<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 6, 1996.
REGISTRATION NO. 33-56546
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT [X]
UNDER
THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. [_]
[X]
POST-EFFECTIVE AMENDMENT NO. 2
REGISTRATION STATEMENT [X]
UNDER
THE INVESTMENT COMPANY ACT OF 1940
[X]
AMENDMENT NO. 7
(CHECK APPROPRIATE BOX OR BOXES)
----------------
SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
333 SOUTH GRAND AVENUE, SUITE 4075, LOS ANGELES, CALIFORNIA 90071
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER: (213) 628-2907
----------------
STEVEN W. ARNOLD
333 SOUTH GRAND AVENUE, SUITE 4075
LOS ANGELES, CALIFORNIA 90071
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
ROBERT A. GRAHAM, JR., ESQ. PAUL F. ROYE, ESQ.
LAW OFFICES OF ROBERT A. GRAHAM, JR. DECHERT PRICE & RHOADS
41 E. FOOTHILL BLVD., SUITE 106 1500 K STREET, N.W., SUITE 500
ARCADIA, CA 91006 WASHINGTON, D.C. 20005
----------------
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. Registrant intends to file the notice required by Rule 24f-2 with
respect to its fiscal year ending March 31, 1998 on or before May 31, 1998.
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<PAGE>
THE BENDER GROWTH FUND
CROSS-REFERENCE SHEET
REQUIRED BY RULE 404 UNDER THE SECURITIES ACT OF 1933
PART A
<TABLE>
<CAPTION>
ITEM HEADING
---- -------
<C> <S> <C>
1. Cover Page........................................ Cover Page
2. Synopsis.......................................... Fund Expenses
3. Condensed Financial Information................... Not Applicable
4. General Description of Registrant................. The Fund; Investment Objective
and Policies; Other Investment
Policies and Their Related Risks
5. Management of the Fund............................ Management of the Company and the
Fund; Brokerage Commissions;
Other Information
6. Capital Stock and Other Securities................ Other Information; Taxation;
Dividends and Distributions
7. Purchase of Securities Being Offered.............. Purchase of Shares; Net Asset
Value
8. Redemption or Repurchase.......................... Redemption of Shares
9. Pending Legal Proceedings......................... Not Applicable
PART B
10. Cover Page........................................ Cover Page
11. Table of Contents................................. Table of Contents
12. General Information and History................... Not Applicable
13. Investment Objectives and Policies................ Investment Objective and Policies
and Associated Risks; Investment
Restrictions
14. Management of the Fund............................ Directors and Officers;
Investment Advisory and Other
Services
15. Control Persons and Principal..................... Not Applicable Holders of
Securities
16. Investment Advisory and Other Services............ Investment Advisory
17. Brokerage Allocation and Other Practices.......... Brokerage Allocation and
Portfolio Transactions
18. Capital Stock and Other Securities................ Other Information--Part A
19. Purchase, Redemption and Pricing of Securities
Being Offered.................................... Purchases, Redemption and Pricing
of Shares
20. Tax Status........................................ Tax Status
21. Underwriters...................................... Distribution of Fund Shares
22. Financial Statements.............................. Financial Statements
</TABLE>
<PAGE>
PROSPECTUS
THE BENDER GROWTH FUND
333 South Grand Avenue, Suite 4075
Los Angeles, California 90071
Telephone No. (213) 628-2907
The Bender Growth Fund (the "Fund") is one of a series of shares issued by The
Santa Barbara Group of Mutual Funds, Inc. (the "Company"), an open-end
management investment company. The Fund's investment objective is to provide
shareholders with long-term capital appreciation. It seeks to achieve this
objective by investing in equity securities of companies that are leaders or
potential leaders in rapidly growing and economically sensitive sectors of the
economy. The companies that the Fund invests in should demonstrate superior
annual growth in earnings and financial stability. Income is not a primary
consideration in the selection of securities. There can be no assurance that
the Funds' Investment Objective will be achieved. The net asset value per
share of the Fund will fluctuate in response to changes in market conditions
and other factors. See "Investment Objectives and Policies."
The Fund will be managed by SBG Capital Management, Inc (the "Fund Manager").
To provide primary investment advice to the Fund, SBG Capital Management has
entered into a Sub-Investment Advisory Contract with Robert Bender &
Associates (the "Investment Adviser"). As of September 30, 1996, Robert Bender
& Associates, Inc. managed over $110 million of assets of institutional and
individual clients. See "Investment Adviser."
Under the Fund's Variable Pricing System, investors may select Class Y or
Class C shares, each with a public offering price that reflects different
sales charges and expense levels. See "Variable Pricing System," "Purchase of
Shares," and "Redemption of Shares." Class Y shares are offered at net asset
value without an initial or contingent deferred sales charge, but subject to
an annual Distribution Fee, and are available only to institutional investors
(as defined herein) with an initial investment in the Fund of $25,000, and to
Directors, officers and employees of the Company, the Investment Adviser, or
Fund Manager and the Distributor, as well as private advisory clients of the
Investment Adviser or Fund Manager. Class C shares are offered at net asset
value without an initial sales charge, but subject to an annual Distribution
and Service fee. See "Purchase of Shares."
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund, including expenses. Please retain it
for future reference. A Statement of Additional Information, dated June 4,
1997 containing additional and more detailed information about the Fund has
been filed with the Securities and Exchange Commission and is hereby
incorporated by reference into this Prospectus. It is available without charge
and may be obtained by writing or calling the Fund at 333 South Grand Avenue,
Los Angeles, California 90071/(800) SB FUNDS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is June 6, 1997.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
PROSPECTUS 1
FUND EXPENSES 3
Example 4
VARIABLE PRICING SYSTEM 5
Differences Among the Classes 5
Factors to Consider in Choosing a Class of Shares 5
Sales Charges 5
Ongoing Annual Expenses 5
Other Information 6
Financial Highlights 6
THE FUND 7
INVESTMENT OBJECTIVE AND POLICIES 7
OTHER INVESTMENT POLICIES AND THEIR RELATED RISKS 8
Commercial Paper 8
Borrowing 8
RISK FACTORS 8
Net Asset Value Fluctuation 8
Foreign Securities 9
MANAGEMENT OF THE COMPANY AND THE FUND 9
Fund Manager 9
Investment Adviser 9
Portfolio Managers 10
Advisory Agreements 10
Administrator 11
DISTRIBUTOR 11
PURCHASE OF SHARES 12
REDEMPTION OF SHARES 13
Involuntary Redemption 14
Contingent Deferred Sales Charge--Class C Shares 14
NET ASSET VALUE 14
DIVIDENDS AND DISTRIBUTIONS 15
BROKERAGE COMMISSIONS 15
TAXATION 15
General Tax Information 15
Other Tax Laws 16
OTHER INFORMATION 16
Description of Shares 16
Performance Information 16
Custodian, Dividend Disbursing Agent, Transfer Agent and Registrar 17
Legal Matters 17
Shareholder Inquiries 17
Voting Rights 17
</TABLE>
<PAGE>
FUND EXPENSES
The following expense table lists the costs and expenses that an investor will
incur either directly or indirectly as a shareholder of the Fund based on the
Fund's operating expenses.
