Subsequently, the relative strength line dropped to
significantly lower levels than usual before turning up in 1999. After such an
extended period of small-cap underperformance, the case can be made that we are
now due for an extended period of small-cap relative overperformance. This does
not necessarily mean that small caps will be up for that whole period of time,
only that they should perform better than large caps on a relative basis.
[GRAPHIC DESCRIPTION]
The relative strength line between the Russell 2000 and the S&P 500 for the
periods 1982 to 2000.
1
<PAGE>
Currently the Stock Market, in general, is in a corrective phase. How long this
will last we don't know. However, when the correction has run its course, small
stocks will probably lead the next advance.
As we mentioned in our last letter, The Perkins Opportunity Fund has a
significant tax loss carryforward. Part of that carryforward was used up last
year; however as of March 31, $4.85 million remains. This means that the Fund
may be able to take up to $2.40 per share of capital gains in the future without
having to make a taxable distribution. The carryforward resulted from the sale
of Fund holdings at a loss to cover redemptions in 1997 and 1998 when small
company stocks were performing badly. This represents a significant shelter for
taxable accounts and can work to the advantage of new investors and long-term
shareholders when the Fund is performing well. The Fund has many good holdings
that have the potential for capital appreciation and will not have to distribute
any tax liability until its carryforward is used up. We are pleased that you as
a shareholder have elected to retain your shares. We also believe it would be an
excellent time to add to your holdings to take advantage of this hidden asset
when the next upswing in the Fund's portfolio takes place.
The Discovery Fund, which is just two years old, is well-positioned in micro-cap
growth stocks, i.e., those with less than a $100 million market capitalization.
There are plenty to choose from, as the price decline in small-cap stocks moved
many into the micro-cap category. The Fund is still very small, just $2 million
in net assets as of March 31, which makes it very interesting for new money
since it contains only 41 stocks and, therefore, price increases in just a few
can be meaningful.
2
<PAGE>
The following table shows the Funds' returns by year and since inception,
compared to several popular indices.
<TABLE>
<CAPTION>
Perkins Perkins
Discovery Opportunity Russell Nasdaq S&P
Fund Fund 2000 Composite 500
Calendar Period (PDFDX) (POFDX) Index Index Index
--------------- ------- ------- ----- ----- -----
<S> <C> <C> <C> <C> <C>
1993 (Partial Year) -- 39.52% 17.62% 17.26% 10.67%
1994 -- 14.85% (3.18)% (3.20)% 1.27%
1995 -- 70.35% 26.21% 39.92% 37.53%
1996 -- (7.33)% 14.76% 22.71% 22.99%
1997 -- (17.08)% 20.52% 21.64% 33.34%
1998 - Discovery (Partial Year) 9.67% -- (11.23)% 21.34% 12.84%
- Opportunity -- (16.01)% (3.45)% 39.63% 28.57%
1999 67.54% 98.58% 19.62% 85.58% 21.03%
2000 (YTD to 03/31/00) 64.23% 18.05% 6.80% 12.37% 2.25%
Annualized - Discovery 75.04% -- 6.04% 59.31% 17.90%
Annualized - Opportunity -- 22.11% 13.42% 31.17% 21.59%
(Inception to 03/31/00)
</TABLE>
Sincerely,
/s/ Richard W. Perkins /s/ Daniel S. Perkins
Richard W. Perkins, C.F.A. Daniel S. Perkins, C.F.A.
President Vice President
Past performance is no guarantee of future performance. The Discovery Fund's
average annual total return, after the maximum sales charge of 4.75%, from
inception of April 9, 1998 through March 31, 2000 was 70.77% and for the 12
months ended on that date was 148.43%. The Opportunity Fund's average annual
total return, after the maximum sales charge of 4.75%, from inception of
February 17, 1993 through March 31, 2000 was 21.27%, for the five-year period
ended on that date was 15.13% and for the 12 months ended on that date was
99.76%. The Funds' returns and share values will fluctuate and shares may be
worth more or less than their original cost when redeemed. Small company
investing involves greater risks and volatility. Recent returns were achieved
during favorable market conditions and investors should not expect that such
returns can be sustained. Returns since the most recent quarter-end may vary
substantially from those shown. The fund is distributed by First Fund
Distributors, Inc., Phoenix, AZ 85018.
3
<PAGE>
PERKINS DISCOVERY FUND
Value of $10,000 vs S&P 500 and Russell 2000 Indices
Average Annual Total Return
Period Ended March 31, 2000
1 Year ....................... 148.43%
Since Inception (4/9/98) ..... 70.77%
Perkins S&P 500 Russell
Qtr Discovery Fund Index w/inc. 2000 w/inc.
