As filed with the Securities and Exchange Commission on October 3, 2001
File No. 33-12213
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 1
PROFESSIONALLY MANAGED PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
(626) 852-1033
(Registrant's Telephone Number, Including Area Code)
2020 E. Financial Way, Ste 100
Glendora, CA 91741
(Address of Principal Executive Offices)
Robert M. Slotky
Professionally Managed Portfolios
2020 E. Financial Way, Ste 100
Glendora, CA 91741
(Name and Address of Agent for Service)
Copy to:
Julie Allecta, Esq.
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Fl.
San Francisco, CA 94104
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
No filing fee is required under the Securities Act of 1933, as amended, because
an indefinite number of shares of beneficial interest, without par value, has
previously been registered pursuant to Rule 24f2 under the Investment Company
Act of 1940, as amended.
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CROSS REFERENCE SHEET
Form N-14 Part A, Item Location in Prospectus/Proxy Statement
---------------------- --------------------------------------
1 Front Cover; Cross Reference
2 Table of Contents
3 I. Introduction - "Comparison of Expenses;"
II. The Proposal - "Description of the Proposed
Reorganization; Comparison of the Funds"
4 I. Introduction - "Summary of the Proposal; "
II. The Proposal - "Description of the Proposed
Reorganization; " "Comparison of the Funds"
5,6 I. Introduction - "General;" II. "The Proposal -
"Description of the Proposed Reorganization;"
"Comparison of the Funds"
7 I. Introduction - "Shares and Voting;" II.
The Proposal - "Vote Required"
8 Not Applicable
9 Not Applicable
Form N-14 Part B, Item Location in Statement of Additional Information
---------------------- -----------------------------------------------
10 Cover Page
11 Table of Contents
12 Incorporation of Documents by Reference to the
Statement of Additional Information of the
Hodges Fund, dated July 30, 2001
13 Not Applicable
14 Incorporation of Documents by Reference to the
Statement of Additional Information of the Hodges
Fund, dated July 30, 2001 and to the Statement of
Additional Information of the Trent Equity Fund,
dated December 29, 2000
Form N-14 Part C
----------------
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of Form N-14.
THE FOLLOWING ITEMS ARE HEREBY INCORPORATED BY REFERENCE:
From Post-Effective Amendment No. 114 to the Registrant's Registration Statement
on Form N-1A, as filed with the Commission on July 12, 2001 (SEC File
No.811-5037):
Prospectus of the Hodges Fund, dated July 30, 2001.
Statement of Additional Information of the Hodges Fund, dated July 30,
2001.
From Post-Effective Amendment No. 109 to the Registrant's Registration Statement
on Form N-1A, as filed with the Commission on December 15, 2000 (SEC File
No.811-5037):
Prospectus of the Trent Equity Fund, dated December 29, 2000.
Statement of Additional Information of the Trent Equity Fund, dated
December 29, 2000.
As previously sent to shareholders of the Hodges Fund and the shareholders of
the Trent Equity Fund and filed with the Commission pursuant to Rule 30b2-1
under the Investment Company Act of 1940, as amended:
Annual Report for the Hodges Fund for the fiscal year ended March 31, 2001.
Annual Report for the Trent Equity Fund for the fiscal year ended August
31, 2000.
Semi-annual Report for the Trent Equity Fund for the six-month period ended
February 28, 2001.
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PART A
COMBINED PROXY STATEMENT AND PROSPECTUS
FOR THE REORGANIZATION OF
TRENT EQUITY FUND
INTO
HODGES FUND
-----------------------------------------
TRENT EQUITY FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
TRENT EQUITY FUND
TO BE HELD NOVEMBER 13, 2001
To the Shareholders of the Trent Equity Fund:
Your Fund will host a special meeting of shareholders at the offices of
Trent Equity Fund, 3150 North Elm St., Suite 204, Greensboro, NC 27408, on
November 13, 2001, at 4:00 p.m., local time. At the meeting, we will ask you to
vote on:
1. A proposal to reorganize the Fund into the Hodges Fund, another fund
within Professionally Managed Portfolios.
2. Any other business that properly comes before the meeting.
Only shareholders of record at the close of business on August 15, 2001
(the "Record Date"), will be entitled to receive this notice and to vote at the
meeting.
By Order of the Board of Trustees
/s/ Robin Berger
Secretary
YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY
SHARES YOU OWNED ON THE RECORD DATE.
Please vote on the enclosed proxy form, date and sign it, and return it in the
pre-addressed envelope provided. No postage is necessary if mailed in the United
States. In order to avoid the additional expense and disruption of further
solicitation, we request your cooperation in voting promptly.
TRENT EQUITY FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
3150 N. Elm St., Suite 204,
Greensboro, NC 27408
(800) 576-8229
COMBINED PROXY STATEMENT AND PROSPECTUS
Dated: October 3, 2001
WHAT IS THIS DOCUMENT AND WHY DID WE SEND IT TO YOU?
The Board of Trustees approved a plan to reorganize the Trent Equity Fund
(the "Trent Fund") into the Hodges Fund, another series of Professionally
Managed Portfolios (the "Trust"). This transaction is referred to as the
"Reorganization." Shareholder approval is needed to proceed with the
Reorganization. The shareholder meeting will be held on November 13, 2001 (the
"Shareholder Meeting"). We are sending this document to you for your use in
deciding whether to approve the Reorganization at the Shareholder Meeting.
This document includes a Notice of Special Meeting of Shareholders, a
Combined Proxy Statement and Prospectus and a form of Proxy.
As a technical matter, the Reorganization will have three steps:
1. the transfer of the assets and liabilities of the Trent Fund to the
Hodges Fund in exchange for shares of the Hodges Fund (the "Hodges
Fund Shares") of equivalent value to the net assets transferred,
2. the pro rata distribution of those Hodges Fund Shares to shareholders
of record of the Trent Fund as of the effective date of the
Reorganization (the "Effective Date") in full redemption of those
shareholders' shares in the Trent Fund, and
3. the immediate liquidation and termination of the Trent Fund.
As a result of the Reorganization, each shareholder of the Trent Fund would
instead hold Hodges Fund Shares having the same total value as the shares of the
Trent Fund held immediately before the Reorganization.
Each Fund's investment objective is to seek capital appreciation.
This Combined Proxy Statement and Prospectus sets forth the basic
information that you should know before voting on the proposal. You should read
it and keep it for future reference.
WHAT OTHER IMPORTANT DOCUMENTS SHOULD I KNOW ABOUT?
The Trent Fund and the Hodges Fund (together, the "Funds") are series of
Professionally Managed Portfolios, an open-end management investment company.
The following documents are on file with the Securities and Exchange Commission
(the "SEC") and are deemed to be legally part of this document:
1. Prospectus for the Trent Fund, dated December 29, 2000 and for the
Hodges Fund dated July 30, 2001.
2. Statement of Additional Information relating to the Trent Fund dated
December 29, 2000 and to the Hodges Fund, dated July 30, 2001
3. Statement of Additional Information relating to this Combined Proxy
Statement and Prospectus
Those documents are available without charge by writing to the Funds'
Administrator at 2020 East Financial Way, Suite 100, Glendora, CA 91741 or by
calling (800) 576-8229.
The Annual Report to Shareholders of the Trent Fund for the fiscal year
ended August 31, 2000, containing audited financial statements of the Trent Fund
has been previously mailed to shareholders. If you do not have a copy,
additional copies of that Annual Report are available without charge by writing
or calling at the address and telephone number listed above.
The Annual Report to Shareholders of the Hodges Fund for the fiscal year
ended March 31, 2001, containing audited financial statements of the Hodges
Fund, has been mailed to the shareholders of the Hodges Fund, is on file with
the SEC, and is deemed to be legally part of this document. This document is
available without charge by writing or calling at the address and telephone
number listed above.
It is expected that this Combined Proxy Statement and Prospectus will be
mailed to shareholders on or about October 3, 2001.
LIKE ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED THESE SECURITIES, NOR HAS IT PASSED ON THE ACCURACY OR ADEQUACY
OF THIS COMBINED PROXY STATEMENT AND PROSPECTUS. IT IS A CRIMINAL OFFENSE TO
REPRESENT OTHERWISE.
2
TABLE OF CONTENTS
I. INTRODUCTION ............................................................ 4
A. GENERAL .............................................................. 4
B. SUMMARY OF THE PROPOSAL .............................................. 4
C. RISK FACTORS ......................................................... 5
D. COMPARISON OF EXPENSES ............................................... 5
E. SHARES AND VOTING .................................................... 6
II. THE PROPOSAL ........................................................... 7
A. DESCRIPTION OF THE PROPOSED REORGANIZATION ........................... 7
1. The Reorganization ................................................ 7
2. Effect of the Reorganization ...................................... 8
3. Federal Income Tax Consequences ................................... 9
4. Description of the Hodges Fund Shares ............................. 9
5. Capitalization .................................................... 9
B. COMPARISON OF THE FUNDS .............................................. 10
1. Investment Objectives and Policies ................................ 10
2. Investment Restrictions ........................................... 12
3. Comparative Performance Information ............................... 13
4. Advisory Fees and Other Expenses .................................. 14
5. Portfolio Managers ................................................ 14
6. Distribution and Shareholder Services ............................. 15
7. Purchase Procedures ............................................... 15
8. Redemption and Exchange Procedures ................................ 15
9. Income Dividends, Capital Gains Distributions and Taxes ........... 16
10. Portfolio Transactions and Brokerage Commissions ................. 16
11. Shareholders' Rights ............................................. 16
C. RISK FACTORS ......................................................... 17
D. RECOMMENDATION OF THE BOARD OF TRUSTEES .............................. 18
E. DISSENTERS' RIGHTS OF APPRAISAL ...................................... 19
F. FURTHER INFORMATION ABOUT THE FUNDS .................................. 19
G. VOTE REQUIRED ........................................................ 20
H. FINANCIAL HIGHLIGHTS ................................................. 20
III. MISCELLANEOUS ISSUES .................................................. 23
A. OTHER BUSINESS ....................................................... 23
B. NEXT MEETING OF SHAREHOLDERS ......................................... 23
C. LEGAL MATTERS ........................................................ 23
D. EXPERTS .............................................................. 23
3
I. INTRODUCTION
A. GENERAL
The Board of Trustees called this shareholder meeting to allow shareholders
to consider and vote on the proposed Reorganization of the Trent Fund. The Board
of Trustees, including a majority of the independent trustees, meaning those
trustees who are not "interested" persons under the Investment Company Act of
1940, as amended (the "Investment Company Act"), voted on June 20, 2001, to
approve the Reorganization subject to the approval of the Trent Fund's
shareholders.
Trent Capital Management, Inc. ("Trent Capital") serves as the investment
adviser to the Trent Fund. Notwithstanding the efforts of Trent Capital to
market the Trent Fund, total assets of the Fund as of August 10, 2001 are
approximately $2,527,754. Trent Capital determined that it is unlikely that the
Fund will grow to a size sufficient to make it economically viable and that
continued waiver of advisory fees and subsidization of Fund operating expenses
is no longer consistent with its business interests, which it believes would be
better served by focusing its activities exclusively on management of its
individual and institutional investment advisory accounts. Trent Capital
recommends that you approve the Reorganization because it can provide you with a
continued mutual fund investment in a fund with the same investment objective
and similar policies in a manner that should not result in the realization of a
taxable gain or loss to you on your current Trent Fund investment.
If the proposed Reorganization is approved and completed, the Trent Fund
will become part of another fund with the same investment objective and similar
policies as well as larger assets, which may permit it to operate more
efficiently.
Trent Fund sells its shares directly to the public at net asset value,
without any sales load. The Trent Fund pays a distribution and service fee at
the annual rate of 0.25% of its average daily net assets. Likewise, the Hodges
Fund sells its shares directly to the public at net asset value, and also pays a
distribution and service fee at the annual rate of 0.25% of its average daily
net assets. If the Reorganization is completed, all remaining shareholders of
the Trent Fund will receive respective shares of the Hodges Fund.
B. SUMMARY OF THE PROPOSAL
At the Shareholder Meeting, the shareholders of the Trent Fund will be
asked to approve the proposed Reorganization of the Trent Fund into the Hodges
Fund. The Reorganization will include the transfer of substantially all of the
assets and liabilities of the Trent Fund to the Hodges Fund. The Trent Fund will
then be terminated and liquidated.
The investment objective of each Fund is capital appreciation.
4
The Hodges Fund has a fiscal year end of March 31, compared to that of
August 31 for the Trent Fund.
Trent Capital and the Board of Trustees believe that the proposed
Reorganization is in the best interests of the Trent Fund and its shareholders,
and that the interests of existing Trent Fund shareholders will not be diluted
as a result of the proposed Reorganization. See Section II.D. below.
Hodges Capital Management, Inc. ("Hodges Capital Management") the
investment adviser to the Hodges Fund, will pay the costs of the Reorganization,
the Shareholder Meeting and solicitation of proxies, including the cost of
copying, printing and mailing proxy materials. In addition to solicitations by
mail, Trent Capital and the Board of Trustees also may solicit proxies, without
special compensation, by telephone, facsimile or otherwise.
C. RISK FACTORS
Investments in the Funds are subject to substantially similar risks. See
Section II.C. below.
D. COMPARISON OF EXPENSES
The following table shows the comparative fees and expenses you may pay if
you buy and hold shares of the Trent Fund, the Hodges Fund and the combined fund
on a pro forma basis. The Funds do not impose any front-end or deferred sales
loads and they do not charge shareholders for reinvesting dividends.
FEES AND EXPENSES OF THE FUNDS
Trent Equity Hodges Hodges
Fund Fund Fund
---- ---- ----
(Pro Forma)
SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee 0.00% 0.00% 0.00%
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)+
Advisory Fee 1.15% 0.85% 0.85%
Distribution/Service (12b-1) Fee 0.25% 0.25% 0.25%
Other Expenses 1.40% 0.65% 0.65%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 2.80% 1.75% 1.75%
Fee Reduction and/or
Expense Reimbursement (0.80%) (0.00%) (0.00%)
----- ----- -----
NET EXPENSES 2.00% 1.75% 1.75%
===== ===== =====
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+ Trent Capital Management had contractually agreed to reduce its fees and/or
absorb expenses to limit total annual operating expenses to 2.00% for an
indefinite period.
