Stephens Funds®
Semi-Annual Report
May 31, 2011
Small Cap Growth Fund
Mid Cap Growth Fund
Table of Contents
| Shareholder Letter | 2 |
| Expense Example | 7 |
| Schedules of Investments | 10 |
| Statements of Assets and Liabilities | 23 |
| Statements of Operations | 25 |
| Statements of Changes in Net Assets | 26 |
| Financial Highlights | 30 |
| Notes to Financial Statements | 34 |
| Additional Information | 43 |
| Privacy Policy | 44 |
Stephens Funds®
July 27, 2011
Fellow Shareholder:
We are pleased to present to you this semi-annual report. It contains a brief overview of the past six months ended May 31, 2011, as well as some thoughts about the market going forward. We also take a look at some of the specifics of each Fund’s performance and identify some of the key investments that contributed to that performance.
Market Overview
Macro concerns finally got the best of the market as we neared the midway point of 2011 and stalled the upward trajectory we had seen after a robust 2010. Small cap stocks performed well and outperformed the broader market. For the six month period ended May 31, 2011 the Russell 2000® Growth posted a return of 19.39% which compares favorably to the 15.03% produced by the S&P 500® Index.
The Arab Spring continued to cause unrest in the Middle East. Even with the conflict in Libya escalating and involving U.S. forces, it took a back seat, in western media, to the nuclear crisis in Japan. By the end of the period however, most of the world was focused on the European debt crisis.
Greece is the word — the country continued to grapple with austerity plans, and Europe dealt with the bailout, hinting at the “Too Big to Fail” mantra. The contagion fears seem real as many European banks hold the Greek debt, and no one really knows who has the relevant credit default swap exposure. On top of that and adding to the list of PIGS (Portugal, Ireland, Greece and Spain), the latest casualty seems to be Italy, experiencing debt problems of its own.
These foreign macro issues all impacted the risk appetite for equities here, but domestically we are dealing with endogenous problems as well. Unemployment data continues to disappoint, suggesting that all the stimulus and easy monetary policy hasn’t done much to help the actual economy, although it may be boosting asset prices. The debt ceiling is the latest issue causing concern for investors.
Valuations for equities had become somewhat stretched. As we approached the halfway point of 2011, the Russell 2000® Growth Index had posted significant gains for six out of the last seven quarters — perhaps we needed to digest those valuations. Under the surface of the overall market, there was some divergence among individual stock performance, essentially a bias toward companies with organic growth, and those with consistent and defensible business models.
Stephens Small Cap Growth Fund
The Stephens Small Cap Growth Fund (Class A shares) was up 23.98% for the six month period ended May 31, 2011, beating the Russell 2000® Growth Index by over 4 percent. Our bias toward
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quality growth companies contributed to our outperformance. The Fund beat its benchmark in nearly every economic sector.
Although the overall economic environment has been slow, there have been bright spots within retail. Consumer stocks posted some of our biggest gains for the period, as two of the Fund’s top five contributors were in this sector: Ulta Salon Cosmetics & Fragrance Inc. and Tempur-Pedic International Inc. The common thread has been companies that have an innovative store concept or innovative product that is taking share from more traditional alternatives.
The Fund continued to do well in Energy. We had meaningful gains and our overweight position helped. Oil prices continued their upward bias as the supply was disrupted by events in Libya. We believe the long term fundamentals for Energy are still very strong. Pioneer Drilling Co. was a top performer as domestic shale discoveries drove activity levels.
The Fund’s Healthcare stocks showed consistent gains and we outperformed our benchmark here as well. IPC The Hospitalist Co. Inc. continued its upward momentum and was a top contributor. We sold MedAssets Inc. when it became evident that their business could not overcome structural challenges.
Technology continues to be the largest sector for the Fund, and it was a relatively in-line performer. Merger and acquisition activity continued, and the Fund benefited as three of the Fund’s companies - Varian Semiconductor Equipment Associates Inc., Atheros Communications Inc., and GSI Commerce Inc. - were acquired by large cap companies.
Industrials underperformed as a group and this was our weakest sector. However, we have been significantly underweight and our performance here bested that of the benchmark. We eliminated our position in American Superconductor Corporation after they experienced pushback from their largest customer.
The Fund’s holdings in Financials continued to perform well. Our continued exposure to debt collection companies like Encore Capital Group Inc. and Portfolio Recovery Associates Inc. boosted the Fund’s returns.
Stephens Mid Cap Growth Fund
The Stephens Mid Cap Growth Fund (Class A shares) was up 16.34% for the six month period ended May 31, 2011, underperforming the Russell MidCap® Growth Index at 18.31% by about 2%.
Consumer Discretionary stocks were impacted by the weakness of the economic environment, but the Fund performed relatively in-line. Tempur-Pedic International Inc. and Netflix Inc. were top performers for the Fund.
The Fund did relatively well in Energy — domestically, new shale discoveries are driving activity levels. We have a bias toward service companies, many of which are benefitting from this phenomenon. Petrohawk Energy Corp. performed well during the period and was a top performer.
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Healthcare outperformed as a group, but was essentially flat compared to the benchmark. Long time holding, Cerner Corp. has enjoyed continued success in 2011 and was a top contributor. Rumors that Gen-Probe Inc. was looking to be acquired boosted the company’s returns, making it a top contributor.
The Fund’s Technology stocks showed gains, but we slightly trailed our benchmark. Varian Semiconductor Equipment Associates Inc. was a source of strength as it benefited from the acquisition by Applied Materials. ARM Holdings PLC was a top contributor and we trimmed our position here into the strength and the rich valuation.
Industrials were weak for the benchmark, but the Fund fared better. In fact, our considerably underweight position and relative outperformance made Industrials our best performing sector from an attribution standpoint.
The Fund’s holdings in Financials lagged the broad market. We reduced our position in Green Dot Corp. due to the increased competition they now face.
Outlook
As it has been for the last three years or so, investors are focused on macroeconomic issues, and for good reason. There are some looming issues domestically and globally that could have significant impact on capital markets. We have addressed some of those issues in these reports before — inflation, an energy crisis, price shocks, geopolitical unrest, an overheated China, and the massive and growing U.S. debt.
Here is a simple tautology to consider: if something is not sustainable, it must come to an end. That sounds simple enough, but when we hear that the federal deficit spending is not sustainable, we must consider how this situation will come to an end. The combination of watching the figurative train wreck in Greece, along with the political nightmare in the U.S. regarding the debt ceiling and massive deficit, should be a reminder of what is in store for us.
We know it must end or change somehow, but we can’t know when or how. Last year, we spoke of hyperbolic discounting and the mismatched timing of costs and benefits providing an incentive to “kick the can down the road.” So, what we also know is that as long as they are able, politicians will do everything in their power to avoid really addressing the long term issue. Additionally, as the debt grows, so too does the debt service. The abnormally low interest rate environment has kept this problem from spiraling out of control. As the can gets kicked down the road, and the debt and interest payments mount, it will be critically important for interest rates to stay low. One of our research providers noted:
If interest rates normalize [thru the end of the decade] the added interest costs in 2021 alone will be $800 billion — more than 20 times the mere $37 billion in budget cuts that tore up Congress in March. It would take virtually all of the cuts in the Ryan budget to cover that added interest, much less to start bringing down the national debt.
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As long as the Federal Reserve Bank and the government have the ability, they will keep interest rates low.
If nominal interest rates are being kept low, it is imperative that inflation be kept under control, else real interest rates would be negative. We quite possibly are in a negative real rate environment now, certainly for short term rates, because the current Consumer Price Index (CPI) calculations probably don’t represent actual inflation. Negative real interest rates can generate perverse unintended consequences: discouraged savings, loss of confidence in the currency, and upward pressure on commodities, other assets, and even stocks.
If you’ve read enough of our commentaries, you probably realize by now that our conclusions don’t change much quarter to quarter. The easy money was made long ago. The first stage of this recovery (expansion?) was beta — a broad market rally and growing valuations. The second stage is all about alpha — stock picking matters, and the fastest growing among them are justifying or overcoming the relatively lofty valuations. As we have said before, this is the type of environment in which historically we have typically thrived. Our outperformance over this six month period hopefully lends some credibility to this argument. Clearly, there are problems looming on the horizon, but it is very difficult to predict the timeframe in which we will be forced to deal with them. Because of the many incentives to maintain accommodative monetary policy (and even creative policy moves like releasing oil from the SPR), we believe that this environment can persist for quite some time: where growth beats value and active beats passive.