--- -------------- ------------ -----------
4/9/98 10,000 10,000 10,000
4/30/98 10,133 10,017 10,065
5/31/98 9,994 9,839 9,523
6/30/98 10,343 10,239 9,543
7/31/98 10,991 10,137 8,771
8/31/98 8,064 8,670 7,068
9/30/98 8,381 9,223 7,621
10/31/98 8,514 9,979 7,932
11/30/98 9,632 10,581 8,347
12/31/98 10,445 11,191 8,864
1/31/99 12,140 11,662 8,982
2/28/99 10,413 11,293 8,254
3/31/99 11,016 11,745 8,383
4/30/99 12,254 12,113 9,134
5/31/99 12,457 11,027 9,268
6/30/99 12,070 12,574 9,686
7/31/99 12,724 12,094 9,421
8/31/99 12,368 11,220 9,072
9/30/99 13,041 11,788 9,074
10/31/99 13,156 12,445 9,111
11/30/99 13,854 11,841 9,655
12/31/99 17,499 13,542 10,748
1/31/00 21,107 12,770 10,575
2/29/00 29,696 11,680 12,321
3/31/00 28,739 13,852 11,508
PERKINS OPPORTUNITY FUND
Value of $10,000 vs S&P 500 and Russell 2000 Indices
Average Annual Total Return
Period Ended March 31, 2000
1 Year ....................... 99.76%
5 Year ....................... 15.13%
Since Inception (2/17/93) .... 21.27%
Perkins S&P 500 Russell 2000
Qtr Opportunity Fund Index w/inc. Index w/inc.
--- ---------------- ------------ ------------
2/17/93 10,000 10,000 10,000
3/31/93 10,108 10,458 10,204
6/30/93 10,603 10,500 10,428
9/30/93 12,324 10,779 11,339
12/31/93 13,288 11,032 11,633
3/31/94 13,365 10,610 11,323
6/30/94 12,053 10,647 10,880
9/30/94 15,294 11,178 11,636
12/31/94 15,260 11,173 11,421
3/31/95 18,540 12,260 11,948
6/30/95 21,833 13,429 13,068
9/30/95 25,856 14,496 14,359
12/31/95 25,996 15,366 14,670
3/31/96 28,020 16,194 15,419
6/30/96 31,173 16,910 16,190
9/30/96 27,488 17,440 16,245
12/31/96 24,090 18,899 17,090
3/31/97 19,911 19,400 16,206
6/30/97 22,159 22,781 18,833
9/30/97 25,388 24,490 21,636
12/31/97 19,975 25,201 20,912
3/31/98 22,539 28,714 22,806
6/30/98 21,336 29,644 21,942
9/30/98 15,005 26,703 17,522
12/31/98 16,778 32,402 20,380
3/31/99 18,756 34,004 19,274
6/30/99 19,911 36,405 22,271
9/30/99 19,437 34,129 20,864
12/31/99 33,318 39,208 24,711
3/31/00 39,332 40,106 26,460
* Inception value is based on an average of the 1/31/93 and 2/28/93 closing
index values. 2/17/93 was unavailable.
Past performance is not predictive of future performance.
The Russell 2000 Index is formed by taking the 3,000 largest U.S. companies and
then eliminating the largest 1,000 leaving a good small company Index. The S&P
500 Index is a broad market-weighted average of U.S. blue-chip companies. The
indicies are unmanaged and returns include reinvested dividends.
