THE SANTA BARBARA GROUP OF MUTUAL FUNDS
STARBUCK TISDALE GROWTH & INCOME FUND
SEMI-ANNUAL REPORT TO SHAREHOLDERS
AS OF SEPTEMBER 30, 1997
<PAGE>
STATEMENT OF NET ASSETS (UNAUDITED) THE SANTA BARBARA GROUP OF MUTUAL FUNDS
September 30, 1997
STARBUCK TISDALE GROWTH & INCOME FUND
Market
Shares Value
------------ ---------------
COMMON STOCKS (92.3%)
BANKS (7.1%)
Citicorp 50 $ 6,697
Norwest 100 6,125
- ----------------------------------------------------------------------------
12,822
- ----------------------------------------------------------------------------
COMPUTER & SERVICES (10.5%)
Adobe Systems 100 5,025
Cisco Systems * 60 4,384
Hewlett Packard 75 5,217
Zebra Tech * 125 4,438
- ----------------------------------------------------------------------------
19,064
- ----------------------------------------------------------------------------
DRUGS (17.6%)
Abbott Labs 75 4,795
Agouron Pharmaceuticals * 150 7,200
American Home Products 60 4,380
Bristol-Myers Squibb 80 6,620
Merck 50 4,997
North American Vaccine * 150 3,788
- ----------------------------------------------------------------------------
31,780
- ----------------------------------------------------------------------------
FOOD & BEVERAGE (10.3%)
H.J. Heinz 125 5,773
Pepsico 100 5,150
Sara Lee 150 7,725
- ----------------------------------------------------------------------------
18,648
- ----------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (3.3%)
Clorox 80 5,930
- ----------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES (7.8%)
HBO & Company 100 3,763
Lydall * 125 2,930
Medapartners * 200 4,287
Mentor 100 3,162
- ----------------------------------------------------------------------------
14,142
- ----------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING (6.9%)
Illinois Tool Works 100 5,000
Minnesota Mining and Manufacturing 80 7,400
- ----------------------------------------------------------------------------
12,400
- ----------------------------------------------------------------------------
PETROLEUM REFINING (3.5%)
Chevron 75 6,239
- ----------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST (5.0%)
Merry Land & Investment 200 4,413
Security Capital Pacific 200 4,700
- ----------------------------------------------------------------------------
9,113
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF NET ASSETS (UNAUDITED) THE SANTA BARBARA GROUP OF MUTUAL FUNDS
September 30, 1997
STARBUCK TISDALE GROWTH & INCOME FUND (CONCLUDED) Shares/ Market
Face Amount Value
------------ --------
SEMI-CONDUCTORS (3.8%)
Linear Technology 100 $ 6,900
- ----------------------------------------------------------------------------
SUPPLIES (7.0%)
Avery Dennison 200 8,000
Valspar 150 4,706
- ----------------------------------------------------------------------------
12,706
- ----------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS (9.5%)
GTE 125 5,672
SBC Communications 100 6,137
Worldcom * 150 5,297
- ----------------------------------------------------------------------------
17,106
- ----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $124,205) 166,850
- ----------------------------------------------------------------------------
PREFERRED STOCK (4.4%)
Security Capital Industrial Trust (Cost $6,088) 250 7,844
- ----------------------------------------------------------------------------
CONVERTIBLE BOND (3.2%)
Xilinx, Convertible to 19.608 shares,
5.25%, 11/01/02 (Cost $4,989) $ 5,000 5,837
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS (99.9%)
(Cost $135,282) 180,531
- ----------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (0.1%) 1,333
- ----------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Y Class ($.001 par value - unlimited
authorization) based on 13,401 outstanding shares 134,008
Undistributed net investment income 1,891
Accumulated net realized gain on investments 715
Net unrealized appreciation on investments 45,250
- ----------------------------------------------------------------------------
Total Net Assets: (100.0%) $ 181,864
- ----------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -
Y CLASS $ 13.57
============================================================================
* Non-income producing security
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED) THE SANTA BARBARA GROUP OF MUTUAL FUNDS
