| Table of Contents | |
| Shareholder Letter | 2 |
| Expense Example | 9 |
| Schedule of Investments | 16 |
| Statements of Assets and Liabilities | 29 |
| Statements of Operations | 31 |
| Statements of Changes in Net Assets | 32 |
| Financial Highlights | 36 |
| Notes to Financial Statements | 40 |
| Additional Information | 56 |
| Privacy Notice | 57 |
| Stephens Funds® |
Fellow Shareholder:
We are pleased to present to you our 2010 annual report. The end of this Fiscal Year represents a significant period in time for us as it marks the 5th anniversary for the Stephens Small Cap Growth Fund. We are very pleased with our successes over these past five years in what has been an interesting time in the market. With that in mind we would like to provide you with a brief overview of the market this past fiscal year along with some thoughts about the market in the coming year.
Market Overview
It has been said that what the market does best is make the most number of people look wrong. After last year’s recovery and with most economic data looking less than robust, there were few outright bulls at the beginning of 2010. And in keeping with the aforementioned saying, the market delivered a big year, surprising most investors. For the fiscal year ended November 30, 2010, Class A shares of the Stephens Small Cap Growth Fund were up 28.05%, excluding sales charges, and Class A shares of the Stephens Mid Cap Growth Fund were up 28.83%, excluding sales charges.
The double digit returns belie the economic difficulties we encountered throughout the year; continued high unemployment, government budget problems (federal, state, and local), tensions with North Korea, the massive oil spill in the Gulf of Mexico, and sovereign debt problems in Greece, Spain, Portugal and Ireland just to name a few.
But perhaps the biggest story, at least in terms of market impact, has been the continued Quantitative Easing (QE) by the Federal Reserve. The Fed normally controls monetary policy by setting short term interest rates, but rates are already at or near zero, and nominal rates cannot turn negative. In order to pursue further expansionary policy, the Fed essentially creates money and uses it to buy assets, in this case mostly U.S. Treasuries and some mortgages. In theory, buying these assets keeps interest rates low, and gives high-powered money to banks, increasing the supply of money. With more money in the system and yields at next to zero, where will the extra money go? Assets of course: gold, silver, and other hard assets have risen steadily all year. We have seen money flow into stocks (but in this case, mostly foreign). Normally real estate and housing prices would benefit, but it seems that there are too many problems there to see the impact.
The market’s move hasn’t been all liquidity driven. Fundamentals have improved as well. We have been able to find plenty of public companies with sound business models and improving results. Merger and acquisition activity has been particularly strong this year, and the buyers don’t seem to mind paying relatively high prices for their targets. Valuations are slightly higher than historical
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| Stephens Funds® |
averages, but prices do not appear unreasonable, given the very low yields on fixed income assets.
Stephens Small Cap Growth Fund
For the fiscal year ended November 30, 2010, Class A shares of the Stephens Small Cap Growth Fund gained 28.05%, excluding sales charges, while the S&P 500® Index was up 9.94% and the Russell 2000® Growth Index was up 30.25%.
From a sector perspective, all of them were well into positive territory, and the trends we saw were remarkably similar to those in Q3. Energy stocks continued their rebound from the challenges due to the blowout and oil spill in the Gulf of Mexico earlier in the year. Commodities marched higher as well, with many pundits speculating oil would be at $100/barrel soon. In nearly a repeat of last quarter, Core Laboratories N.V. again finished the quarter as one of the Fund’s largest holdings; nearly all of the Fund’s energy holdings posted gains this quarter; and our overweight position here helped.
Although they were up, Consumer Discretionary stocks underperformed the broad market. Some of our specialty retail companies lagged. The Fund enjoyed success with certain internet based retailers like Blue Nile Inc. and Shutterfly Inc. Our exposure to education stocks hurt the Fund as these companies came under scrutiny, we exited our positions here in order to limit further risk.
We continue to have an overweight position in Financials, and that is largely because of our exposure to Portfolio Recovery Associates Inc. and Encore Capital Group Inc., two companies focused on debt collections. After lagging the market last quarter, they posted significant gains more recently, and Encore Capital Group Inc. was one of the Fund’s top contributors.
Healthcare stocks trailed the broad market, due to their more conservative nature, and perhaps due to concerns that the recent healthcare legislation will be repealed. Our biotechnology stocks were once again the best performers within Healthcare. We also saw strength in some of our Healthcare I.T. investments like Athenahealth Inc.
Once again, technology stocks were some of the biggest winners. Some of the gains were fueled by merger and acquisition activity and speculation. One of the Fund’s biggest contributors was Isilon Systems Inc., as they were acquired by EMC Corp for a significant premium. Although in a different industry, we benefited from a similar situation as Oracle Corp acquired Art Technology Group Inc.
Historically, we have had very little exposure to Basic Materials, and we are still underweight relative to our benchmark. However, our recent additions here have performed well.
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| Stephens Funds® |
Portfolio Characteristics
Technology remained the Fund’s largest sector, at roughly 30% of assets. Healthcare remained at about 20%. Our weightings in Energy and Financials are still significantly greater than our benchmark. Industrials and Materials are similarly underweight, although we have recently been doing more work in the Materials segment, looking for further opportunities.
Valuations expanded in the quarter, and growth rates stabilized. Today, our median holding reported 35.7% earnings growth in the most recent quarter. Expectations for the next twelve months declined from a robust 25% growth to a still respectable 22.5%. Coming off of a cyclical bottom, the Fund’s median growth rate had converged with the benchmark’s. Further evidence that we are entering the next phase of this market, the Fund has extended its lead relative to the Russell 2000 Growth (35.7% growth vs. 26.5%).
Stephens Mid Cap Growth Fund
For the fiscal year ended November 30, 2010, Class A shares of the Stephens Mid Cap Growth Fund gained 28.83%, excluding sales charges, while the S&P 500® Index was up 9.94% and the Russell Midcap Growth® Index was up 26.33%.
Nearly all of the Fund’s energy holdings posted gains this quarter, and our overweight position here helped, as it was the best performing sector. National Oilwell Varco Inc. was a top contributor for the second quarter in a row.
Our Consumer Discretionary and Consumer Staple stocks trailed the broad market, and we continued to have an underweight position here. Within those sectors, Whole Foods Market Inc. was the biggest contributor for the Fund. We sold our position in Strayer Education Inc. as that industry came under intense regulatory scrutiny.
Our holdings in Financials slightly edged out the benchmark. Affiliated Managers Group Inc. performed well as financial markets rebounded. Our exposure to the sector is inline with the benchmark.
The Fund’s holdings in Healthcare stocks outperformed the benchmark. Illumina Inc. was a top performer after posting excellent Q3 earnings results. Intuitive Surgical Inc. was one of the few stocks that was down during the quarter, but we continue to see a compelling growth opportunity.
In general, Technology stocks performed inline with the market, however we had some of our biggest winners in this sector. F5 Networks Inc. was the Fund’s largest contributor and largest holding at the end of the year. A relatively new position for us, Atmel Corp., also performed well, in part based on the strength of their touch screen business in tablets and mobile devices.
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| Stephens Funds® |
Portfolio Characteristics
Technology remained the Fund’s largest sector, at about 30% of assets. Healthcare is the second largest at roughly 18%. Both Healthcare and Tech are about 7% larger than the Russell Midcap Growth Index. Our weighting in Energy remains significantly greater than our benchmark, although Industrials and Materials are underweight by a similar amount.
Valuations inched higher, the Fund’s median position trades at about 20 times the next twelve months’ earnings estimate. Growth is still at a healthy level. Today, our median holding reported 23.8% earnings growth in the most recent quarter. Expectations for the next twelve months remained at a respectable 16.5% growth.
Please refer to our website (www.stephensfunds.com) for more detailed and up-to-date performance data.
Outlook
In our most recent quarterly commentary, we noted that “asset classes that are normally inversely correlated went up in tandem. Stocks were up, gold was up, but bonds were also up.” This phenomenon recently came to an end, and our prediction in that same commentary seems to be playing out:
“Our belief is that such low interest rates and QE will continue to cause asset prices to rise. In this scenario, bonds are likely to suffer, while stocks and commodities post gains, at least in nominal terms.”
Stocks continued their advance, gold gained a little, and bond prices fell. In the short run, it is reasonable to expect more of the same, although perhaps not without some volatility thrown in for good measure.
For nearly two years, the market has been fueled by stimulative monetary and fiscal policy, easy comparisons, inventory restocking, and corporate cost-cutting initiatives. These factors caused a rising tide among almost all stocks — hence the broad market rally, yet it disproportionately helped lower quality companies. We have said this before, but we still believe that these same factors are losing steam. The first phase of a market recovery is typically driven by beta, and the second phase is driven by alpha. Another way of saying the same thing is: the easy money has been made; picking the right stocks is what will create gains going forward.
While we focus on finding great growth stocks, we are also acutely aware of the macro environment. For the last two years, market participants have been worried about either rapid inflation or deflation. And after an immeasurable amount of debate between the two sides, today it seems that the market is pricing in the “Goldilocks” scenario — just the right amount.
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| Stephens Funds® |
Historically, this seems too good to be true. The Fed got it just right this time? Normally the so-called solution to one financial crisis is the beginning of the next.
We still believe that inflation is a big risk. While Consumer Price Index (CPI) numbers don’t show cause for alarm, the average consumer knows that the prices of many basic needs has risen dramatically. Corn, sugar, and wheat prices are all up substantially, as are industrial metals like copper and aluminum. Oil is now at $90/barrel as opposed to early 2009 when it nearly touched $30/barrel. Oil (or at least energy, broadly speaking) is an input to almost everything. CPI figures have continued to be depressed by a very weak housing market.
In economics we are taught that inflation is an increase in general price levels of goods and services, including wages. The Federal Reserve assures us that inflation is not a problem today. Perhaps what we have today is some variation of inflation — higher prices for energy, food, and everyday needs, but without wage growth or a rising price in many American’s largest asset, their home. Is this a result of China exporting commodity inflation to the rest of the world?
What we worry about the most is a situation where rising energy and commodity prices cut into every consumer’s discretionary spending. Just as $147 per barrel of oil had a hand in causing the last recession in 2008, a similar situation could play out again.
While we are concerned about inflation, we haven’t ruled out “Goldilocks” yet. It is possible that the rebound in the economy and the market may initiate a virtuous cycle of consumer confidence and more spending. Earnings growth rates are as high as they have been in years. We have still been finding plenty of companies that have exciting prospects. Inflationary concerns might also be lifting stock prices too, as investors realize that cash and bonds suffer the most as a result of inflation.
On a net basis, money has been flowing out of domestic stocks for years, and in spite of this, the market has delivered very healthy returns. Those investors still sitting on the sidelines, those that realize what will happen to bonds as inflation becomes a problem, and even the masses that tend to chase performance could provide a tailwind for equity valuations as they enter the market.
We are as focused as ever in navigating these complicated waters. While we can’t be sure about the absolute direction of the market, we believe that we are entering a market environment that favors growth strategies and stock selection.
Closing
We remained disciplined in our search for what we believe are the best and fastest growing companies and adherent to the philosophies and investment principles we have followed for years. We appreciate your confidence and trust. At Stephens, we firmly believe in investing alongside of our clients — each member of the portfolio management team has significant
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| Stephens Funds® |
investments in our Funds. We thank you for your continued support and welcome any feedback you may have.
Your Fellow Shareholder,
Ryan Edward Crane
Past performance is no guarantee of future results.
Opinions expressed are those of Ryan Edward Crane and are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security.
Mutual fund investing involves risk. Principal loss is possible. Small- and Medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales. Investments in foreign securities involve greater volatility and political, economic and currency risks and differences in accounting methods.
Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.
The S&P 500 Index is unmanaged and commonly used to measure performance of U.S. stocks. The Russell 2000 Growth Index is an unmanaged index representing those Russell 2000 Index companies with higher price-to-book ratios and future projected earnings according to the Frank Russell Company. The Russell Midcap Growth Index is an unmanaged index that measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 30% of the total market capitalization of the Russell 1000 Index. One cannot invest directly in an index.
Alpha: An annualized return measure of how much better or worse a fund’s performance is relative to an index of funds in the same category, after allowing for differences in risk. Beta measures the volatility of the fund, as compared to that of the overall market. The Market’s beta is set at 1.00; a beta higher than 1.00 is considered to be more volatile than the market, while a beta lower than 1.00 is considered to be less volatile. Correlation: A correlation coefficient is a measure of the interdependence of two random variables that ranges in value from -1 to +1, indicating perfect negative correlation at -1, absence of correlation at zero, and perfect positive correlation
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| Stephens Funds® |
at +1. Earnings Growth is a measure of growth in a company’s net income over a specific period, often for 1 or more years.
Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any security. Please refer to the schedule of investments within the report for a complete list of fund holdings. Current and future portfolio holdings are subject to risk.
Earnings Growth Rates are not a forecast of the fund’s future performance.
This material must be preceded or accompanied by a current prospectus.
