PZENA
FOCUSED
VALUE
FUND
--------------------------------------------------------------------------------
ANNUAL REPORT
--------------------------------------------------------------------------------
For the Year Ended
April 30, 2000
<PAGE>
PZENA
FOCUSED
VALUE
FUND
Dear Shareholders,
It is our pleasure to present you with our 2000 annual report. While the last
couple of years have been difficult for our deep value style, the year 2000 has
thus far offered us a glimpse of the potential benefits of our investment
discipline. As of April 30, our fund had gained 4.59% year-to-date, rose 1.34%
for the prior twelve months, and earned 8.42% on an annualized basis since
inception (June 24, 1996). From its low on February 28th, the fund gained 20.02%
through April 30th.
We trust that you have selected our fund because you believe as we do that in
the long run stock prices are inexorably tied to earnings and cash flow. Emotion
and hope can only temporarily win the day. As the Watergate informant known as
"deep throat" advised Washington Post reporters Woodward and Bernstein, "Follow
the money." We do follow the money, and we believe it is our commitment to
rigorous investigation into a company's cash generating power that will lead us
to superior long-term returns.
In past letters we have described the powerful momentum forces that drove the
market away from value during the past couple of years. Let us then briefly
offer some thoughts about possible causes for the recent value rally and why
this return to value may continue.
Put simply, the value rally has been driven by the same dynamic that ultimately
shapes all economic questions; supply and demand. As prices for "new economy"
stocks have soared over the past couple of years, the supply of shares for sale
has increased to take advantage of these prices. Start-up companies seeking
capital and entrepreneurs hoping to cash-in on this phenomenon have materialized
in droves and have more than absorbed the new money flowing into the market. As
a result, prices have begun to teeter.
In the meantime, valuation levels for companies in our portfolio have reached
such extremes that new capital is being attracted. For example, already this
year our holding in Hussman Industries was acquired by Ingersoll Rand for a 116%
premium from its prior day's close.
1
<PAGE>
While we do not purchase stocks solely as takeover candidates, at current prices
many of the companies in our portfolio offer compelling return profiles to
potential acquirers, and to the companies themselves as they step-up repurchases
of their own shares. As the following table highlights, this phenomenon is
clearly accelerating:
10 YEAR
1999 AVERAGE
---- -------
Stock Repurchase $174B $99B
Cash Take-Overs $154B $60B
In sum, we are encouraged by the beginning of a shift in the market back toward
valuation normalcy. In addition, we are optimistic about the opportunity that is
still embedded in our portfolio. Our commitment to our valuation discipline has
not wavered and we are confident that significant rewards lie just ahead.
Thank you again for your trust and confidence.
Sincerely,
/s/ Richard S. Pzena
Richard S. Pzena
PZENA FOCUSED VALUE FUND
Value of $10,000 vs S&P Barra/500 Value Index
Average Annual Total Return
Period Ended April 30, 2000
1 Year................................... 1.34%
Since Inception (6/24/96)................ 8.42%
S & P Barra/500 Value
Pzena Focused Value Fund Index with Income
------------------------ -----------------
6/24/96 10,000
6/30/96 9,910 10,000
9/30/96 9,990 10,264
12/31/96 11,067 11,236
3/31/97 11,328 11,434
6/30/97 12,721 13,089
9/30/97 14,215 14,289
12/31/97 13,786 14,606
3/31/98 15,482 16,293
6/30/98 14,797 16,378
9/30/98 11,546 14,263
12/31/98 13,004 16,749
3/31/99 11,513 17,197
6/30/99 15,052 19,054
9/30/99 12,685 17,295
12/31/99 13,042 18,846
3/31/00 13,100 18,890
4/30/00 13,640 18,763
Past performance is not predictive of future performance.
The S&P Barra/500 Value Index is a capitalization-weighted index of all the
stocks in the Standard & Poor's 500 that have low price-to-book ratios. The
index is unmanaged and returns include reinvested dividends.
