[LOGO]
MATRIX GROWTH FUND
MATRIX EMERGING GROWTH FUND
SEMI-ANNUAL REPORT
For the Six Months Ended
June 30, 2000
<PAGE>
[LOGO]
Matrix Funds 2000 Mid-Year Shareholder Letter
Dear Matrix Shareholders,
Investors were less than cheerful at the mid-year point of 2000 as most market
measures were flat for the first half. The S&P 500 posted a -.42% decline and
the Russell 2000 index managed a modest 3% gain, while the Matrix Growth and
Emerging Growth Funds returned -.66% and 18.4%, respectively for the period.
These statistics do not reflect, however, the extreme price volatility investors
faced during the first half, or the scale of gains which evaporated after the
NASDAQ index broke down after reaching its all-time high in early March. "Peak
to trough" the NASDAQ Index declined -37%, delivering a strong blow to the
resolute bulls of this long lived bull market.
In our opinion, such a set back should not have come as a surprise considering
market conditions generally and the circumstances of stocks traded on the NASDAQ
specifically. Investors had been absolutely infatuated with the "new economy"
stocks which Wall Street was underwriting in great abundance, while there was
also a general disregard for a variety of long established economic and business
realities.
Investors had concluded that monetary restraint by the Federal Reserve would not
likely have much effect on an economic expansion based principally on business
investment in information technology, and they also believed that "new economy"
companies could sustain high stock valuations while they endured sizeable
operating losses in pursuit of growth.
The Federal Reserve has raised interest rates six times in the last twelve
months in a determined effort to cool an economy that has averaged over 4.5%
growth for sixteen straight quarters and the impact is now beginning to show. It
is too early to tell whether the economy will slow only so far as a painless
"soft landing", but investors have definitely perceived that economic activity
is slowing which will certainly slow earnings growth. And faced with a
lengthening list of "new economy" stocks which are about to exhaust their cash
balances, investors suddenly have little appetite for shares of loss-making
enterprises regardless of the promised growth rates. The decidedly lower rate of
growth in second quarter earnings reports is definitely having a sobering effect
on stock prices.
The major question at this point is whether the degree of monetary restraint
applied by the Fed will serve to extend the current economic expansion and bull
market, or if the induced slow down could become excessive introducing
additional uncertainties. The onset of the Presidential election campaign does
not seem to worry investors, though any drawn out period of failing "dot.coms"
will likely have a depressing effect on various affiliated companies and
investors in these issues.
2
<PAGE>
Our own view is there is no unambiguous distinction between "new" and "old"
economy stocks. Regardless of the rate of economic growth there is no slow down
in the pace of change of business models throughout the economy and to quote
John Chambers of Cisco Systems: "It is not that big beats small but that fast
beats slow."
On balance the smaller capitalization companies have done a better job of
adopting to new business models and that single factor explains much of the
excellent performance of Matrix Emerging Growth Fund in recent months. We
believe, however, that established growth companies have heard the message loud
and clear and they will accelerate their adoption of the customer and supply and
other management practices which are serving developing companies so very well.
It is hence our expectation that market performance of established growth
companies will relatively improve in the future.
It is interesting to note that at present the cumulative three year returns of
the Matrix Growth and Emerging Growth Funds are almost equal, approximating
58.5%. While market conditions will favor either investment style at any time,
SWRW is dedicated to producing top-flight returns for Matrix shareholders under
all market conditions.
We will spare no effort to sustain our good results and look forward to the
continued opportunity to serve shareholders of both Matrix Funds.