<TABLE>
<CAPTION>
Class Y Class C
-------- --------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Initial Sales Charge None None
(as a percentage of offering price)
Maximum contingent deferred sales charge None 1.00%/1/
(as a percentage of redemption proceeds)
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management fees 0.00%/2/ 0.00%/2/
(after expense reimbursement)
12b-1 fees 0.25%/3/ 1.00%/3/
Other Expenses 2.50%/4/ 2.50%/4/
-------- --------
Total Fund Operating Expenses 2.75% 3.50%
(after expense reimbursements)
</TABLE>
/1/ Investments in Class C shares are not subject to an initial sales charge;
however, a contingent deferred sales charge of 1% is imposed in the event of
certain redemption transactions within one year following such investments.
See "Redemption of Shares."
/2/ During the current fiscal year the Fund Manager and Investment Adviser
have agreed to voluntarily waive their Management Fees, which total 1.25%, to
the extent necessary to prevent the Total Operating Expenses from exceeding
2.75% for Class Y shares and 3.50% for Class C Shares.
/3/ Long term shareholders may pay more than the economic equivalent of the
maximum front end sales charge permitted by the National Association of
Securities Dealers.
/4/ Other Expenses are estimated.
The nature of the services for which the Fund is obligated to pay management
fees is described under "Management of the Company and the Fund." "Other
expenses" in the above table are estimated and include fees for shareholder
services, custodial fees, legal and accounting fees, printing costs,
registration fees, fees for any portfolio valuation service, the cost of
regulatory compliance, the costs associated with maintaining the Fund's legal
existence and the costs involved in communicating with shareholders. After a
substantial period, the Service and Distribution fees, applicable to the
Class C and Class Y shares, may total more than the maximum sales expenses
that would have been permissible if imposed entirely as an initial sales
charge.
3
<PAGE>
EXAMPLE
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect
to an investment in the Fund. These amounts are based on payment by the Fund
of operating expenses at the levels set forth in the above table, and are also
based upon the following assumptions:
A shareholder would pay the following expenses on a $1,000 investment, (1)
assuming 5% annual return and (2) redemption at the end of the following time
periods:
Shareholder expenses with
Redemption at the end of one
year and three years
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class Y shares $27.50 $86.68
Class C shares $45.00 $110.33
Shareholder expenses with no
Redemption
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class Y shares $27.50 $86.68
Class C shares $35.00 $110.33
</TABLE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
The example assumes a 5% annual rate of return pursuant to requirements of the
Securities and Exchange Commission. This hypothetical rate of return is not
intended to be representative of future performance of the Fund.
4
<PAGE>
VARIABLE PRICING SYSTEM
Differences Among the Classes
The primary distinctions among the classes of the Fund's shares are in their
sales charge structures and ongoing expenses, as summarized in the table
below. Each class has distinct advantages and disadvantages for different
investors, and investors may choose the class that best suits their
circumstances and objectives.
<TABLE>
<CAPTION>
Annual 12b-1 Fees
Initial (as a % of average
Sales Charge daily net assets) Other Information
------------ ------------------ -----------------
<S> <C> <C> <C>
Class Y None Distribution fee of Minimum investment
0.25% of $25,000
required; available
only to
institutional
investors
Class C None Service fee of Shares subject to
0.25%; distribution contingent deferred
fee of 0.75% sales charge of 1%
for shares redeemed
within 1 year from
date of purchase
</TABLE>
Factors to Consider in Choosing a Class of Shares
In deciding which class of shares to purchase, investors should consider the
cost of sales charges, together with the cost of the ongoing annual expenses
described below, as well as any other relevant facts and circumstances.
Institutional Investors should purchase Class Y shares if the applicable
minimum investment can be met.
Sales Charges
Class Y and Class C shareholders pay no initial or contingent deferred sales
charges except as noted below. Thus, the entire amount of Class Y or C
shareholder's purchase price is immediately invested in the Fund. Class C
shares, are subject to a 1% contingent deferred sales charge if redeemed
within one year of the date of purchase.
Ongoing Annual Expenses
Class C shares pay an annual 12b-1 service fee of 0.25% of average daily net
assets. Class C shares pay an annual 12b-1 distribution fee of 0.75% of
average daily net assets. Class Y shares pay an annual 12b-1 distribution fee
of 0.25% of average daily net assets. An investor should consider both ongoing
annual expenses in estimating the costs of investing in the Class C shares of
the Fund shares over other available investments.
5
<PAGE>
Expenses borne by classes may differ slightly in the event that other class-
specific expenses, such as transfer agency fees, printing and postage expenses
related to shareholder reports, prospectuses and proxies, and securities
registration fees, are allocated to a specific class. The example set forth
above under "Fund Expenses" shows the cumulative expenses an investor would pay
over periods of one and three years on a hypothetical investment in each class
of Fund shares, assuming an annual return of 5%.
Other Information
Investors should understand that distribution fees are intended to compensate
Ascher/Decision Services, Inc., principal underwriter of the Fund's shares, for
distribution services.
See "Distributor," "Purchase of Shares," and "Redemption of Shares" for a more
complete description of the sales charges, service fees and distribution fees
applicable to the Class C shares of the Fund.
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
The following information has been audited by Deloitte & Touche LLP,
independent accountants, whose unqualified report covering the period from
December 10, 1996 (the inception date of the Fund) through March 31, 1997 (the
end of its first fiscal year) is included in the statement of additional
information. This information should be read in conjunction with the financial
statements and accompanying notes which are also included in the statement of
additional information.
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT ACTIVITIES
----------------------
RATIO OF NET
RATIO OF INVESTMENT
NET RATIO OF RATIO OF EXPENSES TO INCOME TO
REALIZED NET EXPENSES NET AVERAGE NET AVERAGE NET
NET ASSET AND ASSET TO INVESTMENT ASSETS ASSETS
VALUE NET UNREALIZED VALUE NET ASSETS AVERAGE INCOME TO (EXCLUDING (EXCLUDING AVERAGE
BEGINNING INVESTMENT LOSS ON END OF TOTAL END OF NET AVERAGE WAIVERS AND WAIVERS AND COMMISSION
OF PERIOD INCOME INVESTMENTS PERIOD RETURN PERIOD ASSETS NET ASSETS CONTRIBUTIONS) CONTRIBUTIONS) RATE (A)
--------- ---------- ----------- ------ ---------- ---------- -------- ---------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BENDER GROWTH FUND
- ------------------
Y CLASS
FOR THE PERIOD DECEMBER 10, 1996 THRU MARCH 31, 1997:
1997 $10.00 (0.044) (1.696) $8.26 (17.4)%** $937,321 2.75%* (2.16)%* 7.88%* (7.29)%* $0.0893
C CLASS
FOR THE PERIOD DECEMBER 10, 1996 THRU MARCH 31, 1997:
1997 $10.00 (0.059) (1.701) $8.24 (17.60)%** $2,639,635 3.50%* (2.88)%* 8.70%* (8.08)%* $0.0893
</TABLE>
- --------
The turnover rate for the Class Y Shares was 3% and the turnover rate for the
Class C Shares was 3%.