Quasar Distributors, LLC, Distributor. (1/11)
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| Stephens Funds® |
Sector Allocation at November 30, 2010
| * | Cash Equivalents and other assets less liabilities. |
Sector allocations and Fund holdings are subject to change at any time and are not a recommendation to buy or sell any security.
Expense Example For the Six Months Ended November 30, 2010 (Unaudited)
As a shareholder of the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund (each a “Fund” and collectively the “Funds”), you incur two types of costs: (1) transaction costs, including sales charges or loads; and (2) ongoing costs, including investment advisory fees; distribution and/or service fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (June 1, 2010 – November 30, 2010).
Actual Expenses
The first line of the table below provides information about actual account values based on actual returns and actual expenses. You will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, the Funds’ transfer agent. If you request that a redemption be made by wire transfer, currently, a $15.00 fee is charged by the Funds’ transfer agent. You will be charged a redemption fee equal to 2% of the net amount of the redemption if you redeem Class A shares less than 30 days after you purchase them. An Individual Retirement Account (“IRA”) will be charged a $15.00 annual
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| Stephens Funds® |
Expense Example For the Six Months Ended November 30, 2010 (Unaudited), Continued
maintenance fee. To the extent the Funds invest in shares of other investment companies as part of its investment strategy, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Funds invest in addition to the expenses of the Funds. Actual expenses of the underlying funds may vary. These examples are not included in the example below. The example below includes, but is not limited to, investment advisory fees, shareholder servicing fees, fund accounting, custody and transfer agent fees. However, the example below does not include portfolio trading commissions and related expenses, interest expense or dividends on short positions taken by the Funds and other extraordinary expenses as determined under generally accepted accounting principles. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which are not the Funds’ actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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| Stephens Funds® |
Expense Example For the Six Months Ended
November 30, 2010 (Unaudited), Continued
Stephens Small Cap Growth Fund
| Expenses Paid | ||||||||||||
| Beginning | Ending | During the Period | ||||||||||
| Account Value | Account Value | June 1, 2010 – | ||||||||||
| June 1, 2010 | November 30, 2010 | November 30, 2010* | ||||||||||
| Class A Actual | $ | 1,000 | $ | 1,151 | $ | 7.28 | ||||||
| Class A Hypothetical (5% annual return before expenses) | $ | 1,000 | $ | 1,018 | $ | 6.83 | ||||||
| Class I Actual | $ | 1,000 | $ | 1,152 | $ | 5.94 | ||||||
| Class I Hypothetical (5% annual return before expenses) | $ | 1,000 | $ | 1,020 | $ | 5.57 | ||||||
Stephens Mid Cap Growth Fund
| Expenses Paid | ||||||||||||
| Beginning | Ending | During the Period | ||||||||||
| Account Value | Account Value | June 1, 2010 – | ||||||||||
| June 1, 2010 | November 30, 2010 | November 30, 2010** | ||||||||||
| Class A Actual | $ | 1,000 | $ | 1,156 | $ | 8.11 | ||||||
| Class A Hypothetical (5% annual return before expenses) | $ | 1,000 | $ | 1,018 | $ | 7.59 | ||||||
| Class I Actual | $ | 1,000 | $ | 1,158 | $ | 6.76 | ||||||
| Class I Hypothetical (5% annual return before expenses) | $ | 1,000 | $ | 1,019 | $ | 6.33 | ||||||
| * | Expenses are equal to the Stephens Small Growth Cap Fund’s expense ratio for the most recent six-month period of 1.35% (reflecting fee waivers in effect) for Class A shares and 1.10% (reflecting fee waivers in effect) for Class I shares, multiplied by the average account value over the period multiplied by 183/365 (to reflect the one-half year period). | |
| ** | Expenses are equal to the Stephens Mid Cap Growth Fund’s expense ratio for the most recent six-month period of 1.50% (reflecting fee waivers in effect) for Class A shares and 1.25% (reflecting fee waivers in effect) for Class I shares, multiplied by the average account value over the period multiplied by 183/365 (to reflect the one-half year period). |
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| Stephens Small Cap Growth Fund |
Stephens Small Cap Growth Fund – Class A
Value of $10,000 vs Russell 2000®
Growth Index and S&P 500® Index
| Average Annual Total Returns | Since Inception | |||
| Year Ended November 30, 2010 | 1 Year | 3 Year | (12/1/2005) | |
| Class A | 28.05% | (1.09 | )% | 3.09% |
| Class A (with sales charge) | 21.38% | (2.86 | )% | 1.99% |
| Russell 2000® Growth Index | 30.25% | (0.07 | )% | 3.34% |
| S&P 500® Index | 9.94% | (5.15 | )% | 0.74% |
This chart illustrates the performance of a hypothetical $10,000 investment made on December 1, 2005, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The returns reflect fee waivers in effect. In the absence of such waivers, total return would be reduced. The chart assumes reinvestment of capital gains and dividends for the Fund and indices.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-866-735-7464.
The Fund imposes a 2% redemption fee on shares held for less than 30 days. Performance does not reflect the redemption fee. If reflected, total returns would be reduced.
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| Stephens Small Cap Growth Fund |
Stephens Small Cap Growth Fund – Class I
Value of $10,000 vs Russell 2000®
Growth Index and S&P 500® Index
| Average Annual Total Returns | Since Inception | ||||
| Year Ended November 30, 2010 | 1 Year | 3 Year | (8/31/2006) | ||
| Class I | 28.39% | (0.84)% | 4.45% | ||
| Russell 2000® Growth Index | 30.25% | (0.07)% | 3.60% | ||
| S&P 500® Index | 9.94% | (5.15)% | (0.18)% |
This chart illustrates the performance of a hypothetical $10,000 investment made on August 31, 2006, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The returns reflect fee waivers in effect. In the absence of such waivers, total return would be reduced. The chart assumes reinvestment of capital gains and dividends for the Fund and indices.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-866-735-7464.
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| Stephens Small Cap Growth Fund |
Stephens Mid Cap Growth Fund – Class A
Value of $10,000 vs Russell Midcap®
Growth Index and S&P 500®Index
| Average Annual Total Returns | Since Inception | ||||
| Year Ended November 30, 2010 | 1 Year | 3 Year | (2/1/2006) | ||
| Class A | 28.83% | (2.69)% | 2.49% | ||
| Class A (with sales charge) | 22.13% | (4.43)% | 1.36% | ||
| Russell Midcap® Growth Index | 26.33% | (0.96)% | 2.49% | ||
| S&P 500® Index | 9.94% | (5.15)% | 0.42% |
This chart illustrates the performance of a hypothetical $10,000 investment made on February 1, 2006, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The returns reflect fee waivers in effect. In the absence of such waivers, total return would be reduced. The chart assumes reinvestment of capital gains and dividends for the Fund and indices.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-866-735-7464.
The Fund imposes a 2% redemption fee on shares held for less than 30 days. Performance does not reflect the redemption fee. If reflected, total returns would be reduced.
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| Stephens Small Cap Growth Fund |
Stephens Mid Cap Growth Fund – Class I
Value of $10,000 vs Russell Midcap®
Growth Index and S&P 500® Index
| Average Annual Total Returns | Since Inception | |||||
| Year Ended November 30, 2010 | 1 Year | 3 Year | (8/31/2006) | |||
| Class I | 29.18% | (2.42)% | 5.27% | |||
| Russell Midcap® Growth Index | 26.33% | (0.96)% | 3.99% | |||
| S&P 500® Index | 9.94% | (5.15)% | (0.18)% |
This chart illustrates the performance of a hypothetical $10,000 investment made on August 31, 2006 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The returns reflect fee waivers in effect. In the absence of such waivers, total return would be reduced. The chart assumes reinvestment of capital gains and dividends for the Fund and indices.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-866-735-7464.
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| Stephens Small Cap Growth Fund |
Schedule of Investments at November 30, 2010
| Shares | Value | |||||
| COMMON STOCKS - 95.9% | ||||||
| Auto Components - 1.2% | ||||||
| 45,900 | LKQ Corp.* | $ | 990,293 | |||
| Biotechnology - 2.4% | ||||||
| 15,200 | BioMarin Pharmaceutical, Inc.* | 411,616 | ||||
| 34,000 | Cepheid, Inc.* | 669,460 | ||||
| 13,500 | Cubist Pharmaceuticals, Inc.* | 293,085 | ||||
| 20,700 | Myriad Genetics, Inc.* | 445,671 | ||||
| 3,600 | United Therapeutics Corp.* | 226,548 | ||||
| 2,046,380 | ||||||
| Capital Markets - 1.4% | ||||||
| 7,200 | Greenhill & Co., Inc. | 539,568 | ||||
| 13,000 | Stifel Financial Corp.* | 673,790 | ||||
| 1,213,358 | ||||||
| Chemicals - 0.3% | ||||||
| 9,000 | Polypore International, Inc.* | 286,020 | ||||
| Commercial Banks - 1.7% | ||||||
| 42,300 | East West Bancorp, Inc. | 733,482 | ||||
| 16,300 | SVB Financial Group* | 732,359 | ||||
| 1,465,841 | ||||||
| Commercial Services & Supplies - 6.3% | ||||||
| 23,532 | Advisory Board Co.* | 1,116,829 | ||||
| 5,800 | Clean Harbors, Inc.* | 429,490 | ||||
| 18,535 | CoStar Group, Inc.* | 977,536 | ||||
| 50,300 | Darling International, Inc.* | 582,474 | ||||
| 12,000 | FTI Consulting, Inc.* | 427,680 | ||||
| 20,700 | Portfolio Recovery Associates, Inc.* | 1,311,759 | ||||
| 22,100 | Tetra Tech, Inc.* | 510,731 | ||||
| 5,356,499 | ||||||
| Communications Equipment - 3.6% | ||||||
| 48,100 | Aruba Networks, Inc.* | 1,019,720 | ||||
| 16,300 | DG FastChannel, Inc.* | 411,249 | ||||
| 14,800 | Finisar Corp.* | 282,976 | ||||
The accompanying notes are an integral part of these financial statements.