In Closing
We remain disciplined in our search for the best and fastest growing companies and adherent to the philosophies and investment principles we have followed for years. We believe that the future holds many challenges, but also many opportunities — we will work diligently to seize these opportunities. At Stephens, we firmly believe in investing alongside our clients and each member of the portfolio management team has significant personal investments in our Funds. As ever, we are grateful for the trust you have given us and we look forward to continuing to serve your investment needs.
Your Fellow Shareholder,
Ryan Edward Crane
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Stephens Funds®
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.
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.
This material must be preceded or accompanied by a current prospectus.
Quasar Distributors, LLC, Distributor.
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Stephens Funds®
Sector Allocation at May 31, 2011 (Unaudited)
 |  |
| * | Cash Equivalents and other assets less liabilities. |
Sector allocations and fund holdings are subject to change at anytime and are not a recommendation to buy or sell any security.
Expense Example For the Six Months Ended May 31, 2011 (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 (December 1, 2010 – May 31, 2011).
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 maintenance fee. To the extent the Funds invest in shares of other investment companies as
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Stephens Funds®
Expense Example For the Six Months Ended May 31, 2011 (Unaudited), Continued
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 May 31, 2011 (Unaudited), Continued
Stephens Small Cap Growth Fund
| Expenses Paid | ||||||||||||
| Beginning | Ending | During the Period | ||||||||||
| Account Value | Account Value | December 1, 2010 – | ||||||||||
| December 1, 2010 | May 31, 2011 | May 31, 2011* | ||||||||||
| Class A Actual | $ | 1,000 | $ | 1,088 | $ | 7.03 | ||||||
| Class A Hypothetical (5% annual return before expenses) | $ | 1,000 | $ | 1,018 | $ | 6.79 | ||||||
| Class I Actual | $ | 1,000 | $ | 1,088 | $ | 5.73 | ||||||
| Class I Hypothetical (5% annual return before expenses) | $ | 1,000 | $ | 1,019 | $ | 5.54 | ||||||
Stephens Mid Cap Growth Fund
| Expenses Paid | ||||||||||||
| Beginning | Ending | During the Period | ||||||||||
| Account Value | Account Value | December 1, 2010 – | ||||||||||
| December 1, 2010 | May 31, 2011 | May 31, 2011** | ||||||||||
| Class A Actual | $ | 1,000 | $ | 1,047 | $ | 7.66 | ||||||
| Class A Hypothetical (5% annual return before expenses) | $ | 1,000 | $ | 1,017 | $ | 7.54 | ||||||
| Class I Actual | $ | 1,000 | $ | 1,047 | $ | 6.38 | ||||||
| Class I Hypothetical (5% annual return before expenses) | $ | 1,000 | $ | 1,019 | $ | 6.29 | ||||||
| * | Expenses are equal to the Stephens Small Cap Growth 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 182/365 (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 182/365 (to reflect the one-half year period). |
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Stephens Small Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited)
| Shares | Value | |||||
| COMMON STOCKS - 97.7% | ||||||
| Aerospace & Defense - 0.6% | ||||||
| 15,700 | Ceradyne, Inc.* | $ 702,732 | ||||
| Auto Components - 1.0% | ||||||
| 40,600 | LKQ Corp.* | 1,079,554 | ||||
| Biotechnology - 2.7% | ||||||
| 15,800 | BioMarin Pharmaceutical, Inc.* | 446,034 | ||||
| 35,300 | Cepheid, Inc.* | 1,133,836 | ||||
| 16,600 | Cubist Pharmaceuticals, Inc.* | 639,598 | ||||
| 31,100 | Myriad Genetics, Inc.* | 790,251 | ||||
| 3,009,719 | ||||||
| Capital Markets - 0.7% | ||||||
| 20,250 | Stifel Financial Corp.* | 815,467 | ||||
| Chemicals - 0.7% | ||||||
| 12,200 | Polypore International, Inc.* | 799,710 | ||||
| Commercial Banks - 1.6% | ||||||
| 38,800 | East West Bancorp, Inc. | 779,492 | ||||
| 16,900 | SVB Financial Group* | 1,003,522 | ||||
| 1,783,014 | ||||||
| Commercial Services & Supplies - 6.2% | ||||||
| 24,432 | Advisory Board Co.* | 1,284,390 | ||||
| 6,100 | Clean Harbors, Inc.* | 617,076 | ||||
| 19,235 | CoStar Group, Inc.* | 1,213,729 | ||||
| 70,100 | Darling International, Inc.* | 1,342,415 | ||||
| 20,400 | Portfolio Recovery Associates, Inc.* | 1,767,048 | ||||
| 23,000 | Tetra Tech, Inc.* | 559,590 | ||||
| 6,784,248 | ||||||
| Communications Equipment - 2.3% | ||||||
| 41,000 | Aruba Networks, Inc.* | 1,165,220 | ||||
| 16,900 | DG FastChannel, Inc.* | 597,922 | ||||
| 15,500 | Finisar Corp.* | 372,310 | ||||
| 10,100 | Riverbed Technology, Inc.* | 382,992 | ||||
| 2,518,444 | ||||||
The accompanying notes are an integral part of these financial statements.
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Stephens Small Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 97.7%, CONTINUED | ||||||
| Computers & Peripherals - 1.5% | ||||||
| 24,100 | QLogic Corp.* | $ 389,938 | ||||
| 33,300 | STEC, Inc.* | 596,403 | ||||
| 19,800 | Stratasys, Inc.* | 696,960 | ||||
| 1,683,301 | ||||||
| Consumer Finance - 2.3% | ||||||
| 40,332 | EZCORP, Inc.* | 1,322,486 | ||||
| 28,092 | First Cash Financial Services, Inc.* | 1,172,841 | ||||
| 2,495,327 | ||||||
| Consumer Services - 1.1% | ||||||
| 14,923 | Green Dot Corp. - Class A* | 578,117 | ||||
| 13,200 | Steiner Leisure Ltd.* | 660,000 | ||||
| 1,238,117 | ||||||
| Diversified Financial Services - 1.8% | ||||||
| 58,300 | Encore Capital Group, Inc.* | 1,929,147 | ||||
| Electric Services - 0.2% | ||||||
| 8,000 | Ormat Technologies, Inc. | 176,080 | ||||
| Electronic Equipment & Instruments - 2.5% | ||||||
| 17,100 | Cognex Corp. | 603,459 | ||||
| 8,900 | Itron, Inc.* | 456,125 | ||||
| 22,867 | National Instruments Corp. | 667,716 | ||||
| 23,000 | OSI Systems, Inc.* | 919,540 | ||||
| 2,646,840 | ||||||
| Energy Equipment & Services - 7.4% | ||||||
| 6,300 | CARBO Ceramics, Inc. | 946,701 | ||||
| 17,100 | Core Laboratories NV | 1,755,999 | ||||
| 12,400 | Dril-Quip, Inc.* | 919,832 | ||||
| 72,508 | Key Energy Services, Inc.* | 1,281,941 | ||||
| 6,430 | Oceaneering International, Inc.* | 524,045 | ||||
| 12,400 | Oil States International, Inc.* | 980,220 | ||||
| 111,100 | Pioneer Drilling Co.* | 1,626,504 | ||||
| 8,035,242 | ||||||
The accompanying notes are an integral part of these financial statements.