(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.
6
<PAGE>
THE FUND
The Bender Growth Fund (the "Fund") is one of a series of shares issued by The
Santa Barbara Group of Mutual Funds, Inc. (the "Company"), a diversified open-
end management investment company. The Fund was incorporated under the laws of
the State of Maryland on December 30, 1992, and has registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's
principal office is located at 333 South Grand Avenue, Suite 4075,
Los Angeles, California 90071.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide shareholders with long-term
capital appreciation. The Fund seeks to achieve this objective by investing in
equity securities of companies that are leaders or have the potential to be
leaders in rapidly growing and economically sensitive sectors of the economy.
These companies often possess proprietary skills or products.
The Fund will generally invest in companies which have a higher than average
annual rate of earnings growth on a sustained basis. The Fund will also invest
in companies where it is anticipated that the companies will have a higher
than average annual rate of earnings growth. These companies should also
demonstrate financial stability, including strong management history,
improving operating margins, pricing flexibility, higher rates of return on
equity, and positive cash flow. The Fund may at times invest in companies
where the financial stability of the company and its leadership in the
particular economic sector leads the Fund to believe that the company's
securities may appreciate in value on a long term basis. The Fund looks
unfavorably on companies which have large debt positions on their balance
sheets. The Fund may invest in securities of foreign companies that meet the
Fund's investment objective.
The Fund anticipates that under normal conditions at least 80% of the Fund's
assets will be invested in equity securities. Equity Securities include common
and preferred stocks and securities convertible into or exchangeable for
common stock, such as convertible preferred stocks, convertible debentures or
warrants. In addition to investing in equity securities, the Fund is
authorized to invest in high quality short-term fixed income securities as
cash reserves or for temporary defensive purposes.
7
<PAGE>
OTHER INVESTMENT POLICIES AND THEIR RELATED RISKS
The Fund has adopted certain other policies as set forth below. For more
detailed information on the Fund's investment techniques and the associated
risks, see "Investment Objective and Policies and Associated Risks" in the
Statement of Additional Information.
Commercial Paper
The Fund may invest in commercial paper which, at the date of investment, is
rated A-2 or higher by Standard & Poor's Corporation or Prime-2 or higher by
Moody's Investor's Service, Inc. Commercial paper represents short-term
unsecured promissory notes issued in bearer form by bank holding companies,
corporations and finance companies.
Borrowing
The Fund is authorized to borrow money in amounts up to 5% of the value of its
total assets at the time of such borrowing for temporary purposes. However,
the Fund is authorized to borrow money up to 33 1/3 of its assets, as
permitted by the 1940 Act, for the purpose of meeting redemption requests.
Borrowing by the Fund creates an opportunity for greater total return but, at
the same time, increases exposure to capital risk. In addition, borrowed funds
are subject to interest costs that may offset or exceed the return earned on
the borrowed funds. However, the Fund will not purchase portfolio securities
while borrowings exceed 5% of the Fund's total assets. For more detailed
information with respect to the risks associated with borrowing, see the
heading "Borrowing" in the Statement of Additional Information.
RISK FACTORS
Net Asset Value Fluctuation
Due to the nature of the companies in which the Fund will invest, the net
asset value of the Fund may be subject to price fluctuation. Factors
contributing to such fluctuation include: competition within an economic
sector, economic forces affecting a particular economic sector and the
individual companies performance compared against an industry as a whole.
General changes in the national and international economy and the market for
equity securities may have an impact of the fluctuation of the net asset value
of the Fund. Therefore, the current net asset value of the Fund's shares may
vary significantly. Accordingly, the Fund should not be considered suitable
for investors who are unable or unwilling to assume the risks of loss inherent
in such an investment program, nor should investment in the Fund be considered
a balanced or complete investment program.
8
<PAGE>
Foreign Securities
Transactions involving foreign equity securities involve consideration and
risks not typically associated with investing in U.S. markets. These include
changes in currency rates, exchange control regulations, reduced and less
reliable information about issuers and markets, different accounting
standards, illiquidity of securities and markets, local economic and political
stability, the possible imposition of withholding taxes and possible seizure
or nationalization of foreign holdings. Additionally, investing in foreign
securities involves higher costs than investing in U.S. securities.
MANAGEMENT OF THE COMPANY AND THE FUND
The business and affairs of the Company are managed under the direction of the
Board of Directors. Information about the Company's Directors and executive
officers may be found in the Statement of Additional Information.
Fund Manager
SBG Capital Management, Inc. (the "Fund Manager") will manage the Fund's
business affairs and has entered into an Investment Advisory Agreement with
The Fund. Its principal office is located at 333 South Grand Avenue, Suite
4075, Los Angeles, California 90071. A Sub-Investment Advisory Agreement (the
"Sub-advisory Agreement") has been entered into between the Fund Manager and
Robert Bender & Associates, Inc. (the "Investment Adviser") who will provide
the primary and ongoing investment advice to the Fund. The Fund Manager serves
as the fund manager to the Starbuck Tisdale Growth and Income Fund, a series
of shares of the Company. Stephen Y. Ascher and Steven A. Arnold own
controlling interests in the Fund Manager.
Investment Adviser
The Investment Adviser was founded in 1972 and was subsequently incorporated
in 1978. The Investment Adviser is located at 525 Starlight Crest Drive,
La Canada, California 91011. As of September 30, 1996, the Investment Adviser
managed $110 million of assets for various institutional clients, including
pension and profit sharing plans, foundations and companies, as well as high
net worth individuals. The Investment Adviser serves as a sub-investment
adviser to another registered investment company. Robert L. Bender owns a
controlling interest in the Investment Adviser.
9
<PAGE>
Portfolio Managers:
Robert L. Bender--President. After earning a Masters in Business
Administration from the University of California at Los Angeles, Mr. Bender
began his investment career, with Douglas Aircraft Co. as a member of the
treasury staff. Between 1966 and 1970 Mr. Bender was a portfolio manager with
Pennsylvania Life and the Shamrock Fund. His last position before founding the
Investment Adviser was with BWA Inc. as portfolio manager from 1970 to 1972.
