[AVONDALE HESTER LOGO]
TOTAL RETURN FUND
--------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
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For the Six Months Ending
September 30, 2000
<PAGE>
[AVONDALE HESTER LOGO]
October 4, 2000
Dear Shareholders:
Hester Capital Management, L.L.C. ("HCM") is pleased to submit our mid-year
report for the Avondale Hester Total Return Fund (the "Fund") for the period
ending September 30, 2000.
The Fund experienced a return for the quarter and six months ended
September 30 of 1.38% and 4.89%, respectively. Factors benefiting the returns in
the first half of the fiscal year were subtle shifts in the asset allocation, as
well as positive attribution from healthcare, energy, selected financial, and
technology holdings. The equity allocation has been reduced from 89% to 85% of
the Fund's assets, while the fixed-income allocation has been raised slightly
from 7.5% to 10.3%. Cash reserves now stand at almost 5%, up from 3.4% on March
31. The Fund's benchmark, a custom-blended index comprised of 75% S&P 500
Composite and 25% Lehman U.S. Intermediate Government/Credit Index, returned
(0.75%) for the quarter and (1.55%) for the first half of the year.
It has been an active first half with our purchase activity of new equity
securities offset by securities sold. New positions were established in such
technology names as Andrew Corp., Cable Design Technologies, Sawtek, Inc.,
Technitrol, Inc. and Vishay Intertechnology. Positions were trimmed in Adobe
Systems, IBM, Oracle, and Tellabs, Inc. We eliminated positions in Technitrol,
Inc. which had a very sharp increase in price as did Hadco Corporation, which
received a buy-out offer in the spring. Our position in Marriott International
was also eliminated.
Approximately $1.5 million in new money was added to the fixed-income
component of the portfolio in three government agency issues with maturities of
five, eight, and 10 years. These purchases more than offset the maturity of the
IBM note and the sale of two shorter-term government agency issues. All this
activity was consistent with our long-term strategy of targeting an equity
allocation in a range of 70% to 90% of the total assets of the Fund, with the
balance of the monies invested in fixed-income securities.
1
<PAGE>
We expect challenging financial markets for the balance of this year and
through the end of 2001. On a positive note, it appears that Chairman Greenspan
and his counterparts at the Federal Reserve have successfully engineered the
economy to a soft landing. U.S. economic growth continues to moderate with no
recession on the horizon. The United States' attractive growth rate relative to
its trading partners and somewhat-high real interest rates continue to attract
foreign capital which is boosting the U.S. dollar relative to the Euro and the
Japanese yen. This liquidity continues to find its way into our capital markets.
We believe that the Fed has accomplished its mission and expect the central
bank to maintain a neutral policy with a tightening bias through the end of the
year. If events continue to unfold as they presently appear, we would not be
surprised to see the Fed moving to a neutral or possibly easing stance at the
February 2001 meeting. As a result of this position, we plan to maintain our
current bond exposure and would add to the allocation in the portfolio on any
further reduction in interest rates. We continue to prefer spread product over
U.S. Treasuries, in particular, government agencies in the 5-to-10 year maturity
range and high-grade corporate bonds.
The equity market is probably locked in a fairly tight trading range
through the end of next year. The market is now being challenged by negative
earnings surprises, higher-energy prices, and some are even beginning to
question one of the key secular underpinnings of this bull market, that being
fiscal policy, as it appears that both presidential candidates are looking for
ways to spend the surplus. Thus, our expectations for U.S. equities are for 10%
total returns, at best. Our focus will be on searching for companies that
exhibit pricing power, unit sales growth, with the potential to maintain or
expand operating profit margins and return on assets. We believe this will
continue to lead us in the areas of selected technology issues, financial
services, and healthcare.
2
<PAGE>
On behalf of the staff of HCM, we sincerely value the opportunity to serve
as Advisor to the Avondale Hester Total Return Fund and appreciate your trust
and confidence in our team. We will continue to focus our efforts on generating
a competitive return for our shareholders while managing the Fund in line with
its objectives. Should you have any questions, please do not hesitate to give us
a call.