Sincerely,
Sena Weller Rohs Williams, Inc
3
<PAGE>
MATRIX GROWTH FUND
SCHEDULE OF INVESTMENTS at June 30, 2000 (Unaudited)
SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS: 94.0%
BROADCAST MEDIA: 1.5%
8,000 AT&T Corp./Liberty Media Corp.* $ 194,000
-----------
CELLULAR TELECOMMUNICATION: 2.0%
6,000 Vodafone Airtouch Plc ADR 248,625
-----------
COMPUTERS - MICRO: 1.9%
5,000 Dell Computer Corp.* 246,562
-----------
COMPUTERS - SERVICES: 3.1%
6,000 Electronic Data Systems Corp. 247,500
7,785 Marchfirst, Inc.* 142,076
-----------
389,576
-----------
COMPUTERS - SOFTWARE: 6.4%
6,000 Intel Corp. 802,125
-----------
CONGLOMERATES: 8.8%
21,000 General Electric Co. 1,113,000
-----------
CONSUMER NON-CYCLICAL: 11.4%
14,000 Colgate-Palmolive Co. 838,250
12,000 Schering-Plough Corp. 606,000
-----------
1,444,250
-----------
DIVERSIFIED MANUFACTURING: 1.1%
3,000 Tyco International Ltd. 142,125
-----------
DRUGS & PHARMACEUTICALS: 5.2%
13,750 Pfizer, Inc. 660,000
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS: 1.3%
4,000 Cypress Semiconductor Corp.* 169,000
ENERGY: 11.4%
4,000 BP Amoco Plc ADR 226,250
12,000 Enron Corp. 774,000
5,561 Exxon Mobil Corp. 436,539
-----------
1,436,789
-----------
FINANCIAL: 5.0%
12,000 American Express Co. 625,500
-----------
INSURANCE - MULTILINE: 3.7%
4,000 American International Group, Inc. 470,000
-----------
INTERNET SERVICES: 0.7%
4,000 At Home Corp.* 83,000
-----------
MEDICAL INSTRUMENTS: 3.7%
12,000 Biomet, Inc.* 461,250
-----------
OIL - FIELD SERVICES: 1.5%
4,000 Halliburton Co. 188,750
-----------
PUBLISHING - NEWSPAPERS: 2.8%
10,000 Tribune Co. 350,000
-----------
TECHNOLOGY: 7.0%
16,400 Automatic Data Processing 878,425
-----------
TELECOMMUNICATIONS - EQUIPMENT: 8.0%
5,000 ADC Telecommunications, Inc.* 419,375
3,000 Lucent Technologies, Inc. 177,750
6,000 Nortel Networks Corp. 409,500
-----------
1,006,625
-----------
TELECOMMUNICATIONS - SERVICES: 3.1%
8,000 Qwest Communications International, Inc.* 397,500
-----------
UTILITIES: 4.4%
12,000 Worldcom, Inc. 550,500
-----------
TOTAL COMMON STOCKS
(cost $6,280,507) 11,857,602
-----------
4
<PAGE>
MATRIX GROWTH FUND
SCHEDULE OF INVESTMENTS at June 30, 2000 (Unaudited) - (Continued)
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT: 6.2%
$786,000 Firstar Bank Repurchase Agreement, 4.25%, dated
06/30/2000, due 07/03/2000, [collateralized by
$801,695 FHLMC ARM, 6.311% due 09/01/2029]
(value of proceeds $786,278) (cost $786,000) $ 786,000
-----------
TOTAL INVESTMENTS IN SECURITIES (cost $7,066,507+): 100.2% 12,643,602
Liabilities in excess of Other Assets: (0.2)% (31,366)
-----------
NET ASSETS: 100.00% $12,612,236
===========
ADR - American Depositary Receipt.
* Non-income producing security.
+ At June 30, 2000, the basis of investments 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 $6,419,928
Gross unrealized depreciation (842,833)
----------
Net unrealized appreciation $5,577,095
==========
See accompanying Notes to Financial Statements.