5
EXAMPLE OF FUND EXPENSES: This example is intended to help you compare the cost
of investing in the Funds with the cost of investing in other mutual funds. The
table below shows what you would pay in expenses over time, whether or not you
sold your shares at the end of each period. It assumes a $10,000 initial
investment, 5% total return each year and the changes specified above. This
example is for comparison purposes only. It does not necessarily represent the
Funds' actual expenses or returns.
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
Trent Equity Fund $ 203 $ 627 $1,078 $2,327
Hodges Fund (current) $ 178 $ 551 $ 949 $2,062
Hodges Fund (pro forma) $ 178 $ 551 $ 949 $2,062
E. SHARES AND VOTING
The Trust is a Massachusetts business trust and is registered with the SEC
as an open-end management investment company. The Trust currently has 23
operating series, or funds, including the Funds. Each Fund has its own
investment objective and policies and operates independently for purposes of
investments, dividends, other distributions and redemptions.
Each whole or fractional share of the Trent Fund is entitled to one vote or
corresponding fraction at the Shareholder Meeting. At the close of business on
August 15, 2001, the record date for the determination of shareholders entitled
to vote at the Shareholder Meeting (the "Record Date"), there were 232,315.396
shares outstanding held by 201 record holders (including omnibus accounts
representing multiple underlying beneficial owners such as those in the names of
brokers).
All shares represented by each properly signed proxy received before the
meeting will be voted at the Shareholder Meeting. If a shareholder specifies how
the proxy is to be voted on any business properly to come before the Shareholder
Meeting, it will be voted in accordance with the instruction given. If no choice
is indicated on the proxy, it will be voted FOR approval of the Reorganization,
as more fully described in this Combined Proxy Statement and Prospectus. A proxy
may be revoked by a shareholder at any time before its use by written notice to
the Trust, by submission of a later-dated proxy or by voting in person at the
Shareholder Meeting. If any other matters come before the Shareholder Meeting,
proxies will be voted by the persons named as proxies in accordance with their
best judgment.
The presence in person or by proxy of shareholders entitled to cast 40% of
the votes entitled to be cast at the Shareholder Meeting will constitute a
quorum. When a quorum is present, a majority of the outstanding voting
securities voted shall decide the proposal. The majority of the outstanding
voting securities, as defined in the Investment Company Act, means the
affirmative vote of the lesser of (i) 67% of the voting securities of the Trent
Fund present at the Special Meeting if more than 50% of the outstanding shares
of the Trent Fund are present in person on by proxy or (ii) more than 50% of the
outstanding shares of the Trent Fund.
6
The Shareholder Meeting may be adjourned from time to time by a majority of
the votes properly voting on the question of adjourning a meeting to another
date and time, whether or not a quorum is present, and the meeting may be held
as adjourned within a reasonable time after the date set for the original
meeting without further notice. The persons named in the proxy will vote those
shares that they are entitled to vote in favor of adjournment if adjournment is
necessary to obtain a quorum or to obtain a favorable vote on any proposal. If
the adjournment requires setting a new record date or the adjournment is for
more than 60 days from the date set for the original meeting (in which case the
Board of Trustees will set a new record date), the Trust will give notice of the
adjourned meeting to the shareholders. Business may be conducted once a quorum
is present and may continue until adjournment of the meeting.
Proxies may be voted by mail.
All proxies voted, including abstentions and broker non-votes (where the
underlying holder has not voted and the broker does not have discretionary
authority to vote the shares), will be counted toward establishing a quorum.
Approval of the Reorganization will occur only if a sufficient number of votes
at the Meeting are cast FOR that proposal. Abstentions do not constitute a vote
"for" and effectively result in a vote "against." Broker non-votes do not
represent a vote "for" or "against" and are disregarded in determining whether
the proposal has received enough votes.
As of the Record Date, to the Trust's knowledge there were no beneficial
owners who owned more than five percent of the Trent Fund's shares.
The officers and Trustees of the Trust, as a group, owned of record and
beneficially less than one percent of the outstanding voting securities of
either Fund as of the Record Date.
II. THE PROPOSAL
A. DESCRIPTION OF THE PROPOSED REORGANIZATION
1. THE REORGANIZATION
If the Reorganization is approved, on the Effective Date the Hodges Fund
will acquire substantially all of the assets and liabilities of the Trent Fund.
At that time, the Hodges Fund will issue to the Trent Fund the number of Hodges
Fund Shares determined by dividing the value of the net assets of the Trent Fund
so transferred by the net asset value of one Hodges Fund Share. The net asset
value of the Trent Fund and of the Hodges Fund will be calculated at the close
of business on the date immediately preceding the Effective Date in accordance
with the Hodges Fund's valuation procedures described in its prospectus and
statement of additional information dated July 30, 2001.
7
At the same time as that asset transfer, the Trent Fund will distribute the
Hodges Fund Shares it receives pro rata to each remaining shareholder of the
Trent Fund based on the percentage of the outstanding shares of the Trent Fund
held of record by that shareholder on the Valuation Date. For example, on July
31, 2001, the value of the aggregate net assets of the Trent Fund were
approximately $2,518,131. The Trent Fund's shares were valued at $10.72 per
share. The net asset value of each Hodges Fund Share was $11.97. Therefore, if
the Effective Date had been July 31, 2001, the Trent Fund would then have
redeemed each of its then outstanding shares in exchange for 0.896 Hodges Fund
Shares.
This distribution of the Hodges Fund Shares to the Trent Fund's
shareholders will be accomplished by the establishment of accounts on the Hodges
Fund's share records in the names of those shareholders, representing the
respective pro rata number of Hodges Fund Shares deliverable to them. Fractional
shares will be carried to the third decimal place.
Immediately following the Trent Fund's pro rata liquidating distribution of
the Hodges Fund Shares to the Trent Fund shareholders, the Trent Fund will
liquidate and terminate.
Completion of the Reorganization is subject to approval by the shareholders
of the Trent Fund.
The above is a summary of the Reorganization. The summary is not a complete
description of the terms of the Reorganization, which are fully set forth in the
Agreement and Plan of Reorganization attached as Exhibit A to this document.
2. EFFECT OF THE REORGANIZATION
If the Reorganization is approved by the Trent Fund's shareholders and
completed, shareholders of the Trent Fund as of the Effective Date will become
shareholders of the Hodges Fund. The total net asset value of the Hodges Fund
Shares held by each shareholder of the Trent Fund immediately after completion
of the Reorganization will be equivalent to the total net asset value of the
Trent Fund shares held by that same shareholder immediately before completion of
the Reorganization.
On or before the Effective Date the Trent Fund intends to distribute all of
its then-remaining net investment income and realized capital gains.
After the Reorganization, shareholders of the Trent Fund will become
shareholders of the Hodges Fund. Hodges Capital Management will continue to be
the investment adviser for the Hodges Fund. Additionally, as shareholders of the
Hodges Fund, current Trent Fund shareholders will have the following changes in
service providers: (i) First Dallas Securities, Inc. ("First Dallas
Securities"), an affiliate of Hodges Capital Management, will replace First
8
Funds Distributors, Inc. as the distributor and (ii) American Data Services,
Inc. will replace ICA Fund Services Corp. as the transfer agent. The Hodges Fund
will continue to be managed in accordance with its existing investment objective
and policies.
3. FEDERAL INCOME TAX CONSEQUENCES
As a condition to closing the Reorganization, the Trust and Hodges Capital
Management will use their best efforts to ensure that for federal income tax
purposes: (a) the transfer by the Trent Fund of substantially all of its assets
and liabilities to the Hodges Fund, as described above, is a reorganization
within the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"); (b) no gain or loss will be recognized by the Trent Fund
upon the transfer of substantially all of its assets to the Hodges Fund in
exchange solely for Hodges Fund Shares; (c) no gain or loss will be recognized
by the Hodges Fund on receipt of the Trent Fund's assets in exchange for the
Hodges Fund Shares; (d) no gain or loss will be recognized by the Trent Fund
shareholders upon the receipt of Hodges Fund Shares solely in exchange for Trent
Fund Shares; (e) the aggregate tax basis of the Hodges Fund Shares received by
Trent Fund shareholders is in each instance, the same as the aggregate tax basis
of the Trent Fund Shares held by such shareholder immediately prior to the
Reorganization; (f) the holding period of the Hodges Fund Shares received by the
Trent Fund shareholders includes the holding period during which shares of the
Trent Fund were held; (g) the tax basis of the Trent Fund assets acquired by the
Hodges Fund will be the same as the tax basis of such assets to the Trent Fund
immediately prior to the Reorganization; and (h) the holding period of the
assets of the Trent Fund in the hands of the Hodges Fund will include the period
during which those assets were held by the Trent Fund.
4. DESCRIPTION OF THE HODGES FUND SHARES
Each Hodges Fund Share issued to Trent Fund shareholders pursuant to the
Reorganization will be duly authorized, validly issued, fully paid and
nonassessable when issued, will be transferable without restriction and will
have no preemptive or conversion rights. Each Hodges Fund Share will represent
an equal interest in the assets of the Hodges Fund. The Hodges Fund Shares will
be sold and redeemed based upon the net asset value of the Hodges Fund next
determined after receipt of the purchase or redemption request, as described in
the Hodges Fund's Prospectus.
5. CAPITALIZATION
The capitalization of the Funds as of July 31, 2001, and their pro forma
combined capitalization as of that date after giving effect to the proposed
Reorganization are as follows:
Trent Equity Hodges Pro Forma
Fund Fund Combined
------------- -------------- --------------
(unaudited) (unaudited) (unaudited)
Aggregate net assets $ 2,518,131 $ 24,758,253 $ 27,276,384
Shares outstanding* 234,900.28 2,068,358.65 2,278,728.82
Net asset value per share: $ 10.72 $ 11.87 $ 11.97
----------
* Each Fund is authorized to issue an indefinite number of shares.
9
B. COMPARISON OF THE FUNDS
A brief comparison of the Funds is set forth below. See Section II.F. for
more information.
1. INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Trent Fund is to seek capital appreciation.
The Trent Fund invests primarily in common stocks of medium and large
capitalization domestic companies. The Trent Fund generally defines medium
capitalization companies as those having a market capitalization of $2 billion
to $5 billion and large capitalization companies as those having a market
capitalization in excess of $5 billion. The amount of dividends paid by
securities in the Trent Fund's portfolio are of secondary importance. Under
normal market conditions, Trent Capital has sought to limit holdings in the
Trent Fund's portfolio to fewer than 45 holdings in the belief that having a
small number of positions would lead to the potential for above-average capital
appreciation.
The process of selecting common stocks for the Trent Fund primarily has
involved analysis of the fundamentals of individual stocks, often referred to as
a "bottom-up" approach to investing. Factors that have been considered by Trent
Capital in selecting stocks have included price, earnings expectations, earnings
and price histories, cash flow, balance sheets and management. Broad economic
considerations, though important, have been of secondary importance.
The Hodges Fund also has an investment objective of seeking capital
appreciation. The Hodges Fund emphasizes the purchase of common stocks of
domestic companies of any size:
1. with rapidly growing earnings per share,
2. with slower earnings growth which appear to have a predictable track
record, or
3. whose shares are out of favor, but appear to have good prospects for a
turnaround.
Hodges Capital Management seeks to buy common stocks of issuers that, in
its opinion, are undervalued, reasonably priced and have prospects for continued
consistent growth. Hodges Capital Management uses fundamental analysis of
financial statements to select securities of issuers that have strong balance
sheets, experienced management, above-average earnings growth potential and
stocks that are attractively priced relative to their fundamental economic
values.
The Hodges Fund focus on long-term capital appreciation may cause Hodges
Fund shares to not be appropriate for investors who seek regular income or are
pursuing a short term goal.
10
Hodges Capital Management also may purchase securities of companies in
particular market segments that are currently out-of-favor if, in Hodges Capital
Management's opinion, such securities have potential for capital appreciation.
This is often referred to as a "contrarian" approach to investing.
Although not a primary investment strategy, the Hodges Fund also may invest
in some moderate growth stocks whose shares offer a high dividend yield and in
the stocks of foreign companies which are U.S. dollar denominated and traded on
a domestic national securities exchange, including American Depositary Receipts
("ADRs").
The Hodges Fund may invest in convertible securities, which are securities
generally offered fixed interest or dividend yields which may be converted
either at a stated price or state rate for common or preferred stock, preferred
stock, repurchase agreements, securities on an "when-issued basis," illiquid
securities, U.S. Government securities, foreign securities and American
Depositary Receipts. The Hodges Fund may also invest in short-term investments
such as certificates of deposit, bankers' acceptances, time deposits, commercial
paper and short-term notes.
While economic forecasting and industry sector analysis play a part in the
research effort, like its counterpart Trent Capital, the stock selection process
for the Hodges Fund begins with an individual company, often referred to as a
"bottom-up" approach to investing. From a group of companies that meet Hodges
Capital Management standards, Hodges Capital Management selects the securities
of those companies that it believes have the potential to generate above-average
earnings growth over an extended period of time. Under normal market conditions,
at least 55% of the value of the Hodges Fund's total assets will be invested in
common stocks selected for their growth potential.
The Hodges Fund will be managed with tax efficiency as a consideration, but
portfolio turnover has and could exceed 100%. A high portfolio turnover rate
(100% or more) has the potential to result in the realization and distribution
to shareholders of higher capital gains. This may result in you having a higher
tax liability and in higher transacting costs to the Hodges Fund which could
negatively affect its performance.
Under normal market conditions, the Hodges Fund will stay fully invested in
stocks. The Hodges Fund may temporarily depart from its principal strategies by
making short-term investments in cash equivalents in response to adverse market,
economic or political conditions. This may result in the Hodges Fund not
achieving its investment objective.
As described in more detail in its prospectus and statement of additional
information, the Hodges Fund also is authorized to engage in certain additional
investment activities, which may involve greater risks. It may:
(1) write options on its portfolio securities and write or purchase options
on securities indices to seek increased investment returns or hedge against
unfavorable price movements in the securities it holds;
11
(2) engage in "short" sales of securities. In a short sale, the Hodges Fund
sells stock which it does not own, making delivery with securities borrowed from
a broker. The Hodges Fund seeks to realize a gain if the security declines in
price between the date of the short sale and the date on which the Hodges Fund
replaces the borrowed securities. The Hodges Fund will incur a loss if the price
of the securities increases between those dates. Short sales are not expected to
exceed 10% of the assets, and may not in any case exceed 25% of the assets of
the Hodges Fund:
(3) Lend its portfolio securities to brokers, banks or other financial
institutions in order to generate additional income. It is not anticipated that
more than 5% of the value of the Hodges Fund's assets will be subject to
lending.