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| Stephens Small Cap Growth Fund |
Schedule of Investments at November 30, 2010,
Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.9%, CONTINUED | ||||||
| Communications Equipment - 3.6%, Continued | ||||||
| 38,800 | Riverbed Technology, Inc.* | $ | 1,315,708 | |||
| 3,029,653 | ||||||
| Computers & Peripherals - 3.4% | ||||||
| 30,400 | Isilon Systems, Inc.* | 1,026,000 | ||||
| 23,200 | QLogic Corp.* | 415,048 | ||||
| 36,000 | STEC, Inc.* | 611,820 | ||||
| 24,300 | Stratasys, Inc.* | 821,826 | ||||
| 2,874,694 | ||||||
| Consumer Finance - 2.3% | ||||||
| 42,732 | EZCORP, Inc.* | 1,075,137 | ||||
| 29,600 | First Cash Financial Services, Inc.* | 852,184 | ||||
| 1,927,321 | ||||||
| Consumer Services - 0.5% | ||||||
| 7,700 | Green Dot Corp. - Class A* | 445,676 | ||||
| Diversified Financial Services - 1.2% | ||||||
| 56,500 | Encore Capital Group, Inc.* | 1,050,335 | ||||
| Electric Services - 0.2% | ||||||
| 7,700 | Ormat Technologies, Inc. | 206,360 | ||||
| Electrical Equipment - 0.7% | ||||||
| 18,000 | American Superconductor Corp.* | 599,040 | ||||
| Electronic Equipment & Instruments - 2.7% | ||||||
| 8,600 | Itron, Inc.* | 488,222 | ||||
| 14,645 | National Instruments Corp. | 499,688 | ||||
| 18,700 | OSI Systems, Inc.* | 652,069 | ||||
| 27,700 | Power-One, Inc.* | 261,765 | ||||
| 9,110 | Trimble Navigation Ltd.* | 339,256 | ||||
| 2,241,000 | ||||||
| Energy Equipment & Services - 7.1% | ||||||
| 5,900 | CARBO Ceramics, Inc. | 573,185 | ||||
| 17,100 | Core Laboratories NV | 1,463,760 | ||||
| 12,700 | Dril-Quip, Inc.* | 983,488 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 17 -
| Stephens Small Cap Growth Fund |
Schedule of Investments at November 30, 2010,
Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.9%, CONTINUED | ||||||
| Energy Equipment & Services - 7.1%, Continued | ||||||
| 43,600 | Helix Energy Solutions Group, Inc.* | $ | 611,708 | |||
| 69,808 | Key Energy Services, Inc.* | 719,022 | ||||
| 7,230 | Oceaneering International, Inc.* | 499,593 | ||||
| 11,900 | Oil States International, Inc.* | 706,027 | ||||
| 67,900 | Pioneer Drilling Co.* | 465,115 | ||||
| 6,021,898 | ||||||
| Food & Staples Retailing - 1.2% | ||||||
| 26,240 | United Natural Foods, Inc.* | 982,426 | ||||
| Food Products - 1.7% | ||||||
| 9,700 | Balchem Corp. | 300,312 | ||||
| 14,200 | Diamond Foods, Inc. | 660,868 | ||||
| 10,200 | TreeHouse Foods, Inc.* | 506,736 | ||||
| 1,467,916 | ||||||
| Health Care Equipment & Supplies - 5.1% | ||||||
| 35,600 | Conceptus, Inc.* | 468,140 | ||||
| 16,260 | Gen-Probe, Inc.* | 843,244 | ||||
| 25,500 | Neogen Corp.* | 947,325 | ||||
| 30,580 | NuVasive, Inc.* | 714,349 | ||||
| 16,700 | Thoratec Corp.* | 425,098 | ||||
| 34,500 | Volcano Corp.* | 915,975 | ||||
| 4,314,131 | ||||||
| Health Care Providers & Services - 4.8% | ||||||
| 18,500 | Bio-Reference Laboratories, Inc.* | 387,945 | ||||
| 16,000 | HMS Holdings Corp.* | 1,008,160 | ||||
| 27,900 | ICON PLC - ADR* | 561,627 | ||||
| 27,300 | IPC The Hospitalist Company, Inc.* | 885,066 | ||||
| 36,000 | PSS World Medical, Inc.* | 741,600 | ||||
| 23,755 | VCA Antech, Inc.* | 518,928 | ||||
| 4,103,326 | ||||||
| Health Care Technology - 4.0% | ||||||
| 25,702 | athenahealth, Inc.* | 1,054,039 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 18 -
| Stephens Small Cap Growth Fund |
Schedule of Investments at November 30, 2010,
Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.9%, CONTINUED | ||||||
| Health Care Technology - 4.0%, Continued | ||||||
| 45,800 | Med Assets, Inc.* | $ | 849,361 | |||
| 47,821 | Medidata Solutions, Inc.* | 951,638 | ||||
| 14,900 | SXC Health Solutions Corp.* | 571,415 | ||||
| 3,426,453 | ||||||
| Hotels, Restaurants & Leisure - 2.6% | ||||||
| 13,796 | BJ’s Restaurants, Inc.* | 505,623 | ||||
| 14,900 | Buffalo Wild Wings, Inc.* | 722,501 | ||||
| 9,900 | Panera Bread Co. - Class A* | 992,376 | ||||
| 2,220,500 | ||||||
| Household Durables - 0.9% | ||||||
| 20,400 | Tempur-Pedic International, Inc.* | 716,244 | ||||
| Insurance - 0.5% | ||||||
| 6,600 | ProAssurance Corp.* | 390,918 | ||||
| Internet & Catalog Retail - 2.8% | ||||||
| 13,500 | Blue Nile, Inc.* | 667,575 | ||||
| 20,200 | Shutterfly, Inc.* | 666,600 | ||||
| 26,126 | VistaPrint Ltd.* | 1,053,400 | ||||
| 2,387,575 | ||||||
| Internet Software & Services - 4.7% | ||||||
| 19,818 | comScore, Inc.* | 435,996 | ||||
| 12,200 | Digital River, Inc.* | 449,204 | ||||
| 18,500 | GSI Commerce, Inc.* | 441,225 | ||||
| 99,000 | Limelight Networks, Inc.* | 702,900 | ||||
| 13,600 | Mercadolibre, Inc.* | 865,232 | ||||
| 45,270 | Vocus, Inc.* | 1,108,210 | ||||
| 4,002,767 | ||||||
| IT Services - 0.4% | ||||||
| 29,700 | Echo Global Logistics, Inc.* | 340,065 | ||||
| Life Sciences Tools & Services - 1.3% | ||||||
| 51,100 | eResearch Technology, Inc.* | 286,671 | ||||
| 25,100 | Parexel International Corp.* | 440,756 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
-��19 -
| Stephens Small Cap Growth Fund |
Schedule of Investments at November 30, 2010,
Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.9%, CONTINUED | ||||||
| Life Sciences Tools & Services - 1.3%, Continued | ||||||
| 6,600 | Techne Corp. | $ | 396,462 | |||
| 1,123,889 | ||||||
| Machinery - 0.8% | ||||||
| 5,500 | Lindsay Corp. | 324,720 | ||||
| 4,100 | Valmont Industries, Inc. | 331,526 | ||||
| 656,246 | ||||||
| Media - 3.6% | ||||||
| 50,500 | Ballantyne Strong, Inc.* | 346,430 | ||||
| 40,812 | IMAX Corp.* | 1,110,495 | ||||
| 109,100 | Lions Gate Entertainment Corp.* | 786,611 | ||||
| 45,600 | National CineMedia, Inc. | 850,896 | ||||
| 3,094,432 | ||||||
| Metals & Mining - 0.1% | ||||||
| 3,200 | Molycorp, Inc* | 92,864 | ||||
| Oil, Gas & Consumable Fuels - 2.5% | ||||||
| 29,900 | Carrizo Oil & Gas, Inc.* | 867,698 | ||||
| 8,600 | Rosetta Resources, Inc.* | 308,052 | ||||
| 26,800 | Tesco Corp.* | 354,028 | ||||
| 5,500 | Whiting Petroleum Corp.* | 605,275 | ||||
| 2,135,053 | ||||||
| Pharmaceuticals - 0.4% | ||||||
| 7,700 | Salix Pharmaceuticals Ltd.* | 343,805 | ||||
| Prepackaged Software - 0.6% | ||||||
| 20,750 | Blackbaud, Inc. | 525,182 | ||||
| Professional Services - 2.1% | ||||||
| 22,900 | Acacia Research Corp.* | 624,025 | ||||
| 26,100 | Administaff, Inc. | 738,369 | ||||
| 12,400 | Corporate Executive Board Co. | 430,156 | ||||
| 1,792,550 | ||||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 20 -
| Stephens Small Cap Growth Fund |
Schedule of Investments at November 30, 2010,
Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.9%, CONTINUED | ||||||
| Road & Rail - 0.4% | ||||||
| 17,400 | Knight Transportation, Inc. | $ | 335,472 | |||
| Semiconductors & Semiconductor Equipment - 8.6% | ||||||
| 24,700 | Atheros Communications, Inc.* | 804,232 | ||||
| 16,300 | CEVA, Inc.* | 378,160 | ||||
| 16,600 | Cymer, Inc.* | 631,962 | ||||
| 26,000 | Entropic Communications, Inc.* | 232,440 | ||||
| 60,600 | GT Solar International, Inc.* | 405,414 | ||||
| 13,800 | Hittite Microwave Corp.* | 789,912 | ||||
| 27,900 | Intersil Corp. | 355,725 | ||||
| 22,600 | Mellanox Technologies Ltd* | 538,558 | ||||
| 40,630 | Microsemi Corp.* | 899,548 | ||||
| 15,500 | NetLogic Microsystems, Inc.* | 483,600 | ||||
| 14,600 | Power Integrations, Inc. | 588,234 | ||||
| 22,370 | Varian Semiconductor Equipment Associates, Inc.* | 705,326 | ||||
| 10,500 | Veeco Instruments, Inc.* | 461,790 | ||||
| 7,274,901 | ||||||
| Software - 6.6% | ||||||
| 22,400 | Ansys, Inc.* | 1,086,400 | ||||
| 10,200 | Concur Technologies, Inc.* | 522,342 | ||||
| 8,000 | FactSet Research Systems, Inc. | 709,360 | ||||
| 8,700 | Fortinet, Inc.* | 277,269 | ||||
| 18,000 | MICROS Systems, Inc.* | 786,960 | ||||
| 24,000 | Nuance Communications, Inc.* | 424,200 | ||||
| 43,100 | PROS Holdings, Inc.* | 411,605 | ||||
| 11,600 | Quality Systems, Inc. | 748,084 | ||||
| 24,000 | Sourcefire, Inc.* | 651,120 | ||||
| 5,617,340 | ||||||
| Specialty Retail - 3.8% | ||||||
| 20,000 | Aeropostale, Inc.* | 540,600 | ||||
| 52,600 | Pep Boys - Manny, Moe & Jack | 651,714 | ||||
| 15,700 | rue21, Inc.* | 471,157 | ||||
| 29,800 | Ulta Salon, Cosmetics & Fragrance, Inc.* | 1,041,510 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 21 -
| Stephens Small Cap Growth Fund |
Schedule of Investments at November 30, 2010,
Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.9%, CONTINUED | ||||||
| Specialty Retail - 3.8%, Continued | ||||||
| 17,600 | Zumiez, Inc.* | $ | 559,856 | |||
| 3,264,837 | ||||||
| Textiles, Apparel & Luxury Goods - 0.6% | ||||||
| 28,800 | CROCS, Inc.* | 505,296 | ||||
| Trading Companies & Distributors - 0.8% | ||||||
| 11,645 | MSC Industrial Direct Co., Inc. - Class A | 700,330 | ||||
TOTAL COMMON STOCKS (Cost $65,123,690) | 81,568,886 | |||||
| SHORT-TERM INVESTMENTS - 4.0% | ||||||
| Money Market Funds - 4.0% | ||||||
| 3,230,523 | Invesco Liquid Assets Portfolio - Institutional Class. 0.196%1 | 3,230,523 | ||||
| 176,531 | Invesco Short-Term Prime Portfolio - Institutional Class, 0.152%1 | 176,531 | ||||
| 3,407,054 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $3,407,054) | 3,407,054 | |||||
TOTAL INVESTMENTS IN SECURITIES - 99.9% (Cost $68,530,744) | 84,975,940 | |||||
| Other Assets in Excess of Liabilities - 0.1% | 103,535 | |||||
| TOTAL NET ASSETS - 100.0% | $ | 85,079,475 | ||||
| * | Non-income producing security. | |
| ADR | American Depository Receipt | |
| 1 | 7-day yield as of November 30, 2010. |
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 22 -
| Stephens Small Cap Growth Fund |
Schedule of Investments at November 30, 2010
| Shares | Value | |||||
| COMMON STOCKS - 95.4% | ||||||
| Aerospace & Defense - 2.4% | ||||||
| 7,300 | BE Aerospace, Inc.* | $ | 259,150 | |||
| 1,895 | Precision Castparts Corp. | 261,643 | ||||
| 520,793 | ||||||
| Air Freight & Logistics - 0.4% | ||||||
| 1,600 | Expeditors International of Washington, Inc. | 84,640 | ||||
| Auto Components - 1.0% | ||||||
| 10,150 | LKQ Corp.* | 218,986 | ||||
| Beverages - 2.1% | ||||||
| 3,137 | Brown-Forman Corp. - Class B | 205,223 | ||||
| 4,800 | Hansen Natural Corp.* | 255,456 | ||||
| 460,679 | ||||||
| Biological Products - 1.0% | ||||||
| 12,300 | QIAGEN NV* | 225,090 | ||||
| Biotechnology - 1.4% | ||||||
| 1,050 | Alexion Pharmaceuticals, Inc.* | 80,272 | ||||
| 2,230 | Cephalon, Inc.* | 141,583 | ||||
| 1,350 | United Therapeutics Corp.* | 84,956 | ||||
| 306,811 | ||||||
| Capital Markets - 2.6% | ||||||
| 3,280 | Affiliated Managers Group, Inc.* | 286,705 | ||||
| 1,850 | Greenhill & Co., Inc. | 138,639 | ||||
| 4,350 | Lazard Ltd. | 155,773 | ||||
| 581,117 | ||||||
| Commercial Banks - 1.4% | ||||||
| 3,050 | Cullen/Frost Bankers, Inc. | 163,297 | ||||
| 8,200 | East West Bancorp, Inc. | 142,188 | ||||
| 305,485 | ||||||
| Commercial Services & Supplies - 3.2% | ||||||
| 3,850 | FTI Consulting, Inc.* | 137,214 | ||||