In 1972, Mr. Bender formed his own capital management firm. He subsequently
incorporated the Investment Adviser in 1978. Since that time, Mr. Bender has
been the sole shareholder, president, and treasurer of the Investment Adviser.
Reed G. Bender--Vice President. Joined Robert Bender & Associates in 1990 and
currently is responsible for research as well as portfolio management. He is a
1990 graduate of the University of the Pacific.
Advisory Agreements
Under the terms of an Investment Advisory Agreement with the Company on behalf
of the Fund, (the "Advisory Agreement"), the Fund Manager furnishes continuing
investment supervision to the Fund and is responsible for the management of
the Fund's portfolio. The responsibility for making decisions to buy, sell or
hold a particular security rests with the Investment Adviser, subject to
review by the Board of Directors. The Investment Adviser, pursuant to the Sub-
Advisory Agreement, makes the day-to-day decisions with regard to the Fund.
The Fund Manager and Investment Adviser furnish office space, equipment and
personnel in connection with the performance of their responsibilities. The
Fund pays all other expenses incurred in the operation of the Fund including,
but not limited to, brokerage and commission expenses; interest charges; fees
and expenses of legal counsel and independent auditors; the Fund's
organizational and offering expenses, whether or not advanced by the Fund
Manager; taxes and governmental fees; cost of share certificates and any other
expenses (including clerical expenses) of issuance, sale or repurchase of the
Fund's shares; membership fees in trade
associations; expenses of registering and qualifying shares of the Fund for
sale under federal and state securities laws; expenses of printing and
distributing reports, notices and proxy materials to existing shareholders;
expenses of annual and special shareholders meetings; expenses of filing
reports and other documents with governmental agencies; charges and expenses
of the Fund's Administrator, custodian and registrar, transfer agent and
dividend disbursing agent; distribution and service fees; expenses of
disbursing dividends and distributions; compensation of the Fund's officers,
directors and employees who are not affiliated with the Fund Manager,
Investment Adviser or Administrator; travel expenses of Directors of the
Company for attendance at Board meetings; insurance expenses; indemnification
and other expenses not expressly provided for in the Advisory Agreement; and
any extraordinary expenses of a nonrecurring nature.
10
<PAGE>
The Fund Manager and Investment Adviser have agreed that if in any fiscal year
the aggregate expenses of the Fund (including advisory and administrative
fees, but generally excluding 12b-1 fees, interest, taxes, brokerage and
extraordinary expenses) exceed the expense limitation of any state having
jurisdiction over the Fund, the Fund Manager and the Investment Adviser will,
to the extent required by law, reduce their fees from the Fund by the amount
of such excess expense, such amount to be allocated between them in the
proportions that the respective fees bear to the aggregate of such fees paid
by the Fund.
For its services, the Fund Manager will receive from the Fund a monthly fee at
an annual rate of 1.25% of the Fund's average daily net assets. The Fund
Manager pays the Investment Adviser a monthly fee at an annual rate of 0.50%
of the Fund's average daily net assets. The Management Fees payable by the
Fund are higher than the rate payable by most mutual Funds.
Administrator
Under the terms of an administration agreement between SEI Fund Resources (the
"Administrator") and the Fund (the "Administration Agreement"), the
Administrator performs or arranges for the performance of the administrative
services (i.e., services other than investment advice and related portfolio
activities) necessary for the operation of the Fund. For the services rendered
to the Fund, the Fund will pay the Administrator a fee equal on an annual
basis the higher of 0.15% of the Fund's average daily net assets, reduced to
0.125% of such net assets in excess of $50 million, and further reduced to
0.10% of such net assets in excess of $100 million or $60,000. The principal
address of the Administrator is 680 E. Swedesford Road, Oaks, Pennsylvania
19456.
DISTRIBUTOR
Pursuant to a Distribution Agreement with the Fund dated September 17, 1996
Ascher/Decision Services, Inc. (the "Distributor"), located at 333 South Grand
Avenue, Suite 4075, Los Angeles, California 90071, is the principal
underwriter of the Fund's shares. The Distributor is a broker-dealer
registered with the Securities and Exchange Commission and is a member of the
National Association of Securities Dealers, Inc.
The Fund has adopted a Service and Distribution Plan (the "Plan") with respect
to its Class C shares and Class Y shares, pursuant to which it uses its assets
to finance activities relating to the distribution of its shares to investors
and provision of certain shareholder services. Under the Plan, the Distributor
is paid a service fee at an annual rate of 0.25%, and a distribution fee at an
annual rate of 0.75%, of the value of average daily net assets of the Class C
shares. The Distributer is paid a distribution Fee at an annual rate of 0.25%
of the value of the average daily net assets of the Class Y shares.
11
<PAGE>
Under the Plan for Class C shares, the Distributor uses the service fees
primarily to compensate securities dealers (which may include the Distributor
itself) and other financial institutions and organizations (collectively, the
"Service Organizations") who provide shareholder services for the Fund. These
services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund.
The Plan pertaining to Class C shares and Class Y shares permits payments to
be made by the Fund to the Distributor for expenditures incurred by it in
connection with the distribution of Fund shares to investors and provision of
certain shareholder services including but not limited to the payment of
compensation, including incentive compensation to Service Organizations to
obtain various distribution related services for the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature, and other promotional activities on behalf of the Fund. In
addition, the Plan authorizes payment by the Fund of the cost of preparing,
printing and distributing Fund Prospectuses and Statements of Additional
Information to prospective investors and of implementing and operating the
Plan. Distribution expenses also include an allocation of overhead of the
Distributor and accruals for interest on the amount of distribution expenses
that exceed distribution fees received by the Distributor.
Payments under the Plan are not tied exclusively to the distributions and/or
shareholder services expenses actually incurred by the Distributor and the
payments may exceed distribution and/or service expenses actually incurred.
The Company's Board of Directors evaluates the Plan on a regular basis.
PURCHASE OF SHARES
Shares of the Fund are sold on a continuous basis and may be purchased on any
day the New York Stock Exchange is open through authorized investment dealers
or directly from the Fund's Distributor, or the Fund's transfer agent if the
purchase is made by mail. Only the Distributor and investment dealers that
have a sales agreement with the Distributor are authorized to sell shares of
the Fund.
Shares will be credited to a shareholder's account at the net asset value next
computed after an order is received by the Distributor or a dealer. No stock
certificates representing shares purchased will be issued except upon written
request to the Fund's Transfer Agent. The Fund's management reserves the right
to reject any purchase order if, in its opinion, it is in the Fund's best
interest to do so and to suspend the offering of shares of any class for any
period of time.