For the Period Ended September 30, 1997
Starbuck Tisdale
Growth and Income
Fund (1)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest Income $ 1,517
Dividend Income 146
- --------------------------------------------------------------------------------
Total Investment Income 1,663
- --------------------------------------------------------------------------------
EXPENSES:
Custodian Fees 177
Transfer Agent Fees 181
Professional Fees 373
Director Fees 182
Registration Fees 719
Printing Fees 617
Miscellaneous Fees 5
- --------------------------------------------------------------------------------
Total Expenses before Contribution from Advisor 2,254
- --------------------------------------------------------------------------------
Contribution from Advisor (1,000)
- --------------------------------------------------------------------------------
Total Expenses 1,254
- --------------------------------------------------------------------------------
Net Investment Income 409
- --------------------------------------------------------------------------------
Net Realized Loss on Investments (869)
Net Unrealized Appreciation of Investments 35,477
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments 34,608
- --------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $ 35,017
================================================================================
(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>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) THE SANTA BARBARA GROUP OF MUTUAL FUNDS
For the Periods Ended September 30, 1997 and March 31, 1997
<CAPTION>
Starbuck Tisdale
Growth and Income
Fund
- ------------------------------------------------------------------------------------
4/1/97 9/30/96
to to
9/30/97 3/31/97
--------------- ---------------
INVESTMENT ACTIVITIES:
<S> <C> <C>
Net Investment Gain $ 409 $ 1,358
Net Realized Gain/(Loss) on Investments (869) 1,584
Net Unrealized Appreciation of Investments 35,477 9,897
- ------------------------------------------------------------------------------------
Increase in Net Assets Resulting From Operations 35,017 12,839
- ------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 35,017 12,839
- ------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period (13,401 shares) 146,847 134,008
- ------------------------------------------------------------------------------------
NET ASSETS:
End of Period (13,401 shares) $ 181,864 $ 146,847
====================================================================================
</TABLE>
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 ended September 30, 1997
(Unaudited) and March 31, 1997
<TABLE>
<CAPTION>
Realized and Ratio of
Net Asset Value Unrealized Net Asset Expenses to
Beginning of Net Investment Gains or Losses Value End Total Return Net Assets End of Average Net
Period Income on Securities of Period (A) Period Assets (B)
=========================================================================================================================
- -----------------------------------------------------
Starbuck Tisdale Growth & Income Fund
- -----------------------------------------------------
Class Y
<S> <C> <C> <C> <C> <C> <C> <C>
1997** $10.96 0.031 2.579 $13.57 9.64% $181,864 1.50%
1997* $10.00 0.101 0.859 $10.96 9.60% 146,847 0.54%
Ratio of Expenses to Ratio of Net Income
Ratio of Net Average Net Assets to Average Net
Income to (Excluding Waivers Assets (Excluding Average
Average Net and Contributions) Waivers and Portfolio Commission
Assets (B) (B) Contributions) (B) Turnover Rate Rate (C)
===============================================================================================
- -----------------------------------------------------
Starbuck Tisdale Growth & Income Fund
- -----------------------------------------------------
Class Y
<S> <C> <C> <C> <C> <C>
1997** 0.49% 2.90% (0.91%) 1% $0.0750
1997* 1.79% 0.54% 1.79% 79% $0.0746
<FN>
** FOR THE PERIOD ENDED SEPTEMBER 30, 1997. THE STARBUCK TISDALE GROWTH AND INCOME FUND HAS NOT YET COMMENCED SALES
OF ITS SHARES TO THE PUBLIC. SHARES OUTSTANDING AS OF SEPTEMBER 30, 1997 REPRESENT SHARES ISSUED IN CONJUNCTION WITH
THE CONTRIBUTION OF THE SEED CAPITAL ON SEPTEMBER 19, 1996.