2
<PAGE>
PZENA FOCUSED VALUE FUND
SCHEDULE OF INVESTMENTS at April 30, 2000
--------------------------------------------------------------------------------
SHARES COMMON STOCKS: 99.4% VALUE
--------------------------------------------------------------------------------
AEROSPACE - DEFENSE: 6.7%
4,000 Boeing Company $ 158,750
2,850 Northrop Grumman Corp. 201,994
----------
360,744
----------
AUTO PARTS: 3.5%
6,225 Lear Corp. * 186,361
----------
BANKS - REGIONAL: 3.0%
3,300 Pacific Century Financial Corp. 67,856
3,875 Southtrust Corp. 92,515
----------
160,371
----------
CHEMICALS - DIVERSIFIED: 2.4%
2,200 FMC Corp. * 128,012
----------
CHEMICALS - SPECIALTY: 10.5%
17,300 CK Witco Corp. 203,275
7,200 Cytec Industries, Inc. * 216,900
5,375 Lubrizol Corp. 137,734
----------
557,909
----------
COMMUNICATIONS EQUIPMENT: 2.8%
4,500 Anixter International, Inc. * 151,594
----------
COMPUTER HARDWARE: 4.7%
10,600 Quantum Corp. - DLT & Storage* 124,550
10,925 Quantum Corp. - Hard Disk Drive* 127,686
----------
252,236
----------
COMPUTER SOFTWARE: 2.2%
1,650 Autodesk, Inc. 63,319
3,225 Cadence Design Systems, Inc.* 54,220
----------
117,539
----------
CONSUMER STAPLES - RESTAURANTS: 6.7%
25,650 CBRL Group, Inc. 355,894
----------
FINANCIAL - DIVERSIFIED: 3.9%
11,500 Healthcare Realty Trust, Inc. 207,000
----------
HEALTH CARE - LONG TERM: 2.9%
45,650 Beverly Enterprises, Inc. * 154,069
----------
HEALTH CARE - MANAGED CARE: 2.8%
15,050 Foundation Health Systems, Inc. * 151,441
----------
INSURANCE - LIFE/HEALTH: 3.8%
3,550 Aetna, Inc. 205,456
----------
INSURANCE - MULTI-LINE: 4.1%
6,850 John Hancock Financial Services, Inc.* 125,013
1,925 XL Capital Ltd. 91,678
----------
216,691
----------
INSURANCE - PROPERTY/CASUALTY: 1.4%
2,400 CNA Financial Corp. * 73,800
----------
IRON & STEEL: 1.9%
7,575 UCAR International, Inc. * 99,895
----------
MACHINERY - DIVERSIFIED: 5.0%
11,700 AGCO Corp. 138,937
9,300 Hussman International, Inc. 129,038
----------
267,975
----------
METAL FABRICATORS: 3.5%
6,475 Kennametal, Inc. 186,156
----------
OIL - DOMESTICATED INTEGRATED: 2.0%
1,675 Amerada Hess Corp. 106,572
----------
OIL & GAS - DRILLING: 3.5%
5,825 Precision Drilling Corp.* 186,400
----------
OIL & GAS - REFINING/MARKETING: 3.8%
6,325 Tosco Corp. 202,795
----------
PAPER & RELATED PRODUCTS: 3.9%
3,125 Georgia-Pacific Group 114,844
3,950 Georgia-Pacific Corporation (Timber Group) 91,591
----------
206,435
----------
RETAIL - DEPARTMENT STORES: 1.0%
1,900 May Department Stores Co. 52,250
----------
RETAIL - SPECIALTY: 4.5%
4,400 Payless ShoeSource, Inc.* 242,550
----------
3
<PAGE>
PZENA FOCUSED VALUE FUND
SCHEDULE OF INVESTMENTS at April 30, 2000 (Continued)
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
TOBACCO: 2.6%
6,350 Philip Morris Companies, Inc. $ 138,906
----------
TRANSPORTATION - RAILROADS: 2.6%
3,250 Union Pacific Corp. 136,906
----------
TRANSPORTATION - TRUCKERS: 1.8%
3,525 CNF Transportation, Inc. 98,480
----------
UTILITIES - ELECTRIC COMPANIES: 1.9%
2,525 Unicom Corp. 100,369
----------
TOTAL COMMON STOCKS
(cost $5,220,336) 5,304,806
----------
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENT: 1.6
MONEY MARKET INVESTMENT: 1.6%
$83,052 Firstar Stellar Treasury Fund (cost $83,052) $ 83,052
----------
TOTAL INVESTMENTS IN SECURITIES
(cost $5,303,388+): 101.0% 5,387,858
Liabilities in excess of Other Assets: (1.0)% (50,912)
----------
NET ASSETS: 100.0% $5,336,946
==========
* Non-income producing security.
+ At April 30, 2000, the basis of securities for federal income tax purposes
was $5,304,700. Unrealized appreciation and depreciation were as follows:
Gross unrealized appreciation $ 667,635
Gross unrealized depreciation (584,477)
----------
Net unrealized appreciation $ 83,158
==========
See accompanying Notes to Financial Statements.