The minimum initial investment for Class C shares is $2,500 ($1,000 for IRA
accounts) and subsequent investments must be at least $100. The minimum
initial investment for Class Y shares is $25,000 and subsequent investments
must be at least $10,000.
12
<PAGE>
Class Y shares are sold without an initial or a contingent deferred sales
charge. Class Y shares are offered only to institutional investors with a
minimum investment in the Fund of $25,000, and to directors, officers and
employees of the Company, the Fund Manager, the Investment Adviser, and the
Distributor, as well as private advisory clients of the Investment Adviser or
Fund Manager. As used herein, "institutional investors" includes financial
institutions (such as banks, savings institutions and credit unions); pension,
profit sharing and employee benefit plans and trusts; insurance companies;
investment companies; investment advisers; and broker-dealers acting for their
own accounts or for the accounts of their customers through an omnibus
account.
Class C shares are sold without an initial sales charge. However, a 1.00%
contingent deferred sales charge will be imposed in the event of certain
redemption transactions within one year following such investments.
An account may be opened by mailing a check or other negotiable bank draft,
payable to The Bender Growth Fund for $2,500 ($1,000 for an IRA account) for
Class C shares, or $25,000 for Class Y shares, together with the completed
Investment Application Form included with this Prospectus to the Transfer
Agent at National Financial Data Services ("NFDS"), 1004 Baltimore, Kansas
City, MO 64105-1807. All such investments are made at the net asset value next
computed following receipt of payment by the Transfer Agent. Confirmations of
the opening of an account and of all subsequent transactions in the account
are forwarded by the Transfer Agent to the shareholder's address of record.
When placing purchase orders, investors should specify the class of shares
being purchased. All share purchase orders that fail to specify a class will
automatically be invested in Class C shares, unless the purchase order meets
the investment criteria for purchase of Class Y shares, in which case, the
purchase order will be invested in Class Y shares. There is no right to
convert Class C shares to Class Y shares or vice versa.
REDEMPTION OF SHARES
Shareholders may require the Fund to redeem their shares by sending a written
request, signed by the record owner(s), to NFDS, 1004 Baltimore, Kansas City,
MO 64105-1807. If stock certificates have been issued for shares being
redeemed, such certificates must accompany the written request with the
shareholder's signature guaranteed by a commercial bank, trust company,
savings association or credit union as defined by the Federal Deposit
Insurance Act, or by a registered securities broker-dealer member of a
recognized national securities exchange. No signature guarantees are required
for shares for which certificates have not been issued when an application is
on file with the Transfer Agent and payment is made to the shareholder of
record at the shareholder's address of record. However, if the proceeds of the
redemption are greater than $50,000, or are to be paid to someone other than
the registered holder, or to other than the shareholder's address of record,
or if the shares are to be transferred, the owner's signature must be
guaranteed as described above. The redemption price shall be the net asset
value per share next computed after receipt of the redemption request in
proper order. See "Net Asset Value."
13
<PAGE>
The right of redemption and payment of redemption proceeds are subject to
suspension for any period during which the New York Stock Exchange is closed,
other than customary weekend and holiday closing, or when trading on the New
York Stock Exchange is restricted as determined by the Securities and Exchange
Commission; during any period when an emergency as defined by the rules and
regulations of the Securities and Exchange Commission exists; or during any
period when the Securities and Exchange Commission has by order permitted such
suspension. The Fund will not mail redemption proceeds until checks (including
certified checks or cashier's checks) received for the shares purchased have
cleared, which can be as long as 15 days from the purchase date.
The value of shares on redemption may be more or less than the investor's cost
depending upon the market value of the Fund's portfolio securities at the time
of redemption. No redemption fee is charged for the redemption of shares.
Involuntary Redemption
The Fund may at its discretion redeem an investor's shares if the net asset
value of such shares is less than $500; provided that such involuntary
redemptions will not result from fluctuations in the value of an investor's
shares. In addition, the Fund may at its discretion redeem the shares of any
investor who has failed to provide the Fund with a certified taxpayer
identification number or such other tax-related certifications as the Fund may
require. It should be noted that involuntary redemptions of IRA accounts could
have adverse tax consequences.
See the Statement of Additional Information for further information regarding
redemption of the Fund's shares.
Contingent Deferred Sales Charge--Class C Shares
In order to recover commissions paid to dealers on investments in Class C
shares, a contingent deferred sales charge of 1% applies to certain
redemptions of such shares made within the first year after investing. No
charge is imposed to the extent that the net asset value of the shares
redeemed does not exceed (a) the current net asset value of shares purchased
through reinvestment of dividends or capital gains distributions plus (b) the
current net asset value of shares purchased more than one year prior to the
redemption, plus (c) increases in the net asset value of the shareholder's
shares above the purchase payments made during the preceding one year.
NET ASSET VALUE
The net asset value of the Fund's shares will be determined as of the close of
the New York Stock Exchange (currently 4:00 p.m. Eastern Standard Time) on
each day that the New York Stock Exchange is open for trading.
14
<PAGE>
Net asset value per share is determined by dividing the value of the net
assets of the Fund by the total number of shares outstanding. The per share
net asset values and total returns of the various classes will differ due to
differing expenses borne by each class.
Portfolio securities that are traded on a national securities exchange or on
the NASDAQ National Market System are valued at the last sale price on such
exchange or market 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 other over-the-counter markets, including listed
securities for which the primary market is believed to be over-the-counter,
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
value as determined in good faith by or under the direction of the Board of
Directors of the Fund. 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.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute at least annually to shareholders substantially
all of the Fund's net investment income. Net realized capital gains, if any,
will be distributed at least annually to shareholders. All dividends and
distributions will be automatically reinvested in shares of the Fund unless
the shareholder elects to be paid in cash by notifying the Transfer Agent in
writing. The per share dividends on Class Y shares will be higher than the per
share dividends on Class C shares as a result of lower expenses applicable to
Class Y shares.
BROKERAGE COMMISSIONS
All portfolio transactions will be effected at the best price and execution
obtainable within the scope of the Fund's brokerage policies, which are
described under the heading "Brokerage Allocation and Portfolio Transactions"
in the Statement of Additional Information. The Fund's brokerage policies
provide that the receipt of research services from a broker and the sale of
Fund shares by a broker are factors which may be taken into account in
allocating securities transactions.
TAXATION
General Tax Information
The Fund intends to be treated as a regulated investment company under the
federal tax law. As such, the Fund generally will not pay federal income tax
on the income and gains it pays as dividends to its shareholders. In order to
avoid a 4% federal excise tax, the Fund intends to distribute each year
substantially all of its income and gains.
15
<PAGE>
Shareholders will be subject to tax on dividends received from the Fund,
regardless of whether received in cash or reinvested in additional shares.