* FOR THE PERIOD ENDED MARCH 31, 1997.
(A) RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(B) ANNUALIZED.
(C) AVERAGE COMMISSION RATE PAID PER SHARE FOR THE SECURITY PURCHASES AND SALES MADE DURING THE PERIOD.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
STARBUCK TISDALE GROWTH & INCOME FUND - SEPTEMBER 30, 1997 (UNAUDITED)
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 - SEPTEMBER 30, 1997 (UNAUDITED)
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.
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 its 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 (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 its 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 minimum 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 March 31, 1997 to
September 30, 1997, were $3,705 and $2,367, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
================================================================================
STARBUCK TISDALE GROWTH & INCOME FUND - SEPTEMBER 30, 1997 (UNAUDITED)
As of September 30, 1997, net unrealized appreciation on investment securities
for book and federal income tax purposes aggregated $45,249 of which $45,484
related to appreciated securities and $235 related to depreciated securities.
There was no difference between book and tax realized gains on securities for
the period from March 31, 1997 to September 30, 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. ASCHER/DECISION SERVICES,
INC., THE DISTRIBUTOR, AND UNITED MISSOURI BANK, THE CUSTODIAN, ARE NOT
AFFILIATED.
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
BENDER GROWTH FUND
SEMI-ANNUAL REPORT TO SHAREHOLDERS
AS OF SEPTEMBER 30, 1997
<PAGE>
LETTER TO SHAREHOLDERS
FROM THE CHAIRMAN OF THE SANTA BARBARA GROUP OF MUTUAL FUNDS
Dear Shareholder,
It is a pleasure to present our first semi-annual report to you.
Reed and Bob Bender have always been good investors. That is why your Board of
Directors of the Santa Barbara Group of Mutual Funds, Inc. ("the Fund Company")
selected them to manage its first fund, the Bender Growth Fund. In the past six
months the advisor has done remarkably well. The Fund share prices are
approximately 50% above those of March 31, 1997. Fund net assets in the same six
month period have almost doubled to $6,696,495. The overall Fund performance for
the first nine months of 1997 is a gain of over 25%. The shareholder base of the
Fund is approximately 325. Our goal is to more rapidly increase the number of
individual owners of the Fund to 1,000 at which time the net asset value of the
Fund will appear in the newspapers.
With the positive results of the past quarter, our primary interest turns to the
question of consistency and repeatability regarding potential future results.
Bob Bender stated his manifesto for investing in his first letter to you. He
intends to invest your funds in excellent companies whose earnings are estimated
to continue their past growth rate of at least 20% per annum well into the
future. In the Fund Company's search for fund advisors we were impressed that
this is the only way Bob and Reed have invested for their entire investment
careers. Their long term record suggests that their approach is consistent and
repeatable.
While we seek to add other outstanding portfolio managers, the Fund Company's
goal of providing investment excellence of the kind we have achieved with the
Bender Growth Fund, regardless of discipline, make the task very challenging. We
do hope to have one or two more funds available by the end of our fiscal year,
March 31, 1998.
Meanwhile we continue to have great confidence that your Bender Growth Fund will
continue to do well into the future.
Sincerely,
[GRAPHIC OMITTED]
/S/ SIGNATURE
Stephen Y. Ascher
Chairman
<PAGE>
LETTER FROM THE INVESTMENT ADVISOR
TO THE SHAREHOLDERS OF THE BENDER GROWTH FUND:
Many of the companies included in the Bender Growth Fund have recently reported
quarterly earnings. Overall, we are very pleased with the continuing performance
of these companies as they have beaten Wall Street estimates, gained market
share, and shown strength in margins. We would like to reiterate that over time
the stock market values nothing greater than consistent earnings per share
growth. All of our companies are profitable, and have a strong financial
position. We believe these companies can continue to report above average
earnings for several years.
