THE SANTA BARBARA GROUP OF MUTUAL FUNDS
STARBUCK TISDALE GROWTH & INCOME FUND
REPORT TO SHAREHOLDERS
AS OF MARCH 31, 1997
<PAGE>
STATEMENT OF NET ASSETS THE SANTA BARBARA GROUP OF MUTUAL FUNDS
MARCH 31, 1997
STARBUCK TISDALE GROWTH & INCOME FUND
Market
Shares Value
-------- --------
COMMON STOCKS (90.0%)
BANKS (6.8%)
Citicorp 50 $ 5,413
Norwest 100 4,625
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10,038
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COMPUTERS & SERVICES (8.3%)
Adobe Systems* 100 4,013
Cisco Systems* 60 2,887
Verifone* 75 2,456
Zebra Tech* 125 2,875
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12,231
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DRUGS (17.1%)
Abbott Labs 75 4,209
Agouron Pharmiceuticals* 75 5,297
American Home Products* 60 3,600
Bristol-Myers Squibb 80 4,720
Merck 50 4,213
North American Vaccine* 150 3,019
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25,058
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FOOD, BEVERAGE, & TOBACCO (7.5%)
H.J. Heinz* 125 4,938
Sara Lee 150 6,075
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11,013
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HOUSEHOLD PRODUCTS (3.0%)
Clorox 40 4,485
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MEDICAL PRODUCTS & SERVICES (7.7%)
HBO & Company 50 2,375
Lydall* 125 2,531
Medapartners* 200 4,250
Mentor 100 2,162
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11,318
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MISCELLANEOUS MANUFACTURING (7.4%)
Illinois Tool Works 50 4,081
Minnesota Mining and Manufacturing 80 6,760
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10,841
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PETROLEUM REFINING (3.6%)
Chevron 75 5,222
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REAL ESTATE INVESTMENT TRUST (6.1%)
Merry Land & Investment 200 4,100
Security Capital Pacific 200 4,875
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8,975
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The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF NET ASSETS THE SANTA BARBARA GROUP OF MUTUAL FUNDS
MARCH 31, 1997
STARBUCK TISDALE GROWTH & INCOME FUND (CONTINUED)
Market
Shares Value
-------- --------
Semi-Conductors (3.0%)
Linear Technology 100 $ 4,425
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Supplies (8.2%)
Avery Dennison 200 7,700
Valspar 150 4,312
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12,012
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Telephones & Telecommunications (11.3%)
GTE 125 5,828
Orckitt Communications* 200 2,100
SBC Communications 100 5,263
Worldcom 150 3,300
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16,491
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TOTAL COMMON STOCKS
(COST $123,662) 132,109
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PREFERRED STOCK (4.6%)
Security Capital Industrial
Trust (Cost $6,059) 250 6,750
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CONVERTIBLE BOND (3.9%)
Xilinx, Convertible to 19.608 shares,
5.25%, 11/01/02 (Cost $4,988) 5,000 5,725
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CASH EQUIVALENT (1.3%)
United Missouri Bank AFM
(Cost $1,924) 1,924 1,924
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TOTAL INVESTMENTS (99.8%)
(COST $136,633) 146,508
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OTHER ASSETS AND LIABILITIES, NET: (0.2%) 339
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NET ASSETS:
Portfolio Shares of Y Class ($.001 par value - unlimited
authorization) based on 13,401 outstanding shares 134,008
Undistributed net investment income 1,358
Accumulated net realized gain on investments 1,584
Net unrealized appreciation on investments 9,897
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Total Net Assets: (100.0%) $ 146,847
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NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE - Y CLASS $ 10.96
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* Non-income producing security
AFM - Automated Funds Management
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS THE SANTA BARBARA GROUP OF MUTUAL FUNDS
FOR THE PERIOD ENDED MARCH 31, 1997
STARBUCK TISDALE
GROWTH AND INCOME
FUND (1)
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INVESTMENT INCOME:
Interest Income $ 194
Dividend Income 1,576
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Total Investment Income 1,770
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EXPENSES:
Custodian Fees 85
Director Fees 156
Registration Fees 131
Misc. Fees 40
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Total Expenses 412
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Net Investment Income 1,358
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Net Realized Gain on Investments 1,584
Net Unrealized Appreciation on Investments 9,897
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Net Realized and Unrealized Gain on Investments 11,481
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Net Increase in Net Assets
Resulting From Operations $ 12,839
================================================================================
(1) The Starbuck Tisdale Growth and Income Fund was initially seeded on
September 19, 1996 and has not yet commenced sales of its shares to the
public.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE SANTA BARBARA GROUP OF MUTUAL FUNDS
For the Period Ended March 31, 1997
STARBUCK TISDALE
GROWTH AND INCOME
FUND (1)
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
Net Investment Income $ 1,358
Net Realized Gain on Investments 1,584
Net Unrealized Appreciation of Investments 9,897
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Total Increase in Net Assets 12,839
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Net Assets:
Beginning of Period (13,401 shares) 134,008
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Net Assets:
End of Period (13,401 shares) $ 146,847
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(1) The Starbuck Tisdale Growth and Income Fund has not yet commenced sales of
its shares to the public. Shares outstanding as of March 31, 1997 represent
shares issued in conjunction with the contribution of the seed capital on
September 19, 1996.
