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THE BANC STOCK
GROUP FUND
Investing in America through
America's community banks
ANNUAL REPORT
February 29,2000
1105 Schrock Road
Suite 437
Columbus, OH 43229
<PAGE>
THE BANC STOCK GROUP FUND
Dear Shareholder:
We are pleased to submit to you the annual report of activities of the Banc
Stock Group Fund. We believe that opportunities abound, due in part to the
cyclical nature of bank stocks. Many of America's banks continued to produce
double-digit earnings at a time when their individual stocks could be purchased
at relatively low price-to-book multiples. Our long-term investors know the
value of shopping for these kinds of bargains at appropriate intervals. Our goal
is to provide you with what we call "sleep-at-night investing" during all
prevailing market conditions.
THE MARKET
The term TUMULTUOUS ACTIVITY seems a likely description when viewing the general
market gyrations of the past few months. Volatility reigned as huge sums of
currency flowed from one sector to another. The charting lines of the NASDAQ,
S&P 500 and the Dow converged only to separate and careen quickly away from each
other. The numerous fluctuations of this market, it seems, are becoming
commonplace.
WHAT WE SEE
More of the same irregular market activity appears likely to continue well into
this year.
OUR STRATEGY
The Banc Stock Group Fund seeks to provide investment opportunities based upon
our selection of equities with strong fundamentals. In addition to maintaining
our focus, and the majority of the Fund's weighting, in banks and financial
sector stocks, we have rotated a small portion of the Fund's assets into other
areas of the market, most notably, technology and telecommunications stocks. We
see the market's rotation away from the financial sector as a short-term trend
that has been experienced several times in the past prior to a rebound. By
taking advantage of current opportunities in different areas of the market, we
seek to offset these periodic cyclical fluctuations. We will continue to closely
monitor the banks and financial stocks as we see a healthy outlook and many new
opportunities for this sector in the years to come.
Thank you for your investment in The Banc Stock Group Fund. We will pursue our
research and investment methods with the goal of bringing wealth to you and your
families over the long term.
Sincerely,
/s/ Michael E. Guirlinger
MICHAEL E. GUIRLINGER
President
THe BSG Funds
<PAGE>
COMPARISON OF A $10,000* INVESTMENT
IN THE BANC STOCK GROUP FUND CLASS A
(SINCE INCEPTION OF 08/01/97, AFTER SALES CHARGE)
TO THE S&P 500 INDEX AND THE NASDAQ BANK INDEX
INCLUDING REINVESTMENT OF DIVIDENDS
ANNUALIZED RETURN
1 Year Since Inception
------ ---------------
-11.75% 0.15%
[GRAPH] The following information was presented as a line graph:
CLASS A CLASS A NASDAQ
DATE BEFORE SALES CHARGES AFTER SALES CHARGES S&P 500 INDEX BANK INDEX
- ---- -------------------- ------------------- ------------- ----------
Inception $10,000 $ 9,600 $10,000 $10,000
08/31/97 $ 9,960 $ 9,387 $ 9,511 $ 9,925
11/30/97 $11,410 $10,754 $10,144 $11,306
02/28/98 $12,750 $12,017 $11,176 $12,341
05/31/98 $14,290 $13,468 $11,659 $12,847
08/31/98 $11,090 $10,452 $10,290 $ 9,585
11/30/98 $11,586 $10,920 $12,513 $10,966
02/28/99 $11,374 $10,720 $13,343 $10,551
05/31/99 $12,042 $11,350 $14,060 $11,019
08/31/99 $11,947 $11,260 $14,300 $10,458
11/30/99 $11,512 $10,850 $15,068 $10,692
02/29/00 $10,038 $ 9,461 $14,873 $ 8,924
The maximum initial sales charge payable on an investment in Class A Shares of
The Banc Stock Group Fund was 5.75% on February 29, 2000. At public offering
price of $10,000, the net investment in the Fund would be $9,425 assuming no
waiver or reduction of sales charges. The performance information shown
represents past performance and should not be interpreted as indicative of the
Fund's future performance. Return and share price will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. The Fund's
return is net of all fees. The index does not include fees.
* Not covered by Report of Independent Accountants.