Recent volatility in global equity markets should not be viewed as a barometer
for the United States markets. The turmoil in Asian economies is due to specific
domestic policy issues, and could actually lead to lower interest rates in the
United States. Asian economies equal 16 percent of our trade, and the dollar's
strength against these currencies is likely to hold back inflation as U.S.
imports become cheaper.
The U.S. Treasury department has stated that a balanced budget should be
expected by mid-1998. As the economy transitions from a deficit to a surplus,
the Treasury is curtailing its financing plans as there will be a reduced need
for capital. Those institutions who are required to buy U.S. Treasury bonds for
their investment purposes will be forced to buy on the open market. This could
lower bond yields which in turn would be very positive for equity markets.
The current economic fundamentals of a strong dollar, the move toward a balanced
budget, and increasing global competition are very positive for our companies
and the stock market in general. We feel our companies are very well positioned
in their industries, and should provide continued impressive financial results
over the next few years.
Thank you for your support.
Sincerely,
/S/ SIGNATURE /S/ SIGNATURE
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Robert L. Bender Reed G. Bender
Portfolio Manager Portfolio Manager
<PAGE>
STATEMENT OF NET ASSETS (UNAUDITED) THE SANTA BARBARA GROUP OF MUTUAL FUNDS
September 30, 1997
BENDER GROWTH FUND
Market
COMMON STOCKS (94.5%) Shares Value
----------- ----------
COMMUNICATIONS (16.5%)
Advanced Fibre Communication * 5,600 $ 229,600
Ascend Communications * 4,430 143,421
CIENA * 3,000 148,594
Hummingbird Communications * 4,310 168,090
P-COM * 8,620 206,341
Sawtek * 4,545 210,206
- -------------------------------------------------------------------------------
1,106,252
- -------------------------------------------------------------------------------
COMPUTER & SERVICES (36.8%)
CBT Group PLC ADR * 2,608 209,292
Checkpoint Software* 6,540 202,740
Cisco Systems * 2,470 180,464
Gartner Group, Cl A * 4,380 131,400
Genesys Telecom Labs * 5,600 203,700
Intel 1,540 142,161
Legato Systems * 7,130 253,115
McAfee Associates * 2,250 119,250
Microsoft * 1,150 152,159
Network Appliance * 3,605 195,571
Oracle * 4,930 179,637
Sun Microsystems * 3,680 172,270
Synopsys * 4,600 195,500
Versatility * 9,490 125,743
- -------------------------------------------------------------------------------
2,463,002
- -------------------------------------------------------------------------------
MEDICAL (13.5%)
Arterial Vascular Engineering * 6,020 334,110
Gulf South Medical Supply * 7,010 187,518
Quintiles Transnational * 2,240 188,720
Watson Pharmaceuticals * 3,260 194,785
- -------------------------------------------------------------------------------
905,133
- -------------------------------------------------------------------------------
RETAIL (16.9%)
Autozone * 5,770 173,100
Bed Bath and Beyond * 5,615 197,227
CDW Computer Centers * 2,450 158,638
Fastenal 2,350 125,137
Home Depot 3,030 157,939
Kohl's * 2,390 169,690
Starbucks * 3,650 152,616
- -------------------------------------------------------------------------------
1,134,347
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF NET ASSETS (UNAUDITED) THE SANTA BARBARA GROUP OF MUTUAL FUNDS
September 30, 1997
BENDER GROWTH FUND (CONCLUDED) Shares/ Market
Face Amount Value
-------------- ------------
SERVICES (10.8%)
Abacus Direct * 6,050 $ 194,356
CKS Group * 2,100 78,750
CUC International * 4,330 134,230
Forrester Research * 6,500 176,313
Paychex 4,030 140,546
- -------------------------------------------------------------------------------
724,195
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $4,924,563) 6,332,929
- -------------------------------------------------------------------------------
CASH EQUIVALENT (5.7%)
United Missouri Bank AFM
(Cost $380,943) $ 380,943 380,943
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.2%)
(Cost $5,305,506) 6,713,872
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (-0.2%) (17,377)
- -------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Y Class ($.001 par value - unlimited
authorization) based on 137,533 outstanding shares 1,368,194
Portfolio Shares of C Class ($.001 par value - unlimited