| 3,500 | Portfolio Recovery Associates, Inc* | 221,795 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 23 -
| Stephens Mid Cap Growth Fund |
Schedule of Investments at November 30, 2010, Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.4%, CONTINUED | ||||||
| Commercial Services & Supplies - 3.2%, Continued | ||||||
| 4,650 | Stericycle, Inc.* | $ | 343,635 | |||
| 702,644 | ||||||
| Communications Equipment - 2.2% | ||||||
| 3,750 | F5 Networks, Inc.* | 494,550 | ||||
| Computers & Peripherals - 0.9% | ||||||
| 4,100 | NetApp, Inc.* | 208,813 | ||||
| Consumer Services - 0.5% | ||||||
| 1,950 | Green Dot Corp. - Class A* | 112,866 | ||||
| Diversified Financial Services - 0.8% | ||||||
| 1,500 | IntercontinentalExchange, Inc.* | 169,050 | ||||
| Electrical Equipment - 1.1% | ||||||
| 450 | First Solar, Inc.* | 55,283 | ||||
| 2,600 | Roper Industries, Inc. | 188,266 | ||||
| 243,549 | ||||||
| Electronic Equipment & Instruments - 3.3% | ||||||
| 3,900 | Dolby Laboratories, Inc.* | 246,831 | ||||
| 2,950 | Itron, Inc.* | 167,472 | ||||
| 5,520 | National Instruments Corp. | 188,342 | ||||
| 3,210 | Trimble Navigation Ltd.* | 119,540 | ||||
| 722,185 | ||||||
| Energy Equipment & Services - 4.9% | ||||||
| 3,900 | Core Laboratories NV | 333,840 | ||||
| 3,190 | FMC Technologies, Inc.* | 268,726 | ||||
| 4,560 | National-Oilwell Varco, Inc. | 279,482 | ||||
| 2,950 | Oceaneering International, Inc.* | 203,845 | ||||
| 1,085,893 | ||||||
| Food & Staples Retailing - 1.1% | ||||||
| 5,150 | Whole Foods Market, Inc.* | 243,183 | ||||
| Health Care Equipment & Supplies - 6.7% | ||||||
| 4,835 | Gen-Probe, Inc.* | 250,743 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 24 -
| Stephens Mid Cap Growth Fund |
Schedule of Investments at November 30, 2010,
Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.4%, CONTINUED | ||||||
| Health Care Equipment & Supplies - 6.7%, Continued | ||||||
| 12,898 | Hologic, Inc.* | $ | 211,527 | |||
| 3,050 | IDEXX Laboratories, Inc.* | 195,841 | ||||
| 5,550 | Illumina, Inc.* | 333,666 | ||||
| 9,800 | ResMed, Inc.* | 313,110 | ||||
| 2,700 | Varian Medical Systems, Inc.* | 177,741 | ||||
| 1,482,628 | ||||||
| Health Care Providers & Services - 4.4% | ||||||
| 3,545 | Cerner Corp.* | 311,464 | ||||
| 6,000 | Express Scripts, Inc.* | 312,540 | ||||
| 3,045 | Henry Schein, Inc.* | 174,874 | ||||
| 8,580 | VCA Antech, Inc.* | 187,430 | ||||
| 986,308 | ||||||
| Health Care Technology - 0.9% | ||||||
| 10,800 | Allscripts Healthcare Solutions, Inc.* | 189,540 | ||||
| Hotels, Restaurants & Leisure - 2.4% | ||||||
| 1,050 | Chipotle Mexican Grill, Inc.* | 271,415 | ||||
| 2,700 | Panera Bread Co. - Class A* | 270,648 | ||||
| 542,063 | ||||||
| Household Durables - 0.8% | ||||||
| 5,100 | Tempur-Pedic International, Inc.* | 179,061 | ||||
| Insurance - 1.0% | ||||||
| 7,580 | HCC Insurance Holdings, Inc. | 212,846 | ||||
| Internet & Catalog Retail - 2.9% | ||||||
| 2,300 | Netflix, Inc.* | 473,570 | ||||
| 4,200 | VistaPrint Ltd.* | 169,344 | ||||
| 642,914 | ||||||
| Internet Software & Services - 2.9% | ||||||
| 6,350 | Akamai Technologies, Inc.* | 331,406 | ||||
| 2,400 | Mercadolibre, Inc.* | 152,688 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 25 -
| Stephens Mid Cap Growth Fund |
Schedule of Investments at November 30, 2010,
Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.4%, CONTINUED | ||||||
| Internet Software & Services - 2.9%, Continued | ||||||
| 4,900 | VeriSign, Inc.* | $ | 168,119 | |||
| 652,213 | ||||||
| IT Services - 5.3% | ||||||
| 3,900 | Alliance Data Systems Corp.* | 246,012 | ||||
| 5,010 | Cognizant Technology Solutions Corp. - Class A* | 325,550 | ||||
| 5,255 | Global Payments, Inc. | 218,398 | ||||
| 12,695 | Iron Mountain, Inc. | 281,956 | ||||
| 2,700 | Teradata Corp.* | 110,943 | ||||
| 1,182,859 | ||||||
| Life Sciences Tools & Services - 1.8% | ||||||
| 4,480 | Covance, Inc.* | 201,197 | ||||
| 4,100 | Life Technologies Corp.* | 204,200 | ||||
| 405,397 | ||||||
| Machinery - 1.0% | ||||||
| 3,750 | AGCO Corp.* | 169,275 | ||||
| 700 | Valmont Industries, Inc. | 56,602 | ||||
| 225,877 | ||||||
| Media - 0.9% | ||||||
| 5,800 | Discovery Communications, Inc.* | 205,958 | ||||
| Medical Devices - 0.8% | ||||||
| 705 | Intuitive Surgical, Inc.* | 183,504 | ||||
| Multiline Retail - 0.6% | ||||||
| 2,750 | Family Dollar Stores, Inc. | 138,050 | ||||
| Oil, Gas & Consumable Fuels - 4.3% | ||||||
| 5,280 | Newfield Exploration Co.* | 352,862 | ||||
| 7,600 | Petrohawk Energy Corp.* | 135,508 | ||||
| 4,550 | Range Resources Corp. | 191,054 | ||||
| 4,110 | Southwestern Energy Co.* | 148,782 | ||||
| 1,150 | Whiting Petroleum Corp.* | 126,558 | ||||
| 954,764 | ||||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 26 -
| Stephens Mid Cap Growth Fund |
Schedule of Investments at November 30, 2010, Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.4%, CONTINUED | ||||||
| Pharmaceuticals - 0.7% | ||||||
| 2,055 | Shire PLC - ADR | $ | 144,549 | |||
| Professional Services - 1.6% | ||||||
| 3,200 | IHS, Inc.* | 231,424 | ||||
| 4,000 | Verisk Analytics, Inc. - Class A* | 121,080 | ||||
| 352,504 | ||||||
| Road & Rail - 0.8% | ||||||
| 4,650 | J.B. Hunt Transport Services, Inc. | 169,725 | ||||
| Semiconductors & Semiconductor Equipment - 7.4% | ||||||
| 20,515 | ARM Holdings PLC - ADR | 384,656 | ||||
| 7,611 | ASML Holding NV - ADR | 248,347 | ||||
| 19,550 | Atmel Corp.* | 203,124 | ||||
| 3,100 | Cree, Inc.* | 202,058 | ||||
| 10,440 | Intersil Corp. - Class A | 133,110 | ||||
| 8,580 | Microchip Technology, Inc. | 288,374 | ||||
| 5,875 | Varian Semiconductor Equipment Associates, Inc.* | 185,239 | ||||
| 1,644,908 | ||||||
| Software - 8.3% | ||||||
| 19,720 | Activision Blizzard, Inc. | 231,513 | ||||
| 3,550 | Ansys, Inc.* | 172,175 | ||||
| 3,050 | FactSet Research Systems, Inc. | 270,443 | ||||
| 2,950 | Fortinet, Inc.* | 94,017 | ||||
| 10,500 | Nuance Communications, Inc.* | 185,587 | ||||
| 7,840 | Red Hat, Inc.* | 341,040 | ||||
| 2,700 | Rovi Corp.* | 148,959 | ||||
| 2,905 | Salesforce.com, Inc.* | 404,434 | ||||
| 1,848,168 | ||||||
| Specialty Retail - 7.8% | ||||||
| 5,150 | Aeropostale, Inc.* | 139,204 | ||||
| 9,350 | CarMax, Inc.* | 307,615 | ||||
| 5,450 | Guess ?, Inc. | 257,512 | ||||
| 3,750 | O’Reilly Automotive, Inc.* | 225,675 | ||||
| 4,300 | Ross Stores, Inc. | 278,984 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 27 -
| Stephens Mid Cap Growth Fund |
Schedule of Investments at November 30, 2010,
Continued
| Shares | Value | |||||
| COMMON STOCKS - 95.4%, CONTINUED | ||||||
| Specialty Retail - 7.8%, Continued | ||||||
| 4,200 | The TJX Companies, Inc. | $ | 191,562 | |||
| 3,050 | Tractor Supply Co. | 129,534 | ||||
| 5,550 | Urban Outfitters, Inc.* | 209,735 | ||||
| 1,739,821 | ||||||
| Trading Companies & Distributors - 1.8% | ||||||
| 2,930 | Fastenal Co. | 156,814 | ||||
| 4,180 | MSC Industrial Direct Co., Inc. - Class A | 251,385 | ||||
| 408,199 | ||||||
TOTAL COMMON STOCKS (Cost $17,007,000) | 21,178,190 | |||||
| SHORT-TERM INVESTMENTS - 4.2% | ||||||
| Money Market Funds - 4.2% | ||||||
| 883,075 | Invesco Liquid Assets Portfolio - Institutional Class, 0.196%1 | 883,075 | ||||
| 56,274 | Invesco Short-Term Prime Portfolio - Institutional Class, 0.152%1 | 56,274 | ||||
| 939,349 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $939,349) | 939,349 | |||||
TOTAL INVESTMENTS IN SECURITIES - 99.6% (Cost $17,946,349) | 22,117,539 | |||||
| Other Assets in Excess of Liabilities - 0.4% | 82,839 | |||||
| TOTAL NET ASSETS - 100.0% | $ | 22,200,378 | ||||
| * | Non-income producing security. | |
| ADR | American Depository Receipt | |
| 1 | 7-day yield as of November 30, 2010. |
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 28-
| Stephens Funds® |
Statements of Assets and Liabilities at
November 30, 2010
| Stephens Small Cap | Stephens Mid Cap | |||||||
| Growth Fund | Growth Fund | |||||||
| ASSETS | ||||||||
| Investments in securities, at value* (Note 2) | $ | 84,975,940 | $ | 22,117,539 | ||||
| Receivables: | ||||||||
| Investment securities sold | 130,923 | — | ||||||
| Fund shares sold | 102,088 | 111,899 | ||||||
| Dividends and interest | 21,584 | 8,458 | ||||||
| Due from advisor, net | — | 2,242 | ||||||
| Prepaid expenses | 40,225 | 28,214 | ||||||
| Total assets | 85,270,760 | 22,268,352 | ||||||
| LIABILITIES | ||||||||
| Payables: | ||||||||
| Investment securities purchased | 37,988 | — | ||||||
| Fund shares redeemed | 22,121 | 5,364 | ||||||
| Distribution fees | 20,791 | 5,306 | ||||||
| Investment advisory fees, net | 33,582 | — | ||||||
| Administration fees | 4,216 | 484 | ||||||
| Fund accounting fees | 7,800 | 6,600 | ||||||
| Transfer agent fees | 25,395 | 13,199 | ||||||
| Custody fees | 2,500 | 1,200 | ||||||
| Chief Compliance Officer fees | 1,250 | 1,250 | ||||||
| Other accrued expenses | 35,642 | 34,571 | ||||||
| Total liabilities | 191,285 | 67,974 | ||||||
| NET ASSETS | $ | 85,079,475 | $ | 22,200,378 | ||||
| COMPONENTS OF NET ASSETS | ||||||||
| Paid-in capital | $ | 68,922,367 | $ | 20,991,575 | ||||
| Accumulated net realized loss on investments | (288,088 | ) | (2,962,387 | ) | ||||
| Net unrealized appreciation on investments | 16,445,196 | 4,171,190 | ||||||
| Net assets | $ | 85,079,475 | $ | 22,200,378 | ||||
| * Cost of investments | $ | 68,530,744 | $ | 17,946,349 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 29 -
| Stephens Funds® |
Statements of Assets and Liabilities at
November 30, 2010, Continued
| Stephens Small Cap | Stephens Mid Cap | |||||||||
| Growth Fund | Growth Fund | |||||||||
| Class A: | ||||||||||
| Net assets | $ | 45,910,886 | $ | 15,076,473 | ||||||
| Shares issued and outstanding (unlimited number of shares authorized without par value) | 3,945,280 | 1,338,509 | ||||||||
| Net asset value, and redemption price per share | $ | 11.64 | $ | 11.26 | ||||||
| Maximum offering price per share** | ||||||||||
| (net asset value per share/front-end sales charge) ($11.64/94.75%) | $ | 12.28 | ||||||||
| ($11.26/94.75%) | $ | 11.88 | ||||||||
| Class I: | ||||||||||
| Net assets | $ | 39,168,589 | $ | 7,123,905 | ||||||
| Shares issued and outstanding (unlimited number of shares authorized without par value) | 3,256,776 | 572,665 | ||||||||
| Net asset value, offering price, and redemption price per share | $ | 12.03 | $ | 12.44 | ||||||
| ** | On purchases of $25,000 or more the front-end sales charge is reduced. | |||||||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 30 -
| Stephens Funds® |
Statements of Operations For the Year Ended
November 30, 2010
| Stephens Small Cap | Stephens Mid Cap | |||||||
| Growth Fund | Growth Fund | |||||||
| INVESTMENT INCOME | ||||||||
| Income | ||||||||
Dividends (net of $3,306 and $1,016 foreign withholding tax, respectively) | $ | 190,875 | $ | 79,401 | ||||
| Interest | 5,026 | 1,256 | ||||||
| Total investment income | 195,901 | 80,657 | ||||||