5
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS at June 30, 2000 (Unaudited)
SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS: 100.1%
ADVERTISING: 2.0%
6,000 Modem Media Poppe Tyson, Inc.* $ 74,625
3,500 Snyder Communications, Inc.* 83,125
----------
157,750
----------
BUSINESS & INFORMATION SERVICES: 2.4%
3,000 HNC Software, Inc.* 185,250
----------
CHEMICALS: 2.7%
3,000 Cambrex Corp. 135,000
1,700 OM Group, Inc. 74,800
----------
209,800
----------
COMMERCIAL SERVICES: 2.5%
3,575 NOVA Corp.* 99,877
3,000 Pre-Paid Legal Services, Inc.* 89,625
----------
189,502
----------
COMMUNICATIONS - TECHNOLOGY: 6.1%
500 Avanex Corporation 47,750
5,000 FLAG Telecom Holdings Ltd. 74,375
3,000 Metromedia Fiber Network, Inc.* 119,062
1,840 MRV Communications, Inc. 123,740
1,800 Netro Corp.* 103,275
----------
468,202
----------
COMPUTERS - SOFTWARE: 22.5%
6,750 Advent Software, Inc.* 435,375
5,000 Cisco Systems, Inc.* 317,812
4,000 Comverse Technology, Inc.* 372,000
1,500 Digex, Inc.* 101,906
6,000 Oracle Corp.* 504,375
----------
1,731,468
----------
DAY CARE: 1.1%
4,000 Bright Horizons Family Solutions, Inc.* 85,500
----------
DRUGS & PHARMACEUTICALS: 5.3%
4,600 Elan Corp., Plc ADR* 222,812
3,478 Watson Pharmaceuticals, Inc.* 186,942
----------
409,754
----------
EDUCATIONAL SOFTWARE: 2.5%
4,000 Smartforce Public Ltd. Co.* 192,000
----------
ELECTRONICS: 13.8%
4,500 Applied Micro Circuits Corp.* 444,375
2,000 Broadcom Corp. - Class A* 437,875
2,000 Chartered Semiconductor Manufacturing Ltd.* 180,000
----------
1,062,250
----------
FINANCIAL SERVICES: 2.1%
1,866 Radian Group, Inc. 96,565
3,500 Tucker Anthony Sutro Corp. 63,000
----------
159,565
----------
INDUSTRIALS: 0.3%
4,500 Res-Care, Inc.* 24,188
----------
MEDIA AND BROADCASTING: 3.2%
1,800 Citadel Communications Corp.* 62,888
12,000 Radio Unica Corp.* 84,000
12,000 Regent Communications, Inc. 103,125
----------
250,013
----------
MEDICAL SERVICE & SUPPLIES: 4.2%
3,500 Express Scripts, Inc. - Class A* 217,438
1,200 Unitedhealth Group, Inc. 102,900
----------
320,338
----------
MEDICAL SUPPLIES: 2.3%
3,500 Guidant Corp.* 173,250
----------
OIL & GAS PRODUCERS: 0.3%
1,750 Ocean Energy, Inc.* 24,828
----------
OIL - EXPLORATION & PRODUCTION: 0.7%
7,000 Comstock Resources, Inc.* 56,000
----------
OIL EQUIPMENT, WELLS & SERVICES: 3.1%
4,500 Cross Timbers Oil Co. 99,563
6,000 R&B Falcon Corp.* 141,375
----------
240,938
----------
6
<PAGE>
MATRIX EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS at June 30, 2000 (Unaudited) - (Continued)
SHARES VALUE
--------------------------------------------------------------------------------
PHARMACEUTICALS: 2.3%
2,500 Professional Detailing, Inc.* $ 85,156
2,600 Transkaryotic Therapies, Inc.* 95,550
----------
180,706
----------
RETAIL: 2.2%
4,166 99 Cents Only Stores* 166,119
----------
SCHOOLS: 1.8%
2,000 Apollo Group, Inc. - Class A* 56,000
6,000 Sylvan Learning Systems, Inc.* 82,500
----------
138,500
----------
TELECOMMUNICATIONS: 15.9%
2,700 Global Crossing Ltd.* 71,044
2,200 ITC DeltaCom, Inc.* 49,088