authorization) based on 402,253 outstanding shares 4,082,418
Net investment loss (74,238)
Accumulated net realized loss on investments (88,245)
Net unrealized appreciation on investments 1,408,366
- -------------------------------------------------------------------------------
Total Net Assets: (100.0%) $ 6,696,495
- -------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE - Y
CLASS $ 12.46
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE - C
CLASS (SEE FOOTNOTE 2) $ 12.39
===============================================================================
* Non-income producing security
ADR - American Depository Receipt
AFM - Automated Funds Management
Cl - Class
PLC - Public Limited Company
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED) THE SANTA BARBARA GROUP OF MUTUAL FUNDS
For the Period Ended September 30, 1997
Bender
Growth
Fund
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest Income $ 5,749
Dividend Income 823
- -------------------------------------------------------------------------------
Total Investment Income 6,572
- -------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 30,685
Administrator Fees 30,121
Custodian Fees 8,387
Transfer Agent Fees 22,428
Professonal Fees 10,803
Director Fees 1,832
Registration Fees 7,738
Distribution Fees - Class Y 1,608
Distribution Fees - Class C 18,042
Printing Fees 4,077
Amortization of Deferred Organizational Costs 6,286
- -------------------------------------------------------------------------------
Total Expenses before Waiver of Investment Advisory Fees
and Contribution from Advisor 142,007
- -------------------------------------------------------------------------------
Waiver of Investment Advisory Fees (30,685)
Contribution from Advisor (30,512)
- -------------------------------------------------------------------------------
Total Expenses 80,810
- -------------------------------------------------------------------------------
Net Investment Loss (74,238)
- -------------------------------------------------------------------------------
Net Realized Loss on Investments (54,081)
Net Unrealized Appreciation of Investments 2,058,349
- -------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments 2,004,268
- -------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $1,930,030
===============================================================================
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 six month period ended September 30, 1997 (Unaudited) and for the period
ended March 31, 1997
<TABLE>
<CAPTION>
Bender
Growth
Fund
- ---------------------------------------------------------------------------------------------------
4/1/97 12/10/96 (1)
to to
9/30/97 3/31/97
-------------- -------------
INVESTMENT ACTIVITIES:
<S> <C> <C>
Net Investment Loss $ (74,238) $ (24,037)
Net Realized Loss on Investments (54,081) (34,165)
Net Unrealized Appreciation (Depreciation) of Investments 2,058,349 (649,983)
- ---------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting From Operations 1,930,030 (708,185)
- ---------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Class Y:
Proceeds from Shares Issued (42,442 shares) 420,711 1,127,565
Cost of Shares Redeemed (18,441 shares) (170,419) (108,371)
- ---------------------------------------------------------------------------------------------------
Total Class Y Transactions 250,292 1,019,194
- ---------------------------------------------------------------------------------------------------
Class C:
Proceeds from Shares Issued (134,690 shares) 1,411,227 3,283,062
Cost of Shares Redeemed (52,911 shares) (470,010) (122,115)
- ---------------------------------------------------------------------------------------------------
Total Class C Transactions 941,217 3,160,947
- ---------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Capital Share Transactions 1,191,509 4,180,141
- ---------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 3,121,539 3,471,956
- ---------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period (434,006 shares) 3,574,956 105,000
- ---------------------------------------------------------------------------------------------------
NET ASSETS:
End of Period (539,786 shares) $ 6,696,495 $ 3,576,956
===================================================================================================
<FN>
(1) The Bender Growth Fund commenced on December 10, 1996.