| EXPENSES (NOTE 3) | ||||||||
| Investment advisory fees | 547,330 | 131,522 | ||||||
| Transfer agent fees | 142,583 | 70,940 | ||||||
| Distribution fees - Class A | 87,036 | 29,022 | ||||||
| Administration fees | 82,978 | 40,000 | ||||||
| Fund accounting fees | 62,814 | 40,930 | ||||||
| Reports to shareholders | 38,695 | 27,025 | ||||||
| Registration fees | 33,588 | 30,700 | ||||||
| Custody fees | 29,048 | 8,567 | ||||||
| Audit fees | 20,100 | 20,100 | ||||||
| Miscellaneous expenses | 9,723 | 9,807 | ||||||
| Chief Compliance Officer fees | 7,550 | 7,550 | ||||||
| Trustee fees | 5,718 | 4,534 | ||||||
| Legal fees | 4,125 | 4,240 | ||||||
| Insurance expense | 1,485 | 1,475 | ||||||
| Interest expense | 879 | — | ||||||
| Total expenses | 1,073,652 | 426,412 | ||||||
| Less fees waived | (182,906 | ) | (178,188 | ) | ||||
| Net expenses | 890,746 | 248,224 | ||||||
| Net investment loss | (694,845 | ) | (167,567 | ) | ||||
| REALIZED AND UNREALIZED GAIN ON INVESTMENTS | ||||||||
| Net realized gain on investments | 6,532,933 | 135,003 | ||||||
| Change in unrealized appreciation on investments | 10,427,690 | 4,545,035 | ||||||
| Net realized and unrealized gain on investments | 16,960,623 | 4,680,038 | ||||||
| Net increase in net assets resulting from operations | $ | 16,265,778 | $ | 4,512,471 | ||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 31 -
| Stephens Funds® |
Statements of Changes in Net Assets
Stephens Small Cap Growth Fund
| Year Ended | Year Ended | |||||||||
| November 30, 2010 | November 30, 2009 | |||||||||
| INCREASE (DECREASE) IN NET ASSETS FROM: | ||||||||||
| OPERATIONS | ||||||||||
| Net investment loss | $ | (694,845 | ) | $ | (449,272 | ) | ||||
| Net realized gain (loss) on investments | 6,532,933 | (2,831,048 | ) | |||||||
| Change in unrealized appreciation on investments | 10,427,690 | 15,319,458 | ||||||||
| Net increase in net assets resulting from operations | 16,265,778 | 12,039,138 | ||||||||
| CAPITAL SHARE TRANSACTIONS (NOTE 3) | ||||||||||
| Net increase (decrease) in net assets derived from net change in outstanding shares - Class A (a)(b) | 15,705,080 | (2,825,923 | ) | |||||||
| Net decrease in net assets derived from net change in outstanding shares - Class C (a) | — | (147,570 | ) | |||||||
| Net increase (decrease) in net assets derived from net change in outstanding shares - Class I (a) | (3,304,578 | ) | 13,619,635 | |||||||
| Total increase in net assets from capital share transactions | 12,400,502 | 10,646,142 | ||||||||
| Total increase in net assets | 28,666,280 | 22,685,280 | ||||||||
| NET ASSETS | ||||||||||
| Beginning of year | 56,413,195 | 33,727,915 | ||||||||
| End of year | $ | 85,079,475 | $ | 56,413,195 | ||||||
| (a) | Summary of capital share transactions is as follows: | |||||||||
| Year Ended | Year Ended | |||||||||||||||||
| November 30, 2010 | November 30, 2009 | |||||||||||||||||
| Class A | Shares | Value | Shares | Value | ||||||||||||||
| Shares sold | 2,483,197 | $ | 25,657,751 | 494,093 | $ | 3,842,621 | ||||||||||||
| Shares redeemed (b) | (965,319 | ) | (9,952,671 | ) | (988,769 | ) | (7,060,378 | ) | ||||||||||
| Transfer in from Class C (1) | — | — | 43,024 | 391,834 | ||||||||||||||
| Net increase (decrease) | 1,517,878 | $ | 15,705,080 | (451,652 | ) | $ | (2,825,923 | ) | ||||||||||
| (b) | Net of redemption fees of $1,057 and $2,370, respectively. | |||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 32 -
| Stephens Funds® |
Statements of Changes in Net Assets, Continued
| Year Ended | Year Ended | |||||||||||||||
| November 30, 2010 | November 30, 2009 | |||||||||||||||
| Class C (1) | Shares | Value | Shares | Value | ||||||||||||
| Shares sold | — | $ | — | 35,639 | $ | 266,125 | ||||||||||
| Shares redeemed | — | — | (3,394 | ) | (21,861 | ) | ||||||||||
| Transfer out to Class A | — | — | (44,546 | ) | (391,834 | ) | ||||||||||
| Net decrease | — | $ | — | (12,301 | ) | $ | (147,570 | ) | ||||||||
| Year Ended | Year Ended | |||||||||||||||||
| November 30, 2010 | November 30, 2009 | |||||||||||||||||
| Class I | Shares | Value | Shares | Value | ||||||||||||||
| Shares sold | 2,471,071 | $ | 26,677,651 | 2,578,666 | $ | 20,542,282 | ||||||||||||
| Shares redeemed | (2,881,121 | ) | (29,982,229 | ) | (855,978 | ) | (6,922,647 | ) | ||||||||||
| Net increase (decrease) | (410,050 | ) | $ | (3,304,578 | ) | 1,722,688 | $ | 13,619,635 | ||||||||||
| (1) | Effective November 20, 2009, the Stephens Small Cap Growth Fund and Stephens Mid Cap Growth Fund converted the Class C shares into the Class A shares. Class C shares are no longer offered. | |||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 33 -
| Stephens Funds® |
Statements of Changes in Net Assets, Continued
Stephens Mid Cap Growth Fund
| Year Ended | Year Ended | |||||||||
| November 30, 2010 | November 30, 2009 | |||||||||
| INCREASE (DECREASE) IN NET ASSETS FROM: | ||||||||||
| OPERATIONS | ||||||||||
| Net investment loss | $ | (167,567 | ) | $ | (110,912 | ) | ||||
| Net realized gain (loss) on investments | 135,003 | (1,904,517 | ) | |||||||
| Change in unrealized appreciation on investments | 4,545,035 | 5,858,115 | ||||||||
| Net increase in net assets resulting from operations | 4,512,471 | 3,842,686 | ||||||||
| CAPITAL SHARE TRANSACTIONS (NOTE 3) | ||||||||||
| Net increase (decrease) in net assets derived from net change in outstanding shares - Class A (a)(b) | 2,446,247 | (471,070 | ) | |||||||
| Net decrease in net assets derived from net change in outstanding shares - Class C (a) | — | (126,845 | ) | |||||||
| Net increase (decrease) in net assets derived from net change in outstanding shares - Class I (a) | 1,052,374 | (838,660 | ) | |||||||
| Total increase (decrease) in net assets from capital share transactions | 3,498,621 | (1,436,575 | ) | |||||||
| Total increase in net assets | 8,011,092 | 2,406,111 | ||||||||
| NET ASSETS | ||||||||||
| Beginning of year | 14,189,286 | 11,783,175 | ||||||||
| End of year | $ | 22,200,378 | $ | 14,189,286 | ||||||
| Undistributed Net Investment Income | $ | — | $ | 1,071 | ||||||
| (a) | Summary of capital share transactions is as follows: | |||||||||
| Year Ended | Year Ended | |||||||||||||||
| November 30, 2010 | November 30, 2009 | |||||||||||||||
| Class A | Shares | Value | Shares | Value | ||||||||||||
| Shares sold | 349,835 | $ | 3,563,002 | 108,817 | $ | 813,372 | ||||||||||
| Shares redeemed (b) | (114,215 | ) | (1,116,755 | ) | (227,423 | ) | (1,590,438 | ) | ||||||||
| Transfer in from Class C (1) | — | — | 35,201 | 305,996 | ||||||||||||
| Net increase (decrease) | 235,620 | $ | 2,446,247 | (83,405 | ) | $ | (471,070 | ) | ||||||||
| (b) | Net of redemption fees of $650 and $59, respectively. |
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 34 -
| Stephens Funds® |
Statements of Changes in Net Assets, Continued
| Year Ended | Year Ended | |||||||||||||||
| November 30, 2010 | November 30, 2009 | |||||||||||||||
| Class C (1) | Shares | Value | Shares | Value | ||||||||||||
| Shares sold | — | $ | — | 27,425 | $ | 185,800 | ||||||||||
| Shares redeemed | — | — | (1,222 | ) | (6,649 | ) | ||||||||||
| Transfer out to Class A | — | — | (37,194 | ) | (305,996 | ) | ||||||||||
| Net decrease | — | $ | — | (10,991 | ) | $ | (126,845 | ) | ||||||||
| Year Ended | Year Ended | |||||||||||||||
| November 30, 2010 | November 30, 2009 | |||||||||||||||
| Class I | Shares | Value | Shares | Value | ||||||||||||
| Shares sold | 155,487 | $ | 1,661,905 | 293,576 | $ | 2,228,123 | ||||||||||
| Shares redeemed | (55,641 | ) | (609,531 | ) | (373,469 | ) | (3,066,783 | ) | ||||||||
| Net increase (decrease) | 99,846 | $ | 1,052,374 | (79,893 | ) | $ | (838,660 | ) | ||||||||
| (1) | Effective November 20, 2009, the Stephens Small Cap Growth Fund and Stephens Mid Cap Growth Fund converted the Class C shares into the Class A shares. Class C shares are no longer offered. |
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 35 -
| Stephens Funds® |
Financial Highlights For a capital share outstanding
throughout the periods
Stephens Small Cap Growth Fund
| CLASS A | Year Ended | Year Ended | Year Ended | Year Ended | Period Ended | |||||||||||||||
| November 30, | November 30, | November 30, | November 30, | November 30, | ||||||||||||||||
| 2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||
| Net asset value, beginning of year/period | $ | 9.09 | $ | 6.90 | $ | 12.03 | $ | 10.55 | $ | 10.00 | ||||||||||
| INCOME FROM INVESTMENT OPERATIONS | ||||||||||||||||||||
| Net investment loss | (0.11 | )# | (0.09 | ) | (0.13 | ) | (0.16 | ) | (0.11 | ) | ||||||||||
| Net realized and unrealized gain (loss) on investments | 2.66 | 2.28 | (5.00 | ) | 1.64 | 0.65 | ||||||||||||||
| Total from investment operations | 2.55 | 2.19 | (5.13 | ) | 1.48 | 0.54 | ||||||||||||||
| LESS DISTRIBUTIONS | ||||||||||||||||||||
| From net investment income | — | — | — | — | — | |||||||||||||||
| From net realized gain | — | — | — | — | — | |||||||||||||||
| Total distributions | — | — | — | — | — | |||||||||||||||
| Paid-in capital from redemption fees (Note 2) | 0.00 | * | 0.00 | * | 0.00 | * | 0.00 | * | 0.01 | |||||||||||
| Net asset value, end of year/period | $ | 11.64 | $ | 9.09 | $ | 6.90 | $ | 12.03 | $ | 10.55 | ||||||||||
| Total return without sales charge | 28.05 | % | 31.74 | % | (42.64 | )% | 14.03 | % | 5.50 | % ^ | ||||||||||
| Total return with sales charge | 21.38 | % | 24.86 | % | (45.67 | )% | 8.09 | % | 0.00 | % ^ | ||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||
| Net assets, end of year/period (millions) | $ | 45.9 | $ | 22.1 | $ | 19.8 | $ | 39.0 | $ | 42.7 | ||||||||||
| RATIO OF EXPENSES TO AVERAGE NET ASSETS | ||||||||||||||||||||
| Before fees waived and expenses absorbed | 1.60 | % | 1.91 | % | 1.69 | % | 1.68 | % | 1.62 | %+ | ||||||||||
| After fees waived and expenses absorbed | 1.35 | % | 1.50 | % | 1.50 | % | 1.50 | % | 1.46 | %+ | ||||||||||
| RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS | ||||||||||||||||||||
| Before fees waived and expenses absorbed | (1.33 | %) | (1.59 | %) | (1.36 | %) | (1.36 | %) | (1.25 | %)+ | ||||||||||
| After fees waived and expenses absorbed | (1.08 | %) | (1.18 | %) | (1.17 | %) | (1.18 | %) | (1.09 | %)+ | ||||||||||
| Portfolio turnover rate | 66 | % | 35 | % | 43 | % | 51 | % | 70 | % ^ | ||||||||||
| (1) | Fund commenced operations on December 1, 2005. | |
| # | Calculated using the average shares outstanding method. | |
| * | Amount less than $0.01. | |
| ^ | Not annualized. | |
| + | Annualized. |
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 36 -
| Stephens Funds® |
Financial Highlights For a capital share outstanding
throughout the periods, Continued
Stephens Small Cap Growth Fund
| CLASS I | Year Ended | Year Ended | Year Ended | Year Ended | Period Ended | ||||||||||||||||||
| November 30, | November 30, | November 30, | November 30, | November 30, | |||||||||||||||||||