2
<PAGE>
COMPARISON OF A $10,000* INVESTMENT
IN THE BANC STOCK GROUP FUND CLASS C
(SINCE INCEPTION OF 06/03/99, AFTER SALES CHARGE)
TO THE S&P 500 INDEX AND THE NASDAQ BANK INDEX
INCLUDING REINVESTMENT OF DIVIDENDS
AGGREGATE RETURN
Since Inception
---------------
-16.29%
[GRAPH] The following information was presented as a line graph:
CLASS A CLASS A NASDAQ
DATE BEFORE SALES CHARGES AFTER SALES CHARGES S&P 500 INDEX BANK INDEX
- ---- -------------------- ------------------- ------------- ----------
Inception $10,000 $ 9,600 $10,000 $10,000
06/30/99 $10,214 $10,214 $10,571 $10,169
07/31/99 $10,214 $10,214 $10,241 $ 9,866
08/31/99 $10,009 $10,009 $10,191 $ 9,453
09/30/99 $ 9,653 $ 9,653 $ 9,912 $ 9,172
10/31/99 $ 9,679 $ 9,679 $10,537 $ 9,811
11/30/99 $ 9,626 $ 9,626 $11,379 $ 9,228
12/31/99 $ 9,061 $ 9,061 $11,379 $ 9,228
01/31/00 $ 8,658 $ 8,658 $10,811 $ 8,640
02/29/00 $ 8,371 $ 8,204 $10,608 $ 7,892
The maximum contingent deferred sales charge payable on an investment in Class C
Shares of The Banc Stock Group Fund on February 29, 2000 was as follows: 2.00%
if redeemed within the first year from date of purchase; 1.00% if redeemed after
1 year but within 2 years of date of purchase; 0.00% thereafter. The performance
information shown represents past performance and should not be interpreted as
indicative of the Fund's future performance. Return and share price will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost. The Fund's return is net of all fees. The index does not include
fees.
* Not covered by Report of Independent Accountants.
3
<PAGE>
THE BANC STOCK GROUP FUND
SCHEDULE OF INVESTMENTS
February 29, 2000
Market
Shares Security Description Value
Common Stock - 78.8%
Bank Stocks - 73.4%
Alaska - 0.4%
3,976 Northrim Bank........................ $28,329
California - 58.8%
50,271 Northern Empire Bancshares #.................. 823,188
45,262 Quaker City Bancorp, Inc. #...................... 690,246
52,475 ITLA Capital Corp. #...................... 600,183
30,900 First Republic Bank of San Francisco #........... 467,362
50,175 BYL Bancorp.................................... 382,584
35,173 MCB Financial Corp. ............................. 325,350
18,677 Wilshire State Bank #............................ 149,416
5,628 Bank Petaluma........................... 140,700
13,105 Pacific Crest Capital, Inc....................... 137,603
9,132 Hanmi Bank #........................... 117,574
18,070 Community Bancorp, Inc. #...................... 98,256
9,119 Nara Bank National Assoc. #..................... 82,071
2,964 Heritage Oaks Bancorp #...................... 46,683
5,800 Professional Bancorp #....................... 28,275
400 Borel Bank & Trust....................... 6,600
4,096,091
Colorado - 1.3%
10,000 Vail Banks #......................... 93,750
Connecticut - 1.3%
11,200 Alliance Bancorp........................ 92,400
Florida - 3.9%
8,000 SeaCoast Banking Corp...................... 211,000
8,900 BankUnited Financial Corp. #..................... 62,022
273,022
Georgia - 2.8%
7,000 Colony Bankcorp........................ 80,500
6,560 ABC Bankcorp......................... 64,780
2,000 Eagle Bancshares........................ 29,500
2,000 Ebank.com, Inc. #........................ 17,000
191,780
Illinois - 1.9%
10,300 Union Bancorp............................ 130,037
Indiana - 1.4%
2,900 First Financial Corp of Indiana.................. 99,325
98 MetroBancorp............................ 588
99,913
Maine - 2.7%
11,600 Bar Harbor Bankshares.................... 191,400
Maryland - 0.3%
2,000 Columbia Bancorp........................ 19,875
Massachusetts - 12.7%
48,950 Capital Crossing Bank #......................... 556,806
6,475 Peoples Bancshares, Inc....................... 102,791
10,100 Ipswich Bancshares, Inc........................ 87,744
3,000 Home Port Bancorp, Inc....................... 77,813
4,500 Hingham Institution for Savings.................. 57,375
882,529
New Jersey - 0.6%
2,700 Interchange Financial Services Corp.............. 41,850
New Mexico - 1.4%
14,660 Access Anytime Bancorp, Inc #.................... 94,374
New York - 1.9%
1,850 Tompkins Trustco, Inc......................... 48,562
2,000 BSB Bancorp, Inc............................ 35,875
2,800 Long Island Financial Corp....................... 29,575
600 Suffolk Bancorp........................... 16,050
130,062
See accompanying notes to financial statements.