Very truly yours,
/s/ I. Craig Hester, CFA /s/ John E. Gunthorp, CFA
I. Craig Hester, CFA John E. Gunthorp, CFA
3
<PAGE>
INVESTMENT PERFORMANCE
06/30/00* 03/31/00* 12/31/99* 09/30/99**
THROUGH THROUGH THROUGH THROUGH
09/30/00 09/30/00 09/30/00 09/30/00
-------- -------- -------- --------
AVONDALE HESTER
TOTAL RETURN FUND 1.38% 4.89% 12.74% 17.44%
Blended Custom Index*** (0.75%) (1.55%) 0.51% 11.52%
STOCK MARKET INDICES
AVONDALE HESTER -
EQUITIES ONLY 1.49% 5.36% 14.67% 20.40%
Lipper Large Cap
Value Fund Index 3.65% 0.86% 1.59% 10.47%
S&P 500 Composite
Unweighted 3.43% 0.87% (2.61%) 1.43%
S&P 500 Composite Index (0.97%) (3.60%) (1.39%) 13.27%
BOND MARKET INDICES
AVONDALE HESTER
FIXED-INCOME ONLY 3.72% 4.27% 5.80% 6.07%
Lehman U.S. Int. Govt/
Credit Bond Index 2.88% 4.62% 6.19% 6.25%
Lehman U.S. Govt/
Credit Bond Index 2.87% 4.37% 7.17% 6.74%
CASH EQUIVALENTS INDICES
90 Day U.S. Treasury Bills 1.50% 2.99% 4.36% 5.63%
Consumer Price Index 0.53% 1.24% 2.92% 3.17%
* Not Annualized
** Annualized
*** 75% S&P 500 Composite and 25% Lehman U.S.
Intermediate Government/Bond Index
4
<PAGE>
Past performance is no guarantee of future results. Share price and returns
fluctuate and investment in the Fund may be worth more or less then the amount
invested when redeemed. For the 5-and-10 year periods ended September 30, 2000,
the Fund and the Blended Custom Index were each up 15.02%, 13.74%, 17.77% and
16.41%, respectively, on an annualized basis.
The S&P 500 Index is an unmanaged index generally representative of the
market for the stocks of large-sized U.S. companies. The Lehman Brothers
Government/Credit Bond Index is an unmanaged index of all investment grade
government and corporate bonds. The Lehman Brothers Intermediate
Government/Credit Bond Index is an unmanaged index of all investment grade
government and corporate bonds with a maturity between 1 and 10 years.
5
<PAGE>
AVONDALE HESTER TOTAL RETURN FUND
SHARES VALUE
------ -----
COMMON STOCKS: 84.8%
BANKS: 5.7%
4,713 Bank of America Corp. $ 246,843
8,014 Bank One Corp. 309,541
11,020 Regions Financial Corp. 250,016
---------
806,400
---------
BEVERAGES - ALCOHOLIC: 2.1%
7,192 Anheuser-Busch Companies, Inc. 304,311
---------
CHEMICALS - DIVERSIFIED: 0.5%
2,250 H.B. Fuller Co. 64,687
---------
COMPUTERS: 3.7%
2,500 Hewlett-Packard Co. 242,500
2,500 International Business Machines Corp. 281,250
---------
523,750
---------
COMPUTERS - SERVICES: 15.2%
7,000 Adobe Systems, Inc. 1,086,750
9,737 First Data Corp. 380,352
8,700 Oracle Corp.* 685,125
---------
2,152,227
---------
CONSUMER PRODUCTS: 9.2%
22,611 General Electric Co. 1,304,372
---------
DENTAL SUPPLIES & EQUIPMENT: 1.0%
4,000 Dentsply International, Inc. 139,750
---------
DIVERSIFIED MANUFACTURING: 2.4%
2,500 Cooper Industries, Inc. 88,125
2,800 Minnesota Mining and Manufacturing Co. 255,150
---------
343,275
---------
ELECTRONIC MEASURING INSTRUMENTS: 0.3%
953 Agilent Technologies, Inc.* 46,637
---------
ELECTRONICS: 6.5%
8,600 Altera Corp.* 410,650
6,000 Intel Corp.* 249,750
5,900 Kent Electronics Corp.* 140,862
3,750 Vishay Intertechnology, Inc.* 115,313
---------
916,575
---------
FINANCIAL SERVICES: 8.6%
10,539 American Express Co. 640,244
10,666 Citigroup, Inc. 576,685
---------
1,216,929
---------
HOME FURNISHINGS: 1.5%
7,500 Ethan Allen Interiors 212,344
---------
INSTRUMENTS - CONTROLS: 1.1%
4,750 Parker-Hannifin Corp. 160,313
---------
MACHINERY - INDUSTRIAL & SPECIALTY: 6.4%
4,500 Dover Corp. 211,219
13,300 Tyco International Ltd. 689,938
---------
901,157
---------
MANUFACTURING EQUIPMENT: 1.9%
13,600 Pall Corp. 271,150
---------
MEDICAL PRODUCTS: 1.1%
22,500 Possis Medical, Inc.* 151,875
---------
OFFICE FURNISHINGS: 0.4%