| 2010 | 2009 | 2008 | 2007 | 2006(1) | |||||||||||||||||||
| Net asset value, beginning of year/period | $ | 9.37 | $ | 7.09 | $ | 12.34 | $ | 10.80 | $ | 10.00 | |||||||||||||
| INCOME FROM INVESTMENT OPERATIONS | |||||||||||||||||||||||
| Net investment loss | (0.09 | )# | (0.06 | ) | (0.04 | ) | (0.01 | ) | (0.03 | ) | |||||||||||||
| Net realized and unrealized gain (loss) on investments | 2.75 | 2.34 | (5.21 | ) | 1.55 | 0.83 | |||||||||||||||||
| Total from investment operations | 2.66 | 2.28 | (5.25 | ) | 1.54 | 0.80 | |||||||||||||||||
| LESS DISTRIBUTIONS | |||||||||||||||||||||||
| From net investment income | — | — | — | — | — | ||||||||||||||||||
| From net realized gain | — | — | — | — | — | ||||||||||||||||||
| Total distributions | — | — | — | — | — | ||||||||||||||||||
| Paid-in capital from redemption fees (Note 2) | — | — | 0.00 | * | — | — | |||||||||||||||||
| Net asset value, end of year/period | $ | 12.03 | $ | 9.37 | $ | 7.09 | $ | 12.34 | $ | 10.80 | |||||||||||||
| Total return | 28.39 | % | 32.16 | % | (42.54 | )% | 14.26 | % | 8.00 | % ^ | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA | |||||||||||||||||||||||
| Net assets, end of year/period (millions) | $ | 39.2 | $ | 34.4 | $ | 13.8 | $ | 9.1 | $ | 0.5 | |||||||||||||
| RATIO OF EXPENSES TO AVERAGE NET ASSETS | |||||||||||||||||||||||
| Before fees waived and expenses absorbed | 1.35 | % | 1.65 | % | 1.46 | % | 1.43 | % | 1.41 | %+ | |||||||||||||
| After fees waived and expenses absorbed | 1.10 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | %+ | |||||||||||||
| RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS | |||||||||||||||||||||||
| Before fees waived and expenses absorbed | (1.09 | %) | (1.33 | %) | (1.00 | %) | (1.11 | %) | (1.23 | %)+ | |||||||||||||
| After fees waived and expenses absorbed | (0.84 | %) | (0.93 | %) | (0.79 | %) | (0.93 | %) | (1.07 | %)+ | |||||||||||||
| Portfolio turnover rate | 66 | % | 35 | % | 43 | % | 51 | % | 70 | % ^ | |||||||||||||
| (1) | Class I shares have been offered since August 31, 2006. | ||||||||||||||||||||||
| # | Calculated using the average shares outstanding method. | ||||||||||||||||||||||
| * | Amount less than $0.01 | ||||||||||||||||||||||
| ^ | Not annualized. | ||||||||||||||||||||||
| + | Annualized. | ||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 37 -
| Stephens Funds® |
Financial Highlights For a capital share outstanding
throughout the periods, Continued
Stephens Mid Cap Growth Fund
| CLASS A | Year Ended | Year Ended | Year Ended | Year Ended | Period Ended | |||||||||||||||
| November 30, | November 30, | November 30, | November 30, | November 30, | ||||||||||||||||
| 2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||
| Net asset value, beginning of year/period | $ | 8.74 | $ | 6.53 | $ | 12.22 | $ | 9.80 | $ | 10.00 | ||||||||||
| INCOME FROM INVESTMENT OPERATIONS | ||||||||||||||||||||
| Net investment loss | (0.10 | )# | (0.07 | ) | (0.11 | ) | (0.10 | ) | (0.07 | ) | ||||||||||
| Net realized and unrealized gain (loss) on investments | 2.62 | 2.28 | (5.58 | ) | 2.52 | (0.13 | ) | |||||||||||||
| Total from investment operations | 2.52 | 2.21 | (5.69 | ) | 2.42 | (0.20 | ) | |||||||||||||
| LESS DISTRIBUTIONS | ||||||||||||||||||||
| From net investment income | — | — | — | — | — | |||||||||||||||
| From net realized gain | — | — | — | — | — | |||||||||||||||
| Total distributions | — | — | — | — | — | |||||||||||||||
| Paid-in capital from redemption fees (Note 2) | 0.00 | * | 0.00 | * | 0.00 | * | 0.00 | * | 0.00 | * | ||||||||||
| Net asset value, end of year/period | $ | 11.26 | $ | 8.74 | $ | 6.53 | $ | 12.22 | $ | 9.80 | ||||||||||
| Total return without sales charge | 28.83 | % | 33.84 | % | (46.56 | )% | 24.69 | % | (2.00 | )% ^ | ||||||||||
| Total return with sales charge | 22.13 | % | 26.85 | % | (49.38 | )% | 18.18 | % | (7.11 | )% ^ | ||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||
| Net assets, end of year/period (millions) | $ | 15.1 | $ | 9.6 | $ | 7.7 | $ | 13.8 | $ | 10.6 | ||||||||||
| RATIO OF EXPENSES TO AVERAGE NET ASSETS | ||||||||||||||||||||
| Before fees waived and expenses absorbed | 2.52 | % | 3.32 | % | 2.42 | % | 3.14 | % | 3.24 | %+ | ||||||||||
| After fees waived and expenses absorbed | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | %+ | ||||||||||
| RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS | ||||||||||||||||||||
| Before fees waived and expenses absorbed | (2.06 | %) | (2.75 | %) | (1.97 | %) | (2.65 | %) | (2.71 | %)+ | ||||||||||
| After fees waived and expenses absorbed | (1.04 | %) | (0.93 | %) | (1.05 | %) | (1.01 | %) | (0.97 | %)+ | ||||||||||
| Portfolio turnover rate | 20 | % | 29 | % | 32 | % | 52 | % | 29 | % ^ | ||||||||||
| (1) | Fund commenced operations on February 1, 2006. | |
| # | Calculated using the average shares outstanding method. | |
| * | Amount less than $0.01. | |
| ^ | Not annualized. | |
| + | Annualized. |
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 38 -
| Stephens Funds® |
Financial Highlights For a capital share outstanding
throughout the periods, Continued
Stephens Mid Cap Growth Fund
| CLASS I | Year Ended | Year Ended | Year Ended | Year Ended | Period Ended | |||||||||||||||
| November 30, | November 30, | November 30, | November 30, | November 30, | ||||||||||||||||
| 2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||
| Net asset value, beginning of year/period | $ | 9.63 | $ | 7.18 | $ | 13.39 | $ | 10.72 | $ | 10.00 | ||||||||||
| INCOME FROM INVESTMENT OPERATIONS | ||||||||||||||||||||
| Net investment loss | (0.09 | )# | (0.07 | ) | (0.06 | ) | (0.02 | ) | (0.02 | ) | ||||||||||
| Net realized and unrealized gain (loss) on investments | 2.90 | 2.52 | (6.15 | ) | 2.69 | 0.74 | ||||||||||||||
| Total from investment operations | 2.81 | 2.45 | (6.21 | ) | 2.67 | 0.72 | ||||||||||||||
| LESS DISTRIBUTIONS | ||||||||||||||||||||
| From net investment income | — | — | — | — | — | |||||||||||||||
| From net realized gain | — | — | — | — | — | |||||||||||||||
| �� Total distributions | — | — | — | — | — | |||||||||||||||
| Paid-in capital from redemption fees (Note 2) | — | — | 0.00 | * | — | — | ||||||||||||||
| Net asset value, end of year/period | $ | 12.44 | $ | 9.63 | $ | 7.18 | $ | 13.39 | $ | 10.72 | ||||||||||
| Total return | 29.18 | % | 34.12 | % | (46.38 | )% | 24.91 | % | 7.20 | % ^ | ||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||
| Net assets, end of year/period (millions) | $ | 7.1 | $ | 4.6 | $ | 4.0 | $ | 3.7 | $ | 0.5 | ||||||||||
| RATIO OF EXPENSES TO AVERAGE NET ASSETS | ||||||||||||||||||||
| Before fees waived and expenses absorbed | 2.27 | % | 3.03 | % | 2.19 | % | 2.89 | % | 3.13 | %+ | ||||||||||
| After fees waived and expenses absorbed | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | %+ | ||||||||||
| RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS | ||||||||||||||||||||
| Before fees waived and expenses absorbed | (1.81 | %) | (2.46 | %) | (1.57 | %) | (2.40 | %) | (2.65 | %)+ | ||||||||||
| After fees waived and expenses absorbed | (0.79 | %) | (0.69 | %) | (0.63 | %) | (0.76 | %) | (0.77 | %)+ | ||||||||||
| Portfolio turnover rate | 20 | % | 29 | % | 32 | % | 52 | % | 29 | % ^ | ||||||||||
| (1) | Class I shares have been offered since August 31, 2006. | |
| # | Calculated using the average shares outstanding method. | |
| * | Amount less than $0.01. | |
| ^ | Not annualized. | |
| + | Annualized. |
The accompanying notes are an integral part of these financial statements.
| WWW.STEPHENSFUNDS.COM |
- 39 -
| Stephens Funds® |
Notes to Financial Statements November 30, 2010
Note 1 – Organization
The Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund are a series of shares of beneficial interest of the Professionally Managed Portfolios (the “Trust”), which is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end investment management company. The Funds commenced operations on December 1, 2005 and February 1, 2006, respectively.
The Funds offer Class A and Class I shares. Class A shares are sold with a front-end sales charge. Class I shares have no sales charge and are offered primarily for direct investment by investors such as pension and profit-sharing plans, employee benefit trusts, endowments, foundations and corporations. Each class of shares has equal rights as to earnings and assets except that each class bears different distribution expenses. Each class of shares has exclusive voting rights with respect to matters that affect just that class. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
Each Fund’s investment objective is to seek long-term capital appreciation.
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 accounting principles generally accepted in the United States of America.
| A. | Security Valuation. All equity securities that are traded on a national securities exchange, except those listed on the NASDAQ Global Market® (“NASDAQ”), are valued at the last reported sale price on the exchange on which the security is principally traded. Securities traded on NASDAQ will be valued using the NASDAQ Official Closing Price (“NOCP”). If, on a particular day, an exchange-traded or NASDAQ security does not trade, then the mean between the most recent quoted bid and asked prices will be used. All equity securities that are not traded on a listed exchange are valued at the last sale price in the over-the-counter market. If a non-exchange traded security does not trade on a particular day, then the mean between the last quoted closing bid and asked price will be used. Exchange traded options are valued at the composite price, using the National Best Bid and Offer quotes (“NBBO”). NBBO consists of the highest bid price and lowest ask price across any of the exchanges on which an option is quoted, thus providing a view across the entire |
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| Stephens Funds® |
Notes to Financial Statements as of November 30, 2010, Continued
U.S. options marketplace. Composite option pricing calculates the mean of the highest bid price and lowest ask price across the exchanges where the option is traded.
Short-term securities that have maturities of less than 60 days, at the time of purchase, are valued at cost, which when combined with accrued interest, approximates market value.
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. When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board of Trustees. Fair value pricing is an inherently subjective process, and no single standard exists for determining fair value. Different funds could reasonably arrive at different values for the same security. The use of fair value pricing by a fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. At November 30, 2010, the Funds did not hold any fair valued securities.
As described above, the Funds utilize various methods to measure the fair value of most of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access.
Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
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| Stephens Funds® |
Notes to Financial Statements as of November 30, 2010, Continued
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following is a summary of the inputs used to value the Stephens Small Cap Growth Fund’s net assets as of November 30, 2010:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Common Stocks ^ | $ | 81,568,886 | $ | — | $ | — | $ | 81,568,886 | ||||||||
| Short-Term Investments | 3,407,054 | 3,407,054 | ||||||||||||||
| Total Investments in Securities | $ | 84,975,940 | $ | — | $ | — | $ | 84,975,940 | ||||||||
The following is a summary of the inputs used to value the Stephens Mid Cap Growth Fund’s net assets as of November 30, 2010:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Common Stocks | $ | 21,178,190 | $ | — | $ | — | $ | 21,178,190 | ||||||||||
| Short-Term Investments | 939,349 | 939,349 | ||||||||||||||||
| Total Investments in Securities | $ | 22,117,539 | $ | — | $ | — | $ | 22,117,539 | ||||||||||
| ^ | See Schedule of Investments for industry breakout. | |||||||||||||||||
| B. | Option Writing. When a Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option. |
| C. | Federal Income Taxes. Each Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders |
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| Stephens Funds® |
Notes to Financial Statements as of November 30, 2010, Continued
| and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provision for federal income taxes or excise taxes has been made. | |
| In order to avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare each year as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98% of its net realized capital gains (earned during the twelve months ended November 30) plus undistributed amounts, if any, from prior years. | |
| Net capital losses incurred after November 30 and within the taxable year are deemed to arise on the first business day of each Fund’s next taxable year. At November 30, 2010, the Stephens Small Cap Growth Fund did not have capital loss carryforwards available and the Stephens Mid Cap Growth Fund had capital loss carryforwards available for federal income tax purposes as follows: |
| Stephens Mid Cap Growth Fund | ||||
| Year of Expiration | Amount | |||
| November 30, 2014 | $ | 36,244 | ||
| November 30, 2016 | $ | 1,009,897 | ||
| November 30, 2017 | $ | 1,881,522 | ||
| $ | 2,927,663 | |||
| The Funds recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Funds’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2007-2009), or expected to be taken in the Funds’ 2010 tax returns. The Funds identify their major tax jurisdictions as U.S. Federal and Massachusetts State; however the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. | |
| D. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Other non-cash dividends are recognized as investment income at the fair |
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| Stephens Funds® |
Notes to Financial Statements as of November 30, 2010, Continued
| value of property received. Withholding taxes on foreign dividends have been provided for in accordance with the Trust’s understanding of the applicable country’s tax rules and rates. | |
| E. | Distributions to Shareholders. Distributions to shareholders from net investment income and net realized gains on securities for the Funds normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
| F. | Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
| G. | Share Valuation. The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by each Fund, plus cash or other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the NYSE is closed for trading. Class A shares are sold with a front-end sales charge of 5.25%. Purchases greater than $25,000 into the Funds are offered at a reduced sales charge. For Class I shares, the offering and redemption price per share for each Fund is equal to each Fund’s net asset value per share. The Funds charge a 2.00% redemption fee on Class A shares held less than 30 days. These fees are deducted from the redemption proceeds otherwise payable to the shareholder. Both Funds will retain the fee charged as paid-in capital and such fees become part of that Fund’s daily NAV calculation. |
| H. | Guarantees and Indemnifications. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. |
| I. | Reclassification of Capital Accounts. Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net assets per value per share. For the year ended November 30, 2010, the Stephens Small Cap Growth Fund decreased accumulated net investment loss by $694,845 and decreased paid-in capital by $694,845. Net assets were not affected by the change. For the year ended November 30, 2010, the Stephens Mid Cap Growth Fund |
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| Stephens Funds® |
Notes to Financial Statements as of November 30, 2010, Continued
| decreased accumulated net investment loss by $166,496 and decreased paid-in capital by $166,496. Net assets were not affected by the change. | |
| J. | Subsequent events. In preparing these financial statements, management has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. |
| K. | New Accounting Pronouncements. In January 2010, the FASB issued Accounting Standards Update “Improving Disclosures about Fair Value Measurements” (“ASU”). The ASU requires enhanced disclosures about a) transfers into and out of Levels 1 and 2, and b) purchase, sales, issuances, and settlements on a gross basis relating to Level 3 measurements. The first disclosure is effective for the first reporting period beginning after December 15, 2009, and for interim periods within those fiscal years. There were no significant transfers in to or out of Levels 1 and 2 during the current period presented. |
| The second disclosure will become effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Management is currently evaluating the impact this disclosure may have on the Funds’ financial statements. |
Note 3 – Commitments and Other Related Party Transactions
Stephens Investment Management Group, LLC, (the “Advisor”) provides the Funds with investment management services under separate Investment Advisory Agreements (the “Agreements”). Under the Agreement, the Advisor furnishes all investment advice, office space, certain administrative services, and provides most of the personnel needed by the Funds. As compensation for its services, the Advisor is entitled to a monthly fee at the annual rate of 0.75% based upon the average daily net assets of the Funds. For the year ended November 30, 2010, the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund incurred $547,330 and $131,522 in advisory fees, respectively.
The Advisor has contractually agreed to reduce its fees and/or pay Fund expenses in order to limit net annual operating expenses for the Stephens Small Cap Growth Fund Class A shares to 1.35% and Class I shares to 1.10%. (Prior to December 1, 2009, the Stephens Small Cap Growth Fund limited the total net expenses to not more than 1.50% of average daily net assets for Class A shares and not more than 1.25% of average daily net assets for Class I shares.) The Advisor has contractually agreed to reduce its fees and/or pay Fund expenses in order to limit net annual operating expenses for the Stephens Mid Cap Growth Fund Class A shares to 1.50% and Class I shares to 1.25. The Advisor’s contract term is indefinite and may be terminated only by the Board
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| Stephens Funds® |
Notes to Financial Statements as of November 30, 2010, Continued
of Trustees. For the year ended November 30, 2010, the Advisor waived fees of $182,906, and $178,188 for the Stephens Small Cap Growth Fund and Stephens Mid Cap Growth Fund, respectively.
The Advisor is permitted to seek reimbursement from the Funds, subject to limitations for fees waived and/or Fund expenses it pays over the following three years after payment. At November 30, 2010, the remaining unreimbursed amounts paid and/or waived by the Advisor on behalf of the Funds that may be recouped are shown in the table below. The Advisor may recapture a portion of the unreimbursed amounts no later than the date stated.
| Stephens Small Cap Growth Fund | Stephens Mid Cap Growth Fund | |||||||||
| Year of Expiration | Amount | Year of Expiration | Amount | |||||||
| November 30, 2011 | $ | 79,306 | November 30, 2011 | $ | 170,361 | |||||
| November 30, 2012 | $ | 173,326 | November 30, 2012 | $ | 233,862 | |||||
| November 30, 2013 | $ | 182,906 | November 30, 2013 | $ | 178,188 | |||||
| $ | 435,538 | $ | 582,411 | |||||||
Each Fund must pay 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.
U.S. Bancorp Fund Services, LLC (“USBFS”), an indirect wholly-owned subsidiary of U.S. Bancorp, serves as the Funds’ administrator (the “Administrator”) and, in that capacity, performs various administrative and accounting services for the Funds. USBFS also serves as the Funds’ fund accountant, transfer agent, dividend disbursing agent and registrar. 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 the year ended November 30, 2010, the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund incurred $82,978 and $40,000 in administration fees, respectively. The officers of the Trust are employees of the Administrator. The Chief Compliance Officer is also an employee of the Administrator. For the year ended November 30, 2010, the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund were each allocated $7,550 of the Trust’s Chief Compliance Officer fee.
Quasar Distributors, LLC (the “Distributor”) acts as the Funds’ principal underwriter in a continuous public offering of each Funds’ shares. U.S. Bank, N.A. serves as custodian (the “Custodian”) to the Funds. Both the Distributor and Custodian are affiliates of the Administrator.
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| Stephens Funds® |
Notes to Financial Statements as of November 30, 2010, Continued
The Funds have adopted a Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the 1940 Act with respect to the Class A shares. The Plan provides that the Funds may pay a fee to the Distributor at an annual rate of up to 0.25% of the average daily net assets of Class A shares. No distribution or shareholder servicing fees are paid by Class I shares. These fees may be used by the Distributor to provide compensation for sales support distribution activities, or shareholder servicing activities. For the year ended November 30, 2010, Stephens, Inc., an affiliate of Stephens Investment Management Group, LLC, received distribution fees of $87,036 from the Stephens Small Cap Growth Fund Class A shares, and distribution fees of $29,022 from the Stephens Mid Cap Growth Fund Class A shares. For the year ended November 30, 2010, Stephens, Inc. also received sales commissions of $7,673 from the Stephens Small Cap Growth Fund and $23,251 from the Stephens Mid Cap Growth Fund.
Note 4 – Purchases and Sales of Securities
The cost of purchases and the proceeds from sales of securities, excluding short-term securities and U.S. Government securities for the Stephens Small Cap Growth Fund for the year ended November 30, 2010, were $55,748,921 and $45,486,269, respectively and for the Stephens Mid Cap Growth Fund for the year ended November 30, 2010, were $6,015,616 and $3,298,632, respectively.
There were no purchases or sales of long-term U.S. Government securities for the year ended November 30, 2010.
Note 5 – Distributions to Shareholders
For the year ended November 30, 2010 and year ended November 30, 2009, there were no distributions by the Funds.
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| Stephens Funds® |
Notes to Financial Statements as of November 30, 2010, Continued
As of November 30, 2010, the components of accumulated earnings/(losses) on a tax basis were as follows:
| Stephens Small Cap Growth Fund | Stephens Mid Cap Growth Fund | |||||||||
| Cost of investments(a) | $ | 69,887,469 | $ | 17,981,073 | ||||||
| Gross unrealized appreciation | 18,602,685 | 5,326,916 | ||||||||
| Gross unrealized depreciation | (3,514,214 | ) | (1,190,450 | ) | ||||||
| Net tax unrealized appreciation | $ | 15,088,471 | $ | 4,136,466 | ||||||
| Undistributed ordinary income | $ | — | $ | — | ||||||
| Undistributed long-term capital gain | 1,068,637 | — | ||||||||
| Total distributable earnings | $ | 1,068,637 | $ | — | ||||||
| Other accumulated gains | — | (2,927,663 | ) | |||||||
| Total accumulated gains | $ | 16,157,108 | $ | 1,208,803 | ||||||
| (a) | The difference between the cost basis of investments for federal income purposes from their cost for financial reporting purposes was primarily due to wash sales deferred for income tax purposes. | |||||||||
Note 6 – Credit Facility
U.S. Bank, N.A. (the “Bank”) has made available to the Funds a credit facility to be used for temporary or extraordinary purposes. During the year ended November 30, 2010, the Stephens Small Cap Growth Fund did draw on the line of credit and there was no loan payable balance at November 30, 2010. For the year ended November 30, 2010 the average interest rate on the outstanding balance was 3.25% (prime rate) and the interest expense was $879. During the year ended November 30, 2010, the average outstanding average daily balances for the Stephens Small Cap Growth Fund was $1,061,818. For the year ended November 30, 2010, Stephens Mid Cap Growth Fund did not draw on the line of credit and there was no loan payable balance at November 30, 2010. The maximum amounts available for the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund were $8,000,000 and $1,500,000, respectively.
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| Stephens Funds® |
Report of Independent Registered Public Accounting Firm
Board of Trustees and Shareholders of
Professionally Managed Portfolios
We have audited the accompanying statements of assets and liabilities of the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund, each a series of shares of Professionally Managed Portfolios (the “Trust”), including the schedules of investments as of November 30, 2010, and the related statements 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 each of the four years in the period then ended and from commencement of operations (December 1, 2005 for Stephens Small Cap Growth Fund and February 1, 2006 for Stephens Mid Cap Growth Fund) to November 30, 2006. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2010 by correspondence with the custodian and brokers. 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 positions of the Stephens Small Cap Growth Fund and
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the Stephens Mid Cap Growth Fund as of November 30, 2010, the results of their operations for the year then ended, changes in their net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated above, in conformity with accounting principles generally accepted in the United States of America.