4
<PAGE>
THE PERKINS DISCOVERY FUND
SCHEDULE OF INVESTMENTS AT MARCH 31, 2000
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS: 96.8%
Business Services - Miscellaneous: 5.8%
7,500 United Shipping and Technology, Inc.* $ 112,969
----------
Computer - Identification Systems: 5.0%
8,500 Digital Biometrics, Inc.* 70,125
3,000 Intelli-Check, Inc.* 28,500
----------
98,625
----------
Computer - Peripheral Equipment: 7.5%
7,500 Check Technology Corporation* 44,531
1,500 Digital Origin Inc.* 27,750
4,000 Stratasys, Inc.* 31,000
5,000 Tidel Technologies, Inc.* 43,750
----------
147,031
----------
Computer - Internet: 6.4%
2,500 Claimsnet.com Inc.* 22,813
10,000 Netdirect Corporation International* 14,375
4,000 OnHealth Network Company* 16,750
10,000 PopMail.com, Inc.* 40,000
3,000 VCampus Corporation* 32,250
----------
126,188
----------
Computer - Software: 7.6%
6,000 Fourth Shift Corporation* 39,750
3,000 OptiSystems Solutions Ltd.* 28,500
5,000 ShowCase Corporation* 45,000
3,000 TRO Learning, Inc.* 36,000
----------
149,250
----------
Consumer Products - Miscellaneous: 5.5%
10,000 GalaGen Inc.* 25,937
3,000 Koala Corporation* 39,937
4,000 Safety 1st, Inc.* 41,750
----------
107,624
----------
Electrical Products - Miscellaneous: 6.6%
4,000 Isonics Corporation* 48,000
2,000 Panja Inc.* 46,000
5,000 Research, Inc.* 35,781
----------
129,781
----------
Leisure - Gaming: 1.5%
2,500 Shuffle Master, Inc.*$ 29,531
----------
Medical - Products: 21.8%
15,000 Conceptus, Inc.* 105,000
5,000 Diametrics Medical, Inc.* 56,250
20,000 Everest Medical Corporation* 94,375
10,000 LecTec Corporation* 41,250
2,500 Merit Medical Systems, Inc.* 24,688
10,000 Rehabilicare Inc.* 23,750
6,000 SpectraScience, Inc.* 53,910
7,500 Trimedyne, Inc.* 29,063
----------
428,286
----------
Office Equipment: 1.0%
12,000 ATS Money Systems, Inc.* 20,250
----------
Retail: 9.3%
4,000 DAMARK International, Inc.* 152,500
2,500 Sharper Image Corporation* 30,625
----------
183,125
----------
Telecommunications - Equipment and Services: 18.8%
25,000 ACI Telecentrics, Inc.* 53,125
10,000 ChoiceTel Communications, Inc.* 58,750
2,000 Hector Communications Corporation* 28,500
10,000 OneLink Communications, Inc.* 45,000
4,000 Radyne ComStream, Inc.* 106,750
5,000 VIALOG Corporation* 26,250
2,000 WorldQuest Networks, Inc.* 49,500
----------
367,875
----------
Total Common Stocks (Cost $1,169,834) 1,900,535
----------
5
<PAGE>
THE PERKINS DISCOVERY FUND
SCHEDULE OF INVESTMENTS AT MARCH 31, 2000 (CONTINUED)
Shares Value
--------------------------------------------------------------------------------
WARRANTS: 3.7%
Telecommunications - Equipment and Services: 3.7%
4,000 Radyne ComStream Inc., Exp. 02/08/2005 $ 72,000
----------
Total Warrants (Cost $0) 72,000
----------
Total Investments In Securities
(Cost $1,169,834+): 100.5% 1,972,535
Liabilities in excess of Other Assets: (0.5)% (10,132)
----------
Net Assets: 100.0% $1,962,403
==========
* Non-income producing security.
+ At March 31, 2000, the basis of securities for federal income tax
purposes was the same as their cost for financial reporting purposes.
Unrealized appreciation and depreciation were as follows:
Gross unrealized appreciation $ 862,542
Gross unrealized depreciation (59,841)
----------
Net unrealized appreciation $ 802,701
==========
See accompanying Notes to Financial Statements.
6
<PAGE>
THE PERKINS DISCOVERY FUND
STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2000
ASSETS
Investments in securities, at value (cost $1,169,834) ........ $1,972,535
Cash ......................................................... 1,620
Prepaid expenses and other assets ............................ 16,032
----------
Total assets ........................................... 1,990,187
----------
LIABILITIES
Payables:
Administration fees ....................................... 2,548
Distribution fees ......................................... 862
Advisory fees ............................................. 809
Accrued expenses ............................................. 23,565
----------
Total liabilities ...................................... 27,784
----------
NET ASSETS ..................................................... $1,962,403
==========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,962,403/48,792 shares outstanding; unlimited
number of shares authorized without par value) ................ $ 40.22
==========
COMPUTATION OF OFFERING PRICE PER SHARE
(Net asset value $40.22/.9525) ................................ $ 42.23
==========
COMPONENTS OF NET ASSETS
Paid-in capital .............................................. $ 779,330
Accumulated net realized gain on investments ................. 380,372
Net unrealized appreciation on investments ................... 802,701
----------
Net assets ............................................. $1,962,403
==========
See accompanying Notes to Financial Statements.
7
<PAGE>
THE PERKINS DISCOVERY FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2000
INVESTMENT INCOME
Income
Interest .................................................. $ 2,437
Dividends ................................................. 875
-----------
Total income ........................................... 3,312
-----------
Expenses
Transfer agent fees ....................................... 43,026
Administration fees ....................................... 30,000
Audit fees ................................................ 14,039
Fund accounting fees ...................................... 12,562
Advisory fees ............................................. 11,147
Registration expense ...................................... 10,675
Trustee fees .............................................. 3,222
Custody fees .............................................. 3,121
Amortization of deferred organization costs ............... 3,008
Distribution fees ......................................... 2,459
Miscellaneous ............................................. 1,534
Shareholder service fees .................................. 1,246
Reports to shareholders ................................... 886
-----------
Total expenses ......................................... 136,925
Less: fees waived and expenses absorbed ................ (108,845)
-----------
Net expenses ........................................... 28,080
-----------
NET INVESTMENT LOSS ................................. (24,768)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments ............................ 528,588
Net unrealized appreciation on investments .................. 728,192
-----------
Net realized and unrealized gain on investments .......... 1,256,780
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .. $ 1,232,012
===========
See accompanying Notes to Financial Statements.