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Stephens Small Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 97.7%, CONTINUED | ||||||
| Food & Staples Retailing - 1.2% | ||||||
| 29,640 | United Natural Foods, Inc.* | $1,289,636 | ||||
| Food Products - 2.2% | ||||||
| 10,000 | Balchem Corp. | 431,500 | ||||
| 14,900 | Diamond Foods, Inc. | 1,109,007 | ||||
| 14,100 | TreeHouse Foods, Inc.* | 859,113 | ||||
| 2,399,620 | ||||||
| Health Care Equipment & Supplies - 5.5% | ||||||
| 18,222 | Conceptus, Inc.* | 231,966 | ||||
| 12,860 | Gen-Probe, Inc.* | 1,051,820 | ||||
| 22,500 | Neogen Corp.* | 1,008,900 | ||||
| 40,480 | NuVasive, Inc.* | 1,367,819 | ||||
| 19,800 | Thoratec Corp.* | 688,446 | ||||
| 33,900 | Volcano Corp.* | 1,065,477 | ||||
| 9,200 | ZOLL Medical Corp.* | 559,452 | ||||
| 5,973,880 | ||||||
| Health Care Providers & Services - 5.3% | ||||||
| 22,800 | Bio-Reference Laboratories, Inc.* | 568,404 | ||||
| 16,600 | HMS Holdings Corp.* | 1,295,796 | ||||
| 27,200 | ICON PLC - ADR* | 696,048 | ||||
| 28,700 | IPC The Hospitalist Company, Inc.* | 1,457,386 | ||||
| 37,300 | PSS World Medical, Inc.* | 1,089,906 | ||||
| 28,555 | VCA Antech, Inc.* | 698,170 | ||||
| 5,805,710 | ||||||
| Health Care Technology - 3.0% | ||||||
| 28,202 | athenahealth, Inc.* | 1,262,603 | ||||
| 49,621 | Medidata Solutions, Inc.* | 1,140,787 | ||||
| 15,500 | SXC Health Solutions Corp.* | 913,570 | ||||
| 3,316,960 | ||||||
| Hotels, Restaurants & Leisure - 3.0% | ||||||
| 14,396 | BJ’s Restaurants, Inc.* | 737,507 | ||||
| 20,600 | Buffalo Wild Wings, Inc.* | 1,290,384 | ||||
The accompanying notes are an integral part of these financial statements.
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Stephens Small Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 97.7%, CONTINUED | ||||||
| Hotels, Restaurants & Leisure - 3.0%, Continued | ||||||
| 9,900 | Panera Bread Co. — Class A* | $1,237,797 | ||||
| 3,265,688 | ||||||
| Household Durables - 1.1% | ||||||
| 19,000 | Tempur-Pedic International, Inc.* | 1,235,760 | ||||
| Insurance - 0.5% | ||||||
| 8,300 | ProAssurance Corp.* | 583,573 | ||||
| Internet & Catalog Retail - 3.1% | ||||||
| 15,200 | Blue Nile, Inc.* | 760,000 | ||||
| 21,800 | Shutterfly, Inc.* | 1,321,516 | ||||
| 27,126 | VistaPrint Ltd.* | 1,334,057 | ||||
| 3,415,573 | ||||||
| Internet Software & Services - 4.4% | ||||||
| 35,418 | comScore, Inc.* | 994,183 | ||||
| 133,600 | Limelight Networks, Inc.* | 765,528 | ||||
| 12,400 | Mercadolibre, Inc. | 1,092,688 | ||||
| 48,870 | Vocus, Inc.* | 1,331,219 | ||||
| 151,600 | Zix Corp.* | 577,596 | ||||
| 4,761,214 | ||||||
| IT Services - 0.5% | ||||||
| 38,300 | Echo Global Logistics, Inc.* | 570,670 | ||||
| Life Sciences Tools & Services - 1.9% | ||||||
| 94,100 | eResearchTechnology, Inc.* | 596,594 | ||||
| 34,500 | Parexel International Corp.* | 868,365 | ||||
| 6,900 | Techne Corp. | 562,350 | ||||
| 2,027,309 | ||||||
| Machinery - 2.0% | ||||||
| 66,000 | Flow International Corp.* | 271,260 | ||||
| 8,800 | Lindsay Corp. | 590,304 | ||||
| 27,800 | Titan International, Inc. | 764,222 | ||||
The accompanying notes are an integral part of these financial statements.
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Stephens Small Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 97.7%, CONTINUED | ||||||
| Machinery - 2.0%, Continued | ||||||
| 5,500 | Valmont Industries, Inc. | $ 551,210 | ||||
| 2,176,996 | ||||||
| Media - 3.5% | ||||||
| 52,500 | Ballantyne Strong, Inc.* | 298,725 | ||||
| 40,856 | IMAX Corp.* | 1,520,252 | ||||
| 164,000 | Lions Gate Entertainment Corp.* | 972,520 | ||||
| 58,800 | National CineMedia, Inc. | 1,047,228 | ||||
| 3,838,725 | ||||||
| Metals & Mining - 0.3% | ||||||
| 4,400 | Molycorp, Inc.* | 292,292 | ||||
| Oil, Gas & Consumable Fuels - 2.8% | ||||||
| 31,000 | Carrizo Oil & Gas, Inc.* | 1,184,510 | ||||
| 13,300 | GeoResources, Inc.* | 329,441 | ||||
| 8,900 | Rosetta Resources, Inc.* | 437,435 | ||||
| 52,800 | Tesco Corp.* | 1,075,536 | ||||
| 3,026,922 | ||||||
| Pharmaceuticals - 0.9% | ||||||
| 74,200 | Akorn, Inc.* | 505,302 | ||||
| 12,200 | Salix Pharmaceuticals Ltd.* | 488,366 | ||||
| 993,668 | ||||||
| Professional Services - 2.3% | ||||||
| 25,500 | Acacia Research Corp.* | 988,380 | ||||
| 13,000 | Corporate Executive Board Co. | 546,650 | ||||
| 32,500 | Insperity, Inc. | 1,022,450 | ||||
| 2,557,480 | ||||||
| Road & Rail - 0.6% | ||||||
| 41,100 | Knight Transportation, Inc. | 702,810 | ||||
| Semiconductors & Semiconductor Equipment - 8.2% | ||||||
| 19,648 | CEVA, Inc.* | 674,516 | ||||
| 18,000 | Cymer, Inc.* | 861,660 | ||||
| 44,200 | Entropic Communications, Inc.* | 393,380 | ||||
The accompanying notes are an integral part of these financial statements.
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Stephens Small Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 97.7%, CONTINUED | ||||||
| Semiconductors & Semiconductor Equipment - 8.2%, Continued | ||||||
| 85,300 | GT Solar International, Inc.* | $1,088,428 | ||||
| 14,400 | Hittite Microwave Corp.* | 913,248 | ||||
| 29,000 | Intersil Corp. | 416,150 | ||||
| 29,109 | Mellanox Technologies Ltd.* | 898,886 | ||||
| 42,130 | Microsemi Corp.* | 928,966 | ||||
| 45,987 | MIPS Technologies, Inc.* | 364,217 | ||||
| 20,100 | NetLogic Microsystems, Inc.* | 770,232 | ||||
| 15,200 | Power Integrations, Inc. | 559,664 | ||||
| 16,970 | Varian Semiconductor Equipment Associates, Inc.* | 1,042,213 | ||||
| 8,911,560 | ||||||
| Software - 7.0% | ||||||
| 18,400 | Ansys, Inc.* | 1,055,608 | ||||
| 44,700 | Aspen Technology, Inc.* | 739,785 | ||||
| 10,600 | Concur Technologies, Inc.* | 529,682 | ||||
| 6,700 | FactSet Research Systems, Inc. | 742,762 | ||||
| 14,700 | Fortinet, Inc.* | 712,803 | ||||
| 18,600 | MICROS Systems, Inc.* | 949,716 | ||||
| 19,400 | Nuance Communications, Inc.* | 426,024 | ||||
| 44,800 | PROS Holdings, Inc.* | 752,640 | ||||
| 12,000 | Quality Systems, Inc. | 1,032,960 | ||||
| 25,000 | Sourcefire, Inc.* | 667,750 | ||||
| 7,609,730 | ||||||
| Specialty Retail - 4.2% | ||||||
| 76,300 | Pep Boys - Manny, Moe & Jack | 1,083,460 | ||||
| 27,700 | rue21, Inc.* | 937,368 | ||||
| 28,800 | Ulta Salon, Cosmetics & Fragrance, Inc.* | 1,612,224 | ||||
| 31,200 | Zumiez, Inc.* | 947,856 | ||||
| 4,580,908 | ||||||
| Textiles, Apparel & Luxury Goods - 0.8% | ||||||
| 38,409 | CROCS, Inc.* | 873,037 | ||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 15 -
Stephens Small Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 97.7%, CONTINUED | ||||||