5,000 JDS Uniphase Corp.* 599,375
3,000 RSL Communications, Ltd.* 34,313
1,000 Teligent, Inc.* 23,625
3,000 Terayon Communication Systems, Inc.* 192,703
1,500 Tut Systems, Inc.* 86,063
3,750 Worldcom, Inc. 172,031
----------
1,228,242
----------
TRAVEL SERVICES: 0.8%
2,800 Galileo International, Inc. 58,450
----------
TOTAL COMMON STOCKS
(cost $2,947,472) 7,712,613
----------
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT: 1.0%
$78,000 Firstar Bank Repurchase Agreement, 4.25%, dated
06/30/2000, due 07/03/2000, [collateralized by $79,558
FHLMC ARM, 6.311% due 09/01/2029] (value of proceeds $78,028)
(cost $78,000) $ 78,000
TOTAL INVESTMENTS IN SECURITIES (cost $3,025,472+): 101.1% 7,790,613
Liabilities in excess of Other Assets: (1.1)% (87,419)
----------
NET ASSETS: 100.0% $7,703,194
==========
ADR - American Depositary Receipt.
* Non-income producing security.
+ At June 30, 2000, the basis of investments 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 $5,044,195
Gross unrealized depreciation (279,054)
----------
Net unrealized appreciation $4,765,141
==========
See accompanying Notes to Financial Statements.
7
<PAGE>
MATRIX FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AT JUNE 30, 2000 (UNAUDITED)
GROWTH EMERGING GROWTH
FUND FUND
------------ ------------
ASSETS
Investments in securities, at value
(cost $7,066,507 and $3,025,472,
respectively) ............................... $ 12,643,602 $ 7,790,613
Cash ......................................... 421 366
Receivables:
Fund shares sold ............................ -- 387
Dividends and interest ...................... 851 54
Prepaid expenses ............................. 2,868 --
------------ ------------
Total assets ............................... 12,647,742 7,791,420
------------ ------------
LIABILITIES
Payables:
Distribution fees ........................... 7,771 4,666
Due to advisor .............................. 7,460 4,082
Administration fees ......................... 2,442 2,459
Fund shares redeemed ........................ 1,641 52,742
Accrued expenses ............................ 16,192 24,277
------------ ------------
Total liabilities .......................... 35,506 88,226
------------ ------------
NET ASSETS .................................... $ 12,612,236 $ 7,703,194
============ ============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE ($12,612,236/756,998
and $7,703,194/321,477) shares outstanding;
unlimited number of shares authorized
without par value) .......................... $ 16.66 $ 23.96
============ ============
COMPONENTS OF NET ASSETS
Paid-in capital ............................... $ 5,146,190 $ 2,707,849
Accumulated net investment loss ............... (49,080) (72,189)
Accumulated net realized gain on investments... 1,938,031 302,393
Net unrealized appreciation on investments .... 5,577,095 4,765,141
------------ ------------
Net assets .................................... $ 12,612,236 $ 7,703,194
============ ============
See accompanying Notes to Financial Statements.