2. INVESTMENT RESTRICTIONS
Both the Trent Fund and the Hodges Fund have many of the same fundamental
investment restrictions, which cannot be changed without the affirmative vote of
a majority of each Fund's outstanding voting securities as defined in the
Investment Company Act (unless otherwise noted). If a percentage restriction is
adhered to at the time of investment, a subsequent increase or decrease in a
percentage resulting from a change in the values of assets will not constitute a
violation of that restriction, except with regard to borrowing, illiquid
securities or as otherwise noted.
Neither Fund may:
(1) Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objectives and policies, (b)
through the lending of its portfolio securities as described in its Prospectus
or (c) to the extent the entry into a repurchase agreement is deemed to be a
loan. (The Hodges Fund is permitted to lend its portfolio securities; it is not
anticipated that more than 5% of the value of the Hodges Fund's securities would
be subject to lending.)
(2) (a) Borrow money, except for temporary or emergency purposes, provided
that (i) such borrowings will be made only if immediately thereafter there is
asset coverage of at lest 300% of all borrowings, (ii) no additional investments
may be made while any such borrowings are in excess of 5% of total assets and
(iii) such borrowings will be from a bank.
(b) Mortgage, pledge or hypothecate any of its assets except in
connection with such borrowings.
(3) Purchase securities on margin, participate on a joint or joint and
several basis in any securities trading account or underwrite securities. (This
does not preclude a Fund from obtaining such short-term credit as may be
necessary for the clearance of purchases and sales of its portfolio securities.)
(4) Purchase or sell real estate (except that a Fund may invest in debt
securities secured by real estate or real estate interests, or issued by
companies, including real estate investment trusts that invest in real estate or
real estate interests), commodities or commodity contracts (except that the
12
Board of Trustees may authorize the Funds to engage in certain activities
regarding futures contracts for bona fide hedging purposes; any such
authorization will be accompanied by appropriate notification to shareholders.)
(5) Invest 25% or more of the market value of its total assets in the
securities of companies engaged in any one industry. (This restriction does not
apply to investment in the securities of the U.S. Government, its agencies or
instrumentalities.)
(6) Issue senior securities, as defined in the Investment Company Act,
except that this restriction shall not be deemed to prohibit the Fund from (a)
making any permitted borrowings, mortgages or pledges, or (b) entering into
options, futures, forward or repurchase transactions.
(7) Invest in any issuer for purposes of exercising control or management.
Each Fund also observes the following non-fundamental policies , which may
be changed without shareholder vote. Neither Fund may:
(1) Invest, in the aggregate, more than 15% of its net assets in securities
with legal or contractual restrictions on resale, securities which are not
readily marketable and repurchase agreements with more than seven days to
maturity.
(2) Invest in the securities of other investment companies except as
permitted under the Investment Company Act.
(3) Invest more than 10% of its assets in securities of foreign issuers,
including American Depositary Receipts with respect to foreign issuers, but
excluding securities of foreign issuers listed and traded on a domestic national
securities exchange.
DIFFERENCES IN INVESTMENT RESTRICTIONS AND POLICIES
NON-DIVERSIFICATION. The Trent Fund has a fundamental policy that it may
not invest more than 5% of the value of its total assets in the securities of
any one issuer or purchase more than 10% of the outstanding voting securities or
of any class of securities of any one issuer. The Hodges Fund is
"non-diversified." This means that with respect to 50% of its assets, it may
make larger investments in individual companies than a fund that is diversified.
However, with respect to the other 50% of its assets, the Hodges Fund may only
invest 5% of its assets in any individual security. Because the Hodges Fund has
the ability to take larger positions in a smaller number of issuers, the Hodges
Fund's share price may be more volatile than the share price of a diversified
fund. Since its inception, the largest position the Hodges Fund has taken in the
securities of a single issuer has been approximately 11.98%.
3. COMPARATIVE PERFORMANCE INFORMATION
The chart below shows each Fund's average annual total return for the one
year, five-year, ten-year, or such shorter periods from the Fund's inception.
The table compares each Fund's performance to the most commonly used index for
its market segment. Past performance is no guarantee of future results. Returns
and share values fluctuate and investors may have a gain or loss on their
shares.
13
AVERAGE ANNUAL RETURNS THROUGH 06/30/01.
Five Ten
Quarter Six Months Year Yrs. Yrs. From
Ended Ended Ended Ended Ended Inception*
----- ----- ----- ----- ----- ----------
Trent Equity Fund 5.78% -1.10% -16.08% 10.80% 9.92% 11.66%
Hodges Fund 21.59% 8.90% -16.34% 7.26% N/A 11.18%
S & P 500 Index** 5.85% -6.70% -14.83% 14.48% 15.10% 11.58%***
15.90%****
----------
* The inception date for the Trent Fund was 08/13/90. The inception date for
the Hodges Fund was 10/09/92.
** The S & P 500 Index is an unmanaged index generally representative of the
market for stocks of U.S. companies with large market capitalizations.
*** With respect to the Trent Fund.
**** With respect to the Hodges Fund.
4. ADVISORY FEES AND OTHER EXPENSES
The contractual advisory fee rate for the Hodges Fund is lower than that
paid by the Trent Fund. The Hodges Fund pays Hodges Capital Management a
management fee at the annual rate of 0.85% of its average daily net assets. The
Trent Fund pays Trent Capital a management fee at the annual rate of 1.15% of
its average daily net assets.
The total annual expense ratio of the Hodges Fund was 1.75% for the fiscal
year ended March 31, 2001. This is lower than that of the Trent Fund's expense
ratio of 2.00% for its fiscal year ended August 31, 2000. Trent Capital had
agreed to limit expenses of the Trent Fund to no more than 2.00% of average
daily net assets annually. Without this agreement, the Trent Fund's total annual
expense ratio would have been 2.80% for the fiscal year ended August 31, 2000.
For the fiscal year ended August 31, 2000, Trent Capital was entitled to
receive advisory fees of approximately $70,711 from the Trent Fund. Of this
amount, Trent Capital reduced its fee by $49,142. Net assets of the Trent Fund
as of this date were $5.4 million.
For the fiscal year ended March 31, 2001, Hodges Capital Management to the
Hodges Fund received advisory fees of $243,805. Net assets of the Fund as of
this date were $20.4 million.
5. PORTFOLIO MANAGERS
TRENT FUND. Robert V. May, Chief Investment Officer of Trent Capital has
been responsible for the day to day management of the Trent Fund's portfolio.
Mr. May has been an investment officer and portfolio manager since joining Trent
Capital in 1990.
14
HODGES FUND. Don W. Hodges and Craig D. Hodges are co-managers of the
Hodges Fund's investment portfolio. Don Hodges, President of Hodges Capital
Management, has over 40 years of experience in the securities brokerage industry
and previously served as President of a large regional brokerage firm. Craig D.
Hodges, Senior Vice President of Hodges Capital Management, was a founder and
has been a senior officer of the Fund's Distributor, First Dallas Securities, an
affiliate of Hodges Capital Management, where he has managed individual and
institutional investment portfolios.
6. DISTRIBUTION AND SHAREHOLDER SERVICES
First Dallas Securities serves as Distributor of the Hodges Fund. First
Fund Distributors, Inc., 4455 East Camelback Road, Suite 261-E, Phoenix, AZ
85018 serves as Distributor of the Trent Fund and as co-distributor of the
Hodges Fund. The Funds do not impose any front-end or deferred sales charge on
purchases of shares. Each Fund has adopted a Distribution Plan authorized by
Rule 12b-1 under the Investment Company Act permitting the Funds to pay up to
0.25% of its average daily net assets on an annual basis for distribution
expenses.
No sales charge is imposed by either Fund on reinvestment of dividends or
capital gains distributions.
7. PURCHASE PROCEDURES
The Trent Fund generally requires a minimum initial investment of $1,000,
and subsequent investments of $250 or more. The Hodges Fund has lower minimum
initial and subsequent investment amounts. Shareholders may open an account in
the Hodges Fund with $250 and add to the account with amounts of $50 or more.
Both Funds have automatic investment plans under which selected amounts are
electronically withdrawn from shareholders' accounts with banks and are applied
to purchase shares of the Funds.
8. REDEMPTION AND EXCHANGE PROCEDURES
Shareholders of each Fund may redeem their shares at the net asset value
next determined after receipt of a written redemption request or a telephone
redemption order without the imposition of any fee or other charge.
Each Fund may involuntarily redeem a shareholder's shares if the combined
aggregate net asset value of the shares in a shareholder's account is less than
its minimum initial investment ($1000 for the Trent Fund and $250 for the Hodges
Fund) due to redemptions or if purchases through a systematic investment plan
fails to meet that Fund's investment minimum within a twelve-month period. If
the shareholder's account balance is not brought up to the minimum or the
shareholder does not send the Fund other instructions, the Fund will redeem the
shares and send the shareholder the proceeds.
15
9. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Each Fund distributes substantially all of its net investment income and
net capital gains, if any, to shareholders each year. Both Funds currently
intend to make one or more distribution, if necessary to avoid the imposition of
tax on a Fund, during each calendar year. A distribution may be made between
November 1 and December 31 of each year with respect to any undistributed
capital gains earned during the one year period ended October 31 of each
calendar year. Another distribution of any undistributed capital gains may also
be made following the Funds' fiscal year end (March 31 for the Hodges Fund and
August 31 for the Trent Fund).
Each Fund has elected and qualified as a separate "regulated investment
company" under Subchapter M of the Code for federal income tax purposes and
meets all other requirements that are necessary for it (but not its
shareholders) to pay no federal taxes on income and capital gains paid to
shareholders in the form of dividends. In order to accomplish this goal, each
Fund must, among other things, distribute substantially all of its ordinary
income and net capital gains on a current basis and maintain a portfolio of
investments which satisfies certain diversification criteria.
10. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Each Fund's investment adviser is responsible for decisions to buy and sell
securities for each Fund, broker-dealer selection, and negotiation of commission
rates. In placing orders for each Fund's portfolio transactions, the investment
adviser's primary consideration is to obtain the most favorable price and
execution available although the investment adviser also may consider a
securities broker-dealer's sale of Fund shares, or research and brokerage
services provided by the securities broker-dealer, as factors in considering
through whom portfolio transactions will be effected. Each Fund may pay to those
broker-dealers who provide brokerage and research service to its investment
adviser a higher commission than that charged by other broker-dealers if the
investment adviser determines in good faith that the amount of the commission is
reasonable in relation to the value of those services in terms either of the
particular transaction, or in terms of the overall responsibility of the
investment adviser and to any other accounts over which the investment adviser
exercises investment discretion.
11. SHAREHOLDERS' RIGHTS
The Trust is a Massachusetts business trust. Each Fund's operations are
governed by the Trust's Declaration of Trust and By-laws and applicable
Massachusetts law as each Fund is a series of the Trust.
The Funds normally will not hold meetings of shareholders except as
required under the Investment Company Act and Massachusetts law. However,
shareholders holding 10% or more of the outstanding shares of a Fund may call
meetings for the purpose of voting on the removal of one or more of the
Trustees.
16
Shareholders of each Fund have no preemptive, conversion or subscription
rights. The shares of each Fund have non-cumulative voting rights, and each
shareholder of each Fund is entitled to one vote for each full share of that
Fund (and a fractional vote for each fractional share) held in the shareholder's
name on the books of that Fund as of the record date for the action in question.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only, such as approval of that Fund's investment
management arrangements. The shares of all the Funds will be voted in the
aggregate on other matters, such as the election of trustees and ratification of
the Board of Trustees' selection of the Funds' independent accountants.
C. RISK FACTORS
The principal risks of investing in the Funds are substantially similar,
and involve risks of investing in equity securities. These are:
MANAGEMENT RISK. Management risk means that your investment in a Fund
varies with the success or failure of the investment strategies of the
investment adviser and such adviser's research, analysis and selection of
portfolio securities. If the Adviser's investment strategies do not produce the
expected results, the value of your investment could be diminished or even lost.
MARKET RISK. Market risk means that the price of common stock may move up
or down (sometimes rapidly and unpredictably) in response to general market and
economic conditions, investor perception and anticipated events, as well as the
activities of the particular issuer. Market risk may affect a single issuer,
industry, section of the economy, or the market as a whole. Since each Fund
invests principally in equity securities, each Fund's share price changes daily
in respect to stock market movement.
SMALL AND MEDIUM SIZED COMPANY RISK. Investing in the securities of small
and medium-sized companies may involve greater volatility than investing in
larger and more established companies because they can be subject to more abrupt
or erratic share price changes than larger, more established companies. Small
companies may have more limited product lines, markets, or financial resources
and their management may be dependent on a limited number of key individuals.
Securities of these companies may have limited market liquidity and their prices
may be more volatile.
DIVERSIFICATION RISK. As a non-diversified fund, the Hodges Fund may make
larger investments with 50% of its assets in individual Companies than a
diversified fund. The price of the Hodges Fund shares may therefore be more
volatile than the share price of a diversified fund.
17
D. RECOMMENDATION OF THE BOARD OF TRUSTEES
The Board of Trustees of the Trust (including a majority of the
non-interested Trustees), after due consideration, has unanimously determined
that the Reorganization is in the best interests of the shareholders of the
Trent Fund and that the interests of the existing shareholders of the Trent Fund
would not be diluted thereby.
TRUSTEES' CONSIDERATION
The proposed transaction was approved by the Board of Trustees of the
Trust, including a majority of the Disinterested Trustees, at a meeting held on
June 20, 2001.