4
<PAGE>
THE BANC STOCK GROUP FUND
SCHEDULE OF INVESTMENTS (Continued)
February 29, 2000
Ohio - 0.6%
3,210 DCB Financial Corp......................... 44,940
Pennsylvania - 4.2%
10,983 FNB Corp.............................. 238,880
4,330 Prestige Bancorp, Inc............................ 50,336
289,216
Rhode Island - 0.7%
4,000 First Financial Corp........................... 45,500
Texas - 0.8%
3,400 Bay Bancshares, Inc........................... 55,250
Virginia - 0.6%
1,100 Virginia Commonwealth Financial.................. 23,650
1,300 Southern Financial Bancorp..................... 20,637
44,287
Washington - 0.9%
5,956 United Security Bancorp #....................... 62,534
Wisconsin - 0.8%
6,100 Hallmark Capital Corp. ..................... 54,900
Total Bank Stocks.................................... 6,962,039
(Cost $9,415,489)
- --------------------------------------------------------------------------------
Technology Stocks - 5.4%
500 Verisign, Inc. #......................... 126,500
2,000 Varian Semiconductor Equipment Associates, Inc. # 116,250
4,000 Audiovox Corp. #....................... 258,812
Total Technology Stocks.................................. 501,562
(Cost $419,763)
- --------------------------------------------------------------------------------
Total Common Stocks................................... 7,463,601
(Cost $9,835,252)
- --------------------------------------------------------------------------------
Registered Investment Companies - 9.8%
475,510 Flex-funds Money Market Fund................... 475,510
458,008 Vanguard Money Market Fund................... 458,008
Total Registered Investment Companies........................ 933,518
(Cost $933,518)
- --------------------------------------------------------------------------------
Repurchase Agreement - 9.6%
910,000 Firstar Bank, N.A., 3.50%, 03/1/00, (Collateralized by $3,043,000
Government National Mortgage Assoc., Pool No. 8052,
6.75%, 09/20/22, market value - $928,265)........ 910,000
Total Investments - 98.2%
(Cost $11,678,769) (a)................................ 9,307,119
- --------------------------------------------------------------------------------
Assets in Excess of Other Liabilities - 1.8%............... 175,358
Total Net Assets - 100.0%.................................. $9,482,477
State percentages indicated are based on total bank common stocks of $6,962
(a) For Federal income tax purposes the aggregate cost basis of investments
was $11,680,266 and differs from market value by net unrealized depreciation
of securities as follows:
Unrealized appreciation.................... $278,309
Unrealized depreciation.................... (2,651,456)
Net unrealized depreciation.................. ($2,373,147)
# Represents non-income producing securities.
See accompanying notes to financial statements.
5
<PAGE>
THE BANC STOCK GROUP FUND
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000
Assets
Investments in securities, at value (cost $9,307,119
$11,678,769)
Receivable for securities sold............... 313,722
Receivable from dividends and interest....... 11,121
Other assets.......................... 89
Total Assets............................. 9,632,051
Liabilities
Payable for securities purchased............. 116,780
Payable for fund shares redeemed............. 15,255
Payable to investment adviser................ 13,396
Accrued 12b-1 fees - Class A................. 3,576
Accrued 12b-1 and shareholder service fees - 489
Class C
Other liabilities......................... 78
Total Liabilities.......................... 149,574
Components of Net Assets
Paid-in capital.......................... 12,434,578
Accumulated undistributed net realized loss.. (580,451)
Net unrealized market depreciation........... (2,371,650)
Total Net Assets......................... $9,482,477
Net Assets
Class A Shares........................... $9,411,325
Class C Shares............................ 71,152
Total.............................. $9,482,477
Outstanding Units of Beneficial Interest (Shares)
(unlimited number of shares authorized)
Class A Shares......................... 1,001,318
Class C Shares............................ 7,616
Total.............................. 1,008,934
Net Asset Value - redemption price per share
Class A Shares......................... $9.40
Class C Shares*............................ $9.34
Sales charge - Class A Shares................ 5.75%
Maximum offering price per share - Class A Shares
(Class A N.A.V./(100% - sales charge)........ $9.97
* Redemption price varies based upon holding period.