8
<PAGE>
MATRIX FUNDS
STATEMENTS OF OPERATIONS For the Six Months Ended June 30, 2000 (Unaudited)
EMERGING
GROWTH GROWTH
FUND FUND
---- ----
INVESTMENT INCOME
Income
Dividends ............................. $ 39,340 $ 1,681
Interest ....................................... 18,017 5,317
Other .......................................... 2,730 --
----------- -----------
Total income ................................. 60,087 6,998
----------- -----------
Expenses
Advisory fees .................................. 56,143 35,634
Distribution fees .............................. 15,595 9,898
Administration fees ............................ 14,838 14,920
Fund accounting fees ........................... 9,985 9,522
Audit fees ..................................... 7,206 7,254
Transfer agent fees ............................ 4,958 4,585
Custody fees ................................... 4,465 3,600
Trustee fees ................................... 1,810 1,594
Legal fees ..................................... 1,049 1,978
Registration expense ........................... 963 682
Reports to shareholders ........................ 832 1,097
Insurance expense .............................. 246 14
Deferred organization expense .................. -- 1,778
Miscellaneous .................................. 214 --
----------- -----------
Total expenses ............................... 118,304 92,556
Less: fees waived ............................ (9,137) (13,369)
----------- -----------
Net expenses ................................. 109,167 79,187
----------- -----------
NET INVESTMENT LOSS ........................ (49,080) (72,189)
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments ............... 1,731,257 1,018,098
Net unrealized appreciation (depreciation)
on investments ............................... (1,784,576) 355,178
----------- -----------
Net realized and unrealized gain (loss)
on investments ............................. (53,319) 1,373,276
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................ $ (102,399) $ 1,301,087
=========== ===========
See accompanying Notes to Financial Statements.
9
<PAGE>
MATRIX GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000* DECEMBER 31, 1999
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ....................... $ (49,080) $ (62,153)
Net realized gain on investments .......... 1,731,257 3,819,403
Net unrealized depreciation
on investments .......................... (1,784,576) (1,840,676)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. (102,399) 1,916,574
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain .................... -- (3,722,309)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Net increase (decrease) in net assets
derived from net change in outstanding
shares.................................... (536,476) 1,511,376
------------ ------------
TOTAL DECREASE IN NET ASSETS .......... (638,875) (294,359)
NET ASSETS
Beginning of period........................ 13,251,111 13,545,470
------------ ------------
END OF PERIOD.............................. $ 12,612,236 $ 13,251,111
============ ============
(a) A summary of capital share transactions is as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000* DECEMBER 31, 1999
-------------------- ----------------------
Shares Value Shares Value
------- --------- ------- -----------
Shares sold 22,537 $ 366,987 16,166 $ 333,555
Shares issued in reinvestment
of distributions -- -- 221,930 3,668,495
Shares redeemed (55,931) (903,463) (120,105) (2,490,674)
------- --------- ------- -----------
Net increase (decrease) (33,394) $(536,476) 117,991 $ 1,511,376
======= ========= ======= ===========
* Unaudited.
See accompanying Notes to Financial Statements.
10
<PAGE>
MATRIX EMERGING GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000* DECEMBER 31, 1999
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ...................... $ (72,189) $ (111,624)
Net realized gain (loss) on investments... 1,018,098 (434,762)
Net unrealized appreciation on
investments ............................ 355,178 2,131,981
----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... 1,301,087 1,585,595
----------- -----------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets derived from
net change in outstanding shares ....... (946,974) (1,061,294)
----------- -----------
TOTAL INCREASE IN NET ASSETS.......... 354,113 524,301
NET ASSETS
Beginning of period ...................... 7,349,081 6,824,780
----------- -----------
END OF PERIOD ............................ $ 7,703,194 $ 7,349,081
=========== ===========
(a) A summary of capital share transactions is as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000* DECEMBER 31, 1999
----------------------- -------------------------
Shares Value Shares Value
------ ----- ------ -----
Shares sold 12,156 $ 269,374 32,530 $ 498,112
Shares redeemed (53,769) (1,216,348) (106,356) (1,559,406)
------- ----------- -------- -----------
Net decrease (41,613) $ (946,974) (73,826) $(1,061,294)
======= =========== ======== ===========
* Unaudited.
See accompanying Notes to Financial Statements.