| Trading Companies & Distributors - 0.8% | ||||||
| 12,045 | MSC Industrial Direct Co., Inc. - Class A | $ 837,248 | ||||
TOTAL COMMON STOCKS (Cost $73,507,140) | 106,743,911 | |||||
| SHORT-TERM INVESTMENT - 3.7% | ||||||
| Money Market Fund - 3.7% | ||||||
| 4,018,340 | Invesco Liquid Assets Portfolio - Institutional Class, 0.10%1 | 4,018,340 | ||||
TOTAL SHORT-TERM INVESTMENT (Cost $4,018,340) | 4,018,340 | |||||
TOTAL INVESTMENTS IN SECURITIES - 101.4% (Cost $77,525,480) | 110,762,251 | |||||
| Liabilities in Excess of Other Assets - (1.4)% | (1,491,345 | ) | ||||
| TOTAL NET ASSETS - 100.0% | $109,270,906 | |||||
| * | Non-income producing security. | |
| ADR | American Depository Receipt | |
| 1 | 7-Day Yield as of May 31, 2011. |
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 16 -
Stephens Mid Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited)
| Shares | Value | |||||
| COMMON STOCKS - 96.4% | ||||||
| Aerospace & Defense - 2.2% | ||||||
| 10,100 | BE Aerospace, Inc.* | $ 377,942 | ||||
| 2,595 | Precision Castparts Corp. | 407,675 | ||||
| 785,617 | ||||||
| Air Freight & Logistics - 0.3% | ||||||
| 2,200 | Expeditors International of Washington, Inc. | 116,204 | ||||
| Auto Components - 1.0% | ||||||
| 13,000 | LKQ Corp.* | 345,670 | ||||
| Beverages - 2.2% | ||||||
| 4,387 | Brown-Forman Corp. - Class B | 317,970 | ||||
| 6,650 | Hansen Natural Corp.* | 476,472 | ||||
| 794,442 | ||||||
| Biotechnology - 1.7% | ||||||
| 3,000 | Alexion Pharmaceuticals, Inc.* | 142,260 | ||||
| 17,050 | QIAGEN NV* | 336,396 | ||||
| 1,850 | United Therapeutics Corp.* | 119,455 | ||||
| 598,111 | ||||||
| Capital Markets - 2.0% | ||||||
| 4,580 | Affiliated Managers Group, Inc.* | 484,243 | ||||
| 6,050 | Lazard Ltd. | 235,648 | ||||
| 719,891 | ||||||
| Chemicals - 1.1% | ||||||
| 5,850 | Airgas, Inc. | 404,118 | ||||
| Commercial Banks - 0.8% | ||||||
| 14,950 | East West Bancorp, Inc. | 300,345 | ||||
| Commercial Services & Supplies - 2.8% | ||||||
| 4,800 | Portfolio Recovery Associates, Inc.* | 415,776 | ||||
| 6,400 | Stericycle, Inc.* | 570,176 | ||||
| 985,952 | ||||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 17 -
Stephens Mid Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 96.4%, CONTINUED | ||||||
| Communications Equipment - 2.1% | ||||||
| 5,000 | Aruba Networks, Inc.* | $ 142,100 | ||||
| 5,200 | F5 Networks, Inc.* | 590,616 | ||||
| 732,716 | ||||||
| Computers & Peripherals - 0.9% | ||||||
| 5,700 | NetApp, Inc.* | 312,189 | ||||
| Consumer Services - 0.6% | ||||||
| 5,535 | Green Dot Corp. - Class A* | 214,426 | ||||
| Diversified Financial Services - 0.9% | ||||||
| 2,700 | IntercontinentalExchange, Inc.* | 325,755 | ||||
| Electrical Equipment - 0.8% | ||||||
| 3,600 | Roper Industries, Inc. | 300,492 | ||||
| Electronic Equipment & Instruments - 3.3% | ||||||
| 5,450 | Dolby Laboratories, Inc.* | 254,733 | ||||
| 1,750 | IPG Photonics Corp.* | 131,512 | ||||
| 4,050 | Itron, Inc.* | 207,563 | ||||
| 11,455 | National Instruments Corp. | 334,486 | ||||
| 5,260 | Trimble Navigation Ltd.* | 229,809 | ||||
| 1,158,103 | ||||||
| Energy Equipment & Services - 5.6% | ||||||
| 5,450 | Core Laboratories NV | 559,661 | ||||
| 3,000 | Dril-Quip, Inc.* | 222,540 | ||||
| 5,700 | Ensco PLC - ADR | 303,924 | ||||
| 6,530 | FMC Technologies, Inc.* | 291,434 | ||||
| 5,550 | Nabors Industries Ltd.* | 154,789 | ||||
| 2,110 | National-Oilwell Varco, Inc. | 153,144 | ||||
| 3,600 | Oceaneering International, Inc.* | 293,400 | ||||
| 1,978,892 | ||||||
| Food & Staples Retailing - 1.2% | ||||||
| 7,150 | Whole Foods Market, Inc. | 437,294 | ||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 18 -
Stephens Mid Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 96.4%, CONTINUED | ||||||
| Health Care Equipment & Supplies - 7.2% | ||||||
| 6,685 | Gen-Probe, Inc.* | $ 546,766 | ||||
| 19,798 | Hologic, Inc.* | 425,657 | ||||
| 4,200 | IDEXX Laboratories, Inc.* | 330,624 | ||||
| 7,650 | Illumina, Inc.* | 551,412 | ||||
| 13,550 | ResMed, Inc.* | 436,310 | ||||
| 3,700 | Varian Medical Systems, Inc.* | 249,898 | ||||
| 2,540,667 | ||||||
| Health Care Providers & Services - 3.4% | ||||||
| 4,945 | Cerner Corp.* | 593,895 | ||||
| 4,195 | Henry Schein, Inc.* | 301,285 | ||||
| 11,830 | VCA Antech, Inc.* | 289,243 | ||||
| 1,184,423 | ||||||
| Health Care Technology - 2.0% | ||||||
| 14,950 | Allscripts Healthcare Solutions, Inc.* | 300,645 | ||||
| 7,050 | SXC Health Solutions Corp.* | 415,527 | ||||
| 716,172 | ||||||
| Hotels, Restaurants & Leisure - 2.2% | ||||||
| 1,100 | Chipotle Mexican Grill, Inc.* | 317,977 | ||||
| 3,700 | Panera Bread Co. - Class A* | 462,611 | ||||
| 780,588 | ||||||
| Household Durables - 1.3% | ||||||
| 7,050 | Tempur-Pedic International, Inc.* | 458,532 | ||||
| Insurance - 1.0% | ||||||
| 10,480 | HCC Insurance Holdings, Inc. | 346,783 | ||||
| Internet & Catalog Retail - 2.8% | ||||||
| 2,350 | Netflix, Inc.* | 636,380 | ||||
| 6,800 | VistaPrint Ltd.* | 334,424 | ||||
| 970,804 | ||||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 19 -
Stephens Mid Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 96.4%, CONTINUED | ||||||
| Internet Software & Services - 2.6% | ||||||
| 8,750 | Akamai Technologies, Inc.* | $ 296,931 | ||||
| 3,350 | Mercadolibre, Inc. | 295,202 | ||||
| 8,750 | VeriSign, Inc. | 306,425 | ||||
| 898,558 | ||||||
| IT Services - 5.6% | ||||||
| 3,950 | Alliance Data Systems Corp.* | 371,024 | ||||
| 5,660 | Cognizant Technology Solutions Corp. - Class A* | 430,386 | ||||
| 7,255 | Global Payments, Inc. | 376,970 | ||||
| 17,545 | Iron Mountain, Inc. | 596,705 | ||||
| 3,700 | Teradata Corp.* | 206,423 | ||||
| 1,981,508 | ||||||
| Life Sciences Tools & Services - 2.2% | ||||||
| 6,180 | Covance, Inc.* | 363,755 | ||||
| 5,700 | Life Technologies Corp.* | 296,229 | ||||
| 1,050 | Waters Corp.* | 103,488 | ||||
| 763,472 | ||||||
| Machinery - 2.2% | ||||||
| 5,200 | AGCO Corp.* | 268,684 | ||||
| 3,200 | Pall Corp. | 179,520 | ||||
| 3,200 | Valmont Industries, Inc. | 320,704 | ||||
| 768,908 | ||||||
| Media - 1.5% | ||||||
| 8,000 | Discovery Communications, Inc.* | 310,640 | ||||
| 5,827 | IMAX Corp.* | 216,823 | ||||
| 527,463 | ||||||
| Medical Devices - 1.0% | ||||||
| 1,005 | Intuitive Surgical, Inc.* | 350,745 | ||||
| Metals & Mining - 0.4% | ||||||
| 2,100 | Molycorp, Inc.* | 139,503 | ||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 20 -
Stephens Mid Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 96.4%, CONTINUED | ||||||
| Multiline Retail - 0.6% | ||||||