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS THE SANTA BARBARA GROUP OF MUTUAL FUNDS
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Income from
Investment Activities
Net ---------------------------- Ratio of
Asset Net Realized Net Net Ratio Net Investment
Value Net and Unrealized Asset Value Assets of Expenses Income
Beginning Investment Gain on End Total End to Average to Average
of Period Income Investments of Period Return of Period Net Assets Net Assets
- ----------------------------------------------------------------------------------------------------------
- -------------------------------------
STARBUCK TISDALE GROWTH & INCOME FUND
- -------------------------------------
Y CLASS
FOR THE PERIOD SEPTEMBER 19, 1996 THRU MARCH 31, 1997,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $10.00 0.101 0.859 $10.96 9.60% ** $146,847 0.54% * 1.79% *
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Ratio of Net Investment
of Expenses Income
to Average to Average
Net Assets Net Assets
(Excluding (Excluding Portfolio Average
Waivers and Waivers and Turnover Commission
Contributions) Contributions) Rate Rate (A)
- --------------------------------------------------------------
- -------------------------------------
STARBUCK TISDALE GROWTH & INCOME FUND
- -------------------------------------
Y CLASS
FOR THE PERIOD SEPTEMBER 19, 1996 THRU MARCH 31, 1997,:
<S> <C> <C> <C> <C>
1997 0.54% * 1.79% * 79% $0.0746
</TABLE>
(A) AVERAGE COMMISSION RATE PAID PER SHARE FOR THE SECURITY PURCHASES AND SALES
MADE DURING THE PERIOD.
* ANNUALIZED
** RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
STARBUCK TISDALE GROWTH & INCOME FUND -- MARCH 31, 1997
1. ORGANIZATION
The Santa Barbara Group of Mutual Funds, Inc. (the "Company"), was organized as
a Maryland corporation under Articles of Incorporation dated December 30, 1992.
The Company is registered under the Investment Company Act of 1940, as amended,
as a diversified open-end management investment company with two funds: the
Bender Growth Fund and the Starbuck Tisdale Growth and Income Fund (the
"Funds"). The assets of each Fund are segregated, and a shareholder's interest
is limited to the Fund in which shares are held. The financial statements of The
Starbuck Tisdale Growth and Income Fund (the "Fund") are included herein. The
Bender Growth Fund is presented separately. The Company is registered to offer
two classes of shares, Class Y and Class C. Each Fund's prospectus provides a
description of the Fund's investment objectives, policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund.
SECURITY VALUATION -- Investment securities which are listed on a national
securities exchange or on the NASDAQ National Market System for which market
quotations are available are valued by an independent pricing service at the
last reported sale price for such security as of the close of business on the
date of valuation. Securities traded on a national securities exchange or on the
NASDAQ National Market System for which there were no sales on the date of
valuation and securities traded on the over-the-counter market are valued at the
mean between the most recently quoted bid and asked prices. Securities for which
market quotations are not available are valued at fair market value as
determined in good faith by the Board of Directors. Short-term investments that
mature in 60 days or less are valued at amortized cost, unless the Board of
Directors determines that such valuation does not constitute fair value.
SECURITY TRANSACTION AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date of the security purchase or sale. Costs used in
determining net realized capital gains and losses on the sale of securities will
be those of the specific securities sold. Dividend income is recorded on the
ex-dividend date, and interest income is recorded on the accrual basis. Purchase
discounts and premiums on securities held by the Fund are accreted and amortized
to maturity using the scientific interest method, which approximates the
effective interest method.
FEDERAL INCOME TAXES -- The Company's policy is to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Accordingly no provision
for Federal income taxes is required in the financial statements.