11
<PAGE>
MATRIX GROWTH FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------------------------
JUNE 30, 2000* 1999 1998 1997 1996 1995
-------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $16.77 $20.14 $18.64 $15.09 $14.96 $13.45
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ......... (0.06) (0.08) (0.07) (0.06) (0.01) 0.10
Net realized and unrealized gain
(loss) on investments ............... (0.05) 2.97 3.72 5.24 2.69 3.06
------ ------ ------ ------ ------ ------
Total from investment operations ....... (0.11) 2.89 3.65 5.18 2.68 3.16
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income ........... -- -- -- -- -- (0.10)
From net realized gain ............... -- (6.26) (2.15) (1.63) (2.55) (1.55)
------ ------ ------ ------ ------ ------
Total distributions .................... -- (6.26) (2.15) (1.63) (2.55) (1.65)
------ ------ ------ ------ ------ ------
Net asset value, end of period ......... $16.66 $16.77 $20.14 $18.64 $15.09 $14.96
====== ====== ====== ====== ====== ======
Total return ........................... (0.66%)++ 16.04% 20.44% 34.57% 17.93% 23.52%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions).. $ 12.6 $ 13.3 $ 13.5 $ 12.6 $ 12.1 $ 12.3
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed ........................... 1.90%+ 1.98% 2.00% 1.98% 1.99% 1.76%
After fees waived and expenses
absorbed ........................... 1.75%+ 1.75% 1.75% 1.75% 1.75% 1.75%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed ........................... (0.93%)+ (0.72%) (0.63%) (0.57%) (0.33%) 0.47%
After fees waived and expenses
absorbed ........................... (0.78%)+ (0.49%) (0.38%) (0.34%) (0.08%) 0.48%
Portfolio turnover rate ......... 23.87%++ 49.00% 1.00% -- -- 27.00%
</TABLE>
* Unaudited.
+ Annualized.
++ Not annualized.
See accompanying Notes to Financial Statements.
12
<PAGE>
MATRIX EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, APRIL 4, 1995*
SIX MONTHS ENDED ---------------------------------- THROUGH
JUNE 30, 2000# 1999 1998 1997 1996 DEC. 31, 1995
-------------- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $20.24 $15.62 $16.33 $14.24 $ 12.9 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ....................... (0.22) (0.31) (0.26) (0.21) (0.18) (0.03)
Net realized and unrealized gain
(loss) on investments ................... 3.94 4.93 (0.21) 2.56 1.54 3.01
------ ------ ------ ------ ------ ------
Total from investment operations ............ 3.72 4.62 (0.47) 2.35 1.36 2.98
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net realized gain .................... -- -- (0.24) (0.26) (0.10) --
------ ------ ------ ------ ------ ------
Net asset value, end of period .............. $23.96 $20.24 $15.62 $16.33 $14.24 $12.98
====== ====== ====== ====== ====== ======
Total return ................................ 18.38%++ 29.58% (2.72%) 16.58% 10.47% 29.80%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) ...... $ 7.7 $ 7.3 $ 6.8 $ 7.0 $ 5.7 $ 4.3
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed... 2.34%+ 2.86% 2.70% 2.71% 3.13% 3.43%+
After fees waived and expenses absorbed.... 2.00%+ 2.00% 2.00% 2.00% 2.00% 2.00%+
RATIO OF NET INVESTMENT LOSS TO AVERAGE
NET ASSETS:
Before fees waived and expenses
absorbed ................................ (2.16%)+ (2.69%) (2.29%) (2.19%) (2.53%) (1.87%)+
After fees waived and expenses
absorbed ................................ (1.82%)+ (1.83%) (1.59%) (1.48%) (1.40%) (0.43%)+
Portfolio turnover rate .............. 7.00%++ 25.00% 25.00% 41.00% 30.00% 10.00%++
</TABLE>
* Commencement of operations.
+ Annualized.
++ Not annualized.
# Unaudited.
See accompanying Notes to Financial Statements.
13
<PAGE>
MATRIX FUNDS
NOTES TO FINANCIAL STATEMENTS (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") 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 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 Nasdaq are valued at the last reported sales
price at the close of regular trading on each day that 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 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. 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. Interest income is recorded on an accrual basis.