| 3,800 | Family Dollar Stores, Inc. | $ 211,812 | ||||
| Oil, Gas & Consumable Fuels - 4.7% | ||||||
| 7,280 | Newfield Exploration Co.* | 543,015 | ||||
| 16,900 | Petrohawk Energy Corp.* | 447,343 | ||||
| 3,950 | Range Resources Corp. | 220,884 | ||||
| 5,660 | Southwestern Energy Co.* | 247,738 | ||||
| 3,200 | Whiting Petroleum Corp.* | 214,720 | ||||
| 1,673,700 | ||||||
| Pharmaceuticals - 0.8% | ||||||
| 2,855 | Shire PLC - ADR | 272,909 | ||||
| Professional Services - 1.6% | ||||||
| 4,450 | IHS, Inc.* | 390,354 | ||||
| 5,550 | Verisk Analytics, Inc. — Class A* | 188,978 | ||||
| 579,332 | ||||||
| Road & Rail - 0.8% | ||||||
| 6,400 | J.B. Hunt Transport Services, Inc. | 293,440 | ||||
| Semiconductors & Semiconductor Equipment - 7.2% | ||||||
| 15,715 | ARM Holdings PLC - ADR | 448,663 | ||||
| 10,561 | ASML Holding NV - ADR | 411,985 | ||||
| 27,000 | Atmel Corp.* | 405,540 | ||||
| 5,350 | Cree, Inc.* | 234,811 | ||||
| 14,440 | Intersil Corp. - Class A | 207,214 | ||||
| 11,830 | Microchip Technology, Inc. | 467,640 | ||||
| 5,875 | Varian Semiconductor Equipment Associates, Inc.* | 360,813 | ||||
| 2,536,666 | ||||||
| Software - 8.5% | ||||||
| 35,920 | Activision Blizzard, Inc. | 430,681 | ||||
| 4,950 | Ansys, Inc.* | 283,981 | ||||
| 4,200 | FactSet Research Systems, Inc. | 465,612 | ||||
| 4,050 | Fortinet, Inc.* | 196,385 | ||||
| 6,050 | MICROS Systems, Inc.* | 308,913 | ||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 21 -
Stephens Mid Cap Growth Fund
Schedule of Investments at May 31, 2011 (Unaudited),
Continued
| Shares | Value | |||||
| COMMON STOCKS - 96.4%, CONTINUED | ||||||
| Software - 8.5%, Continued | ||||||
| 14,550 | Nuance Communications, Inc.* | $ 319,518 | ||||
| 10,840 | Red Hat, Inc.* | 472,624 | ||||
| 3,355 | Salesforce.com, Inc.* | 510,832 | ||||
| 2,988,546 | ||||||
| Specialty Retail - 5.6% | ||||||
| 12,950 | CarMax, Inc.* | 384,097 | ||||
| 5,200 | O’Reilly Automotive, Inc.* | 312,572 | ||||
| 5,900 | Ross Stores, Inc. | 483,564 | ||||
| 5,800 | The TJX Companies, Inc. | 307,516 | ||||
| 4,200 | Tractor Supply Co. | 265,272 | ||||
| 7,750 | Urban Outfitters, Inc.* | 236,065 | ||||
| 1,989,086 | ||||||
| Trading Companies & Distributors - 1.7% | ||||||
| 5,460 | Fastenal Co. | 181,163 | ||||
| 5,780 | MSC Industrial Direct Co., Inc. - Class A | 401,768 | ||||
| 582,931 | ||||||
TOTAL COMMON STOCKS (Cost $26,509,697) | 34,066,765 | |||||
| SHORT-TERM INVESTMENTS - 3.4% | ||||||
| Money Market Funds - 3.4% | ||||||
| 974,843 | Invesco Liquid Assets Portfolio - Institutional Class, 0.10%1 | 974,843 | ||||
| 251,119 | Invesco Prime Portfolio - Institutional Class, 0.05%1 | 251,119 | ||||
TOTAL SHORT-TERM INVESTMENTS (Cost $1,225,962) | 1,225,962 | |||||
TOTAL INVESTMENTS IN SECURITIES - 99.8% (Cost $27,735,659) | 35,292,727 | |||||
| Other Assets in Excess of Liabilities - 0.2% | 63,561 | |||||
| TOTAL NET ASSETS - 100.0% | $35,356,288 | |||||
| * | Non-income producing security. | |
| ADR | American Depository Receipt | |
| 1 | 7-Day Yield as of May 31, 2011. |
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 22 -
Stephens Funds®
Statements of Assets and Liabilities at May 31, 2011 (Unaudited)
| Stephens Small Cap | Stephens Mid Cap | |||||||
| Growth Fund | Growth Fund | |||||||
| ASSETS | ||||||||
| Investments in securities, at value* (Note 2) | $ | 110,762,251 | $ | 35,292,727 | ||||
| Cash | — | 1,558 | ||||||
| Receivables: | ||||||||
| Investment securities sold | 101,180 | 2,531 | ||||||
| Fund shares sold | 250,300 | 111,333 | ||||||
| Dividends and interest | 19,938 | 7,501 | ||||||
| Prepaid expenses | 39,929 | 46,592 | ||||||
| Total assets | 111,173,598 | 35,462,242 | ||||||
| LIABILITIES | ||||||||
| Payables: | ||||||||
| Investment securities purchased | 1,544,429 | — | ||||||
| Fund shares redeemed | 131,506 | 2,000 | ||||||
| Distribution fees | 46,538 | 10,022 | ||||||
| Investment advisory fees, net | 67,906 | 15,845 | ||||||
| Administration fees | 16,986 | 4,524 | ||||||
| Fund accounting fees | 18,542 | 16,131 | ||||||
| Transfer agent fees | 28,691 | 18,622 | ||||||
| Custody fees | 7,418 | 2,121 | ||||||
| Chief Compliance Officer fees | 2,576 | 2,495 | ||||||
| Other accrued expenses | 38,100 | 34,194 | ||||||
| Total liabilities | 1,902,692 | 105,954 | ||||||
| NET ASSETS | $ | 109,270,906 | $ | 35,356,288 | ||||
| COMPONENTS OF NET ASSETS | ||||||||
| Paid-in capital | $ | 73,332,334 | $ | 29,997,266 | ||||
| Accumulated net investment loss | (493,268 | ) | (107,852 | ) | ||||
| Accumulated net realized gain (loss) on investments | 3,195,069 | (2,090,194 | ) | |||||
| Net unrealized appreciation on investments | 33,236,771 | 7,557,068 | ||||||
| Net assets | $ | 109,270,906 | $ | 35,356,288 | ||||
| * Cost of investments | $ | 77,525,480 | $ | 27,735,659 | ||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 23 -
Stephens Funds®
Statements of Assets and Liabilities at May 31, 2011
(Unaudited), Continued
| Stephens Small Cap | Stephens Mid Cap | ||||||||
| Growth Fund | Growth Fund | ||||||||
| Class A: | |||||||||
| Net assets | $ | 57,230,653 | $ | 20,310,076 | |||||
| Shares issued and outstanding (unlimited number of shares authorized without par value) | 4,012,723 | 1,550,656 | |||||||
| Net asset value, and redemption price per share | $ | 14.26 | $ | 13.10 | |||||
| Maximum offering price per share** (net asset value per share/front-end sales charge) | $(14.26/94.75%) | $ | 15.05 | ||||||
| $(13.10/94.75%) | $ | 13.83 | |||||||
| Class I: | |||||||||
| Net assets | $ | 52,040,253 | $ | 15,046,212 | |||||
| Shares issued and outstanding (unlimited number of shares authorized without par value) | 3,524,706 | 1,038,919 | |||||||
| Net asset value, offering price, and redemption price per share | $ | 14.76 | $ | 14.48 | |||||
| ** | 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
- 24 -
Stephens Funds®
Statements of Operations For the Year Ended
May 31, 2011 (Unaudited)
| Stephens Small Cap | Stephens Mid Cap | |||||||||||
| Growth Fund | Growth Fund | |||||||||||
| INVESTMENT INCOME | ||||||||||||
| Income | ||||||||||||
Dividends (net of $1,294 and $1,285 foreign withholding tax, respectively) | $ | 108,008 | $ | 96,351 | ||||||||
| Interest | 2,464 | 832 | ||||||||||
| Total investment income | 110,472 | 97,183 | ||||||||||
| EXPENSES (NOTE 3) | ||||||||||||
| Investment advisory fees | 368,127 | 109,580 | ||||||||||
| Distribution fees – Class A | 63,821 | 22,400 | ||||||||||
| Administration fees | 48,895 | 19,945 | ||||||||||
| Transfer agent fees | 40,055 | 30,405 | ||||||||||