Shareholders must treat dividends, other than capital gain dividends, as
ordinary income. Dividends designated as capital gain dividends are taxable to
shareholders as long-term capital gain. Certain dividends declared in October,
November, or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to shareholders during January of
the following calendar year. The Fund will advise shareholders annually of the
amount and nature of dividends paid to them.
Other Tax Laws
The preceding discussion relates only to federal income taxes; the
consequences under other tax laws may differ. For additional information
relating to the tax aspects of investing in the Fund, see "Tax Status" in the
Statement of Additional Information.
OTHER INFORMATION
Description of Shares
The Company was organized as a Maryland corporation on December 30, 1992. The
Fund currently issues two classes of common stock, $.01 par value per share,
designated Class Y, and Class C shares. The Company currently has one series
of shares, in addition to the Fund, the Starbuck, Tisdale Growth and Income
Fund. All shares represent interests in the same assets of the Fund and are
identical in all respects except that each class bears different distribution
expenses and may bear various class-specific expenses, and each class has
exclusive voting rights with respect to its service and/or distribution plan.
The Fund is controlled by Robert Bender & Associates which owns all the
currently issued and outstanding shares of the Fund. See "Other Information--
Voting Rights." Class C shares are subject to a distribution and service fee
which will cause Class C shares to have a higher expense ratio and pay lower
dividends than Class Y shares. Shares of the Fund issued are fully paid, non-
assessable, fully transferable and redeemable at the option of the holder.
Performance Information
The Fund may include its total return in advertisements or reports to
shareholders or prospective investors. Quotations of average annual total
return will be expressed in terms of the average annual compounded rate of
return on a hypothetical investment in the Fund over a period of one, five and
ten years (or up to the life of the Fund), will reflect the deduction of a
proportional share of Fund expenses (on an annual basis), and will assume that
all dividends and distributions are reinvested when paid. Total return may be
expressed in terms of the cumulative value of an investment in the Fund at the
end of a defined period of time. For a description of the methods used to
determine total return for the Fund, see "Performance Information" in the
Statement of Additional Information.
16
<PAGE>
Custodian, Dividend Disbursing Agent, Transfer Agent and Registrar
The transfer agent, dividend disbursing agent and registrar for the shares of
the Fund will be National Financial Data Services. Its address is 1004
Baltimore, Kansas City, MO 64105. The Fund's securities and cash are held
under a Custodial Agreement with UMB Bank, 928 Grand Boulevard, Kansas City,
MO 64141.
Legal Matters
Dechert Price & Rhoads, Washington, D.C. has passed upon certain legal matters
in connection with the shares offered by this Prospectus, and also acts as
counsel to the Fund.
Shareholder Inquiries
Shareholder inquires should be directed to 333 South Grand Ave., Suite 4075,
Los Angeles, California 90071 or by Calling (800) SB FUNDS.
Voting Rights
All shares have equal voting rights and equal rights with respect to
dividends, assets and liquidation, except only the shares of a given class
vote on matters pertaining to that class and classes differ with respect to
sales load structure and certain fees.
The Company does not intend to hold annual shareholder meetings, but does
intend to hold periodic information meetings for shareholders, at the
Investment Adviser's expense, at which the Fund's performance and prospects
will be reviewed. The Directors will call a meeting for any purpose upon
written request of shareholders holding at least 10% of the Company's
outstanding shares.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the Statement
of Additional Information and/or in the Fund's official sales literature in
connection with the offering of the Fund's shares and, if given or made, such
other information or representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer in any
state in which, or to any person to whom, such offer may not lawfully be made.
17
<PAGE>
FUND MANAGER
SBG Capital Management Inc
333 S. Grand Avenue, Suite 4075
Los Angeles, CA 90071
INVESTMENT ADVISER
Robert Bender & Associates
525 Starlight Crest Drive
La Canada, CA 91099
TRANSFER AGENT
National Financial Data Service
1004 Baltimore
Kansas City, MO 64105-1807
CUSTODIAN
UMB Bank
928 Grand Boulevard
Kansas City, MO 64141
PRINCIPAL UNDERWRITER
Ascher/Decision Services, Inc.
333 South Grand Avenue
40th Floor
Los Angeles, CA 90071
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
1000 Wilshire Blvd.
Los Angeles, CA 90017
For more complete information about any other fund in the Santa Barbara Group
of Mutual Funds, including charges and expenses, please call (213) 628-2907 or
(800) SB FUNDS or write to Ascher/Decision Services, Inc. and request a free
prospectus. Read the prospectus carefully before you invest or send money.
[LOGO OF SANTA BARBARA GROUP]
The
Bender
Growth Fund
------------------
The date of this Prospectus is June 6, 1997.
<PAGE>
THE BENDER GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
JUNE 4, 1997
The Bender Growth Fund (the "Fund") is currently one of a series of
shares of Santa Barbara Group of Mutual Funds Inc. (the "Company"), a open-end
investment management company. The Fund has entered into an Investment Agreement
with SBG Capital Management, Inc. (the "Fund Manager"), which has entered into a
Sub-Investment Advisory Agreement with Robert Bender & Associates ("Investment
Adviser") which will provide primary and ongoing investment advice to the Fund.
This Statement of Additional Information is intended to supplement the
information provided to investors in the Prospectus dated June 4, 1997 of
the Fund and has been filed with the Securities and Exchange Commission as part
of the Fund's Registration Statement. Investors should note, however, that this
Statement of Additional Information is not itself a prospectus and should be
read carefully in conjunction with the Fund's Prospectus and retained for future
reference. The contents of this Statement of Additional Information are
incorporated by reference in the Prospectus in their entirety. A copy of the
Prospectus may be obtained free of charge from the Fund by writing to or calling
the Fund at 333 South Grand Ave., Suite 4075, Los Angeles, California
90071/(800) SB FUNDS.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES AND
ASSOCIATES RISKS 3
U.S. Government Securities 3
Commercial Paper 3
Repurchase Agreements 3
Foreign Securities 4
Loans of Portfolio Securities 4
Borrowing 5
INVESTMENT RESTRICTIONS 5
DIRECTORS AND OFFICERS 7
INVESTMENT ADVISORY AND OTHER SERVICES 8
Investment Adviser/Fund Manager 8
Custodian, Dividend Disbursing Agent,
Transfer Agent and Registrar 9
Independent Accountants 9
Counsel 9
BROKERAGE ALLOCATION AND PORTFOLIO TRANSACTIONS 9
PURCHASE, REDEMPTION AND PRICING OF SHARES 10
Pricing of Shares 10
TAX STATUS 11
Currency Fluctuations -- "Section 988" -- Gains or Losses 12
Investment in Passive Foreign Investment Companies 12
Debt Securities Acquired at a Discount 13
Distributions 13
Disposition of Shares 14
Backup Withholding 14
Other Taxation 15
DISTRIBUTION OF FUND SHARES 15
PERFORMANCE INFORMATION 15
REGISTRATION STATEMENT 17
FINANCIAL STATEMENTS 18
</TABLE>
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES AND ASSOCIATED RISKS
The Fund's investment objective and policies are described in the
Prospectus under the heading "Investment Objective and Policies." Additional
information concerning the characteristics of certain of the Fund's investments
are set forth below.