D. DEFERRED ORGANIZATION COSTS. The costs incurred by the Matrix Emerging
Growth Fund with respect to adopting its current management and trust
agreement, and initial organization, have been deferred and are being
amortized using the straight-line method over a period of five years
commencing April 4, 1995.
14
<PAGE>
MATRIX FUNDS
NOTES TO FINANCIAL STATEMENTS (Unaudited) - (Continued)
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.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS.
Sena, Weller, Rohs, Williams, Inc. (the "Advisor") provided the Funds with
investment management services under an Investment Advisory Agreement. The
Advisor furnished all investment advice, office space, certain administrative
services and 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 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, 2000, the advisory fees incurred were $56,143
for Matrix Growth and $35,634 for Matrix Emerging Growth.
The Funds are responsible for their own operating expenses. The Advisor has
contractually agreed to limit the Funds' total operating expenses by reducing
all or a portion of their fees and reimbursing the Funds for expenses, excluding
interest and tax expense, so that the ratio of expenses to average net assets
will not exceed 1.75% and 2.00% for the Matrix Growth Fund and the Matrix
Emerging Growth Fund, respectively. Any fee waived and/or any Fund expense
absorbed by the Advisor pursuant to an agreed upon expense cap shall be
reimbursed by the Funds to the Advisor, if so requested by the Advisor, provided
the aggregate amount of the Funds' current operating expenses for such fiscal
year does not exceed the applicable limitation on Fund expenses. For the six
months ended June 30, 2000, the Advisor waived fees of $9,137 and $13,369 for
the Matrix Growth Fund and Matrix Emerging Growth Fund, respectively. At June
30, 2000, the cumulative unreim-bursed amount paid and/or waived by the Advisor
on behalf of the Matrix Growth Fund and Matrix Emerging Growth Fund was $131,136
and $252,613, respectively.
The Advisor may recapture a portion of the above amounts no later than the
dates as stated below:
DECEMBER 31,
----------------------------------------
FUNDS 2000 2001 2002 2003
----- ---- ---- ---- ----
Matrix Growth Fund ................. $32,156 $59,709 $30,134 $ 9,137
Matrix Emerging Growth Fund ........ $91,241 $95,751 $52,252 $13,369
15
<PAGE>
MATRIX FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited) - (Continued)
The Funds must pay their current ordinary operating expenses before the
Advisor is entitled to any reimbursement. Any such reimbursement is also
contingent upon Board of Trustees review and approval prior to the time the
reimbursement is initiated.
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 rate:
Under $15 million $30,000
$15 to $50 million 0.20% of average daily net assets
$50 to $100 million 0.15% of average daily net assets
$100 to $150 million 0.10% of average daily net assets
Over $150 million 0.05% of average daily net assets
For the six months ended June 30, 2000, Matrix Growth Fund and Matrix
Emerging Growth Fund incurred administration fees of $14,838 and $14,920,
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 Advisor.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator.
NOTE 4 - DISTRIBUTION PLAN
Each Fund has adopted a Distribution Plan (the "Plan") in accordance with
Rule 12b-1 under the 1940 Act. Each Plan provides that the Funds will pay a fee
to the Advisor as Distribution Coordinator at an annual rate of up to 0.25% of
the average daily net assets of each Fund. 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, 2000, the
Matrix Growth Fund and the Matrix Emerging Growth Fund paid to the Advisor, as
Distribution Coordinator, $15,595 and $9,898, respectively.
16
<PAGE>
MATRIX FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited) - (Continued)
NOTE 5 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, other than
short-term investments, were $2,801,291 and $3,424,858 respectively, for the
Matrix Growth Fund and $529,912 and $1,511,279 respectively, for the Matrix
Emerging Growth Fund.
NOTE 6 - REPURCHASE AGREEMENT
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.
17
<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
ICA FUND SERVICES CORP.
4455 East Camelback Road, Suite E261
Phoenix, Arizona 85018
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.