8
<PAGE>
THE PERKINS DISCOVERY FUND
STATEMENT OF CHANGES IN NET ASSETS
April 9, 1998*
Year Ended through
March 31, 2000 March 31, 1999
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ........................... $ (24,768) $ (6,980)
Net realized gain (loss) on investments ....... 528,588 (1,201)
Net unrealized appreciation on investments .... 728,192 74,509
----------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................ 1,232,012 66,328
----------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain ........................ (120,760) --
----------- ---------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........ (120,760) --
----------- ---------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net
change in outstanding shares (a) ............. 54,376 730,447
----------- ---------
TOTAL INCREASE IN NET ASSETS ............... 1,165,628 796,775
NET ASSETS
Beginning of year ............................. 796,775 --
----------- ---------
END OF YEAR..................................... $ 1,962,403 $ 796,775
=========== =========
(a) A summary of capital shares transactions is as follows:
April 9, 1998*
Year Ended through
March 31, 2000 March 31, 1999
------------------- --------------------
Shares Value Shares Value
------ --------- ------- ---------
Shares sold 7,170 $ 162,035 60,507 $ 942,959
Shares issued in reinvestment
of distribution 4,268 91,630 -- --
Shares redeemed (8,564) (199,289) (14,589) (212,512)
------ --------- ------- ---------
Net increase 2,874 $ 54,376 45,918 $ 730,447
====== ========= ======= =========
* Commencement of operations.
See accompanying Notes to Financial Statements.
9
<PAGE>
THE PERKINS DISCOVERY FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
April 9, 1998*
Year Ended through
March 31, 2000 March 31, 1999
-------------- --------------
Net asset value, beginning of period ............ $ 17.35 $ 15.00
------- -------
Income from investment operations:
Net investment loss ........................... (0.51) (0.15)
Net realized and unrealized gain
on investments .............................. 26.07 2.50
------- -------
Total from investment operations ................ 25.56 2.35
------- -------
Less distributions:
From net realized gain .......................... (2.69) --
------- -------
Net asset value, end of period .................. $ 40.22 $ 17.35
======= =======
Total return .................................... 160.88% 15.67%
Ratios/supplemental data:
Net assets, end of year (millions) ............ $ 2.0 $ 0.8
Ratio of expenses to average net assets:
Before fees waived and expenses absorbed ...... 12.27% 24.67%+
After fees waived and expenses absorbed ....... 2.50% 2.50%+
Ratio of net investment loss to average net assets:
Before fees waived and expenses absorbed ...... (11.97)% (23.41)%+
After fees waived and expenses absorbed ....... (2.20)% (1.24)%+
Portfolio turnover rate ......................... 144.58% 137.32%
* Commencement of operations.
+ Annualized.
See accompanying Notes to Financial Statements.
10
<PAGE>
THE PERKINS OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS AT MARCH 31, 2000
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS: 88.4%
Business Services - Miscellaneous: 7.6%
87,500 Appliance Recycling Centers of America, Inc.* $ 153,125
437,500 Health Fitness Corporation* 460,819
750,000 Insignia Systems, Inc. (a)* 2,906,250
400,000 Integrated Securityc Systems, Inc.* 237,500
250,000 Reality Interactive, Inc. (a)* 62,500
-----------
3,820,194
-----------
Computer - Internet: 3.6%
50,000 NetRadio Corporation* 218,750
250,000 OnHealth Network Company* 1,046,875
50,000 VCampus Corporation* 537,500
-----------
1,803,125
-----------
Computer - Memory Devices: 2.2%
100,000 Ciprico, Inc.* 1,087,500
-----------
Computer - Peripheral Equipment: 5.1%
200,000 Digital Biometrics, Inc.* 1,650,000
45,000 Hauppauge Digital, Inc. * 829,688
100,000 RSI Systems, Inc.* 87,500
-----------
2,567,188
-----------
Computer - Services: 1.5%
19,000 PSW Technologies, Inc.* 755,250
-----------
Computer - Software: 18.4%
225,000 Ebix.com, Inc.* 2,826,563
200,000 Fourth Shift Corporation* 1,325,000
75,000 IntraNet Solutions, Inc.* 3,450,000
75,000 ShowCase Corporation* 675,000
100,000 The 3DO Company* 968,750
-----------
9,245,313
-----------
Consumer Products - Miscellaneous: 3.0%
250,000 GalaGen Inc.* 648,437
250,000 MBC Holding Company (a)* 851,563
-----------
1,500,000
-----------
Direct Marketing: 1.6%
20,000 ValueVision International, Inc.* 827,500
-----------
Electrical Products - Miscellaneous: 6.5%
300,000 Destron Fearing Corporation* 1,650,000
175,000 Micro Component Technology, Inc.* 1,596,875