The Fund's investment objective is a fundamental policy and may not be
changed without the authorization of the holders of a majority of the Fund's
outstanding shares. As used in this Statement of Additional Information and the
Prospectus, a "majority of the Fund's outstanding shares" means the lesser of
(i) 67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares.
U.S. GOVERNMENT SECURITIES
The Fund may invest in U.S. Government securities. U.S. Government
securities are obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities. Securities guaranteed by the U.S. Government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes, and bonds) and (2) Federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury (such as GNMA certificates, which are
mortgage-backed securities). With respect to these securities, the payment of
principal and interest is unconditionally guaranteed by the U.S. Government, and
thus they are of the highest possible credit quality. Such securities are
subject to variations in market value due to fluctuations in interest rates,
but, if held to maturity, will be paid in full.
Securities issued by U.S. Government instrumentalities and certain federal
agencies are neither direct obligations of nor guaranteed by the U.S. Treasury.
However, they involve Federal sponsorship in one way or another; some are backed
by specific types of collateral; some are supported by the issuer's right to
borrow from the Treasury; some are supported by the discretionary authority of
the Treasury to purchase certain obligations of the issuer; others are supported
only by the credit of the issuing government agency or instrumentality. These
agencies and instrumentalities include, but are not limited to, Federal Land
Banks, Farmers Home Administration, Central Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Home Loan Banks, Federal National Mortgage
Association, and Student Loan Marketing Association.
COMMERCIAL PAPER
Commercial paper represents short-term unsecured promissory notes issued in
bearer from by bank holding companies, corporations and finance companies.
3
<PAGE>
The Fund may invest in commercial paper which, at the date of investment, is
rated A-1 or higher by Standard & Poor's Corporations or Prime-1 or higher by
Moody Investors Services, Inc.
FOREIGN SECURITIES
The Fund may invest up to 15% of the value of its total assets in
securities of foreign issuers represented by American Depositary Receipts listed
on a domestic securities exchange or included in the NASDAQ National Market
System, or foreign securities listed directly on a domestic securities exchange.
Income and gains on such securities may be subject to foreign withholding taxes.
Investors should consider carefully the substantial risks involved in securities
of companies and governments of foreign nations, which are in addition to the
usual risks inherent in domestic investments.
There may be less publicly available information about foreign companies
comparable to the reports and ratings published about companies in the United
States. Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, and auditing practices and
requirements may not be comparable to those applicable to United States
companies. Foreign markets have substantially less volume than the New York
Stock Exchange and securities of some foreign companies are less liquid and more
volatile than securities of comparable United States companies.
4
<PAGE>
Commission rates in foreign countries, which are generally fixed rather than
subject to negotiation as in the United States, are likely to be higher. In many
foreign countries there is less government supervision and regulation of stock
exchanges, brokers, and listed companies than in the United States.
BORROWING
The Fund is authorized to borrow money from a bank in amounts up to 5% of
the value of its total assets at the time of such borrowing for temporary
purposes, and is authorized to borrow money in excess of the 5% limit as
permitted by the Investment Company Act of 1940 ("1940 Act") to meet redemption
requests. The Fund will not purchase portfolio securities while borrowing
exceed 5% of the Fund's total assets. This borrowing may be unsecured. The
1940 Act requires the Fund to maintain continuous asset coverage of 300% of the
amount borrowed. If the 300% asset coverage should decline as a result of
market fluctuations or other reasons, the Fund may be required to sell some of
its portfolio holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. Borrowing may exaggerate the effect
on net asset value of any increase of decrease in the market value of the Fund.
Money borrowed will be subject to interest costs which may or may not be
recovered by an appreciation of the securities purchased. The Fund may also be
required to maintain minimum average balances in connection with such borrowing
or to pay a commitment or other fee to maintain a line of credit; either of
these requirements would
5
<PAGE>
increase the cost of borrowing over the stated interest rate. The Fund may, in
connection with permissible borrowing, transfer as collateral securities owned
by the Portfolio.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment restrictions that
may not be changed without the affirmative vote of the holders of a majority of
the Fund's outstanding voting securities. The Fund may not:
1. make further investments when 25% or more of its total assets
would be invested in any one industry (securities issued or guaranteed
by the United States Government, its agencies or instrumentalities are
not considered to represent industries);
2. invest more than 5% of the Fund's assets (taken at market value
at the time of purchase) in the securities of any single issuer or own
more than 10% of the outstanding voting securities of any one issuer
(other than securities issued or guaranteed by the United States
Government, its agencies or instrumentalities);
3. borrow money or issue senior securities (as defined in the 1940
Act) except that the Fund may borrow (i) for temporary purposes in
amounts not exceeding 5% of its total assets and (ii) to meet
redemption requests, in amounts (when aggregated with amounts borrowed
under clause (i)) not exceeding 33 1/3% of its total assets;
4. pledge, mortgage or hypothecate its assets other than to secure
borrowing permitted by restriction 3 above;
5. make loans of securities to other persons except loans of portfolio
securities and provided the Fund may invest without limitation in
short-term obligations (including repurchase agreements) and publicly
distributed obligations;
6. underwrite securities of other issuers, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933 in
selling portfolio securities;
7. purchase or sell real estate or mortgages on real estate,
(although the Fund may invest in marketable securities secured by real
estate or interests therein or issued by companies or investment
trusts that invest in real estate or interests
6
<PAGE>
therein);
8. purchase securities on margin, or make short sales of
securities, except for the use of short-term credit necessary for the
clearance of purchases and sales of portfolio securities; or,
9. make investments for the purpose of exercising control or
management.
10. invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale of forward
foreign currency exchange contracts, financial futures contracts, and
options on financial futures contracts and options on securities and
on securities indices.
Additional investment restrictions adopted by the Fund, which may be
changed by the Board of Directors, provide that the Fund may not:
1. invest in securities issued by an investment company;
2. invest more than 15% of its net assets in securities which
cannot be readily resold because of legal or contractual restrictions
and which are not otherwise marketable;
3. invest in warrants if at the time of acquisition more than 5%
of its net assets, taken at market value at the time of purchase,
would be invested in warrants, and if at the time of acquisition more
than 2% of its total assets, taken at market value at the time of
purchase, would be invested in warrants not traded on the New York
Stock Exchange or American Stock Exchange. For purposes of this
restriction, warrants acquired by the Fund in units or attached to
securities may be deemed to be without value; or,
4. Invest more than 10% of its total assets in securities of
issuers which together with any predecessors have a record of less
than three years of continuous operation.