The Board of Trustees of the Trust was presented with information
demonstrating that the terms of the transaction are fair to, and in the best
interests of, the Trust, each of the Funds and the shareholders of the Funds. In
considering the proposed transaction, the Trustees had before them information
to evaluate the experience of Hodges Capital Management's key personnel in
portfolio management, the quality of services Hodges Capital Management is
expected to provide to the Fund, and the compensation proposed to be paid to
Hodges Capital Management. The Trustees gave equal consideration to all factors
deemed to be relevant to the Funds, including, but not limited to the following:
(1) the fact that both Funds have the same investment objective; (2) the fees
and operating expenses to be borne by the Fund if the proposed transaction is
approved, which involve a decrease in the rate of advisory fee payable by the
Hodges Fund from 1.15% to 0.85% annually, and the likelihood of a reduction in
Fund operating expenses as a result of the larger size of the Hodges Fund, which
currently has a lower expense ratio than that of the Trent Fund, even after
giving effect to Trent Capital's waiver of fees and payment of expenses; (3) the
likelihood that unless the transaction is approved, the Trent Fund is likely to
be liquidated and its assets distributed to shareholders, with immediate tax
consequences to shareholders receiving a liquidation distribution; (4) the
potential benefit of the transaction to each Fund's shareholders through a
continued investment in accordance with their investment objectives at an
anticipated lower expense ratio; (5) the favorable history, reputation,
qualification and background of Hodges Capital Management, as well as the
qualifications of its personnel and financial condition; (6) a possible
reduction of portfolio transaction costs since Hodges Capital Management would
be able to trade in larger quantities due to the larger net asset base; (7) each
Fund's overall investment performance record; and (8) other factors deemed
relevant.
LEGAL REQUIREMENTS UNDER THE INVESTMENT COMPANY ACT
Section 15(f) of the Investment Company Act provides that, when a change in
control of an investment adviser occurs, the investment adviser or any of its
affiliated persons may receive any amount or benefit in connection with the
change in control as long as two conditions are satisfied. The first condition
specifies that no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the change of control, or any express or
implied terms, conditions or understandings. The term "unfair burden," as
defined in the Investment Company Act, includes any arrangement during the
two-year period after the change in control whereby the investment adviser (or
18
predecessor or successor adviser), or any interested person of any such adviser,
receives or is entitled to receive any compensation, directly or indirectly,
from the investment company or its security holders (other than fees for bona
fide investment advisory or other services) or from any person in connection
with the purchase or sale of securities or other property to, from, or on behalf
of the investment company (other than fees for bona fide principal underwriting
services). Hodges Capital has agreed to use its best efforts to ensure that the
Reorganization will not cause the imposition of an unfair burden, as that term
is defined in Section 15(f) of the Investment Company Act, on the Hodges Fund.
The second condition specifies that, during the three-year period
immediately following consummation of the transaction, at least 75% of the
investment company's board of directors must be disinterested trustees.
Currently, the Board of Trustees of the Trust meets this 75% requirement.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ADOPTION OF THE PROPOSAL.
E. DISSENTERS' RIGHTS OF APPRAISAL
Shareholders of the Trent Fund who object to the proposed will not be
entitled to any "dissenters' rights" under Massachusetts law. However, those
shareholders have the right at any time up to when the Reorganization occurs to
redeem shares of the Trent Fund at net asset value. After the Reorganization,
shareholders of the Trent Fund will hold shares of the Hodges Fund, which may
also be redeemed at net asset value in accordance with the procedures described
in its Prospectus dated July 30, 2001, subject to applicable redemption
procedures.
F. FURTHER INFORMATION ABOUT THE FUNDS
Further information about the Trent Fund and the Hodges Fund is contained
in the following documents:
Prospectus for the Trent Fund, dated December 29, 2000 and for the Hodges
Fund dated July 30, 2001.
Statement of Additional Information relating to the Trent Fund dated
December 29, 2000 and to the Hodges Fund, dated July 30, 2001
Those documents are available without charge by writing to the Funds'
Administrator at 2020 East Financial Way, Suite 100, Glendora, California 91741
or by calling (800) 576-8229.
The Annual Report to Shareholders of the Trent Fund (the "Annual Report")
for the fiscal year ended August 31, 2000, containing audited financial
statements of the Trent Fund has been previously mailed to shareholders. If you
do not have a copy of the Annual Report, additional copies of that Annual Report
are available without charge by writing or calling at the address and telephone
number listed above.
The Annual Report to shareholders of the Hodges Fund for the fiscal year
ended March 31, 2001, containing audited financial statements of the Hodges
Fund, has been mailed to the shareholders of the Hodges Fund, is on file with
the SEC, and is deemed to be legally part of this document. This document is
available without charge by writing or calling at the address and telephone
number listed above.
19
It is expected that this Combined Proxy Statement and Prospectus will be
mailed to shareholders on or about October 3, 2001.
The Trust is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and the Investment Company Act, and it files
reports, proxy materials and other information with the SEC. These reports,
proxy materials and other information can be inspected and copied at the Public
Reference Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's regional office at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of these materials can be obtained at prescribed
rates from the Public Reference Branch, Office of Consumer Affairs and
Information Services, of the SEC, Washington, D.C. 20549, or by e-mailing the
SEC at PUBLICINFO@SEC.GOV.
G. VOTE REQUIRED
Approval of the proposed Reorganization requires the affirmative vote of
the holders of a majority of the shares of the Trent Fund present or voting by
proxy at the Shareholder Meeting. If the shareholders of the Trent Fund do not
approve the proposed Reorganization, or if the Reorganization is not consummated
for any other reason, then the Board of Trustees will take any further action as
it deems to be in the best interest of the Trent Fund and its shareholders,
including liquidation of the Trent Fund.
H. FINANCIAL HIGHLIGHTS
These tables show each Fund's financial performance for the past five
fiscal years. Certain information reflects financial results for a single fund
share. "Total return" shows how much an investment in the Fund would have
increased or decreased during each period, assuming that all dividends and
distributions had been reinvested. This information has been audited by Tait,
Weller & Baker, independent certified public accountants. Their report and each
Fund's financial statements are included in each Fund's annual report, which is
available upon request.
20
HODGES FUND
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH YEAR
YEAR ENDED MARCH 31,
--------------------------------------------------------
2001 2000 1999 1998 1997
------- ------- ------- ------- -------
Net asset value, beginning of year ..................... $ 18.18 $ 16.79 $ 14.44 $ 13.20 $ 12.87
------- ------- ------- ------- -------
INCOME FOR INVESTMENT OPERATIONS:
Net investment loss .................................. (0.21) (0.13) (0.15) (0.09) (0.11)
Net realized and unrealized gain (loss)
on investments ...................................... (7.81) 2.36 3.05 4.79 1.85
------- ------- ------- ------- -------
Total from investment operations ....................... (8.02) 2.23 2.90 4.70 1.74
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net realized gain ............................... (0.20) (0.84) (0.55) (3.46) (1.41)
------- ------- ------- ------- -------
Net asset value, end of year ........................... $ 9.96 $ 18.18 $ 16.79 $ 14.44 $ 13.20
======= ======= ======= ======= =======
Total return ........................................... (44.29)% 14.13% 21.11%* 41.26%* 14.18%*
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions) ................... $ 20.4 $ 38.8 $ 35.5 $ 32.4 $ 19.4
Ratio of expenses to average net assets .............. 1.75% 1.75% 1.92% 1.96% 2.14%
Ratio of net investment loss to average net assets ... (1.46)% (0.77)% (0.99)% (0.76)% (0.95)%
Portfolio turnover rate ................................ 176.08% 126.05% 129.86% 94.05% 115.77%
----------
* Sales load is not reflected in the total return number. Effective April 20,
1999, the Fund no longer imposed a sales load.
21
TRENT EQUITY FUND
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH YEAR
YEAR ENDED AUGUST 31,
--------------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
Net asset value, beginning of year ..................... $15.13 $12.23 $11.90 $ 9.86 $10.24
------ ------ ------ ------ ------
Income from investment operations:
Net investment loss .................................. (0.20) (0.12) (0.16) (0.10) (0.06)
Net realized and unrealized gain on investments ...... 1.50 5.73 0.49 2.14 0.67
------ ------ ------ ------ ------
Total from investment operations ....................... 1.30 5.61 0.33 2.04 0.61
------ ------ ------ ------ ------
Less distributions: .................................... (1.71) (2.71) -- -- (0.99)
------ ------ ------ ------ ------
From net realized gain ............................... $14.72 $15.13 $12.23 $11.90 $ 9.86
====== ====== ====== ====== ======
Net asset value, end of year
Total return ........................................... 7.34% 52.81% 2.77% 20.69% 7.23%
Ratios/supplemental data:
Net assets, end of year (millions) ..................... $ 5.5 $ 5.2 $ 3.2 $ 3.3 $ 3.0
Ratio of expenses to average net assets:
Before fees waived and expenses absorbed ............. 2.80% 3.36% 3.08% 3.48% 3.63%
After fees waived and expenses absorbed .............. 2.00% 2.00% 2.00% 2.00% 2.10%
Ratio of net investment loss to average net assets:
Before fees waived and expenses absorbed ............. (1.99%) (2.31%) (2.23%) (2.25%) (2.15%)
After fees waived and expenses absorbed .............. (1.19%) (0.94%) (1.15%) (0.76%) (0.62%)
Portfolio turnover rate ................................ 85.69% 53.71% 41.14% 43.81% 59.33%
22
III. MISCELLANEOUS ISSUES
A. OTHER BUSINESS
The Board of Trustees of the Trust knows of no other business to be brought
before the Shareholder Meeting. If any other matters come before the Shareholder
Meeting, it is the Board's intention that proxies that do not contain specific
restrictions to the contrary will be voted on those matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
B. NEXT MEETING OF SHAREHOLDERS
The Trust is not required and does not intend to hold annual or other
periodic meetings of shareholders except as required by the Investment Company
Act. If the Reorganization is not completed, the next meeting of the
shareholders of the Trent Fund will be held at such time as the Board of
Trustees may determine or at such time as may be legally required. Any
shareholder proposal intended to be presented at such meeting must be received
by the Trust at its office at a reasonable time before the meeting, as
determined by the Board of Trustees, to be included in the Trust's proxy
statement and form of proxy relating to that meeting, and must satisfy all other
legal requirements.
C. LEGAL MATTERS
Paul, Hastings, Janofsky & Walker LLP will have been consulted by the Trust
on certain legal matters as to the valid issuance of the Hodges Fund Shares.
D. EXPERTS
The financial statements of the Trent Fund for the fiscal year ended August
31, 2000 contained in the Trent Fund's Annual Report to Shareholders, and the
financial statements of the Hodges Fund for the fiscal year ended March 31,
2001, contained in the Hodges Fund's Annual Report to Shareholders, have been
audited by Tait Weller & Baker, independent public accountants, as stated in
their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given their authority as
experts in accounting and auditing.
23
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of
this -- day of September, 2001, by Professionally Managed Portfolios ("PMP"), a
Massachusetts business trust, for itself and on behalf of the Hodges Fund (the
"Acquiring Fund"), a series of PMP, and on behalf of the Trent Equity Fund (the
"Acquired Fund"), also a series of PMP. Hodges Capital Management, Inc. ("HCM"),
the adviser of the Hodges Fund, shall also be a party to this Agreement for
certain requirements as set forth below.
In accordance with the terms and conditions set forth in this Agreement,
the parties desire that all of the assets of the Acquired Fund be transferred to
the Acquiring Fund, and that the Acquiring Fund assume the Stated Liabilities
(as defined in paragraph 1.3) of the Acquired Fund, in exchange for shares of
the Acquiring Fund ("Acquiring Fund Shares"), and that these Acquiring Fund
Shares be distributed immediately after the Closing, as defined in this
Agreement, by the Acquired Fund to its shareholders in liquidation of the
Acquired Fund. This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the "Code").
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:
1. REORGANIZATION OF ACQUIRED FUND
1.1 Subject to the terms and conditions herein set forth, and on the basis
of the representations and warranties contained herein, the Acquired Fund shall
assign, deliver and otherwise transfer its assets as set forth in paragraph 1.2
(the "Fund Assets") to the Acquiring Fund and the Acquiring Fund shall assume
the Acquired Fund's Stated Liabilities. The Acquiring Fund shall, as
consideration therefor, on the Closing Date (as defined in paragraph 3.1),
deliver to the Acquired Fund full and fractional Acquiring Fund Shares, the
number of which shall be determined by dividing (a) the value of the Acquired
Fund Assets, net of the Acquired Fund's Stated Liabilities, computed in the
manner and as of the time and date set forth in paragraph 2.1, by (b) the net
asset value of one share of the Acquiring Fund computed in the manner and as of
the time and date set forth in paragraph 2.2. Such transfer, delivery and
assumption shall take place at the closing provided for in paragraph 3.1
(hereinafter sometimes referred to as the "Closing"). Immediately following the
Closing, the Acquired Fund shall distribute the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation of the Acquired Fund as
provided in paragraph 1.4 hereof. Such transactions are hereinafter sometimes
collectively referred to as the "Reorganization."
1.2 (a) With respect to the Acquired Fund, the Fund Assets shall consist
of all property and assets of any nature whatsoever, including, without
limitation, all cash, cash equivalents, securities, instruments, claims and
receivables (including dividend and interest receivables) owned by the Acquired
Fund, and any prepaid expenses shown as an asset on the Acquired Fund's books on
the Closing Date.
24
(b) Before the Closing Date, the Acquired Fund will provide the
Acquiring Fund with a schedule of its assets and its known liabilities, and the
Acquiring Fund will provide the Acquired Fund with a copy of the current
investment objective and policies applicable to the Acquiring Fund. The Acquired
Fund reserves the right to sell or otherwise dispose of any of the securities or
other assets shown on the list of the Acquired Fund's Assets before the Closing
Date but will not, without the prior approval of the Acquiring Fund, acquire any
additional securities other than securities which the Acquiring Fund is
permitted to purchase in accordance with its stated investment objective and
policies. Before the Closing Date, the Acquiring Fund will advise the Acquired
Fund of any investments of the Acquired Fund shown on such schedule which the
Acquiring Fund would not be permitted to hold, pursuant to its stated investment
objective and policies or otherwise. If the Acquired Fund holds any investments
that the Acquiring Fund would not be permitted to hold under its stated
investment objective or policies, the Acquired Fund, if requested by the
Acquiring Fund, will dispose of those securities prior to the Closing Date to
the extent practicable. In addition, if it is determined that the portfolios of
the Acquired Fund and the Acquiring Fund, when aggregated, would contain
investments exceeding certain percentage limitations to which the Acquiring Fund
is or will be subject with respect to such investments, the Acquired Fund, if
requested by the Acquiring Fund, will dispose of and/or reinvest a sufficient
amount of such investments as may be necessary to avoid violating such
limitations as of the Closing Date.