THE BANC STOCK GROUP FUND
STATEMENT OF OPERATIONS
For the year ended February 29, 2000
Investment Income
Dividends............................ $153,310
Interest............................. 92,864
Total investment income.............. 246,174
Fund Expenses
Investment advisory fees............. 277,238
12b-1 distribution fees - Class A.... 24,596
12b-1 distribution fees - Class C.... 367
Shareholder service fees - Class C... 122
Trustee fees.................... 12,184
Total fund expenses.................. 314,507
Trustee fees reimbursed by investment (12,184)
Net investment loss.................. (56,149)
Net Realized and Unrealized Loss
on Investments
Net realized loss from investment
transactions...................... (575,746)
Net change in unrealized appreciation
on investments.................... (678,116)
Net realized and unrealized gain (loss)
on investments.................... (1,253,862)
Net decrease in net assets resulting
from operations...................($1,310,011)
See accompanying notes to financial statements.
6
<PAGE>
THE BANC STOCK GROUP FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the For the
year ended year ended
February 29, 2000 February 28, 1999
Increase (Decrease) in Net Assets From
Operations
Net investment loss.................. ($56,149) ($221,943)
Net realized gain (loss) on investments...... (575,746) 684,434
Net decrease in unrealized appreciation...... (678,116) (3,108,740)
Net decrease in net assets
resulting from operations............... (1,310,011) (2,646,249)
Distributions to Class A Shareholders
From net realized gains on investments....... (76,735) (993,784)
Net decrease in net assets resulting from (76,735) (993,784)
distributions
Distributions to Class C Shareholders
From net realized gains on investments....... (503) 0
Net decrease in net assets resulting from (503) 0
distributions
Capital Share Transactions
Sold........................ 841,617 7,940,884
Reinvested...................... 73,646 940,605
Redeemed...................... (5,761,225) (3,227,744)
Net increase (decrease) in net assets resulting
from capital share transactions........... (4,845,962) 5,653,745
Total increase (decrease) in net assets...... (6,233,211) 2,013,712
Net assets - beginning of period............. 15,715,688 13,701,976
Net assets - end of period................ $9,482,477 $15,715,688
Share Transactions
Sold........................ 78,775 591,261
Reinvested...................... 7,157 86,932
Redeemed...................... (543,607) (286,593)
Net increase (decrease) in shares............ (457,675) 391,600
See accompanying notes to financial statements.
7
<PAGE>
THE BANC STOCK GROUP FUND
FINANCIAL HIGHLIGHTS
(For a fund share outstanding throughout the period)
<TABLE>
<CAPTION>
Class A Class C Class A Class A
For the period For the period
June 3, 1999 August 1, 1997
(commencement (commencement
For the of operations) For the of operations)
year ended through year ended through
February 29, 2000 February 29, 2000 February 28, 1999 February 28, 1998
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period.......... $10.72 $11.23 $12.75 $10.00
Income (Loss) from Investment Operations
Net investment loss......................... (0.06) (0.05) (0.15) (0.07)
Net realized and unrealized gains (losses)
on investments........................... (1.19) (1.77) (1.22) 2.82
Total from investment operations.............. (1.25) (1.82) (1.37) 2.75
Less Distributions
From net capital gains........................ (0.07) (0.07) (0.66) 0.00
Total distributions......................... (0.07) (0.07) (0.66) 0.00
Net Asset Value, end of period................ $9.40 $9.34 $10.72 $12.75
Total return (excludes sales and redemption (11.75%) (16.29%)(1) (10.79%) 27.50%(1)
charges).....
Ratios/Supplementary Data
Net assets at end of period (000)............. $9,411 $71 $15,716 $13,702
Ratio of expenses to average net assets....... 2.17% 2.74%(2) 2.50% 2.50%(2)
Ratio of net investment loss to average net assets.. (0.40%) (0.82%)(2) (1.27%) (1.07%)(2)
Ratio of expenses to average net assets before
reimbursement of trustee fees............... 2.26% 2.84%(2) 2.50% 2.50%(2)
Ratio of net investment loss to average net assets before
reimbursement of trustee fees............... (0.49%) (0.92%)(2) (1.27%) (1.07%)(2)
Portfolio turnover rate....................... 119.13% 119.13%(1) 54.07% 26.65%(1)
<FN>
(1) Not annualized.