| Fund accounting fees | 31,751 | 20,948 | ||||||||||
| Registration fees | 18,762 | 14,748 | ||||||||||
| Reports to shareholders | 14,760 | 9,166 | ||||||||||
| Custody fees | 13,042 | 4,713 | ||||||||||
| Audit fees | 11,395 | 11,405 | ||||||||||
| Miscellaneous expenses | 5,873 | 4,889 | ||||||||||
| Chief Compliance Officer fees | 4,824 | 3,747 | ||||||||||
| Legal fees | 2,343 | 2,251 | ||||||||||
| Trustee fees | 1,783 | 1,816 | ||||||||||
| Insurance expense | 746 | 692 | ||||||||||
| Total expenses | 626,177 | 256,705 | ||||||||||
| Less fees waived | (22,437 | ) | (51,670 | ) | ||||||||
| Net expenses | 603,740 | 205,035 | ||||||||||
| Net investment loss | (493,268 | ) | (107,852 | ) | ||||||||
| REALIZED AND UNREALIZED GAIN ON INVESTMENTS | ||||||||||||
| Net realized gain on investments | 4,551,865 | 872,193 | ||||||||||
| Change in unrealized appreciation on investments | 16,791,575 | 3,385,878 | ||||||||||
| Net realized and unrealized gain on investments | 21,343,440 | 4,258,071 | ||||||||||
| Net increase in net assets resulting from operations | $ | 20,850,172 | $ | 4,150,219 | ||||||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 25 -
Stephens Funds®
Statements of Changes in Net Assets
Stephens Small Cap Growth Fund
| Six Months Ended | ||||||||
| May 31, 2011 | Year Ended | |||||||
| (Unaudited) | November 30, 2010 | |||||||
| INCREASE (DECREASE) IN NET ASSETS FROM: | ||||||||
| OPERATIONS | ||||||||
| Net investment loss | $ | (493,268 | ) | $ | (694,845 | ) | ||
| Net realized gain on investments | 4,551,865 | 6,532,933 | ||||||
| Change in unrealized appreciation on investments | 16,791,575 | 10,427,690 | ||||||
| Net increase in net assets resulting from operations | 20,850,172 | 16,265,778 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| From net realized gain: | ||||||||
| Class A Shares | (566,882 | ) | — | |||||
| Class I Shares | (501,826 | ) | — | |||||
| Total distributions to shareholders | (1,068,708 | ) | — | |||||
| CAPITAL SHARE TRANSACTIONS (NOTE 3) | ||||||||
| Net increase in net assets derived from net change in outstanding shares - Class A (a)(b) | 971,272 | 15,705,080 | ||||||
| Net increase (decrease) in net assets derived from net change in outstanding shares - Class I (a) | 3,438,695 | (3,304,578 | ) | |||||
| Total increase in net assets from capital share transactions | 4,409,967 | 12,400,502 | ||||||
| Total increase in net assets | 24,191,431 | 28,666,280 | ||||||
| NET ASSETS | ||||||||
| Beginning of period/year | 85,079,475 | 56,413,195 | ||||||
| End of period/year | $ | 109,270,906 | $ | 85,079,475 | ||||
| Accumulated Net Investment loss | $ | (493,268 | ) | $ | — | |||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 26 -
Stephens Funds®
Statements of Changes in Net Assets, Continued
| (a) | Summary of capital share transactions is as follows: |
| Six Months Ended | ||||||||||||||||
| May 31, 2011 | Year Ended | |||||||||||||||
| (Unaudited) | November 30, 2010 | |||||||||||||||
Class A | Shares | Value | Shares | Value | ||||||||||||
| Shares sold | 410,878 | $ | 5,469,021 | 2,483,197 | $ | 25,657,751 | ||||||||||
| Shares issued in reinvestments of distributions | 42,978 | 530,776 | ||||||||||||||
| Shares redeemed (b) | (386,413 | ) | (5,028,525 | ) | (965,319 | ) | (9,952,671 | ) | ||||||||
| Net increase | 67,443 | $ | 971,272 | 1,517,878 | $ | 15,705,080 | ||||||||||
| (b) | Net of redemption fees of $353 and $1,057, respectively. |
| Six Months Ended | ||||||||||||||||
| May 31, 2011 | Year Ended | |||||||||||||||
| (Unaudited) | November 30, 2010 | |||||||||||||||
Class I | Shares | Value | Shares | Value | ||||||||||||
| Shares sold | 784,791 | $ | 10,414,102 | 2,471,071 | $ | 26,677,651 | ||||||||||
| Shares issued in reinvestments of distributions | 29,705 | 379,340 | ||||||||||||||
| Shares redeemed | (546,566 | ) | (7,354,747 | ) | (2,881,121 | ) | (29,982,229 | ) | ||||||||
| Net increase (decrease) | 267,930 | $ | 3,438,695 | (410,050 | ) | $ | (3,304,578 | ) | ||||||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
- 27 -
Stephens Funds®
Statements of Changes in Net Assets, Continued
Stephens Mid Cap Growth Fund
| Six Months Ended | ||||||||
| May 31, 2011 | Year Ended | |||||||
| (Unaudited) | November 30, 2010 | |||||||
| INCREASE (DECREASE) IN NET ASSETS FROM: | ||||||||
| OPERATIONS | ||||||||
| Net investment loss | $ | (107,852 | ) | $ | (167,567 | ) | ||
| Net realized gain on investments | 872,193 | 135,003 | ||||||
| Change in unrealized appreciation on investments | 3,385,878 | 4,545,035 | ||||||
| Net increase in net assets resulting from operations | 4,150,219 | 4,512,471 | ||||||
| CAPITAL SHARE TRANSACTIONS (NOTE 3) | ||||||||
| Net increase in net assets derived from net change in outstanding shares - Class A (a)(b) | 2,612,175 | 2,446,247 | ||||||
| Net increase in net assets derived from net change in outstanding shares - Class I (a) | 6,393,516 | 1,052,374 | ||||||
| Total increase in net assets from capital share transactions | 9,005,691 | 3,498,621 | ||||||
| Total increase in net assets | 13,155,910 | 8,011,092 | ||||||
| NET ASSETS | ||||||||
| Beginning of period/year | 22,200,378 | 14,189,286 | ||||||
| End of period/year | $ | 35,356,288 | $ | 22,200,378 | ||||
| Accumulated Net Investment loss | $ | (107,852 | ) | $ | — | |||
| (a) | Summary of capital share transactions is as follows: |
| Six Months Ended | ||||||||||||||||
| May 31, 2011 | Year Ended | |||||||||||||||
| (Unaudited) | November 30, 2010 | |||||||||||||||
Class A | Shares | Value | Shares | Value | ||||||||||||
| Shares sold | 312,497 | $ | 3,862,944 | 349,835 | $ | 3,563,002 | ||||||||||
| Shares redeemed (b) | (100,350 | ) | (1,250,769 | ) | (114,215 | ) | (1,116,755 | ) | ||||||||
| Net increase | 212,147 | $ | 2,612,175 | 235,620 | $ | 2,446,247 | ||||||||||
| (b) | Net of redemption fees of $0 and $650, respectively. |
The accompanying notes are an integral part of these financial statements.
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Stephens Funds®
Statements of Changes in Net Assets, Continued
| Six Months Ended | ||||||||||||||||
| May 31, 2011 | Year Ended | |||||||||||||||
| (Unaudited) | November 30, 2010 | |||||||||||||||
Class I | Shares | Value | Shares | Value | ||||||||||||
| Shares sold | 499,358 | $ | 6,843,022 | 155,487 | $ | 1,661,905 | ||||||||||
| Shares redeemed | (33,104 | ) | (449,506 | ) | (55,641 | ) | (609,531 | ) | ||||||||
| Net increase | 466,254 | $ | 6,393,516 | 99,846 | $ | 1,052,374 | ||||||||||
The accompanying notes are an integral part of these financial statements.