4
<PAGE>
PZENA FOCUSED VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES at April 30, 2000
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $5,303,388) ...... $ 5,387,858
Receivables:
Due from advisor .......................................... 11,568
Dividends and interest .................................... 2,729
Deferred organization costs ................................ 8,047
Prepaid expenses ........................................... 1,246
-----------
Total assets ........................................... 5,411,448
-----------
LIABILITIES
Payables:
Fund shares redeemed ...................................... 37,669
Deferred organization costs ............................... 10,063
Administration fees ....................................... 2,693
Accrued expenses ........................................... 24,077
-----------
Total liabilities ...................................... 74,502
-----------
NET ASSETS ................................................... $ 5,336,946
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($5,336,946/458,706 shares outstanding; unlimited
number of shares authorized without par value).............. $ 11.63
===========
COMPONENTS OF NET ASSETS
Paid-in capital ............................................ $ 5,730,521
Accumulated net realized loss on investments ............... (478,045)
Net unrealized appreciation on investments ................. 84,470
-----------
Net assets ............................................... $ 5,336,946
===========
See accompanying Notes to Financial Statements.
5
<PAGE>
PZENA FOCUSED VALUE FUND
STATEMENT OF OPERATIONS For the Year Ended April 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends .................................................. $ 76,441
Interest ................................................... 6,013
---------
Total income ............................................. 82,454
---------
Expenses
Advisory fees .............................................. 80,432
Administration fees ........................................ 30,000
Audit fees ................................................. 19,875
Fund accounting fees ....................................... 15,921
Transfer agent fees ........................................ 13,651
Registration expense ....................................... 10,435
Amortization of deferred organization costs ................ 7,016
Reports to shareholders .................................... 5,351
Trustee fees ............................................... 4,125
Custody fees ............................................... 3,637
Legal fees ................................................. 1,669
Insurance expense, miscellaneous ........................... 359
---------
Total expenses ........................................... 192,471
Less: fees waived and expenses absorbed .................. (79,867)
---------
Net expenses ............................................. 112,604
---------
NET INVESTMENT LOSS .................................... (30,150)
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments ............................. (410,995)
Net unrealized appreciation on investments ................... 423,705
---------
Net realized and unrealized gain on investments ............ 12,710
---------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $ (17,440)
=========
See accompanying Notes to Financial Statements.
6
<PAGE>
PZENA FOCUSED VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, 2000 APRIL 30, 1999
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss .......................... $ (30,150) $ (33,228)
Net realized gain (loss) on investments ...... (410,995) 114,692
Net unrealized appreciation (depreciation)
on investments ............................. 423,705 (1,700,242)
----------- -----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS .......................... (17,440) (1,618,778)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain ....................... (171,493) (343,927)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets derived
from net change in outstanding shares (a) .. (1,635,207) (530,603)
----------- -----------
TOTAL DECREASE IN NET ASSETS ............... (1,824,140) (2,493,308)
NET ASSETS
Beginning of year ............................ 7,161,086 9,654,394
----------- -----------
END OF YEAR .................................. $ 5,336,946 $ 7,161,086
=========== ===========
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 2000 APRIL 30, 1999
-------------------- ---------------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
<S> <C> <C> <C> <C>
Shares sold 121,683 $ 1,399,831 153,638 $ 1,870,983
Shares issued in reinvestment
of distribution 16,252 171,134 31,885 343,409
Shares redeemed (284,645) (3,206,172) (250,459) (2,744,995)
-------- ----------- -------- -----------
Net decrease (146,710) $(1,635,207) (64,936) $ (530,603)
======== =========== ======== ===========
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
PZENA FOCUSED VALUE FUND
FINANCIAL HIGHLIGHTS For a capital share outstanding throughout each period
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, JUNE 24, 1996*
-------------------------- THROUGH
2000 1999 1998 APRIL 30, 1997
---- ---- ---- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .............. $11.83 $14.40 $11.56 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................. (0.06) (0.05) (0.03) 0.00
Net realized and unrealized gain
(loss) on investments ......................... 0.19 (2.02) 3.93 1.59
------ ------ ------ ------
Total from investment operations .................. 0.13 (2.07) 3.90 1.59
------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income ...................... 0.00 0.00 0.00 (0.01)
From net realized gain .......................... (0.33) (0.50) (1.06) (0.02)
------ ------ ------ ------
Total distributions ............................... (0.33) (0.50) (1.06) (0.03)
------ ------ ------ ------
Net asset value, end of period .................... $11.63 $11.83 $14.40 $11.56
====== ====== ====== ======
Total return ...................................... 1.34% (14.03%) 35.10% 15.88%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) ............ $ 5.3 $ 7.2 $ 9.7 $ 3.9
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed ........ 2.99% 2.60% 2.69% 5.82%+
After fees waived and expenses absorbed ......... 1.75% 1.75% 1.75% 1.75%+
RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed......... (1.71%) (1.26%) (1.26%) (4.16%)+
After fees waived and expenses absorbed.......... (0.47%) (0.41%) (0.32%) (0.09%)+
Portfolio turnover rate ......................... 50.07% 47.14% 53.95% 22.06%
</TABLE>
* Commencement of operations.