-----------
3,246,875
-----------
Leisure - Gaming: 0.4%
100,000 Innovative Gaming Corporation of America* 178,125
-----------
Medical - Drugs: 6.0%
75,000 MGI Pharma, Inc.* 3,023,437
-----------
Medical - Products: 20.8%
150,000 ATS Medical, Inc.* 1,668,750
250,000 Diametrics Medical, Inc.* 2,812,500
50,000 Eclipse Surgical Technologies, Inc.* 371,875
400,000 InnerDyne, Inc.* 2,450,000
99,500 LecTec Corporation* 410,437
57,386 Possis Medical, Inc. (b)* 456,219
175,000 SpectraScience, Inc.* 1,572,375
50,000 Theragenics Corporation* 668,750
-----------
10,410,906
-----------
Retail - Miscellaneous: 5.9%
200,000 Big Buck Brewery & Steakhouse, Inc.* 406,250
30,000 Hot Topic, Inc.* 1,050,000
112,500 Wilsons The Leather Experts, Inc.* 1,518,750
-----------
2,975,000
-----------
Telecommunications - Equipment and Services: 3.3%
85,000 ChoiceTel Communications, Inc.* 499,375
100,000 Norstan, Inc.* 650,000
115,000 OneLink Communications, Inc.* 517,500
-----------
1,666,875
-----------
Travel: 2.5%
50,000 American Classic Voyages Co.* 1,259,375
-----------
Total Common Stocks (Cost $37,904,974) 44,366,663
-----------
11
<PAGE>
THE PERKINS OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS AT MARCH 31, 2000 (CONTINUED)
Principal
Amount Value
--------------------------------------------------------------------------------
WARRANTS: 0.5%
Business Services: 0.0%
275,000 Reality Interactive, Inc., Exp. 4/11/2000 (a) $ 11,000
-----------
Computer - Internet: 0.3%
100,000 PopMail.com, Inc., Exp. 11/03/2001 137,500
-----------
Medical Products: 0.0%
11,477 Possis Medical, Inc., Exp. 3/6/2004 (b) 9,124
-----------
Retail - Miscellaneous: 0.1%
300,000 Big Buck Brewery & Steakhouse, Inc., Exp. 6/13/2000 37,500
-----------
Telecommunications: 0.1%
85,000 ChoiceTel Communications, Inc., Exp. 10/16/2002 85,000
-----------
Total Warrants (Cost $10,801) 280,124
-----------
REPURCHASE AGREEMENT: 6.3%
--------------------------------------------------------------------------------
$3,149,000 Firstar Bank Repurchase Agreement, 3.75%, dated
03/31/2000, due 04/03/2000, collateralized by
FHLMC ARM,6.319%, due 09/01/2029 (proceeds
$3,149,984) (Cost $3,149,000) $ 3,149,000
Total Investments in Securities
(Cost $41,064,775+): 95.2% 47,795,787
Other Assets less Liabilities: 4.8% 2,410,121
-----------
Net Assets: 100.0% $50,205,908
===========
* Non-Income producing security.
(a) Affiliated company (see Note 8).
(b) Restricted security.
+ At March 31, 2000, the basis of securities for federal income tax purposes
was $41,108,977. Unrealized appreciation and depreciation were as follows:
Gross unrealized appreciation $16,546,031
Gross unrealized depreciation (9,859,221)
-----------
Net unrealized appreciation $ 6,686,810
===========
See accompanying Notes to Financial Statements.
12
<PAGE>
THE PERKINS OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 2000
ASSETS
Investments in securities, at value
(cost $41,064,775) .................................... $47,795,787
Cash .................................................... 393
Receivables:
Securities sold ....................................... 2,646,867
Fund shares sold ...................................... 302,399
Interest .............................................. 328
Prepaid expenses and other assets ....................... 19,085
-----------
Total assets ....................................... 50,764,859
-----------
LIABILITIES
Payables:
Fund shares redeemed .................................. 422,125
Advisory fees ......................................... 46,892
Distribution fees ..................................... 24,842
Administration fees ................................... 10,020
Accrued expenses ........................................ 55,072
-----------
Total liabilities .................................. 558,951
-----------
NET ASSETS ................................................ $50,205,908
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($50,205,908/2,020,347 shares outstanding;
unlimited number of shares authorized without
par value) ............................................... $ 24.85
===========
COMPUTATION OF OFFERING PRICE PER SHARE
(Net asset value $24.85/.9525) ........................... $ 26.09
===========
COMPONENTS OF NET ASSETS
Paid-in capital .......................................... $48,371,293
Accumulated net realized loss on investments ............. (4,896,397)
Net unrealized appreciation on investments ............... 6,731,012
-----------
Net assets .......................................... $50,205,908
===========
See accompanying Notes to Financial Statements.