1,900 Herman Miller, Inc. 60,919
---------
OIL - INTERNATIONAL INTEGRATED: 3.2%
3,539 Exxon Mobil Corp. 315,413
2,500 Texaco, Inc. 131,250
---------
446,663
---------
PHARMACEUTICALS: 7.9%
5,932 Bristol-Myers Squibb Co. 338,866
3,500 Johnson & Johnson 328,781
10,000 Pfizer, Inc. 449,375
---------
1,117,022
---------
6
<PAGE>
AVONDALE HESTER TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS
SHARES VALUE
------ -----
RETAIL - GENERAL MERCHANDISE: 1.1%
4,800 Sears, Roebuck and Co. $ 155,616
-----------
TECHNOLOGY: 1.0%
3,600 Sawtek, Inc.* 138,656
-----------
TELECOMMUNICATIONS - EQUIPMENT: 2.5%
8,000 Andrew Corp.* 209,500
3,000 Tellabs, Inc.* 143,250
-----------
352,750
-----------
TELEPHONE: 0.9%
4,250 WorldCom, Inc.* 129,094
-----------
WIRE & CABLE PRODUCTS: 0.6%
3,450 Cable Design Technologies* 83,878
-----------
TOTAL COMMON STOCKS (cost $6,387,510) 12,000,350
-----------
PRINCIPAL AMOUNT
--------------------------------------------------------------------------------
BONDS: 10.3%
U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY: 10.3%
$200,000 Federal Home Loan Bank, 5.705%, 3/2/2009 186,077
100,000 Federal Home Loan Bank, 7.000%, 12/14/2005 99,123
500,000 Federal Home Loan Mortgage Corp., 7.000%, 3/15/2010 508,409
100,000 Federal Home Loan Mortgage Corp., 7.500%, 7/31/2006 99,794
500,000 Federal Home Loan Mortgage Corp., 6.140%, 9/2/2008 497,297
64,925 Federal National Mortgage Assoc., 7.000%, 6/1/2003 64,678
-----------
TOTAL BONDS (cost $1,417,415) 1,455,378
-----------
SHORT-TERM INVESTMENT: 4.7%
MONEY MARKET INVESTMENT: 4.7%
$673,716 Firstar Stellar Treasury Fund (cost $673,716) $ 673,716
-----------
TOTAL INVESTMENTS IN SECURITIES: 99.8%
(cost $8,478,641+) 14,129,444
Other Assets less Liabilities: 0.2% 26,598
-----------
NET ASSETS: 100.0% $14,156,042
===========
* Non-income producing security.
+ At September 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 $ 6,176,406
Gross unrealized depreciation (525,603)
-----------
Net unrealized appreciation $ 5,650,803
===========
See accompanying Notes to Financial Statements.
7
<PAGE>
AVONDALE HESTER TOTAL RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES at September 30, 2000 (Unaudited)
ASSETS
Investments in securities, at value (cost $8,478,641) ........ $14,129,444
Receivables:
Dividends and interest ..................................... 21,709
Fund shares sold ........................................... 16,087
Prepaid expenses ........................................... 9,728
-----------
Total assets ............................................. 14,176,968
-----------
LIABILITIES
Payables:
Due to Advisor ............................................. 8,015
Administration fees ........................................ 2,384
Fund shares redeemed ....................................... 12
Accrued expenses ........................................... 10,515
-----------
Total liabilities ........................................ 20,926
-----------
NET ASSETS ..................................................... $14,156,042
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($14,156,042/331,935 shares outstanding; unlimited number
of shares authorized without par value) ...................... $ 42.65
===========
COMPONENTS OF NET ASSETS
Paid-in capital ................................................ $ 7,173,787
Accumulated net investment income .............................. 40,746
Accumulated net realized gain on investments ................... 1,290,706
Net unrealized appreciation on investments ..................... 5,650,803
-----------
Net assets ..................................................... $14,156,042
===========
See accompanying Notes to Financial Statements.