+ Annualized.
See accompanying Notes to Financial Statements.
8
<PAGE>
PZENA FOCUSED VALUE FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
The Pzena Focused Value Fund (the "Fund") is a non-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 Fund began operations on June 24,
1996. The investment objective of the Fund is to seek long-term growth of
capital.
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 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 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. Security
transactions are accounted for on the trade date. The cost of
securities sold is determined on 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. All of the expenses incurred by the
Advisor in connection with the organization and registration of the
Fund's shares have been borne by the Fund and are being amortized on a
straight-line basis over a period of five years.
9
<PAGE>
PZENA FOCUSED VALUE FUND
NOTES TO FINANCIAL STATEMENTS (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.
F. RECLASSIFICATION OF CAPITAL ACCOUNTS. The Fund accounts and reports
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 April 30, 2000, the Fund decreased
paid-in capital by $22,346 and increased net realized loss on
investments by $7,804 due to the Fund experiencing a net investment
loss during the year. Net assets were not affected by this change.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS.
Pzena Investment Management, LLC (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 1.25% based upon the average
daily net assets of the Fund. For the year ended April 30, 2000, the Fund
incurred $80,432 in advisory fees.
The Fund is responsible for its own operating expenses. The Advisor has
agreed to limit the Fund's total expenses to not more than 1.75% of average
daily net assets. Any fee waived 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, provided the aggregate amount of the
Fund's current operating expenses for such fiscal year does not exceed the
applicable limitation on Fund expenses. For the year ended April 30, 2000, the
Advisor waived fees of $79,867. At April 30, 2000, the cumulative unreimbursed
amount paid and/or waived by the Advisor on behalf of the Fund is $282,209. The
Advisor may recapture $133,391 of the above amount no later than April 30, 2002
and $148,818 no later than April 30, 2003. The Fund must pay its 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.
10
<PAGE>
PZENA FOCUSED VALUE FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Fund's administrator under an Administration Agreement. The Administrator pre-
pares 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 an annual fee at
the following 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 year ended April 30, 2000, the Fund incurred $30,000 in
administration fees.
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 the proceeds from the sale of securities, other
than short-term investments, for the year ended April 30, 2000, were $3,128,690
and $4,976,678, respectively.
NOTE 5 - REPURCHASE AGREEMENTS
The Fund 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 Fund 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 Fund in each agreement, and the Fund will make payment for such
securities only upon physical delivery or upon evidence of book entry transfer
to the account 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.
11
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
Pzena Focused Value Fund and
The Board of Trustees of
Professionally Managed Portfolios
We have audited the accompanying statement of assets and liabilities, of Pzena
Focused Value Fund (the "Fund"), a series of Professionally Managed Portfolios,
including the schedule of investments, as of April 30, 2000, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended 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 audit 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 April
30, 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
Pzena Focused Value Fund as of April 30, 2000, the resultsof its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for the periods indicated
thereon, in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
June 9, 2000
12
<PAGE>
================================================================================
Advisor
PZENA INVESTMENT MANAGEMENT, LLC
830 Third Avenue
14th Floor
New York, NY 10022
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
AMERICAN DATA SERVICES, INC.
P.O. Box 5536
Hauppauge, NY 11788
Independent Auditors
TAIT, WELLER & BAKER
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103
Counsel to the Fund
PAUL, HASTINGS, JANOFSKY & WALKER LLP
345 California Street, 29th Floor
San Francisco, CA 94104
Counsel to the Advisor
NUTTER, McCLENNEN & FISH, LLP
One International Place
Boston, MA 02110
================================================================================
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.