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund will
assume all liabilities and obligations reflected on an unaudited statement of
assets and liabilities of the Acquired Fund prepared by the administrator of PMP
as of the Applicable Valuation Date (as defined in paragraph 2.1), in accordance
with generally accepted accounting principles consistently applied from the
prior audited period ("Stated Liabilities"). The Acquiring Fund shall assume
only the Stated Liabilities of the Acquired Fund, and no other liabilities or
obligations, whether absolute or contingent, known or unknown, accrued or
unaccrued.
1.4 Immediately following the Closing, the Acquired Fund will distribute
the Acquiring Fund Shares received by the Acquired Fund pursuant to paragraph
1.1 pro rata to its shareholders of record determined as of the close of
business on the Closing Date ("Acquired Fund Investors") in complete liquidation
of the Acquired Fund. That distribution will be accomplished by an instruction,
signed by an appropriate officer of PMP, to transfer the Acquiring Fund Shares
then credited to the Acquired Fund's account on the books of the Acquiring Fund
to open accounts on the books of the Acquiring Fund established and maintained
by the Acquiring Fund's transfer agent in the names of record of the Acquired
Fund Investors and representing the number of shares of the Acquiring Fund due
such Acquired Fund Investor. All issued and outstanding shares of the Acquired
Fund will be cancelled simultaneously therewith on the Acquired Fund's books,
and any outstanding share certificates representing interests in the Acquired
Fund will represent only the right to receive such number of Acquiring Fund
Shares after the Closing as determined in accordance with paragraph 1.l.
1.5 If any request shall be made for a change of the registration of shares
of the Acquiring Fund to another person from the account of the stockholder in
which name the shares are registered in the records of the Acquired Fund, it
25
shall be a condition of such registration of shares that there be furnished to
the Acquiring Fund an instrument of transfer properly endorsed, accompanied by
appropriate signature guarantees and otherwise in proper form for transfer and
that the person requesting such registration shall pay to the Acquiring Fund any
transfer or other taxes required by reason of such registration or establish to
the reasonable satisfaction of the Acquiring Fund that such tax has been paid or
is not applicable.
1.6 Following the transfer of assets by the Acquired Fund to the Acquiring
Fund, the assumption of the Acquired Fund's Stated Liabilities by the Acquiring
Fund, and the distribution by the Acquired Fund of the Acquiring Fund Shares
received by it pursuant to paragraph 1.4, PMP shall terminate the qualification,
classification and registration of the Acquired Fund with all appropriate
federal and state agencies. Any reporting or other responsibility of PMP is and
shall remain the responsibility of PMP up to and including the date on which the
Acquired Fund is terminated and deregistered, subject to any reporting or other
obligations described in paragraph 4.8.
2. VALUATION
2.1 The value of the Acquired Fund's Fund Assets shall be the value of
those assets computed as of the time at which its net asset value is calculated
pursuant to the valuation procedures set forth in the Acquiring Fund's
then-current Prospectus and Statement of Additional Information on the business
day immediately preceding the Closing Date, or at such time on such earlier or
later date as may mutually be agreed upon in writing among the parties hereto
(such time and date being herein called the "Applicable Valuation Date").
2.2 The net asset value of each share of the Acquiring Fund shall be the
net asset value per share computed on the Applicable Valuation Date, using the
market valuation procedures set forth in the Acquiring Fund's then-current
Prospectus and Statement of Additional Information.
2.3 All computations of value contemplated by this Article 2 shall be made
by the Acquiring Fund's administrator in accordance with its regular practice as
pricing agent. The Acquiring Fund shall cause its administrator to deliver a
copy of its valuation report to PMP and to the Acquired Fund at the Closing.
3. CLOSING(S) AND CLOSING DATE
3.l The Closing for the Reorganization shall occur on ___________, 2001,
and/or on such other date(s) as may be mutually agreed upon in writing by the
parties hereto (each, a "Closing Date"). The Closing(s) shall be held at the
offices of Investment Company Administration LLC, 4455 East Camelback, Suite
261E, Phoenix, Arizona 85018, or at such other location as is mutually agreeable
to the parties hereto. All acts taking place at the Closing(s) shall be deemed
to take place simultaneously as of 10:00 a.m., local time on the Closing Date
unless otherwise provided.
26
3.2 The Acquiring Fund's custodian shall deliver at the Closing evidence
that: (a) the Fund Assets have been delivered in proper form to the Acquiring
Fund on the Closing Date and (b) all necessary taxes including all applicable
federal and state stock transfer stamps, if any, have been paid, or provision
for payment shall have been made, by the Acquired Fund in conjunction with the
delivery of portfolio securities.
3.3 Notwithstanding anything herein to the contrary, if on the Applicable
Valuation Date (a) the New York Stock Exchange shall be closed to trading or
trading thereon shall be restricted or (b) trading or the reporting of trading
on such exchange or elsewhere shall be disrupted so that, in the judgment of
PMP, accurate appraisal of the value of the net assets of the Acquiring Fund or
the Acquired Fund is impracticable, the Applicable Valuation Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed without restriction or disruption and reporting shall have
been restored.
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUND AND THE ACQUIRED FUND
4.1 With respect to the Acquired Fund, PMP has called or will call a
meeting of Acquired Fund shareholders to consider and act upon this Agreement
and to take all other actions reasonably necessary to obtain the approval of the
transactions contemplated herein, including approval for the Acquired Fund's
liquidating distribution of Acquiring Fund Shares contemplated hereby, and for
PMP to terminate the Acquired Fund's qualification, classification and
registration if requisite approvals are obtained with respect to the Acquired
Fund. Professionally Managed Portfolios, on behalf of the Acquired Fund, shall
prepare the notice of meeting, form of proxy and proxy statement (collectively,
"Proxy Materials") to be used in connection with that meeting.
4.2 PMP, on behalf of the Acquired Fund, covenants that the Acquiring Fund
Shares to be issued hereunder are not being acquired for the purpose of making
any distribution thereof, other than in accordance with the terms of this
Agreement.
4.3 PMP, on behalf of the Acquired Fund, will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of shares of the Acquired Fund.
4.4 Subject to the provisions hereof, PMP, on its own behalf and on behalf
of the Acquiring Fund and the Acquired Fund, will take, or cause to be taken,
all actions, and do, or cause to be done, all things reasonably necessary,
proper or advisable to consummate and make effective the transactions
contemplated herein.
4.5 PMP, on behalf of the Acquired Fund, shall furnish to the Acquiring
Fund on the Closing Date, a final statement of the total amount of the Acquired
Fund's assets and liabilities as of the Closing Date.
4.6 PMP, on behalf of the Acquiring Fund, has prepared and filed, or will
prepare and file, with the Securities and Exchange Commission (the "SEC") a
registration statement on Form N-14 under the Securities Act of 1933, as amended
(the "1933 Act"), relating to the Acquiring Fund Shares (the "Registration
27
Statement"). PMP, on behalf of the Acquired Fund, has provided or will provide
the Acquiring Fund with the Proxy Materials for inclusion in the Registration
Statement, prepared in accordance with paragraph 4.1, and with such other
information and documents relating to the Acquired Fund as are requested by the
Acquiring Fund and as are reasonably necessary for the preparation of the
Registration Statement.
4.7 As soon after the Closing Date as is reasonably practicable, PMP, on
behalf of the Acquired Fund: (a) shall prepare and file all federal and other
tax returns and reports of the Acquired Fund required by law to be filed with
respect to all periods ending on/or before the Closing Date but not theretofore
filed and (b) shall pay all federal and other taxes shown as due thereon and/or
all federal and other taxes that were unpaid as of the Closing Date.
4.8 Following the transfer of Fund Assets by the Acquired Fund to the
Acquiring Fund and the assumption of the Stated Liabilities of the Acquired Fund
in exchange for Acquiring Fund Shares as contemplated herein, PMP will file any
final regulatory reports, including but not limited to any Form N-SAR and Rule
24f-2 filings with respect to the Acquired Fund, promptly after the Closing Date
and also will take all other steps as are necessary and proper to effect the
termination or declassification of the Acquired Fund in accordance with the laws
of the Commonwealth of Massachusetts and other applicable requirements.
5. REPRESENTATIONS AND WARRANTIES
5.1 PMP, on behalf of the Acquiring Fund, represents and warrants to the
Acquired Fund as follows:
(a) PMP was duly created pursuant to its Agreement and Declaration of
Trust by the Trustees for the purpose of acting as a management investment
company under the Investment Company Act of 1940 (the "1940 Act") and is validly
existing under the laws of the Commonwealth of Massachusetts, and the
Declaration of Trust directs the Trustees to manage the affairs of PMP and
grants them all powers necessary or desirable to carry out such responsibility,
including administering PMP's business as currently conducted by PMP and as
described in the current prospectuses of PMP. PMP is registered as an investment
company classified as an open-end management company, under the 1940 Act and its
registration with the SEC as an investment company is in full force and effect;
(b) The Registration Statement, including the current prospectus and
statement of additional information of the Acquiring Fund, conforms or will
conform, at all times up to and including the Closing Date, in all material
respects to the applicable requirements of the 1933 Act and the 1940 Act and the
regulations thereunder and do not include or will not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(c) The Acquiring Fund is not in violation of, and the execution,
delivery and performance of this Agreement by PMP for itself and on behalf of
the Acquiring Fund does not and will not (i) violate PMP's Declaration of Trust
28
or By-Laws, or (ii) result in a breach or violation of, or constitute a default
under, any material agreement or material instrument, to which PMP is a party or
by which its properties or assets are bound;
(d) Except as previously disclosed in writing to the Acquired Fund, no
litigation or administrative proceeding or investigation of or before any court
or governmental body is presently pending or, to PMP's knowledge, threatened
against PMP or its business, the Acquiring Fund or any of its properties or
assets, which, if adversely determined, would materially and adversely affect
PMP or the Acquiring Fund's financial condition or the conduct of their
business. PMP knows of no facts that might form the basis for the institution of
any such proceeding or investigation, and the Acquiring Fund is not a party to
or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects, or is reasonably
likely to materially and adversely affect, its business or its ability to
consummate the transactions contemplated herein;
(e) All issued and outstanding shares, including shares to be issued
in connection with the Reorganization, of the Acquiring Fund will, as of the
Closing Date, be duly authorized and validly issued and outstanding, fully paid
and nonassessable, the shares of each class of the Acquiring Fund issued and
outstanding before the Closing Date were offered and sold in compliance with the
applicable registration requirements, or exemptions therefrom, of the 1933 Act,
and all applicable state securities laws, and the regulations thereunder, and
the Acquiring Fund does not have outstanding any option, warrants or other
rights to subscribe for or purchase any of its shares nor is there outstanding
any security convertible into any of its shares;
(f) The execution, delivery and performance of this Agreement on
behalf of the Acquiring Fund will have been duly authorized prior to the Closing
Date by all necessary action on the part of PMP, the Trustees and the Acquiring
Fund, and this Agreement will constitute a valid and binding obligation of PMP
and the Acquiring Fund enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, arrangement, moratorium
and other similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles;
(g) On the effective date of the Registration Statement, at the time
of the meeting of the Acquired Fund shareholders and on the Closing Date, any
written information furnished by PMP with respect to the Acquiring Fund for use
in the Proxy Materials, the Registration Statement or any other materials
provided in connection with the Reorganization does not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the information provided not misleading;
(h) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934 (the "1934
Act"), the 1940 Act or Delaware law for the execution of this Agreement by PMP,
for itself and on behalf of the Acquiring Fund, or the performance of the
Agreement by Professionally Managed Portfolios for itself and on behalf of the
Acquiring Fund, except for such consents, approvals, authorizations and filings
as have been made or received, and except for such consents, approvals,
authorizations and filings as may be required after the Closing Date;
29
(i) The Statement of Assets and Liabilities, Statement of Operations
and Statements of Changes in Net Assets of the Acquiring Fund as of and for the
year ended March 31, 2001, audited by Tait, Weller & Baker (copies of which have
been or will be furnished to the Acquired Fund) fairly present, in all material
respects, the Acquiring Fund's financial condition as of such date and its
results of operations for such period in accordance with generally accepted
accounting principles consistently applied, and as of such dates there were no
liabilities of the Acquiring Fund (contingent or otherwise) known to PMP that
were not disclosed therein but that would be required to be disclosed therein in
accordance with generally accepted accounting principles;
(j) Since the date of the most recent audited financial statements,
there has not been any material adverse change in the Acquiring Fund's financial
condition, assets, liabilities or business, other than changes occurring in the
ordinary course of business; or any incurrence by the Acquiring Fund of
indebtedness maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed in writing to and accepted by the
Acquired Fund, prior to the Closing Date (for the purposes of this subparagraph
(j), neither a decline in the Acquiring Fund's net asset value per share nor a
decrease in the Acquiring Fund's size due to redemptions shall be deemed to
constitute a material adverse change);
(k) For each full and partial taxable year from its inception through
the Closing Date, the Acquiring Fund has qualified as a separate regulated
investment company under the Code and has taken all necessary and required
actions to maintain such status; and
(1) All federal and other tax returns and reports of PMP and the
Acquiring Fund required by law to be filed on or before the Closing Date shall
have been filed, and all taxes owed by PMP or the Acquiring Fund shall have been
paid so far as due, and to the best of PMP's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to any
such return.