8
<PAGE>
AVONDALE HESTER TOTAL RETURN FUND
STATEMENT OF OPERATIONS For the Six Months Ended September 30, 2000 (Unaudited)
INVESTMENT INCOME
Income
Dividends ................................................. $ 59,448
Interest .................................................. 57,786
Other ..................................................... 2,047
---------
Total income ............................................ 119,281
---------
Expenses
Advisory fees ............................................. 48,125
Administration fees ....................................... 14,959
Fund accounting fees ...................................... 11,377
Audit fees ................................................ 6,551
Transfer agent fees ....................................... 6,435
Trustee fees .............................................. 2,939
Reports to shareholders ................................... 1,863
Custody fees .............................................. 1,691
Legal fees ................................................ 1,454
Miscellaneous ............................................. 1,173
---------
Total expenses .......................................... 96,567
---------
NET INVESTMENT INCOME ................................. 22,714
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments ............................ 676,972
Net change in unrealized appreciation on investments ........ (54,983)
---------
Net realized and unrealized gain on investments ........... 621,989
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $ 644,703
=========
See accompanying Notes to Financial Statements.
9
<PAGE>
AVONDALE HESTER TOTAL RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000# MARCH 31, 2000
------------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income .................... $ 22,714 $ 17,472
Net realized gain on investments ......... 676,972 1,294,684
Net change in unrealized
appreciation on investments ............ (54,983) 714,055
------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .......... 644,703 2,026,211
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............... -- (30,276)
From net realized gain ................... -- (1,139,643)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .... -- (1,169,919)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from
net change in outstanding shares ......... 652,249 778,301
------------ ------------
TOTAL INCREASE IN NET ASSETS ............... 1,296,952 1,634,593
------------ ------------
NET ASSETS
Beginning of period ...................... 12,859,090 11,224,497
------------ ------------
END OF PERIOD ............................ $ 14,156,042 $ 12,859,090
============ ============
(a) A summary of capital share transactions is as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000# MARCH 31, 2000
---------------------- ----------------------
Shares Value Shares Value
------ ----- ------ -----
Shares sold ............ 36,004 $ 1,493,083 32,470 $ 1,273,095
Shares issued in
reinvestment of
distributions ........ -- -- 28,162 1,025,956
Shares redeemed ........ (20,303) (840,834) (37,926) (1,520,750)
------- -------- ------- ----------
Net increase ........... 15,701 $ 652,249 22,706 $ 778,301
====== =========== ====== ===========
# Unaudited.
See accompanying Notes to Financial Statements.
10
<PAGE>
AVONDALE HESTER TOTAL RETURN FUND
FINANCIAL HIGHLIGHTS For a capital share outstanding throughout each period
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
SIX MONTHS ENDED -------------------------------------------------------
SEPTEMBER 30, 2000# 2000 1999 1998 1997 1996
------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............ $40.66 $38.24 $35.26 $26.13 $27.76 $23.58
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............ 0.07 0.06 0.15 0.16 0.18 0.27
Net realized and unrealized gain
on investments ................. 1.92 6.48 3.62 9.61 0.14 6.00
------ ------ ------ ------ ------ ------
Total from investment operations ... 1.99 6.54 3.77 9.77 0.32 6.27
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income ....... -- (0.11) (0.05) (0.15) (0.28) (0.27)
From net realized gain ........... -- (4.01) (0.74) (0.49) (1.67) (1.82)
------ ------ ------ ------ ------ ------
Total distributions ................ -- (4.12) (0.79) (0.64) (1.95) (2.09)
------ ------ ------ ------ ------ ------
Net asset value, end of period ..... $42.65 $40.66 $38.24 $35.26 $26.13 $27.76
====== ====== ====== ====== ====== ======
Total return ....................... 4.89%^ 18.34% 10.94% 37.65% 1.10% 26.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (millions) .............. $ 14.2 $ 12.9 $ 11.2 $ 10.9 $ 9.9 $ 9.8
Ratio of expenses to
average net assets ............. 1.40%+ 1.46% 1.57% 1.59% 1.83% 1.69%
Ratio of net investment income
to average net assets .......... 0.33%+ 0.15% 0.41% 0.48% 0.62% 1.03%
Portfolio turnover rate .......... 15.98%^ 25.93% 25.71% 9.38% 40.87% 52.25%
</TABLE>
+ Annualized
^ Not annualized
# Unaudited
See accompanying Notes to Financial Statements.