WWW.STEPHENSFUNDS.COM
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Stephens Funds®
Financial Highlights For a capital share outstanding
throughout the periods
Stephens Small Cap Growth Fund
| Six-Months Ended | Year Ended | Year Ended | Year Ended | Year Ended | Period Ended | |||||||||||||||||||
| May 31, 2011 | November 30, | November 30, | November 30, | November 30, | November 30, | |||||||||||||||||||
| CLASS A | (Unaudited) | 2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||||
| Net asset value, beginning of period/year | $ | 11.64 | $ | 9.09 | $ | 6.90 | $ | 12.03 | $ | 10.55 | $ | 10.00 | ||||||||||||
| INCOME FROM INVESTMENT OPERATIONS | ||||||||||||||||||||||||
| Net investment loss | (0.07 | )# | (0.11 | )# | (0.09 | ) | (0.13 | ) | (0.16 | ) | (0.11 | ) | ||||||||||||
| Net realized and unrealized gain (loss) on investments | 2.84 | 2.66 | 2.28 | (5.00 | ) | 1.64 | 0.65 | |||||||||||||||||
| Total from investment operations | 2.77 | 2.55 | 2.19 | (5.13 | ) | 1.48 | 0.54 | |||||||||||||||||
| LESS DISTRIBUTIONS | ||||||||||||||||||||||||
| From net investment income | — | — | — | — | — | — | ||||||||||||||||||
| From net realized gain | (0.15 | ) | — | — | — | — | — | |||||||||||||||||
| Total distributions | (0.15 | ) | — | — | — | — | — | |||||||||||||||||
| Paid-in capital from redemption fees (Note 2) | 0.00 | * | 0.00 | * | 0.00 | * | 0.00 | * | 0.00 | * | 0.01 | |||||||||||||
| �� | ||||||||||||||||||||||||
| Net asset value, end of period/year | $ | 14.26 | $ | 11.64 | $ | 9.09 | $ | 6.90 | $ | 12.03 | $ | 10.55 | ||||||||||||
| Total return without sales load. | 23.98 | % ^ | 28.05 | % | 31.74 | % | (42.64 | %) | 14.03 | % | 5.50 | % ^ | ||||||||||||
| Total return with sales load. | 17.52 | % ^ | 21.38 | % | 24.86 | % | (45.67 | %) | 8.09 | % | 0.00 | % ^ | ||||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
| Net assets, end of period/year (millions) | $ | 57.2 | $ | 45.9 | $ | 22.1 | $ | 19.8 | $ | 39.0 | $ | 42.7 | ||||||||||||
| RATIO OF EXPENSES TO AVERAGE NET ASSETS | ||||||||||||||||||||||||
| Before fees waived and expenses absorbed | 1.40 | %+ | 1.60 | % | 1.91 | % | 1.69 | % | 1.68 | % | 1.62 | %+ | ||||||||||||
| After fees waived and expenses absorbed | 1.35 | %+ | 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 | (1.17 | %)+ | (1.33 | %) | (1.59 | %) | (1.36 | %) | (1.36 | %) | (1.25 | %)+ | ||||||||||||
| After fees waived and expenses absorbed | (1.12 | %)+ | (1.08 | %) | (1.18 | %) | (1.17 | %) | (1.18 | %) | (1.09 | %)+ | ||||||||||||
| Portfolio turnover rate | 16 | % ^ | 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.
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Stephens Funds®
Financial Highlights For a capital share outstanding
throughout the periods, Continued
Stephens Small Cap Growth Fund
| Six-Months Ended | Year Ended | Year Ended | Year Ended | Year Ended | Period Ended | |||||||||||||||||||
| May 31, 2011 | November 30, | November 30, | November 30, | November 30, | November 30, | |||||||||||||||||||
| CLASS I | (Unaudited) | 2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||||
| Net asset value, beginning of period/year | $ | 12.03 | $ | 9.37 | $ | 7.09 | $ | 12.34 | $ | 10.80 | $ | 10.00 | ||||||||||||
| INCOME FROM INVESTMENT OPERATIONS | ||||||||||||||||||||||||
| Net investment loss | (0.06 | )# | (0.09 | )# | (0.06 | ) | (0.04 | ) | (0.01 | ) | (0.03 | ) | ||||||||||||
| Net realized and unrealized gain (loss) on investments | 2.94 | 2.75 | 2.34 | (5.21 | ) | 1.55 | 0.83 | |||||||||||||||||
| Total from investment operations | 2.88 | 2.66 | 2.28 | (5.25 | ) | 1.54 | 0.80 | |||||||||||||||||
| LESS DISTRIBUTIONS | ||||||||||||||||||||||||
| From net investment income | — | — | — | — | — | — | ||||||||||||||||||
| From net realized gain | (0.15 | ) | — | — | — | — | — | |||||||||||||||||
| Total distributions | (0.15 | ) | — | — | — | — | — | |||||||||||||||||
| Paid-in capital from redemption fees (Note 2) | — | — | — | 0.00 | * | — | — | |||||||||||||||||
| Net asset value, end of period/year | $ | 14.76 | $ | 12.03 | $ | 9.37 | $ | 7.09 | $ | 12.34 | $ | 10.80 | ||||||||||||
| Total return | 24.12 | % ^ | 28.39 | % | 32.16 | % | (42.54 | %) | 14.26 | % | 8.00 | % ^ | ||||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
| Net assets, end of period/year (millions) | $ | 52.0 | $ | 39.2 | $ | 34.4 | $ | 13.8 | $ | 9.1 | $ | 0.5 | ||||||||||||
| RATIO OF EXPENSES TO AVERAGE NET ASSETS | ||||||||||||||||||||||||
| Before fees waived and expenses absorbed | 1.15 | %+ | 1.35 | % | 1.65 | % | 1.46 | % | 1.43 | % | 1.41 | %+ | ||||||||||||
| After fees waived and expenses absorbed | 1.10 | %+ | 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 | (0.92 | %)+ | (1.09 | %) | (1.33 | %) | (1.00 | %) | (1.11 | %) | (1.23 | %)+ | ||||||||||||
| After fees waived and expenses absorbed | (0.87 | %)+ | (0.84 | %) | (0.93 | %) | (0.79 | %) | (0.93 | %) | (1.07 | %)+ | ||||||||||||
| Portfolio turnover rate | 16 | % ^ | 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.
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Stephens Funds®
Financial Highlights For a capital share outstanding
throughout the periods, Continued
Stephens Mid Cap Growth Fund
| Six-Months Ended | Year Ended | Year Ended | Year Ended | Year Ended | Period Ended | |||||||||||||||||||
| May 31, 2011 | November 30, | November 30, | November 30, | November 30, | November 30, | |||||||||||||||||||
| CLASS A | (Unaudited) | 2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||||
| Net asset value, beginning of period/year | $ | 11.26 | $ | 8.74 | $ | 6.53 | $ | 12.22 | $ | 9.80 | $ | 10.00 | ||||||||||||
| INCOME FROM INVESTMENT OPERATIONS | ||||||||||||||||||||||||
| Net investment loss | (0.05 | )# | (0.10 | )# | (0.07 | ) | (0.11 | ) | (0.10 | ) | (0.07 | ) | ||||||||||||
| Net realized and unrealized gain (loss) on investments | 1.89 | 2.62 | 2.28 | (5.58 | ) | 2.52 | (0.13 | ) | ||||||||||||||||
| Total from investment operations | 1.84 | 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 period/year | $ | 13.10 | $ | 11.26 | $ | 8.74 | $ | 6.53 | $ | 12.22 | $ | 9.80 | ||||||||||||
| Total return without sales load. | 16.34 | % ^ | 28.83 | % | 33.84 | % | (46.56 | %) | 24.69 | % | (2.00 | %) ^ | ||||||||||||
| Total return with sales load | 10.27 | % ^ | 22.13 | % | 26.85 | % | (49.38 | %) | 18.18 | % | (7.11 | %) ^ | ||||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
| Net assets, end of period/year (millions) | $ | 20.3 | $ | 15.1 | $ | 9.6 | $ | 7.7 | $ | 13.8 | $ | 10.6 | ||||||||||||
| RATIO OF EXPENSES TO AVERAGE NET ASSETS | ||||||||||||||||||||||||
| Before fees waived and expenses absorbed | 1.86 | %+ | 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 | % | 1.50 | %+ | ||||||||||||
| RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS | ||||||||||||||||||||||||
| Before fees waived and expenses absorbed | (1.18 | %)+ | (2.06 | %) | (2.75 | %) | (1.97 | %) | (2.65 | %) | (2.71 | %)+ | ||||||||||||
| After fees waived and expenses absorbed | (0.82 | %)+ | (1.04 | %) | (0.93 | %) | (1.05 | %) | (1.01 | %) | (0.97 | %)+ | ||||||||||||
| Portfolio turnover rate | 12 | % ^ | 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.