5.2 PMP, on behalf of the Acquired Fund, represents and warrants to the
Acquiring Fund as follows:
(a) PMP was duly created pursuant to its Agreement and Declaration of
Trust by the Trustees for the purpose of acting as a management investment
company under the 1940 Act and is validly existing under the laws of Delaware,
and the Agreement and Declaration of Trust directs the Trustees to manage the
affairs of PMP and grants them all powers necessary or desirable to carry out
such responsibility, including administering PMP's business as currently
conducted by PMP and as described in the current prospectuses of PMP. PMP is
registered as an investment company classified as an open-end management
company, under the 1940 Act and its registration with the SEC as an investment
company is in full force and effect;
(b) All of the issued and outstanding shares of the Acquired Fund have
been offered and sold in compliance in all material respects with applicable
registration or notice requirements of the 1933 Act and state securities laws;
30
all issued and outstanding shares of each class of the Acquired Fund are, and on
the Closing Date will be, duly authorized and validly issued and outstanding,
and fully paid and non-assessable, and the Acquired Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of its shares, nor is there outstanding any security convertible into any of
its shares;
(c) The Acquired Fund is not in violation of, and the execution,
delivery and performance of this Agreement by PMP for itself and on behalf of
the Acquired Fund does not and will not (i) violate PMP's Agreement and
Declaration of Trust or By-Laws, or (ii) result in a breach or violation of, or
constitute a default under, any material agreement or material instrument to
which PMP is a party or by its properties or assets are bound;
(d) Except as previously disclosed in writing to the Acquiring Fund,
no litigation or administrative proceeding or investigation of or before any
court or governmental body is presently pending or, to PMP's knowledge,
threatened against the Acquired Fund or any of its properties or assets which,
if adversely determined, would materially and adversely affect the Acquired
Fund's financial condition or the conduct of its business, PMP knows of no facts
that might form the basis for the institution of any such proceeding or
investigation, and the Acquired Fund is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
that materially and adversely affects, or is reasonably likely to materially and
adversely affect, its business or its ability to consummate the transactions
contemplated herein;
(e) The Statement of Assets and Liabilities, Statements of Operations
and Statements of Changes in Net Assets of the Acquired Fund as of and for the
period ended January 31, 2001, audited by Tait, Weller & Baker (copies of which
have been or will be furnished to the Acquiring Fund) fairly present, in all
material respects, the Acquired Fund's financial condition as of such date and
its results of operations for such period in accordance with generally accepted
accounting principles consistently applied, and as of such date there were no
liabilities of the Acquired Fund (contingent or otherwise) known to PMP that
were not disclosed therein but that would be required to be disclosed therein in
accordance with generally accepted accounting principles;
(f) Since the date of the most recent audited financial statements,
there has not been any material adverse change in the Acquired Fund's financial
condition, assets, liabilities or business, other than changes occurring in the
ordinary course of business, or any incurrence by the Acquired Fund of
indebtedness maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, prior to the Closing Date (for the purposes of this subparagraph
(f), neither a decline in the Acquired Fund's net asset value per share nor a
decrease in the Acquired Fund's size due to redemptions shall be deemed to
constitute a material adverse change);
(g) All federal and other tax returns and reports of PMP and the
Acquired Fund required by law to be filed on or before the Closing Date shall
have been filed, and all taxes owed by PMP or the Acquired Fund shall have been
paid so far as due, and to the best of PMP's knowledge, no such return is
31
currently under audit and no assessment has been asserted with respect to any
such return;
(h) For each full and partial taxable year from its inception through
the Closing Date, the Acquired Fund has qualified as a separate regulated
investment company under the Code and has taken all necessary and required
actions to maintain such status;
(i) At the Closing Date, the Acquired Fund will have good and
marketable title to the Fund Assets and full right, power and authority to
assign, deliver and otherwise transfer such Fund Assets hereunder, and upon
delivery and payment for such Fund Assets as contemplated herein, the Acquiring
Fund will acquire good and marketable title thereto, subject to no restrictions
on the ownership or transfer thereof other than such restrictions as might arise
under the 1933 Act;
(j) The execution, delivery and performance of this Agreement on
behalf of the Acquired Fund will have been duly authorized prior to the Closing
Date by all necessary action on the part of PMP, the Trustees and the Acquired
Fund, and this Agreement will constitute a valid and binding obligation PMP and
the Acquired Fund enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, arrangement, moratorium
and other similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles;
(k) From the effective date of the Registration Statement, through the
time of the meeting of the Acquired Fund Investors, and on the Closing Date, the
Proxy Materials (exclusive of the portions of the Acquiring Fund's Prospectus
contained or incorporated by reference therein, and exclusive of any written
information furnished by PMP with respect to the Acquiring Fund): (i) will
comply in all material respects with the applicable provisions of the 1933 Act,
the 1934 Act and the 1940 Act and the regulations thereunder and (ii) do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and as of such dates and times, any written information furnished by
PMP, on behalf of the Acquired Fund, for use in the Registration Statement or in
any other manner that may be necessary in connection with the transactions
contemplated hereby does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the information provided not
misleading; and
(1) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the 1934 Act, the 1940 Act or the Commonwealth of
Massachusetts law for the execution of this Agreement by PMP, for itself and on
behalf of the Acquired Fund, or the performance of the Agreement by PMP for
itself and on behalf of the Acquired Fund, except for such consents, approvals,
authorizations and filings as have been made or received, and except for such
consents, approvals, authorizations and filings as may be required subsequent to
the Closing Date.
32
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUND
The obligations of PMP to consummate the Reorganization with respect to the
Acquired Fund shall be subject to the performance by PMP, for itself and on
behalf of the Acquiring Fund, of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions with respect to the Acquiring Fund:
6.1 All representations and warranties of PMP with respect to the Acquiring
Fund contained herein shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated herein, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
6.2 PMP, on behalf of the Acquiring Fund, shall have delivered to the
Acquired Fund at the Closing a certificate executed on behalf of the Acquiring
Fund by PMP's President, Vice President, Assistant Vice President, Secretary or
Assistant Secretary in a form reasonably satisfactory to the Acquired Fund and
dated as of the Closing Date, to the effect that the representations and
warranties of PMP with respect to the Acquiring Fund made herein are true and
correct at and as of the Closing Date, except as they may be affected by the
transactions contemplated herein, and as to such other matters as the Acquired
Fund shall reasonably request.
6.3 Unless waived by the Acquired Fund, the Acquired Fund shall have
received at the Closing assurances of an officer of PMP, in a form reasonably
satisfactory to the Acquired Fund, substantially to the effect that:
(a) PMP is a duly registered, open-end, management investment company,
and its registration with the SEC as an investment company under the 1940 Act is
in full force and effect;
(b) the Acquiring Fund is a separate portfolio of PMP, which is a
business trust duly created pursuant to its Agreement and Declaration of Trust,
is legally existing and in good standing under the laws of the Commonwealth of
Massachusetts, and the Agreement and Declaration of Trust directs the Trustees
to manage the affairs of PMP and grants them all powers necessary or desirable
to carry out such responsibility, including administering PMP's business as
described in the current prospectuses of PMP;
(c) this Agreement has been duly authorized, executed and delivered by
PMP on behalf of PMP and the Acquiring Fund and, assuming due authorization,
execution and delivery of this Agreement on behalf of the Acquired Fund, is a
valid and binding obligation of PMP, enforceable against PMP in accordance with
its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability relating
to or affecting creditors, rights and to general equity principles;
(d) the Acquiring Fund Shares to be issued to the Acquired Fund and
then distributed to the Acquired Fund Investors pursuant to this Agreement are
duly registered under the 1933 Act on the appropriate form, and are duly
authorized and upon such issuance will be validly issued and outstanding and
33
fully paid and non-assessable, and no shareholder of the Acquiring Fund has any
preemptive rights to subscription or purchase in respect thereof;
(e) the Registration Statement has become effective with the SEC and,
to the best of such counsel's knowledge, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose have
been instituted or are pending or threatened;
(f) no consent, approval, authorization, filing or order of any court
or governmental authority of the United States or any state is required for the
consummation of the Reorganization with respect to the Acquiring Fund, except
for such consents, approvals, authorizations and filings as have been made or
received, and except for such consents, approvals, authorizations and filings as
may be required after the Closing Date; and
(g) to the best knowledge of such officer, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to PMP or the Acquiring
Fund or any of their properties or assets and neither PMP nor the Acquiring Fund
is a party to or subject to the provisions of any order, decree or judgment of
any court or governmental body that materially and adversely affects its
business.
6.4 As of the Closing Date, there shall have been no material change in the
investment objective, policies and restrictions nor any material change in the
investment management fees, fee levels payable pursuant to any 12b-1 plan of
distribution, other fees payable for services provided to the Acquiring Fund,
fee waiver or expense reimbursement undertakings, or sales loads of the
Acquiring Fund from those fee amounts, undertakings and sales load amounts
described in the prospectus of the Acquiring Fund delivered to the Acquired Fund
pursuant to paragraph 4.1 and in the Proxy Materials.
6.5 With respect to the Acquiring Fund, the Board of Trustees of PMP shall
have determined that the Reorganization is in the best interests of the
Acquiring Fund and that the interests of the existing shareholders of the
Acquiring Fund would not be diluted as a result of the Reorganization.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND
The obligations of PMP to consummate the Reorganization with respect to the
Acquiring Fund shall be subject to the performance by PMP of all the obligations
to be performed by it hereunder, with respect to the Acquired Fund, on or before
the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of PMP with respect to the Acquired
Fund contained herein shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date, with the same force and
effect as if made on and as of the Closing Date.
7.2 PMP, on behalf of the Acquired Fund, shall have delivered to the
Acquiring Fund at the Closing a certificate executed on behalf of the Acquired
Fund, by PMP's President, Vice President, Assistant Vice President, Secretary or
Assistant Secretary, in form and substance satisfactory to the Acquiring Fund
34
and dated as of the Closing Date, to the effect that the representations and
warranties of PMP with respect to the Acquired Fund made herein are true and
correct at and as of the Closing Date, except as they may be affected by the
transactions contemplated herein and as to such other matters as the Acquiring
Fund shall reasonably request.
7.3 The Acquiring Fund shall have received at the Closing assurances of an
officer of PMP, in a form reasonably satisfactory to the Acquiring Fund,
substantially to the effect that:
(a) PMP is a duly registered, open-end, management investment company,
and its registration with the SEC as an investment company under the 1940 Act is
in full force and effect;
(b) the Acquired Fund is a separate portfolio of PMP, which is a
business trust duly created pursuant to its Agreement and Declaration of Trust,
is validly existing and in good standing under the laws of Delaware, and the
Agreement and Declaration of Trust directs the Trustees to manage the affairs of
PMP and grants them all powers necessary or desirable to carry out such
responsibility, including administering PMP's business as described in the
current prospectuses of PMP;
(c) this Agreement has been duly authorized, executed and delivered by
PMP on behalf of PMP and the Acquired Fund and, assuming due authorization,
execution and delivery of this Agreement on behalf of the Acquiring Fund, is a
valid and binding obligation of PMP, enforceable against PMP in accordance with
its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability relating
to or affecting creditors, rights and to general equity principles;
(d) no consent, approval, authorization, filing or order of any court
or governmental authority of the United Sates or any state is required for the
consummation of the Reorganization with respect to the Acquired Fund, except for
such consents, approvals, authorizations and filings as have been made or
received, and except for such consents, approvals, authorizations and filings as
may be required subsequent to the Closing Date; and
(e) to the best knowledge of such officer, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to PMP or the Acquired
Fund or any of their properties or assets and neither PMP nor the Acquired Fund
is a party to or subject to the provisions of any order, decree or judgment of
any court or governmental body that materially and adversely effects its
business.
7.4 With respect to the Acquired Fund, the Board of Trustees of PMP shall
have determined that the Reorganization is in the best interests of the Acquired
Fund.
35
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
The obligations of the Acquiring Fund and of the Acquired Fund herein are
each subject to the further conditions that on or before the Closing Date with
respect to the Acquiring Fund and the Acquired Fund:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of PMP's Agreement and
Declaration of Trust and the requirements of the 1940 Act, and certified copies
of the resolutions evidencing such approval shall have been delivered to the
Acquiring Fund.
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or any of the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders, approvals
and permits of federal, state and local regulatory authorities (including,
without limitation, those of the SEC and of state securities authorities) deemed
necessary by PMP, on behalf of the Acquiring Fund or the Acquired Fund, to
permit consummation, in all material respects, of the transactions contemplated
herein shall have been obtained, except where failure to obtain any such
consent, order or permit would not, in the opinion of the party asserting that
the condition to closing has not been satisfied, involve a risk of a material
adverse effect on the assets or properties of the Acquiring Fund or the Acquired
Fund.
8.4 The Registration Statement shall have become effective under the 1933
Act, no stop orders suspending the effectiveness thereof shall have been issued
and, to the best knowledge of the parties hereto, no investigation or proceeding
for that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act.
8.5 The Acquired Fund shall have declared and paid a dividend or dividends
which, together with all previous such dividends, shall have the effect of
distributing to the Acquired Fund's shareholders substantially all of the
Acquired Fund's investment company taxable income for all taxable years ending
on or prior to the Closing Date (computed without regard to any deduction for
dividends paid) and substantially all of its net capital gain realized in all
taxable years ending on or prior to the Closing Date (after reduction for any
capital loss carryover).
8.6 On behalf of both the Acquiring Fund and the Acquired Fund, PMP shall
have considered the federal and income tax issues. PMP acknowledges that no
legal opinion on tax issues will be issued by legal counsel. PMP and HCM
represent that they will use their best efforts to assume that the following
conditions will be satisfied:
36
(a) the transfer by the Acquired Fund of the Fund Assets in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Stated Liabilities will constitute a "reorganization" within the meaning of
Section 368(a)(1)(C) of the Code and the Acquiring Fund and the Acquired Fund
each are a "party to a reorganization" within the meaning of Section 368(b) of
the Code;
(b) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the Fund Assets solely in exchange for the Acquiring Fund Shares and
the assumption by the Acquiring Fund of the Stated Liabilities;
(c) no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Fund Assets to the Acquiring Fund and the assumption by the
Acquiring Fund of the Stated Liabilities in exchange for the Acquiring Fund
Shares or upon the distribution (whether actual or constructive) of the
Acquiring Fund Shares to the Acquired Fund shareholders in exchange for their
shares of the Acquired Fund;
(d) no gain or loss will be recognized by the Acquired Fund Investors
upon the exchange of their Acquired Fund Shares for the Acquiring Fund Shares;
(e) the aggregate tax basis for the Acquiring Fund Shares received by
each of the Acquired Fund Investors pursuant to the Reorganization will be the
same as the aggregate tax basis of the Acquired Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period of
the Acquiring Fund Shares to be received by each Acquired Fund Investors will
include the period during which the Acquired Fund shares exchanged therefor were
held by such shareholder (provided the Acquired Fund shares were held as capital
assets on the date of the Reorganization); and
(f) the tax basis of the Acquired Fund assets acquired by the
Acquiring Fund will be same as the tax basis of such assets to the Acquired Fund
immediately prior to the Reorganization, and the holding period of the assets of
the Acquired Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Acquired Fund.