11
<PAGE>
AVONDALE HESTER TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS at September 30, 2000 (Unaudited)
NOTE 1 - ORGANIZATION
Avondale Hester Total Return Fund (the "Fund") is a 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 investment management company. The Fund began
operations on Octo-ber 12, 1988.
Hester Capital Management, L.L.C., the Fund's Advisor, is a registered
investment advisor, and provides investment advisory service to individuals and
institutions with assets of approximately $700 million. Mr. I. Craig Hester,
President, and Mr. John Gunthorp, Executive Vice President, are responsible for
the management of the Fund's portfolio. Prior to September 1, 1998, the Fund was
known as the Avondale Total Return Fund and was managed by Herbert R. Smith &
Co., Inc.
The Fund's investment objective is to realize the combination of income and
capital appreciation that will produce the maximum total return consistent with
reasonable risk. The Fund seeks to achieve its objective by investing primarily
in higher-quality fixed income debt securities and equity securities.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange or included in the NASDAQ National Market System
are valued at the last reported sales price at the close of regular
trading on the last business day of the period; securities traded on
an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the last reported bid price.
Securities for which quotations are not readily available are valued
at their respective fair values as determined in good faith by the
Board of Trustees. Short-term investments are stated at cost, which
when combined with accrued interest, approximates market value.
U.S. Government securities with less than 60 days remaining to
maturity when acquired by the Fund are valued on an amortized cost
basis. U.S. Government securities with more than 60 days remaining to
maturity are valued at the current market value (using the mean
between the bid and the ask price) until the 60th day prior to
maturity, and then valued at amortized cost based upon the value on
such date unless the Board determines during such 60-day period that
this amortized cost basis does not represent fair value.
12
<PAGE>
AVONDALE HESTER TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited), (Continued)
B. FEDERAL INCOME TAXES. The Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
C. SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS. As is
common in the industry, security transactions are accounted for on the
trade date. The cost of securities owned on realized transactions are
relieved 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. Discounts and
premiums on securities purchased are amortized over the life of the
respective securities.
D. 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
For the six months ended September 30, 2000, Hester Capital Management,
L.L.C., Incorporated (the "Advisor") provided the Fund with investment
management services under an Investment Advisory Agreement. The Advisor
furnished all investment advice, office space, facilities, and most of the
personnel needed by the Fund. As compensation for its services, the Advisor was
entitled to a monthly fee at the annual rate of 0.70% on the first $200 million
of average daily net assets, 0.60% on the next $300 million of net assets, and
0.50% on net assets exceeding $500 million. For the six months ended September
30, 2000, the Fund incurred $48,125 in advisory fees.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Fund's 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 Fund expenses and reviews the Fund's
expense accruals. For its services, the Administrator receives a monthly fee at
an annual rate equal to the greater of 0.15% of the Fund's average daily net
assets or $30,000. For the six months ended September 30, 2000, the Fund
incurred $14,959 in Administration fees.
13
<PAGE>
AVONDALE HESTER TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited), (Continued)
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's 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 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of securities, excluding
short-term securities and U.S. Government securities, for the six months ended
September 30, 2000, were $1,099,675 and $1,115,341, respectively.
For the six months ended September 30, 2000, the cost of purchases and the
proceeds from sales of U.S. Government and Government Agency obligations,
excluding short-term securities, were $1,464,386 and $1,007,822, respectively.
14
<PAGE>
Investment Advisor
HESTER CAPITAL MANAGEMENT, L.L.C.
100 Congress Ave., Suite 1960
Austin, TX 78701
Distributor
FIRST FUND DISTRIBUTORS, INC.
4455 E. Camelback Road, Suite 261E
Phoenix, AZ 85018
Custodian
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
425 Walnut Street
Cincinnati, OH 45202
Transfer Agent
AMERICAN DATA SERVICES, INC.
P.O. Box 5536
Hauppauge, NY 11788-0132
(800) 282-2340
Auditors
TAIT, WELLER & BAKER
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WALKER, LLP
345 California Street, 29th Floor
San Francisco, CA 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.