(2) Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
THE BANC STOCK GROUP FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 2000
- --------------------------------------------------------------------------------
ORGANIZATION
The Banc Stock Group Fund (the "Fund") was organized as a series of the BSG
Funds, an Ohio business trust (the "Trust") on January 14, 1997 and commenced
operations on August 1, 1997. The Fund is an open-end, diversified management
investment company under the Investment Company Act of 1940 (the "Act").
The Trust is authorized to issue an unlimited number of shares of capital
stock in separate series, with each series representing interests in a separate
portfolio of securities and other assets, each with its own investment
objectives and policies. The Trust has an agreement with Heartland Advisory
Group, Inc. (the "Adviser"), with whom certain officers and trustees of the
Trust are affiliated, to serve as investment adviser to the Fund.
The Fund's investment objective is to provide shareholders with long term
capital appreciation. The Fund seeks to achieve its objective by investing
primarily in equity securities of community banks, lending institutions, and
financial services companies believed by the Adviser to offer superior prospects
for long-term growth. The Fund is the only current series of the BSG Funds and
the Trust has issued two classes of Fund shares. The Class A shares are subject
to initial sales charges imposed at the time of purchase, in accordance with the
Fund's prospectus. Certain redemptions of Class C shares made within two years
of purchase are subject to contingent deferred sales charges, in accordance with
the Fund's prospectus. Each class of shares for the Fund has identical rights
and privileges except with respect to distribution (12b-1) fees, voting rights
on matters affecting a single class of shares and the exchange privileges of
each class of shares.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by the Fund in the preparation of its financial statements. These policies are
in conformity with generally accepted accounting principles for investment
companies. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the period. Actual results could differ from these estimates.
Security Valuation - Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its highest bid price on such
exchanges, or at the highest bid price in the over-the-counter market except
when, in the Adviser's opinion, the highest bid price does not accurately
reflect the current value of the security. Securities for which market
quotations are not readily available, or when the Adviser determines the highest
bid price does not accurately reflect the current value, or when restricted
securities are being valued, are valued as determined in good faith by the
Adviser, subject to review by the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by an independent pricing
service which uses prices based upon yields or prices of comparable securities,
indications as to values from dealers, and general market conditions, when the
Adviser believes such prices accurately reflect the fair market value of the
security.
Short term investments in fixed income securities with maturities of less
than sixty days when acquired, or which subsequently are within sixty days of
maturity, are valued by using the amortized cost method of valuation, which the
Board has determined will represent fair value.
Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its net investment income and any realized
capital gain. Therefore, no federal income tax provision is required.
Dividends and Distributions - The Fund intends to distribute substantially
all of its net investment income as dividends to its shareholders on an annual
basis. The Fund
9
<PAGE>
THE BANC STOCK GROUP FUND
NOTES TO FINANCIAL STATEMENTS (continued)
February 29, 2000
- --------------------------------------------------------------------------------
intends to distribute its net long term capital gains and its
net short term capital gains at least once a year. Income and capital gain
distributions to shareholders are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
Those differences are primarily due to differing treatments for net operating
losses and deferral of wash sale losses.
Security Transactions and Related Income - The Fund records security
transactions on trade date. The specific identification method is used for
determining gains or losses for financial statements and income tax purposes.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis. Discount and premium on securities purchased are
amortized over the life of the respective securities.
Investment Income & Expenses - Income and realized and unrealized gains and
losses are allocated to the separate classes based on their relative net assets.
Expenses of the Fund, other than expenses incurred pursuant to the Class A and
Class C distribution and shareholder service plans, are allocated to the
separate classes based on their relative net assets or other appropriate basis.
PURCHASES AND SALES OF SECURITIES
Investment transactions (other than short term investments) for the year
ended February 29, 2000 were as follows:
Purchases.......................$14,463,332
Sales.............................$21,269,240
INVESTMENT ADVISORY AGREEMENT AND OTHER RELATED PARTY TRANSACTIONS
Under the Trust's agreement with the Adviser to serve as investment adviser
to the Fund, a monthly fee is paid to the Adviser at an annual rate of 1.70% of
the average daily net assets of the Fund. Prior to July 1, 1999 the Adviser was
paid at an annual rate of 2.50%. The Adviser pays all of the operating expenses
of the Fund except distribution, shareholder servicing, brokerage, taxes,
interest, fees and expenses of non-interested person trustees and extraordinary
expenses. The Adviser has made an irrevocable commitment to reimburse the Fund's
trustee expenses through June 1, 2003. After the initial two years, this
advisory agreement is subject to an annual approval by the Trustees of the
Trust.