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- 32 -
Stephens Funds®
Financial Highlights For a capital share outstanding
throughout the periods, Continued
Stephens Mid Cap Growth Fund
| Six-Months Ended | Year Ended | Year Ended | Year Ended | Year Ended | Period Ended | |||||||||||||||||||
| May 31, 2011 | November 30, | November 30, | November 30, | November 30, | November 30, | |||||||||||||||||||
| CLASS I | (Unaudited) | 2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||||
| Net asset value, beginning of period/year | $ | 12.44 | $ | 9.63 | $ | 7.18 | $ | 13.39 | $ | 10.72 | $ | 10.00 | ||||||||||||
| INCOME FROM INVESTMENT OPERATIONS | ||||||||||||||||||||||||
| Net investment loss | (0.04 | )# | (0.09 | )# | (0.07 | ) | (0.06 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||
| Net realized and unrealized gain (loss) on investments | 2.08 | 2.90 | 2.52 | (6.15 | ) | 2.69 | 0.74 | |||||||||||||||||
| Total from investment operations | 2.04 | 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 period/year | $ | 14.48 | $ | 12.44 | $ | 9.63 | $ | 7.18 | $ | 13.39 | $ | 10.72 | ||||||||||||
| Total return | 16.40 | % ^ | 29.18 | % | 34.12 | % | (46.38 | %) | 24.91 | % | 7.20 | % ^ | ||||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
| Net assets, end of period/year (millions) | $ | 15.0 | $ | 7.1 | $ | 4.6 | $ | 4.0 | $ | 3.7 | $ | 0.5 | ||||||||||||
| RATIO OF EXPENSES TO AVERAGE NET ASSETS | ||||||||||||||||||||||||
| Before fees waived and expenses absorbed | 1.61 | %+ | 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 | % | 1.25 | %+ | ||||||||||||
| RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS | ||||||||||||||||||||||||
| Before fees waived and expenses absorbed | (0.96 | %)+ | (1.81 | %) | (2.46 | %) | (1.57 | %) | (2.40 | %) | (2.65 | %)+ | ||||||||||||
| After fees waived and expenses absorbed | (0.60 | %)+ | (0.79 | %) | (0.69 | %) | (0.63 | %) | (0.76 | %) | (0.77 | %)+ | ||||||||||||
| Portfolio turnover rate | 12 | % ^ | 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
- 33 -
Stephens Funds®
Notes to Financial Statements – May 31, 2011
(Unaudited)
(Unaudited)
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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- 34 -
Stephens Funds®
(Unaudited), 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 May 31, 2011, 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 May 31, 2011
(Unaudited), Continued
(Unaudited), 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 May 31, 2011:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Common StocksÙ | $ | 106,743,911 | $ | — | $ | — | $ | 106,743,911 | ||||||||
| Short-Term Investment | 4,018,340 | 4,018,340 | ||||||||||||||
| Total Investments in Securities | $ | 110,762,251 | $ | — | $ | — | $ | 110,762,251 | ||||||||
The following is a summary of the inputs used to value the Stephens Mid Cap Growth Fund’s net assets as of May 31, 2011:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Common StocksÙ | $ | 34,066,765 | $ | — | $ | — | $ | 34,066,765 | ||||||||
| Short-Term Investments | 1,225,962 | 1,225,962 | ||||||||||||||
| Total Investments in Securities | $ | 35,292,727 | $ | — | $ | — | $ | 35,292,727 | ||||||||
| ^ | See Schedule of Investments for industry breakout. |
There were no significant transfers into or out of Levels 1 and 2 during the six months ended May 31, 2011, for both Funds.
| 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. |
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- 36 -
Stephens Funds®
Notes to Financial Statements – as of May 31, 2011
(Unaudited), Continued
(Unaudited), Continued
| 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 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 |
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- 37 -
Stephens Funds®
Notes to Financial Statements – as of May 31, 2011
(Unaudited), Continued
(Unaudited), Continued
| 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 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. | 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. |
| J. | New Accounting Pronouncements. In January 21 2010, the Financial Accounting Standards Board issued an Accounting Standards Update, Fair Value Measurements and Disclosures |
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Stephens Funds®
Notes to Financial Statements – as of May 31, 2011
(Unaudited), Continued
(Unaudited), Continued
| (Topic 820): Improving Disclosures about Fair Value Measurements, which provides guidance on how investment securities are to be valued and disclosed. Specifically, the amendment requires reporting entities to disclose purchases, sales, issuances and settlements on a gross basis in the Level 3 rollforward rather than as one net number. The effective date of the amendment is for interim and annual periods beginning after December 15, 2010. At this time, the Funds are evaluating the implications of the update and the impact to the 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 an Investment Advisory Agreement (the “Agreement”). 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 six months ended May 31, 2011, the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund incurred $368,127 and $109,580 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 of Trustees. For the six months ended May 31, 2011, the Advisor waived fees of $22,437, and $51,670 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 May 31, 2011, the remaining unreimbursed amounts paid and/or waived by the Advisor on behalf
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Stephens Funds®
Notes to Financial Statements – as of May 31, 2011
(Unaudited), Continued
(Unaudited), Continued
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 | |||||
| November 30, 2014 | $ | 22,437 | November 30, 2014 | $ | 51,670 | |||||
| $ | 457,975 | $ | 634,081 | |||||||
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 six months ended May 31, 2011, the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund incurred $48,895 and $19,945 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 six months ended May 31, 2011, the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund incurred $4,824 and $3,747 in Chief Compliance Officer fees, respectively.
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. (the “Custodian”) serves as custodian to the Funds. Both the Distributor and Custodian are affiliates of the Administrator.
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
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Stephens Funds®
Notes to Financial Statements – as of May 31, 2011
(Unaudited), Continued
activities. For the six months ended May 31, 2011, Stephens, Inc., an affiliate of Stephens Investment Management Group, LLC, received distribution fees of $63,821 from the Stephens Small Cap Growth Fund Class A shares, and distribution fees of $22,400 from the Stephens Mid Cap Growth Fund Class A shares. For the six months ended May 31, 2011, Stephens, Inc. also received sales commissions of $34,109 from the Stephens Small Cap Growth Fund and $59,566 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 six months ended May 31, 2011, were $19,076,360 and $15,244,775, respectively and for the Stephens Mid Cap Growth Fund for the six months ended May 31, 2011, were $12,100,701 and $3,450,284, respectively.
There were no purchases or sales of long-term U.S. Government securities for the six months ended May 31, 2011.
The cost basis of investments for federal income tax purposes at May 31, 2010 was as follows:
| Stephens Small Cap | Stephens Mid Cap | |||||||
| Growth Fund | Growth Fund | |||||||
Cost of investments(a) | $ | 78,882,205 | $ | 27,770,383 | ||||
| Gross unrealized appreciation | 34,517,198 | 8,060,073 | ||||||
| Gross unrealized depreciation | (2,637,152 | ) | (537,729 | ) | ||||
| Net tax unrealized appreciation | $ | 31,880,046 | $ | 7,522,344 | ||||
| (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 5 – Distributions to Shareholders |
The Tax character of distributions paid during the six months ended May 31, 2011 and year ended November 30, 2010 for the Stephens Small Cap Growth Fund was as follows:
| May 31, 2011 | November 30, 2010 | |||||||
| Distributions Paid from: | ||||||||
| Ordinary Income | $ | — | $ | — | ||||
| Long-term capital gain | $ | 1,068,708 | $ | — | ||||
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Stephens Funds®
Notes to Financial Statements – as of May 31, 2011
(Unaudited), Continued
(Unaudited), Continued
The Stephens Mid Cap Growth Fund did not have distributions for the six months ended May 31, 2011 or year ended November 30, 2010.
As of November 30 2010, the components of accumulated earnings/(losses) on a tax basis were as follows:
| Stephens Small Cap | Stephens Mid Cap | |||||||
| Growth Fund | Growth Fund | |||||||
| 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 loss | $ | — | $ | (2,927,663 | ) | |||
| Total accumulated gains | $ | 16,157,108 | $ | 1,208,803 | ||||
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 six months ended May 31, 2011, the Stephens Small Cap Growth Fund and the Stephens Mid Cap Growth Fund did not draw on the line of credit and there was no loan payable balance at May 31, 2011. 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®
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 12 months ending June 30, 2010 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)
(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. The Funds also disclose their calendar quarter-end holdings on their website at www.stephensfunds.com with a 30 day lag. 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.
Information About Householding (Unaudited)
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.
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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 Semi-Annual Report
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