13
<PAGE>
THE PERKINS OPPORTUNITY FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2000
INVESTMENT INCOME
Income
Dividends ................................................... $ 63,046
Interest .................................................... 37,880
-----------
Total income ............................................. 100,926
-----------
Expenses
Advisory fees ............................................... 364,621
Transfer agent fees ......................................... 117,364
Distribution fees ........................................... 72,924
Administration fees ......................................... 60,910
Shareholder service fees .................................... 47,256
Registration expense ........................................ 38,950
Custody fees ................................................ 24,125
Fund accounting fees ........................................ 22,637
Reports to shareholders ..................................... 18,000
Audit fees .................................................. 17,758
Trustee fees ................................................ 6,441
Legal fees .................................................. 2,650
Miscellaneous ............................................... 1,236
Insurance expense ........................................... 162
-----------
Total expenses ........................................... 795,034
-----------
NET INVESTMENT LOSS ................................... (694,108)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments .............................. 10,098,026
Net unrealized appreciation on investments .................... 19,358,743
-----------
Net realized and unrealized gain on investments........... 29,456,769
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ..................................... $28,762,661
===========
See accompanying Notes to Financial Statements.
14
<PAGE>
THE PERKINS OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
March 31, 2000 March 31, 1999
----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ........................... $ (694,108) $ (652,978)
Net realized gain (loss) on investments ....... 10,098,026 (2,754,312)
Net unrealized appreciation (depreciation)
on investments ............................... 19,358,743 (5,416,328)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............ 28,762,661 (8,823,618)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets derived from net
change in outstanding shares (a) ............. (10,331,153) (15,531,012)
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS .... 18,431,508 (24,354,630)
NET ASSETS
Beginning of year ............................. 31,774,400 56,129,030
----------- -----------
END OF YEAR ................................... $50,205,908 $31,774,400
=========== ===========
(a) A summary of capital shares transactions is as follows:
Year Ended Year Ended
March 31, 2000 March 31, 1999
--------------------------- ---------------------------
Shares Value Shares Value
----------- ------------ ----------- ------------
Shares sold 633,195 $ 11,778,533 261,889 $ 3,012,619
Shares redeemed (1,294,244) (22,109,686) (1,521,977) (18,543,631)
----------- ------------ ----------- ------------
Net decrease (661,049) $(10,331,153) (1,260,088) $(15,531,012)
=========== ============ =========== ============
See accompanying Notes to Financial Statements.
15
<PAGE>
THE PERKINS OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------------------------
2000 1999 1998 1997 1996++
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year . $ 11.85 $ 14.24 $ 12.58 $ 18.78 $ 13.03
------- ------- ------- ------- -------
Income from investment operations:
Net investment loss .............. (0.34) (0.24) (0.34) (0.24) (0.12)
Net realized and unrealized gain
(loss) on investments .......... 13.34 (2.15) 2.00 (4.98) 6.66
------- ------- ------- ------- -------
Total from investment operations ... 13.00 (2.39) 1.66 (5.22) 6.54
------- ------- ------- ------- -------
Less distributions:
From net realized gain ........... -- -- -- (0.98) (0.79)
------- ------- ------- ------- -------
Net asset value, end of year ..... $ 24.85 $ 11.85 $ 14.24 $ 12.58 $ 18.78
======= ======= ======= ======= =======
Total return ..................... 109.70% (16.78)% 13.20% (28.94)% 51.29%
Ratios/supplemental data:
Net assets, end of year (millions) $ 50.2 $ 31.8 $ 56.1 $ 75.3 $ 92.3
Ratio of expenses to
average net assets ............. 2.18% 2.24% 2.27% 1.90% 1.97%
Ratio of net investment loss to
average net assets ............. (1.90)% (1.69)% (1.85)% (1.25)% (1.16)%
Portfolio turnover rate .......... 29.64% 19.34% 53.37% 86.88% 92.45%
</TABLE>
++ Per share data has been restated to give effect to a 2-for-1 stock split to
shareholders of record as of the close of June 3, 1996.
See accompanying Notes to Financial Statements.