 | |
TAIT, WELLER & BAKER LLP |
Philadelphia, Pennsylvania
January 24, 2011
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| Stephens Funds® |
Approval of Investment Advisory Agreements (Unaudited)
Stephens Small Cap Growth Fund Stephens Mid Cap Growth Fund
Annual Report – Period Ended November 30, 2010
At a meeting held on July 19 and 20, 2010, the Board (which is comprised entirely of persons who are Independent Trustees as defined under the Investment Company Act) considered and approved the continuance of the Advisory Agreements for the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund (the “Funds”), each a series of Professionally Managed Portfolios (the “Trust”), with Stephens Investment Management Group, LLC (the “Advisor”) for another annual term. At this meeting and at a prior meeting held on May 24 and 25, 2010, the Board received and reviewed substantial information regarding the Funds, the Advisor and the services provided by the Advisor to the Funds under the Advisory Agreements. In addition, the Board engaged an independent third party consulting firm to review the appropriateness of the peer group categories selected for comparison purposes. This information, together with the information provided to the Board throughout the course of the year, formed the primary (but not exclusive) basis for the Board’s determinations. Below is a summary of the factors considered by the Board and the conclusions that formed the basis for the Board’s continuance of the Advisory Agreements:
| 1. | The nature, extent and quality of the services provided and to be provided by the Advisor under the Advisory Agreements. The Board considered the Advisor’s specific responsibilities in all aspects of day-to-day investment management of the Funds. The Board considered the qualifications, experience and responsibilities of the portfolio managers, as well as the responsibilities of other key personnel of the Advisor involved in the day-to-day activities of the Funds. The Board also considered the resources and compliance structure of the Advisor, including information regarding its compliance program, its chief compliance officer and the Advisor’s compliance record, and the Advisor’s business continuity plan. The Board also considered the prior relationship between the Advisor and the Trust, as well as the Board’s knowledge of the Advisor’s operations, and noted that during the course of the prior year they had met with the Advisor in person to discuss various marketing and compliance topics, including the Advisor’s diligence in risk oversight. The Board concluded that the Advisor had the quality and depth of personnel, resources, investment methods and compliance policies and procedures essential to performing its duties under the Advisory Agreements and that the nature, overall quality, cost and extent of such management services are satisfactory and reliable. |
| 2. | The Funds’ historical year-to-date performance and the overall performance of the Advisor. In assessing the quality of the portfolio management delivered by the Advisor, the Board |
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| Stephens Funds® |
Approval of Investment Advisory Agreements (Unaudited)
Stephens Small Cap Growth Fund Stephens Mid Cap Growth Fund, Continued
| reviewed the short-term and long-term performance of the Funds on both an absolute basis, and in comparison to its peer funds utilizing Lipper classifications. | |
| For the Stephens Small Cap Growth, the Board noted that the Fund’s performance was above its peer group median for the one-year and three-year periods. | |
| For the Stephens Mid Cap Growth Fund, the Board noted that the Fund’s performance was below its peer group median for the one-year period and above its peer group median for the three-year period. | |
| The Board also considered any differences of performance between similarly managed accounts and the performance of the Funds and found the differences to be reasonable. | |
| 3. | The costs of the services to be provided by the Advisor and the structure of the Advisor’s fees under the Advisory Agreements. In considering the advisory fee and total fees and expenses of the Funds, the Board reviewed comparisons to their peer funds and separate accounts for other types of clients advised by the Advisor, as well as any expense waivers and reimbursements available for the Funds. |
| For the Stephens Small Cap Growth, the Board noted that the Advisor had contractually agreed to maintain an annual expense ratio for the Fund of 1.35% for the Class A shares, and 1.10% for the Class I shares. The Board also noted that the contractual advisory fee was below its peer group median and its total expense ratio was in line with its peer group median. | |
| For the Stephens Mid Cap Growth Fund, the Board noted that the Advisor had contractually agreed to maintain an annual expense ratio for the Fund of 1.50% for the Class A shares and 1.25% for the Class I shares. The Board noted that, while the Fund’s total expense ratio was above its peer group median, the contractual advisory fee was in line with the median. The Board noted that the Fund’s net expenses were not outside the range of its peer group. Finally, the Board noted that the Advisor waived all of its advisory fees during the previous year. | |
| The Board took into consideration the services the Advisor provided to its institutional and separately managed account clients comparing the fees charged for those management services to the fees charged to the Funds. The Board found that the fees charged to Funds were generally in line with the fees charged by the Advisor to its separately managed account clients. |
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| Stephens Funds® |
Approval of Investment Advisory Agreements (Unaudited)
Stephens Small Cap Growth Fund Stephens Mid Cap Growth Fund, Continued
| 4. | Economies of Scale. The Board also considered that economies of scale would be expected to be realized as the assets of the Funds grew. The Board noted that the Advisor has contractually agreed to reduce its advisory fees or reimburse expenses so that the Funds do not exceed a specified expense limitation. The Board concluded that there were no effective economies of scale to be shared with the Funds at current asset levels, but considered revisiting this issue in the future as circumstances changed and asset levels increased. |
| 5. | The profits to be realized by the Advisor and its affiliates from their relationship with the Funds. The Board reviewed the Advisor’s financial information and took into account both the direct benefits and the indirect benefits to the Advisor from advising the Funds. The Board considered the profitability to the Advisor from its relationship with the Funds and considered any additional benefits derived by the Advisor from its relationship with the Funds, particularly benefits received in exchange for “soft dollars” and the 12b-1 fees. After such review, the Board determined that the profitability to the Advisor with respect to the Advisory Agreement was not excessive, and that the Advisor had maintained adequate profit levels to support the services it provides to the Funds. |
No single factor was determinative of the Board’s decision to approve the continuance of the Advisory Agreements, but rather the Board based its determination on the total mix of information available to them. Based on a consideration of all the factors in their totality, the Board determined that the advisory arrangements with the Advisor, including the advisory fee, were fair and reasonable. The Board therefore determined that the continuance of the Advisory Agreements would be in the best interests of the Funds and its shareholders.
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| Stephens Funds® |
Trustees and Executive Officers
The Board is responsible for the overall management of the Trust, including general supervision and review of the investment activities of the Funds. The Board, in turn, elects the officers of the Trust, who are responsible for administering the day-to-day operations of the Trust and its separate series. The current Trustees and officers of the Trust, their dates of birth and positions with the Trust, term of office with the Trust and length of time served, their principal occupations and other directorships held for the past five years are set forth in the following table.
| Number of | ||||||||||
| Portfolios | Other | |||||||||
| Term of | Principal | in Fund | Directorships | |||||||
| Position | Office and | Occupation | Complex(2) | Held During | ||||||
| Name, Age | with | Length of | During Past | Overseen | the Past | |||||
| and Address | the Trust(1) | Time Served | Five Years | by Trustees | Five Years | |||||
| Independent Trustees of the Trust | ||||||||||
Dorothy A. Berry (born 1943) c/o U.S. Bancorp Fund Services, LLC 2020 E. Financial Way Suite 100 Glendora, CA 91741 | Chairman and Trustee | Indefinite Term; Since May 1991. | President, Talon Industries, Inc. (administrative, management and business consulting); formerly, Executive Vice President and Chief Operating Officer, Integrated Asset Management (investment advisor and manager) and formerly, President, Value Line, Inc. (investment advisory and financial publishing firm). | 2 | Trustee; PNC Funds, Inc. | |||||
Wallace L. Cook (born 1939) c/o U.S. Bancorp Fund Services, LLC 2020 E. Financial Way Suite 100 Glendora, CA 91741 | Trustee | Indefinite Term; Since May 1991. | Investment Consultant; formerly, Chief Executive Officer, Rockefeller Trust Co., (prior thereto Senior Vice President), and Managing Director, Rockefeller & Co. (Investment Manager and Financial Advisor); formerly, Senior Vice President, Norton Simon, Inc. | 2 | The Dana Foundation; The University of Virginia Law School Foundation. | |||||
Carl A. Froebel (born 1938) c/o U.S. Bancorp Fund Services, LLC 2020 E. Financial Way Suite 100 Glendora, CA 91741 | Trustee | Indefinite Term; Since May 1991. | Former owner, Golf Adventures, LLC, (Vacation Services); formerly, President and Founder, National Investor Data Services, Inc. (investment related computer software). | 2 | None. | |||||
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| Stephens Funds® |
Trustees and Executive Officers, Continued
| Number of | ||||||||||
| Portfolios | Other | |||||||||
| Term of | Principal | in Fund | Directorships | |||||||
| Position | Office and | Occupation | Complex(2) | Held During | ||||||
| Name, Age | with | Length of | During Past | Overseen | the Past | |||||
| and Address | the Trust(1) | Time Served | Five Years | by Trustees | Five Years | |||||
Steven J. Paggioli (born 1950) c/o U.S. Bancorp Fund Services, LLC 2020 E. Financial Way Suite 100 Glendora, CA 91741 | Trustee | Indefinite Term; Since May 1991. | Consultant, since July 2001; formerly, Executive Vice President, Investment Company Administration, LLC (mutual fund administrator). | 2 | Independent Trustee, The Managers Funds; Trustee, Managers AMG Funds, Aston Funds; Advisory Board Member, Sustainable Growth Advisers, LP; Independent Director, Chase Investment Counsel; formerly Independent Director, Guardian Mutual Funds. | |||||
| Officers of the Trust | ||||||||||
Robert M. Slotky (born 1947) c/o U.S. Bancorp Fund Services, LLC 2020 E. Financial Way Suite 100 Glendora, CA 91741 | Chief Compliance Officer Anti-Money Laundering Officer | Indefinite Term; Since September 2004. Indefinite Term; Since December 2005. | Senior Vice President, U.S. Bancorp Fund Services, LLC since July 2001. | Not Applicable. | Not Applicable. | |||||
Eric W. Falkeis (born 1973) c/o U.S. Bancorp Fund Services, LLC 615 East Michigan St. Milwaukee, WI 53202 | President | Indefinite Term; Since January 2011. | Senior Vice President and Chief Financial Officer (and other positions), U.S. Bancorp Fund Services, LLC, since 1997. | Not Applicable. | Not Applicable. | |||||
Patrick J. Rudnick (born 1973) c/o U.S. Bancorp Fund Services, LLC 615 East Michigan St. Milwaukee, WI 53202 | Treasurer | Indefinite Term; Since November 2009. | Vice President, U.S. Bancorp Fund Services, LLC, since 2006; formerly, Manager, PricewaterhouseCoopers LLP (1999-2006). | Not Applicable. | Not Applicable. | |||||
Elaine E. Richards (born 1968) c/o U.S. Bancorp Fund Services, LLC 2020 E. Financial Way Suite 100 Glendora, CA 91741 | Secretary | Indefinite Term; Since February 2008 | Vice President and Legal Compliance Officer, U.S. Bancorp Fund Services, LLC, since July 2007; formerly Vice President and Senior Counsel, Wells Fargo Funds Management, LLC (2004-2007). | Not Applicable. | Not Applicable. | |||||
| (1) | The Trustees of the Trust are not “interested persons” of the Trust as defined under the 1940 Act (“Independent Trustees”). | |
| (2) | The Trust is comprised of numerous series managed by unaffiliated investment advisors. The term “Fund Complex” applies only to the Funds. The Funds do not hold themselves out as related to any other series within the Trust for purposes of investment and investor services, nor does it share the same investment advisor with any other series. |
| WWW.STEPHENSFUNDS.COM |
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| Stephens Funds® |
Information About Proxy Voting (Unaudited)
Information regarding how the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund voted proxies relating to portfolio securities during the most recent year ending June 30 is available without charge, upon request, by calling (866) 735-7464. Furthermore, you can obtain the Form N-PX on the SEC’s website at www.sec.gov.
Information About the Portfolio Holdings (Unaudited)
The Stephens Small Cap Growth Fund and Stephens Mid Cap Growth Fund file their complete schedule of portfolio holdings for their first and third quarters with the SEC on Form N-Q. Each Fund’s Form N-Q is available without charge, upon request, by calling (866) 735-7464. Furthermore, you can obtain the Form N-Q on the SEC’s website at www.sec.gov. In addition, the Funds’ schedule of portfolio holdings are posted on its website at www.stephensfunds.com within seven business days after month-end.
Information About Householding
In an effort to decrease costs, the Funds intend to reduce the number of duplicate prospectuses and Annual and Semi-Annual Reports you receive by sending only one copy of each to those addresses shared by two or more accounts and to shareholders the Transfer Agent reasonably believes are from the same family or household. Once implemented, if you would like to discontinue householding for your accounts, please call toll-free at (866) 735-7464 to request individual copies of these documents. Once the Transfer Agent receives notice to stop householding, the Transfer Agent will begin sending individual copies thirty days after receiving your request. This policy does not apply to account statements.
| WWW.STEPHENSFUNDS.COM |
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| PRIVACY NOTICE |
The Funds collect non-public personal information about you from the following sources:
| ● | Information we receive about you on applications or other forms; | |
| ● | Information you give us orally; and/or | |
| ● | Information about your transactions with us or others. |
We do not disclose any non-public personal information about our shareholders or former shareholders without the shareholder’s authorization, except as permitted by law or in response to inquiries from governmental authorities. We may share information with affiliated parties and unaffiliated third parties with whom we have contracts for servicing the Funds. We will provide unaffiliated third parties with only the information necessary to carry out their assigned responsibility. All shareholder records will be disposed of in accordance with applicable law. We maintain physical, electronic and procedural safeguards to protect your non-public personal information and require third parties to treat your non-public personal information with the same high degree of confidentiality.
In the event that you hold shares of a Fund through a financial intermediary, including, but not limited to, a broker-dealer, bank or trust company, the privacy policy of your financial intermediary would govern how your non-public personal information would be shared with unaffiliated third parties.
This page is not a part of the Annual Report
| WWW.STEPHENSFUNDS.COM |
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| INVESTMENT ADVISOR | LEGAL COUNSEL | |
| Stephens Investment Management Group, LLC | Paul, Hastings, Janofsky & Walker LLP | |
| 111 Center Street | Park Avenue Tower | |
| Little Rock, Arkansas 72201 | 75 E. 55th Street, Floor 15 | |
| New York, New York 10022 | ||
| INDEPENDENT REGISTERED | ||
| PUBLIC ACCOUNTING FIRM | CUSTODIAN | |
| Tait, Weller & Baker LLP | U.S. Bank, N.A. | |
| 1818 Market Street, Suite 2400 | Custody Operations | |
| Philadelphia, Pennsylvania 19103-3638 | 1555 North RiverCenter Drive, Suite 302 | |
| Milwaukee, Wisconsin 53212 |
| Stephens Funds® | Ticker | CUSIP | ||||||
| Stephens Small Cap Growth Fund — Class A | STSGX | 742935422 | ||||||
| Stephens Small Cap Growth Fund — Class I | STSIX | 742935380 | ||||||
| Stephens Mid Cap Growth Fund — Class A | STMGX | 742935414 | ||||||
| Stephens Mid Cap Growth Fund — Class I | SFMIX | 742935372 | ||||||
TRANSFER AGENT, FUND ACCOUNTANT AND FUND ADMINISTRATOR | DISTRIBUTOR | |
| Quasar Distributors, LLC | ||
| U.S. Bancorp Fund Services, LLC | 615 East Michigan Street | |
| 615 East Michigan Street | Milwaukee, Wisconsin 53202 | |
| Milwaukee, Wisconsin 53202 |
This report is intended for the shareholders of the Funds and may not be used as sales literature unless preceded or accompanied by a current prospectus.
Mutual fund investing involves risk. Principal loss is possible.
stephensimg.com
FOR ADDITIONAL INFORMATION CONTACT YOUR INVESTMENT ADVISOR OR VISIT STEPHENSFUNDS.COM