9. EXPENSES
9.1 Except as may be otherwise provided herein, each of the Acquired Fund
and the Acquiring Fund shall be liable for its respective expenses incurred in
connection with entering into and carrying out the provisions of this Agreement,
whether or not the transactions contemplated hereby are consummated. The
expenses payable by the Acquired Fund hereunder shall include (i) fees and
expenses of its counsel and independent auditors incurred in connection with the
Reorganization; (ii) expenses associated with printing and mailing the
Prospectus/Proxy Statement and soliciting proxies in connection with the meeting
of shareholders of the Acquired Fund referred to in paragraph 4.1 hereof; (iii)
all fees and expenses related to the liquidation of the Acquired Fund; (iv) fees
and expenses of the Acquired Fund's custodian and transfer agent(s) incurred in
connection with the Reorganization; and (v) any special pricing fees associated
with the valuation of the Acquired Fund's portfolio on the Applicable Valuation
37
Date. HCM has agreed to reimburse the Acquired Fund for the expenses listed in
items (i) and (ii) above. The expenses payable by the Acquiring Fund hereunder
shall include (i) fees and expenses of its counsel and independent auditors
incurred in connection with the Reorganization; (ii) expenses associated with
preparing this Agreement and preparing and filing the Registration Statement
under the 1933 Act covering the Acquiring Fund Shares to be issued in the
Reorganization; (iii) registration or qualification fees and expenses of
preparing and filing such forms, if any, as are necessary under applicable state
securities laws to qualify the Acquiring Fund Shares to be issued in connection
with the Reorganization; (iv) any fees and expenses of the Acquiring Fund's
custodian and transfer agent(s) incurred in connection with the Reorganization;
and (v) any special pricing fees associated with the valuation of the Acquiring
Fund's portfolio on the Applicable Valuation Date. HCM has agreed to reimburse
the Acquiring Fund for the expenses listed in items (i) and (ii).
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 This Agreement constitutes the entire agreement between the parties
and supersedes any prior or contemporaneous understanding or arrangement with
respect to the subject matter hereof.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated herein.
11. TERMINATION
11.1 This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time before the Closing by the mutual written
consent of the Acquiring Fund and the Acquired Fund.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of PMP, acting
on behalf of the Acquired Fund and the Acquiring Fund; provided, however, that
following the meeting of the shareholders of the Acquired Fund, no such
amendment may have the effect of changing the provisions for determining the
number of shares of the Acquiring Fund to be to the Acquired Fund Investors
under this Agreement to the detriment of such Acquired Fund Investors, or
otherwise materially and adversely affecting the Acquired Fund, without the
Acquired Fund obtaining the Acquired Fund Investors' further approval except
that nothing in this paragraph 12 shall be construed to prohibit the Acquiring
Fund and the Acquired Fund from amending this Agreement to change the Closing
Date or Applicable Valuation Date by mutual agreement.
38
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy, certified mail or overnight express courier addressed to:
For PMP, on behalf of itself and the
Acquiring Fund and/or Acquired Fund:
Professionally Managed Portfolios
915 Broadway, Suite 1605
New York, NY 10010
Attention: Steven J. Paggioli
President & Trustee
With a copy to:
Julie Allecta, Esq.
Paul, Hastings, Janofsky & Walker LLP
345 California St., 29th Floor
San Francisco, California 94104
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1 The article and paragraph headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. All references herein to Articles, paragraphs, subparagraphs or
Exhibits shall be construed as referring to Articles, paragraphs or
subparagraphs hereof or Exhibits hereto, respectively. Whenever the terms
"hereto", "hereunder", "herein" or "hereof" are used in this Agreement, they
shall be construed as referring to this entire Agreement, rather than to any
individual Article, paragraph, subparagraph or sentence.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the laws of Delaware.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other parties. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
39
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed by its authorized officer.
Professionally Managed Portfolios,
for itself and on behalf of the Hodges Fund
By: /s/ Steven J. Paggioli
-------------------------------------
Steven J. Paggioli
President and Trustee of
Professionally Managed Portfolios
Professionally Managed Portfolios,
for itself and on behalf of
the Trent Equity Fund
By: /s/ Steven J. Paggioli
-------------------------------------
Steven J. Paggioli
President and Trustee of
Professionally Managed Portfolios
With respect to the obligations of
Hodges Capital Management, Inc.
By: /s/ Donald W. Hodges
-------------------------------------
Donald W. Hodges
40
-----------------------------------------
PART B
STATEMENT OF ADDITIONAL INFORMATION
FOR THE REORGANIZATION OF
TRENT EQUITY FUND
INTO
HODGES FUND
-----------------------------------------
PROFESSIONALLY MANAGED PORTFOLIOS
HODGES FUND
2905 Maple Avenue
Dallas, Texas 75201
(800) 576-8229
STATEMENT OF ADDITIONAL INFORMATION
DATED OCTOBER 3, 2001
FOR REGISTRATION STATEMENT ON FORM N-14
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Combined Proxy Statement and Prospectus dated
October 3, 2001, which has been filed by Professionally Managed Portfolios
("PMP") in connection with a Special Meeting of Shareholders of the Trent Equity
Fund (the "Trent Fund"), a series of PMP, that has been called to vote on an
Agreement and Plan of Reorganization (and the transactions contemplated
thereby). Copies of the Combined Proxy Statement and Prospectus may be obtained
at no charge by writing to the Funds' Administrator at 2020 East Financial Way,
Suite 100, Glendora, CA 91741 or by calling (800) 576-8229.
Unless otherwise indicated, capitalized terms used herein and not otherwise
defined have the same meanings as are given to them in the Combined Proxy
Statement and Prospectus.
Further information about PMP, the Trent Fund, and the Hodges Fund (the
"Hodges Fund"), a series of PMP, is contained in the Trent Fund's Prospectus
dated December 29, 2000, the Hodges Fund's Prospectus dated July 30, 2001, the
Annual Report for the Trent Fund for the fiscal year ended August 31, 2000, the
Semi-a Report for the Trent Fund for the six-month period ended February 28,
2001 and the Annual Report for the Hodges Fund for the fiscal year ended March
31, 2001. Trent Fund's Statement of Additional Information, dated December 29,
2000, and the Hodge's Fund's Statement of Additional Information, dated July 30,
2001 are incorporated by reference in this Statement of Additional Information
and are available without charge by calling PMP at (800) 576-8229.
Unaudited pro-forma financial statements of the Hodges Fund are ahereto as
Exhibit A.
TABLE OF CONTENTS
Page
----
General Information ...................................................... B-2
Exhibit A ................................................................ B-3
B-1
GENERAL INFORMATION
The shareholders of the Trent Equity Fund (the "Trent Fund"), a series of
Professionally Managed Portfolios ("PMP"), are being asked to approve a form of
Agreement and Plan of Reorganization (the "Plan") regarding the reorganization
of the Trent Fund into the Hodges Fund (the "Hodges Fund"), also a series of PMP
(that transaction is referred to as the "Reorganization"), and the transactions
contemplated thereby. The Plan contemplates the transfer of all of the assets
and liabilities of the Trent Fund as of the effective date of the Reorganization
to the Hodges Fund (the "Effective Date"), and the assumption by the Hodges Fund
of the stated liabilities of the Trent Fund, in exchange for shares of the
Hodges Fund. Promptly after the Effective Date, the Trent Fund will distribute
to its shareholders of record as of the close of business on the Effective Date
the shares of the Hodges Fund received. The shares of the Hodges Fund that will
be issued for distribution to the Trent Fund's shareholders will have an
aggregate net asset value equal to the aggregate net asset value of the shares
of the Trent Fund held as of the closing of the reorganization (the "Closing
Date"). PMP will then take all necessary steps to terminate the qualification,
registration and classification of the Trent Fund. All issued and outstanding
shares of the Trent Fund will be canceled on the Trent Fund's books. Shares of
the Hodges Fund will be represented only by book entries; no share certificates
will be issued.
A Special Meeting of the Trent Fund's shareholders to consider the
Reorganization will be held at the offices of the Trent Fund, 3150 North Elm
St., Suite 204, Greensboro, NC 27408 on November 13, 2001 at 4:00 p.m., local
time.
For further information about the transaction, see the Combined Proxy
Statement and Prospectus. For further information about PMP, the Trent Fund and
the Hodges Fund, see the Trent Fund's Statement of Additional Information, dated
December 29, 2000, and the Hodges Fund's Statement of Additional Information,
dated July 30. 2001, both of which are available without charge by calling (800)
576-8229.
B-2
EXHIBIT A
THE HODGES FUND
SCHEDULE OF INVESTMENTS at August 31, 2001
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS: 96.6%
AIRLINES: 1.8%
25,000 Southwest Airlines Co. 447,250
------------
AUTO MANUFACTURERS: 3.3%
15,000 General Motors Corp. 821,250
------------
AUTO/TRUCK PARTS AND EQUIPMENT: 0.2%
2,400 Dana Corp. 47,040
------------
BANKS: 0.2%
1,200 Union Planters Corp. 53,400
------------
CHEMICALS: 0.3%
2,900 Sherwin-Williams Co. 65,685
------------
COMMERCIAL SERVICES: 1.3%
4,770 Central Parking Corp. 97,308
1,055 Certegy, Inc. 36,250
2,120 Equifax, Inc. 55,184
2,900 Korn/Ferry International 37,787
8,295 ServiceMaster Co. 97,051
------------
323,580
------------
COMMUNICATION: 2.3%
20,000 Echostar Communications Corp. - Class A * 563,200
------------
COMPUTERS: 0.2%
1,600 Hewlett-Packard Co. 37,136
------------
B-3
SHARES VALUE
--------------------------------------------------------------------------------
COMPUTERS - INTEGRATED SYSTEMS: 0.6%
30,000 Digital River, Inc. 141,000
------------
COMPUTERS, SOFTWARE & TECHNOLOGY: 16.3%
30,000 I2 Technologies, Inc. * 199,800
100,000 Intrusion.Com, Inc. * 250,000
20,000 Microsoft Corp. * 1,141,000
45,000 Oracle Corp. * 549,450
50,000 Sun Microsystems, Inc. * 572,500
358,000 Tyler Technologies, Inc. * 1,306,700
------------
4,019,450
------------
CONSTRUCTION: 1.4%
25,100 Encore Wire Corp. * 346,882
------------
COSMETICS: 0.4%
3,610 Gillette Company (The) 110,646
------------
DIAGNOSTIC EQUIPMENT: 0.2%
6,400 PharmaNetics, Inc. * 51,200
------------
DIVERSIFIED FINANCIAL SERVICES: 0.9%
3,030 American Express Co. 110,353
2,380 Citigroup, Inc. 108,885
------------
219,238
------------
ELECTRONIC INSTRUMENTS: 0.4%
24,741 DocuCorp International, Inc. 86,841
------------
ENTERTAINMENT: 3.7%
35,000 Speedway Motorsports, Inc. * 910,000
------------
FHLMC COLLATERAL: 0.4%
1,420 FHLMC 89,290
------------
FINANCIAL: 5.1%
50,000 Charles Schwab Corp. 623,000
100,000 E*trade Group, Inc. * 640,000
------------
1,263,000
------------
FOOD: 4.3%
50,000 CBRL Group, Inc. 1,053,000
------------
FOOD & RESTAURANTS: 3.4%
95,000 Luby's, Inc. 834,100
------------
FOOD - DIVERSIFIED: 0.7%
1,240 Heinz (H.J.) & Co. 56,023
3,500 Kraft Foods, Inc. 112,875
------------
168,898
------------
B-4
SHARES VALUE
--------------------------------------------------------------------------------
FOOD PROCESSING: 2.4%
15,000 Tootsie Roll Industries, Inc. 593,100
------------
HEALTH PRODUCTS: 0.3%
1,400 Johnson & Johnson 73,794
------------
HOME FURNISHINGS: 0.9%
4,640 Leggett & Platt, Inc. 109,133
4,420 Newell Rubbermaid, Inc. 101,218
------------
210,351
------------
INTERNET: 3.8%
25,000 AOL Time Warner, Inc. * 933,750
------------
INTERNET SOFTWARE: 1.0%
10,000 Travelocity.com 239,200
------------
JEWELRY, WATCHES & GEMSTONES: 0.4%
6,080 Claire's Stores, Inc. 105,610
------------
MACHINERY - CONSTRUCTION & MINING: 0.3%
1,300 Caterpillar, Inc. 65,000
------------
MANUFACTURING: 0.1%
940 Honeywell International, Inc. 35,024
------------
MEDIA: 0.4%
2,090 Clear Channel Communications, Inc. * 105,064
------------
OIL & GAS PRODUCERS: 1.6%
10,000 Exxon Mobil Corp. 401,500
------------
OIL SERVICES: 3.8%
25,000 Texas Pacific Land Trust 947,500
------------
PHARMACEUTICALS: 0.2%
920 Merck & Co. 59,892
------------
REAL ESTATE INVESTMENT TRUSTS - DIVERSIFIED: 3.5%
60,000 Corrections Corporation of America 873,000
------------
B-5
REAL ESTATE INVESTMENT TRUSTS - MORTGAGE: 1.1%
11,000 Capstead Mortgage Corp. 267,520
------------
RETAIL: 14.7%
180,250 Calloway's Nursery, Inc. * 192,868
20,000 Costco Wholesale Corp. * 748,200
19,800 Cutter & Buck, Inc. * 101,772
20,000 Home Depot, Inc. 919,000
1,840 McDonald's Corp. 55,255
37,000 Tractor Supply Co. * 884,300
15,000 Wal-Mart Stores, Inc. 720,750
------------
3,622,145
------------
RETAIL - RESTAURANTS: 1.4%
11,000 Krispy Kreme Doughnuts, Inc. 339,350
------------
RETAIL - SPECIALTY: 1.6%
28,500 Guitar Center, Inc. * 397,575
------------
RETAIL AND CATALOG: 0.4%
5,440 Dollar General Corp. 93,840
------------
SEMICONDUCTOR: 3.4%
25,000 Texas Instruments, Inc. 827,500
------------
SEMICONDUCTORS: 0.2%
2,000 Intel Corp. 55,920
------------
SERVICES: 6.2%
110,000 Children's Comprehensive Services, Inc. * 558,800
301,000 Dwyer Group, Inc. * 975,240
------------
1,534,040
------------
TELECOMMUNICATIONS: 0.7%
3,040 Cisco Systems, Inc. * 49,643
1,920 Global Crossing Ltd. * 8,122
10,000 Inet Technologies Inc * 57,000
4,180 Nokia OYJ 65,793
------------
180,558
------------
TELEPHONE: 0.3%
2,240 CenturyTel, Inc. 78,512
------------
TOYS: 0.4%
5,780 Hasbro, Inc. 100,225
------------
VENTURE CAPITAL: 0.1%
100,000 Massey Burch Venture Fund I * 27,769
------------
TOTAL COMMON STOCKS
(cost $23,888,836) 23,819,825
------------
B-6
CONTRACTS VALUE
--------------------------------------------------------------------------------
LONG EQUITY OPTIONS: 1.3%
COMMON STOCKS/EXPIRATION DATE/EXERCISE PRICE
200 EXXON MOBIL CORP CALL OCT/37.50 72,000
32 NASDAQ 100 INDEX CALL SEP/1500.00 167,200
100 Allstate Corp. CALL/Jan/25.00 95,500
------------
TOTAL LONG EQUITY OPTIONS
(cost $580,425) 334,700
------------
PRINCIPAL
AMOUNT VALUE
------ -----
SHORT-TERM INVESTMENT: 4.2%
MONEY MARKET INVESTMENT: 4.2%
$1,030,557 Firstar Stellar Treasury Fund (cost $1,030,557) 1,030,557
------------
TOTAL INVESTMENTS IN SECURITIES
(cost $25,499,818+): 102.1% 25,185,082
Liabilities in excess of Other Assets: (2.1)% (522,528)
------------
NET ASSETS: 100.0% $ 24,662,554
============
----------
+ At March 31, 2001, the basis of investments for federal income tax
purposes was $24,078,608. Unrealized appreciation and depreciation
were as follows: 0
Gross unrealized appreciation $ 1,393,035
Gross unrealized depreciation (4,676,358)
------------
Net unrealized depreciation $ (3,283,323)
============
SCHEDULE OF CALL OPTIONS WRITTEN at August 31, 2001
CONTRACTS
SUBJECT TO CALL COMMON STOCKS/EXPIRATION DATE/EXERCISE PRICE VALUE
--------------- -------------------------------------------- -----
60 KRISPY KREME DOUGHNUTS, INC CALL SEP/35.00 (3,000)
38 KRISPY KREME DOUGHNUTS, INC CALL SEP/40.00 (190)
50 TRAVELOCITY.COM INC CALL SEP/25.00 (10,125)
50 TRAVELOCITY.COM INC CALL SEP/30.00 (2,375)
------------
TOTAL CALL OPTIONS WRITTEN
(premiums received $23,644) $ (15,690)
------------
See accompanying Notes to Financial Statements.