16
<PAGE>
THE PERKINS DISCOVERY FUND AND
THE PERKINS OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
The Perkins Discovery Fund and the Perkins Opportunity Fund (the "Funds") are
diversified series of shares of beneficial interest of Professionally Managed
Portfolios (the "Trust"), which is registered under the Investment Company Act
of 1940 (the "1940 Act") as an open-end management investment company. The
Funds' primary investment objective is capital appreciation. The Perkins
Discovery Fund and Perkins Opportunity Fund began operations on April 9, 1998
and February 18, 1993, 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. SECURITIES VALUATION. Securities traded on a national securities exchange
or Nasdaq are valued at the last reported sale price at the close of
regular trading on each day the exchanges are open for trading; 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 stated
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 taxable income to their shareholders. Therefore, no
federal income tax provision is required.
For the Perkins Opportunity Fund, at March 31, 2000, there is a capital
loss carryforward of approximately $4,852,000, of which $1,117,000 expires
March 31, 2006 and $3,735,000 expires March 31, 2007, available to offset
future gains, if any.
17
<PAGE>
THE PERKINS DISCOVERY FUND AND
THE PERKINS OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
C. SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS. Security
transactions are accounted for on the trade date. The cost of securities
owned on realized transactions are relieved on a specific identification
basis. Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Interest income is recognized on an accrual basis.
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Those differences are primarily due to
differing treatments for net operating losses.
D. DEFERRED ORGANIZATION COSTS. All of the expenses incurred by the Adviser in
connection with the organization and registration of the Perkins Discovery
Fund's shares will be borne by the Fund and are being amortized to expense
on a straight-line basis over a period of five years.
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, as well as the
reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
F. RECLASSIFICATION OF CAPITAL ACCOUNTS. The Funds account and report for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountant's Statement of Position 93-2: DETERMINATION,
DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL AND
RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES. For the year ended
March 31, 2000, the Perkins Discovery Fund decreased net realized gain on
investments by $24,768 due to the Fund experiencing a net investment loss
during the year. For the year ended March 31, 2000, the Perkins Opportunity
Fund decreased paid-in capital by $694,108 due to the Fund experiencing a
net investment loss during the year. Net assets were not affected by these
changes.
18
<PAGE>
THE PERKINS DISCOVERY FUND AND
THE PERKINS OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the year ended March 31, 2000, Perkins Capital Management, Inc. (the
"Advisor") provided the Funds with investment management services under an
Investment Advisory Agreement. The Advisor furnishes all investment advice,
office space and certain administrative services, and provides most of the
personnel needed by the Funds. As compensation for its services, the Advisor was
entitled to a monthly fee at the annual rate of 1.00% based upon the average
daily net assets of each Fund. For the year ended March 31, 2000, the Perkins
Discovery Fund and the Perkins Opportunity Fund incurred $11,147 and $364,621 in
Advisory fees, respectively.
The Funds are responsible for their own operating expenses. The advisor has
agreed to reduce fees for the Perkins Discovery Fund to the extent necessary to
limit the Fund's aggregate annual operating expenses to 2.50% of the average
daily net assets. For the year ended March 31, 2000, the Advisor has voluntarily
waived its fees of $11,147 and absorbed expenses of $97,698 for the Perkins
Discovery Fund.
Any fee withheld or voluntarily reduced and/or any Fund expense absorbed by the
Advisor pursuant to an agreed upon expense cap shall be reimbursed by the Fund
to the Advisor, if so requested by the Advisor, anytime before the end of the
third fiscal year following the year to which the fee waiver and/or expense
absorption relates, provided the aggregate amount of the Fund's current
operating expenses for such fiscal year does not exceed the applicable
limitation on Fund expenses. Any such reimbursement is also contingent upon
Board of Trustees review and approval prior to the time the reimbursement is
initiated. The Fund must pay its current ordinary operating expenses before the
Advisor is entitled to any reimbursement.
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 Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of Funds' expenses and reviews the
Funds' expense accruals. For its services, the Administrator receives a monthly
fee at the following annual rate:
Under $12 million $30,000
$12 to $50 million 0.25% of average daily net assets
$50 to $100 million 0.20% of average daily net assets
$100 to $200 million 0.15% of average daily net assets
Over $200 million 0.10% of average daily net assets
19
<PAGE>
THE PERKINS DISCOVERY FUND AND
THE PERKINS OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the year ended March 31, 2000, the Funds incurred $30,000 and $60,910 in
Administration fees for the Perkins Discovery Fund and the Perkins Opportunity
Fund, respectively.
First Fund Distributors, Inc. (the "Distributor") acts as the Funds' principal
underwriter in a continuous public offering of the Funds' shares. The
Distributor is an affiliate of the Administrator.
Certain officers and trustees of the Trust are also officers and/or directors of
the Administrator and Distributor.