</FN>
</TABLE>
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 ended September 30, 1997
(Unaudited) and March 31, 1997
<TABLE>
<CAPTION>
Realized and Ratio of
Net Asset Value Unrealized Net Asset Expenses to
Beginning of Net Investment Gains or Losses Value End Total Return Net Assets End of Average Net
Period Income on Securities of Period (A) Period Assets (B)
=========================================================================================================================
- ----------------------------------
Bender Growth Fund
- ----------------------------------
Class Y
<S> <C> <C> <C> <C> <C> <C> <C>
1997** $8.26 (0.107) 4.307 $12.46 50.85% $1,713,850 2.75%
1997* $10.00 (0.044) (1.696) $8.26 (17.4%) 937,321 2.75%
Class C
1997** $8.24 (0.132) 4.282 $12.39 50.36% $4,982,645 3.50%
1997* $10.00 (0.059) (1.701) $8.24 (17.6%) 2,639,635 3.50%
Ratio of Expenses to Ratio of Net Income
Ratio of Average Net Assets to Average Net
Income to (Excluding Waivers Assets (Excluding Average
Average Net and Contributions) Waivers and Portfolio Commission
Assets (B) (B) Contributions) (B) Turnover Rate Rate (C)
===============================================================================================
- ----------------------------------
Bender Growth Fund
- ----------------------------------
Class Y
<S> <C> <C> <C> <C> <C>
1997** (2.48%) 4.00% (3.73%) 8.00% $0.0988
1997* (2.16%) 7.88% (7.29%) 3.00% $0.0893
Class C
1997** (3.23%) 4.75% (4.48%) 8.00% $0.0988
1997* (2.88%) 8.70% (8.08%) 3.00% $0.0893
<FN>
** FOR THE PERIOD ENDED SEPTEMBER 30, 1997.
* FOR THE PERIOD ENDED MARCH 31, 1997. THE BENDER GROWTH FUND COMMENCED ON
DECEMBER 10, 1996.
(A) RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(B) ANNUALIZED.
(C) AVERAGE COMMISSION RATE PAID PER SHARE FOR THE SECURITY PURCHASES AND SALES
MADE DURING THE PERIOD.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
BENDER GROWTH FUND - SEPTEMBER 30, 1997 (UNAUDITED)
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
Bender Growth Fund (the "Fund") are included herein. The Starbuck Tisdale Growth
and Income 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)
================================================================================
BENDER GROWTH FUND - SEPTEMBER 30, 1997 (UNAUDITED)
The amounts of distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from those amounts determined under generally accepted accounting
principles. To the extent these book/tax differences are permanent, they are
charged or credited to paid-in capital in the period that the difference arises.
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 Fund's 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. The redemption price disclosed in the financial statements
for Class C shares does not reflect the contingent deferred sales charge.
ORGANIZATIONAL COSTS -- Organizational costs approximating $43,100 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 its 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 1.25% of the average daily net
assets of the Fund. The Advisor has agreed to waive a portion of their fees and
reimburse the Fund for other expenses as necessary in order to limit the
operating expenses to 2.75% and 3.50% of average daily net assets of the Class Y
and Class C shares, respectively.
Sub-Advisory services are provided to the Advisor for the Fund by Robert Bender
& 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 its 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 minimum 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
================================================================================
BENDER GROWTH FUND - SEPTEMBER 30, 1997 (UNAUDITED)
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 April 1, 1997
to September 30, 1997, were $1,382,348 and $380,205, respectively.
As of September 30, 1997, net unrealized appreciation on investment securities
for book and federal income tax purposes aggregated $1,408,366 of which
$1,566,997 related to appreciated securities and $158,631 related to depreciated
securities. There was no difference between book and tax realized gains on
securities for the period from April 1, 1997 to September 30, 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. ASCHER/DECISION SERVICES,
INC., THE DISTRIBUTOR, AND UNITED MISSOURI BANK, THE CUSTODIAN, ARE NOT
AFFILIATED.