B-7
TOP 10 HOLDINGS at August 31, 2001 Percentage
---------------------------------- ----------
Tyler Technologies, Inc. 5.3%
Microsoft Corp. 4.6%
CBRL Group, Inc. 4.3%
Firstar Stellar Treasury Fund 4.2%
Dwyer Group, Inc. 4.0%
Texas Pacific Land Trust 3.8%
AOL Time Warner, Inc. 3.8%
Home Depot, Inc. 3.7%
Speedway Motorsports, Inc. 3.7%
Tractor Supply Co. 3.6%
B-8
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES August 31, 2001 (Unaudited)
Trent The Pro Forma Pro Forma
ASSETS: Equity Fund Hodges Fund Adjustments Combined
------------ ------------ ------------ ------------
Investment securities, at cost $ 1,961,368 $ 23,514,805 $ 0 $ 25,476,173
============ ============ ============ ============
Investment securities, at value 2,215,283 22,954,108 0 25,169,391
Cash 46,439 0 0 46,439
Receivables:
Securities sold 0 242,419 0 242,419
Prepaid items 2,122 2,339 0 4,462
Interest and Dividends 4,827 12,256 0 17,082
Fund Shares Sold 8,229 99,637 0 107,866
Unamortized Organization Expenses 0 0 0 0
Other assets 26,643 9,153 0 35,796
------------ ------------ ------------ ------------
Total assets 2,303,543 23,319,912 0 25,623,455
------------ ------------ ------------ ------------
LIABILITIES:
Accrued liabilities:
Administration fees 2,950 4,538 0 7,488
Distribution fees 0 14,538 1,586 16,124
Investment advisory fees 16,146 19,287 (4,587) 30,846
Other accrued expenses 19,389 20,415 0 39,804
Other payables 0 0 0 0
Payable for securities purchased 0 713,840 0 713,840
Redemptions payable 8,029 96,770 0 104,799
------------ ------------ ------------ ------------
Total Liabilities 46,513 869,388 (3,001) 912,901
------------ ------------ ------------ ------------
NET ASSETS:
Paid-In Capital 2,455,131 24,494,649 0 26,949,779
Accumulated undistributed net
investment income (282,635) (832,312) 3,001 (1,111,946)
Accumulated undistributed net
realized gain (loss) on investment
transactions (169,380) (651,116) 0 (820,496)
Net unrealized
appreciation/depreciation
of investment 253,915 (560,697) 0 (306,782)
------------ ------------ ------------ ------------
Net Assets $ 2,257,031 $ 22,450,524 $ 3,001 $ 24,710,556
------------ ------------ ------------ ------------
Shares of capital stock outstanding
($.01 par value; unlimited number of
shares authorized):
Shares 219,149 2,048,852 0 23,583,278
------------ ------------
Net asset value, redemption price and
maximum offering price per share: $ 10.30 $ 10.96
============ ============
See Notes to financial statements
B-9
STATEMENT OF OPERATIONS FOR THE FIVE MONTHS ENDING August 31, 2001
Trent The Pro Forma Pro Forma
INVESTMENT INCOME: Equity Fund Hodges Fund Adjustments Combined
----------- ----------- ----------- -----------
Dividend $ 23,108 $ 35,127 $ 0 $ 58,235
Interest 420 8,400 0 8,820
Other 0 0 0 0
----------- ----------- ----------- -----------
Total Investment Income 23,528 43,527 0 67,055
----------- ----------- ----------- -----------
EXPENSES: (Note 2)
Administrative fees 12,786 19,871 0 32,657
Distribution fees 1,869 24,839 1,586 28,294
Investment advisory fees 16,333 84,453 (4,587) 96,199
Custodian fees 2,039 11,655 0 13,694
Printing and Postage 2,786 7,239 0 10,025
Professional fees 0 1,546 0 1,546
Registration fees 2,490 5,782 0 8,272
Transfer agent fees 6,442 9,349 0 15,791
Trustees fees and expenses 2,381 2,754 0 5,135
Amortization of deferred org. expenses 0 0 0 0
Fund accounting expense 7,720 10,299 0 18,019
Other 638 1,482 0 2,120
----------- ----------- ----------- -----------
Total Expenses 55,484 179,269 (3,001) 231,752
Less amounts waived (36,760) 0 36,760 0
----------- ----------- ----------- -----------
Net Expenses 18,724 179,269 33,759 231,752
Net investment income 42,251 222,796 0 265,047
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investments (158,628) (370,195) 0 (528,823)
Change in net unrealized appreciation
on investments 37,069 2,381,806 0 2,418,875
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments (121,559) 2,011,611 0 1,890,052
Net increase (decrease) in net assets
from operations $ (79,308) $ 2,234,407 $ 0 $ 2,155,099
=========== =========== =========== ===========
B-10
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENT
NOTE 1 -- BASIS OF PRO FORMA PRESENTATION
The pro forma combining financial statements and the accompanying pro forma
schedules of investments give effect to the proposed Agreements and Plan of
Reorganization pursuant to which the Trent Equity Fund will transfer all of its
assets and liabilities to the Hodges Fund in exchange for shares of the Hodges
Fund. The Hodges Fund will be the legal and accounting survivor of the
reorganizations. The pro forma statements should be read in conjunction with the
historical financial statements of the Trent Equity Fund included in the
Statement of Additional Information.
It is contemplated that the reorganizations will be accounted for as a tax-free
reorganization of investment companies.
NOTE 2 -- PRO FORMA ADJUSTMENTS
Pro forma adjustments have been made to give effect to the following as if the
reorganizations had occurred as of the beginning of the period presented:
A - Adjust investment advisory fees to conform with the contractual
rates of the Hodges Fund
B - Adjust Distribution Fees to conform with the Hodges Fund.
C - Adjust expense waiver/reimbursements to conform with the Hodges
Fund's contractual arrangements
NOTE 3 -- INVESTMENTS IN SECURITIES
Investments in securities traded on a national securities exchange or Nasdaq are
valued at the last reported sales price at the close of regular trading on the
last business day of the period; securities traded on an exchange or Nasdaq for
which there have been no sales and other over-the-counter securities are valued
at the last reported bid price. Securities for which quotations are not readily
available are valued at their respective fair values as determined in good faith
by the Board of Trustees. Short-term investments are stated at cost, which when
combined with accrued interest, approximates market value.
B-11
-----------------------------------------
PART C
PROFESSIONALLY MANAGED PORTFOLIOS
OTHER INFORMATION
-----------------------------------------
PROFESSIONALLY MANAGED PORTFOLIOS
FORM N-14
PART C
ITEM 15. INDEMNIFICATION
The information on insurance and indemnification is incorporated by rto
Pre-Effective Amendment No.1 and Post-Effective Amendment No. 1 to the
Registrant's Registration Statement filed on Form N-1A (File No. 33-12213).
In addition, insurance coverage for the officers and trustees of the
Registrant also is provided under a Directors and Officers/Errors and Omissions
Liability insurance policy issued by ICI Mutual Insurance Company with a
$1,000,000 limit of liability.
Pursuant to Rule 484 under the Securities Act of 1933, the Registrant
further furnished the following undertaking:
"Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue."
C-1
ITEM 16. EXHIBITS
(1) Agreement and Declaration of Trust. (A)
(2) By-Laws. (A)
(3) Voting Trust Agreement B Not applicable.
(4) Form of Agreement and Plan of Reorganization is included in Part A.
(5) Instruments Defining Rights of Security Holder - Not applicable.
(6) Form of Investment Management Agreement. (B)
(7) Form of Distribution Agreement. (B)
(8) Bonus of Profit Sharing Contracts - Not applicable.
(9) Form of Custody Agreement with Firstar Bank. (D)
(10) Form of Shareholder Services Agreement. (D)
(11) Consent and Opinion of Counsel as to legality of shares - Not
applicable
(12) Consent and Opinion of Counsel as to Reorganization Tax Matters - Not
applicable.
(13) Other Material Contracts
(a) Form of Administrative Services Agreement with Investment Company
Administration, LLC. (C)
(b) Form of Transfer Agent Agreement with American Data Services. (D)
(14) Other Opinions - Independent Auditors' Consent
(15) All financial statements omitted pursuant to Item 14(a)(1) - Not
applicable.
(16) Power of Attorney - Not applicable
(17) Additional Exhibits - Not applicable.
----------
(A) Previously filed as an exhibit to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N-1A (File No. 33-12213) on
December 29, 1995.
(B) Previously filed as an exhibit to Registrant's Post-Effective Amendment No.
24 (File No. 33-12213) on January 16, 1996.
(C) Previously filed as an exhibit to Registrant's Post-Effective Amendment No.
35 (File No. 33-12213) on April 24, 1997.
(D) Previously filed as an exhibit to Registrant's Post-Effective Amendment No.
48 (File No. 33-12213) on June 15, 1998.
C-2
ITEM 17.UNDERTAKINGS
(1) Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of
this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities
Act, the reoffering prospectus will contain the information called for
by the applicable registration form for the reofferings by persons who
may be deemed underwriters, in addition to the information cfor by the
other items of the applicable form.
(2) Registrant agrees that every prospectus that is filed under paragraph
(1) above will be filed as part of an amendment to the Registration
Statement and will not be used until the amendment is effective, and
that, in determining any liability under the Securities Act, each
post- effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
C-3
SIGNATURES
As required by the Securities Act of 1933, this Post-Effective Amendment to
the Registration Statement has been signed on behalf of the Registrant, in the
City of New York in the State of New York on the 1st day of October, 2001.
PROFESSIONALLY MANAGED PORTFOLIOS
/s/ Steven J. Paggioli
--------------------------------------
Steven J. Paggioli
President, Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Steven J. Paggioli Trustee October 1, 2001
------------------------------
Steven J. Paggioli
/s/ Robert M. Slotky Principal Financial October 1, 2001
------------------------------ Officer
Robert M. Slotky
/s/ Dorothy A. Berry Trustee October 1, 2001
------------------------------
Dorothy A. Berry
/s/ Wallace L. Cook Trustee October 1, 2001
------------------------------
Wallace L. Cook
/s/ Carl A. Froebel Trustee October 1, 2001
------------------------------
Carl A. Froebel
/s/ Rowley W. P. Redington Trustee October 1, 2001
------------------------------
Rowley W. P. Redington
SEC File No. 33-12213
PROFESSIONALLY MANAGED PORTFOLIOS
FORM N-14
EXHIBIT INDEX
NUMBER EXHIBIT
------ -------
14 Independent Auditors' Consent
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
PROXY
FOR SPECIAL MEETING OF SHAREHOLDERS OF
TRENT EQUITY FUND
ON NOVEMBER 13, 2001
The undersigned hereby appoints Robert V. May and Robert M. Slotky and each
of them, proxies for the undersigned, with full power of substitution, to
represent the undersigned and to vote all of the shares of the Trent Equity Fund
(the "Trent Fund") a series of Professionally Managed Portfolios (the "Trust"),
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of the Fund to be held on November 13, 2001 and at any adjournment thereof.
* Proposal to approve or disapprove a Reorganization of the Trent Fund
providing for (i) the transfer of substantially all of the assets and
liabilities of the Trent Fund to the Hodges Fund, a separate series of
the Trust, in exchange for shares of the Hodges Fund (the "Hodges Fund
Shares") of equivalent value, (ii) the pro rata distribution of those
Hodges Fund Shares to the shareholders of the Trent Fund in full
redemption of those shareholders' shares in the Trent Fund, and (iii)
the immediate liquidation and termination of the Trent Fund, all as
described in the accompanying Combined Proxy Statement and Prospectus.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
And, in their discretion, to transact any other business that may lawfully come
before the meeting or any adjournment(s) thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND WILL BE
VOTED AS YOU DIRECT ON THIS FORM. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE PROPOSAL.
Dated: ___________________, 2001
______________________________________________
Signature of Shareholder
______________________________________________
Signature of Shareholder
When shares are registered jointly in the names of two or more persons, ALL must
sign. Signature(s) must correspond exactly with the name(s) shown. Please sign,
date and return promptly in the enclosed envelope.