EXPENSES -- Expenses that are directly related to the Fund are charged to the
Fund. Other operating expenses of the Company will be prorated to the Funds on
the basis of relative net assets when the Starbuck Tisdale Growth and Income
Fund commences sales of its shares to the public. Expenses, income and gains and
losses are allocated daily among share classes of each Fund based on the
relative proportion of net assets represented by each class.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -- The financial
statements have been prepared in conformity with generally accepted accounting
principles which requires management to make certain estimates and assumptions
that affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are
declared and paid at least annually. Any net realized capital gains on sales of
securities are distributed annually.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
STARBUCK TISDALE GROWTH & INCOME FUND -- MARCH 31, 1997
NET ASSET VALUE PER SHARE -- The net asset value per share of the Fund is
calculated each business day by dividing the total value of the Funds assets,
less liabilities, by the number of shares outstanding. Class C shares redeemed
within one year of purchase may be subject to a contingent deferred sales charge
equal to one-percent.
ORGANIZATIONAL COSTS -- Organizational costs approximating $57,108 have been
deferred in the account of the Fund and are being amortized on a straight line
basis over a period of sixty months commencing with operations. In the event any
of the initial shares of the Fund are redeemed by any holder thereof during the
period that the Fund is amortizing it's organizational costs, the redemption
proceeds payable to the holders thereof by the Fund will be reduced by the pro
rata share (based on the proportionate share of the original shares redeemed to
the total number of shares outstanding at the time of such redemption) of the
unamortized deferred organizational costs as of the date of such redemption.
3. SERVICE AGREEMENTS
Pursuant to an investment advisory agreement, investment advisory services are
provided to the Company by SBG Capital Management (the "Advisor"). The Advisor
receives a monthly fee at an annual rate of 1.00% of the average daily net
assets of the Fund.
Sub-Advisory services are provided to the Advisor for the Fund by Starbuck,
Tisdale & Associates, Inc. (the "Sub-Advisor") pursuant to a sub-advisory
agreement. Under terms of the agreement, the Sub-Advisor receives a monthly fee
at an annual rate of 0.50% of the average daily net assets of the fund and is
paid by the Advisor. The Advisor is responsible for the supervision of and
payment of fees to the Sub-Advisor in connection with it's services.
Ascher/Decision Services, Inc. (an affiliate of the Advisor) serves as
distributor to the Fund pursuant to a Service and Distribution Plan (the
"Plan"). Under terms of the Plan, the Distributor is paid a distribution fee at
an annual rate of 0.25% and 0.75% of the average daily net assets of the Class Y
and C shares respectively. Class C shares are subject to a shareholder services
fee, which is paid to the Distributor, at an annual rate of 0.25% of the average
daily net assets of the Class C shares of the Fund.
SEI Fund Resources (the "Administrator") serves as administrator to the Fund
pursuant to an administration agreement. Under terms of such agreement the
Administrator is paid an annual fee equal to the greater of 0.15% of the first
$50 million in average daily net assets, 0.125% for the next $50 million in
average daily net assets and 0.10% for such daily net assets in excess of $100
million or a mininum of $60,000.
The Fund and United Missouri Bank (the "Custodian") are parties to a custodial
agreement under which the custodian holds cash, securities and other assets of
the Fund as required by the Investment Company Act of 1940. The Custodian plays
no role in determining the investment policies of the Fund or which securities
are to be purchased or sold by the Fund.
The Fund and National Financial Data Services (the "Transfer Agent") are parties
to a servicing agreement, under which the Transfer Agent provides transfer
agency and dividend disbursing services for the Fund.
4. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than temporary cash investments for the period from September 19, 1996 to
March 31, 1997, were $229,000 and $107,000, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
================================================================================
STARBUCK TISDALE GROWTH & INCOME FUND -- MARCH 31, 1997
As of March 31, 1997, net unrealized appreciation on investment securities for
book and federal income tax purposes aggregated $10,000 of which $14,000 related
to appreciated securities and $4,000 related to depreciated securities. There
was no difference between book and tax realized gains on securities for the
period from September 19, 1996 to March 31, 1997.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF THE COMPANY. THE REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE COMPANY, UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. NEITHER THE COMPANY NOR SEI
FINANCIAL SERVICES COMPANY IS A BANK AND COMPANY SHARES ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY. INVESTING IN MUTUAL FUNDS INVOLVES RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. SEI FINANCIAL SERVICES COMPANY AND
UMB BANK ARE NOT AFFILIATED.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of the Starbuck Tisdale Growth and
Income Fund:
We have audited the accompanying statement of net assets of the Starbuck Tisdale
Growth and Income Fund (the Fund), as of March 31, 1997, and the related
statements of operations, changes in net assets, and financial highlights for
the period September 19, 1996 (inception) to March 31, 1997. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at March 31, 1997 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Starbuck Tisdale Growth and Income Fund at March 31, 1997, and the results of
its operations, changes in net assets, and financial highlights for the period
September 19, 1996 (inception) to March 31, 1997, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
May 22, 1997