For the year ended February 29, 2000, the Adviser earned advisory fees of
$277,238. For this same time period, the Adviser paid all fees and expenses
relating to non-interested person trustees, and will not seek reimbursement from
the Fund.
The Trust has agreements with Mutual Funds Service Co. (the
"Administrator") to provide transfer agent, fund accounting and administrative
services to the Fund. The services to be provided under the agreements include
day-to-day administration of matters related to the corporate existence of the
Fund (other than rendering investment advice), maintenance of its records,
preparation of reports, supervision of the Fund's arrangement with its custodian
and assistance in the preparation of the Fund's registration statement under
federal and state laws.
The Trust has an agreement with Banc Stock Financial Services, Inc. (the
"Distributor"), with whom certain officers and trustees of the Trust are
affiliated, to act as the principal underwriter of the Fund's shares. The
Distributor also receives brokerage commissions from the Fund for executing
portfolio purchase and sale transactions. Both the Adviser and the Distributor
are wholly owned by The Banc Stock Group, Inc. For the year ended February 29,
2000, the Distributor earned underwriter fees and brokerage commissions in the
amount of $1,551 and $2,781, respectively. In addition, Banc Stock Financial
Services, Inc. received brokerage commissions for the execution of portfolio
purchase and sale transactions in the amount of $144,454.
Pursuant to Rule 12b-1 of the Act, the Fund has adopted two Distribution
Plans (the "Plans") that allow each class to pay distribution fees for the sale
and distribution of its shares. Additionally, the Plan for Class C shares also
allows the
10
<PAGE>
THE BANC STOCK GROUP FUND
NOTES TO FINANCIAL STATEMENTS (continued)
February 29, 2000
- --------------------------------------------------------------------------------
class to pay for services provided to shareholders. Class A shares
pay annual 12b-1 expenses of 0.25% and Class C shares pay annual 12b-1 and
service fee expenses of 1.00% (of which 0.75% is an asset based sales charge and
0.25% is a service fee) of average daily net assets.
FUND SHARE TRANSACTIONS
For the year ended February 29, 2000
CLASS A
Shares Amount
Sold 71,208 $757,142
Reinvested 7,108 73,143
Redeemed (543,607) (5,761,225)
================= =================
Net Decrease (465,291) ($4,930,940)
================= =================
For the period June 3, 1999 (commencement of operations) through February 29,
2000
CLASS C
Shares Amount
Sold 7,567 $84,475
Reinvested 49 503
Redeemed 0 0
================= ===============
Net Decrease 7,616 $84,978
================= ===============
For the year ended February 28, 1999
CLASS A
Shares Amount
Sold 591,261 $7,940,884
Reinvested 86,932 940,605
Redeemed (286,593) (3,227,744)
====================== ===================
Net Increase 391,600 $5,653,745
====================== ===================
RECLASSIFICATION OF CAPITAL ACCOUNTS
The Fund has adopted Statement of Position 93-2, Determination, Disclosure
and Financial Statement Presentation of Income, Capital Gain and Return of
Capital Distributions by Investment Companies. As a result of this statement,
the Fund changed the classification of distributions to shareholders to better
disclose the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, undistributed
net investment loss has been adjusted to Paid-in Capital as of February 29, 2000
in the amount of $56,149. These restatements did not affect net investment
income, net realized gain (loss) or net assets for the year ended February 29,
2000.
FEDERAL TAX INFORMATION
During the year ended February 29, 2000, the Fund declared long-term
capital gain distributions in the amount of $77,238.
At February 29, 2000, the Fund had unused capital loss carryforwards of
$574,249 available to offset future gains, if any, for Federal income tax
purposes. The capital loss carryforward expires in 2008.
11
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
Banc Stock Group Fund:
We have audited the accompanying statement of assets and liabilities of Banc
Stock Group Fund, including the schedule of portfolio investments, as of
February 29, 2000, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the two years and for
the period from August 1, 1997 (commencement of operations) to February 28, 1998
in the period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash owned
as of February 29, 2000, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Banc
Stock Group Fund as of February 29, 2000, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the two years and
for the period from August 1, 1997 (commencement of operations) to February 28,
1998 in the period then ended, in conformity with generally accepted accounting
principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
March 22, 2000
THE BANC STOCK
GROUP FUND
1105 Schrock Road
Suite 437
Columbus, OH 43229