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 may pay a fee to the
Distributor at an annual rate of up to 0.20% of the average daily net assets of
the Funds. The fee is paid to the Distributor as reimbursement for, or in
anticipation of, expenses incurred for distribution-related activity. For the
year ended March 31, 2000, the Perkins Discovery Fund and the Perkins
Opportunity Fund paid the Distributor $2,459 and $72,924 under the plan,
respectively.
NOTE 5 - SHAREHOLDER SERVICING FEE
The Funds have entered into a Shareholder Service Agreement with the Advisor,
under which the Funds pay servicing fees at an annual rate of up to 0.25% of
each Fund's average daily net assets. Payments to the Advisor under the
Shareholder Servicing Agreement may reimburse the Advisor for payments it makes
to selected brokers, dealers and administrators which have entered into Service
Agreements with the Advisor for services provided to shareholders of the Funds.
The services provided by such intermediaries are primarily designed to assist
shareholders of the Funds and include the furnishing of office space and
equipment, telephone facilities, personnel and assistance to the Funds in
servicing such shareholders. Services provided by such intermediaries also
include the provision of support services to the Funds and include establishing
and maintaining shareholders' accounts and record processing, purchase and
redemption transactions, answering routine client inquiries regarding the Funds,
and providing such other personal services to shareholders as the Funds may
reasonably request. For the year ended March 31, 2000, the Perkins Discovery
Fund and Perkins Opportunity Fund incurred $1,246 and $47,256 in Shareholder
Servicing fees, respectively.
20
<PAGE>
THE PERKINS DISCOVERY FUND AND
THE PERKINS OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - PURCHASES AND SALES OF SECURITIES
For the year ended March 31, 2000, the cost of purchases and the proceeds from
sales of securities for the Perkins Discovery Fund, excluding short-term
securities, were $1,515,347 and $1,523,411, respectively.
For the year ended March 31, 2000, the cost of purchases and the proceeds from
sales of securities for the Perkins Opportunity Fund, excluding short-term
securities, were $10,341,857 and $26,647,098, respectively.
NOTE 7 - REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements with government securities
dealers recognized by the Federal Reserve Board, with member banks of the
Federal Reserve System or with such other brokers or dealers that meet the
credit guidelines established by the Board of Trustees. The Funds will always
receive and maintain, as collateral, securities whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount invested
by the Funds in each agreement, and the Funds will make payment for such
securities only upon physical delivery or upon evidence of book entry transfer
to the accounts of the custodian. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to ensure the adequacy of the collateral.
If the seller defaults and the value of the collateral declines, or if
bankruptcy proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Funds may be delayed or limited.
NOTE 8 - INVESTMENTS IN AFFILIATES
Affiliated companies, as defined in Section 2 (a) (3) of the Investment Company
Act of 1940, are companies 5% or more of whose outstanding voting shares are
held by the Fund. For the year ended March 31, 2000, the Perkins Opportunity
Fund had the following transactions with affiliated companies:
<TABLE>
<CAPTION>
Shares Held Shares Held Value
March 31, Shares Shares March 31, March 31, Realized
1999 Purchased Sold 2000 2000 Gain
------- --------- ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Everest Medical Corp.: 500,000 500,000 $ 929,034
Insignia Systems Inc.: 500,000 250,000 750,000 $2,906,250
MBC Holding Company: 250,000 250,000 851,563
Reality Interactive, Inc.: 250,000 250,000 62,500
Reality Interactive, Inc.-
Warrants: 275,000 275,000 11,000
---------- ----------
Totals $3,831,313 $ 929,034
========== ==========
</TABLE>
21
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
The Perkins Discovery Fund
The Perkins Opportunity Fund
The Board of Trustees of
Professionally Managed Portfolios
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of The Perkins Discovery Fund and The Perkins
Opportunity Fund, each a series of shares of Professionally Managed Portfolios,
as of March 31, 2000, and the related statement of operations for the year then
ended, the statement of changes in net assets and the financial highlights for
the periods indicated thereon. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 2000, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Perkins Discovery Fund and The Perkins Opportunity Fund as of March 31, 2000,
the results of their operations, the changes in their net assets and the
financial highlights for the periods presented in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 21, 2000
<PAGE>
================================================================================
Advisor
PERKINS CAPITAL MANAGEMENT, INC.
730 East Lake Street
Wayzata, MN 55391-1769
(800) 998-3190
(952) 473-8367
Distributor
FIRST FUND DISTRIBUTORS, INC.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
Custodian
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
425 Walnut Street
Cincinnati, OH 45202
Transfer Agent
PFPC, INC.
P.O. Box 8813
Wilmington, DE 19899-8813
(800) 280-4779
Auditors
TAIT, WELLER & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19101
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WaLker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
================================================================================
This report is intended for the 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.