With the exception of the restriction on borrowing, if a percentage
restriction set forth above is adhered to at the time a transaction is effected,
later changes in percentage resulting from changes in value or in
7
<PAGE>
the number of outstanding securities of an issuer will not be considered a
violation.
DIRECTORS AND OFFICERS
The Board of Directors of the Company is responsible for the overall
management and operation of the Fund. The Directors and officers of the Company
and their principal occupations during the last five years are set forth below:
<TABLE>
<CAPTION>
Principal Occupation
Name Position with Company During Past 5 Years
---- --------------------- -------------------
<S> <C> <C>
Stephen Y. Ascher(1) Director, Chief Chairman, Director and
Executive Officer; Chief Executive Officer
Chief Financial of the Underwriter;
Officer, Treasurer Chairman, Director and
Shareholder of Capital
Management Group
registered investment
adviser.
Steven W. Arnold(1) Director, President Officer, Director and
and Secretary Shareholder of Capital
Management Group; Marketing
Manager for Robert Bender
& Associates.
L. David Tisdale(1)(2) Director Chairman of the Board
of Directors, Chief
Executive Officer,
Shareholder and President
of the Sub-Investment
Adviser
Robert L. Bender(1)(2) Director Chairman of the Board of
Directors, Chief Executive
Officer, Shareholder and
President of Robert Bender
& Associates, a registered
investment adviser
Hugh M. Grant Director Partner with Ernst &
Young, certified public
accountants
Watson M. Laetsch Director Former Vice-chancellor,
University of California,
Berkeley; Consultant to
non-profit corporations
and foreign entities.
John W. Svendsen Director Investor
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Name Position with Company During Past 5 Years
---- --------------------- -------------------
<S> <C> <C>
Robert A. Graham, Jr. Assistant Secretary Attorney
</TABLE>
(1) Director who is an "interested person" of the Company, as defined in the
1940 Act.
(2) "Controlling person" of the Investment Adviser, as defined in the 1940 Act.
<TABLE>
<CAPTION>
Total
Aggregate Compensation
Compensation from from Company
Name of Director Company and
Fund Complex
<S> <C> <C>
Hugh M. Grant $1,000 per year $2,000
plus $250 per meeting
Watson M. Laetsch $1,000 per year $2,000
plus $250 per meeting
John W. Svendsen $1,000 per year $2,000
plus $250 per meeting
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The investment adviser of the Fund is Robert Bender & Associates (the
"Investment Adviser"), in which Robert L. Bender owns a controlling interest.
It has been retained under an Investment Advisory Agreement (the "Advisory
Agreement") with the Fund Manager, SBG Capital Management, subject to the
authority of the Board of Directors. The Investment Adviser was incorporated in
December, 1978.
Under the terms of the Advisory Agreement, the Fund Manager furnishes
continuing investment supervision to the Fund and is responsible for the
management of the Fund's portfolio. The responsibility for making decisions to
buy, sell or hold a particular security rests with the Investment Adviser,
subject to review by the Board of Directors. However, pursuant to the Sub-
Advisory Agreement, the Investment Adviser makes the day to day decisions with
regard to the Fund.
For its services, the Fund Manager receives from the Fund a monthly fee at
an annual rate of 1.25% of the Fund's average daily net assets.
The Investment Adviser is paid by the Fund Manager monthly at an annual
rate of 0.50% of the Fund's average daily net assets.
The Advisory Agreement and Sub-Advisory Agreement will continue in effect
for a period of two years from their effective date. If not sooner terminated,
the Advisory Agreement and Sub-Advisory Agreement will continue in effect for
successive one year periods thereafter, provided that each continuance is
specifically approved annually by (a) the vote of a
9
<PAGE>
majority of the Company's Board of Directors who are not parties to the
Agreement or interested persons (as defined in the 1940 Act), cast in person at
a meeting called for the purpose of voting on approval; and, (b) either (i) the
vote of a majority of the outstanding voting securities of the Fund or (ii) the
vote of a majority of the Company's Board of Directors. The Advisory Agreement
and Sub-Advisory Agreement may be terminated at any time by the Fund on 60 days'
written notice, without the payment of any penalty, upon the vote of a majority
of the Company's Board of Directors of a majority of the outstanding voting
securities of the Fund. The Advisory Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act). The Investment Adviser
may terminate the Advisory Agreement and Sub-Advisory Agreement without penalty
on 90 days written notice to the Fund.
CUSTODIAN, DIVIDEND DISBURSING AGENT, TRANSFER AGENT AND REGISTRAR
The transfer agent, dividend disbursing agent and registrar for the shares
of the Fund is National Financial Data Services ("Transfer Agent"). Its address
is 1004 Baltimore, Kansas City, Missouri 64105. The Fund's securities and cash
are held under a Custodial Agreement with UMB Bank. Its address is 928 Grand
Boulevard, Kansas City, Missouri 64141.
INDEPENDENT ACCOUNTANTS
Deliotte Touche, LLP serves as the independent public audit services, tax
and accounting assistance, and consultation in connection with Securities and
Exchange Commission filings. Its address is 1000 Wilshire Blvd., Los Angeles,
California 90017.
COUNSEL
Dechert Price & Rhoads, 1500 K Street, N.W., Washington, D.C. 20005, has
passed upon certain legal matters in connection with the shares offered by the
Fund, and also acts as counsel to the Fund.
BROKERAGE ALLOCATION AND PORTFOLIO TRANSACTIONS
Subject to policies established by the Board of Directors of the Fund, the
Investment Adviser is responsible for investment decisions and for the execution
of the Fund's portfolio transactions. The Fund has no obligation to deal with
any particular broker or dealer in the execution of transactions in portfolio
securities. In executing such transactions, the Investment Adviser seeks to
obtain the best price and execution for its transactions. While the Investment
Adviser generally seeks reasonably competitive commission rates, the Fund does
not necessarily pay the lowest commission.
10
<PAGE>
Where best price and execution may be obtained from more than one broker or
dealer, the Investment Adviser may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and other
information to the Investment Adviser. Information so received will be in
addition to and not in lieu of the services required to be performed by the
Investment Adviser under the Sub-Advisory Agreement and the expenses of the
Investment Adviser will not necessarily be reduced as a result of the receipt of
such supplemental information. Although certain research, market and
statistical information from brokers and dealers can be useful to the Fund and
the Investment Adviser, the Investment Adviser has advised that such information
is, in its opinion, only supplementary to the Investment Adviser's own research
activities and the information must still be analyzed, weighed and reviewed by
the Investment Adviser.
The Fund will not purchase securities from, or sell securities to, the Fund
Manager or Investment Adviser. The Investment Adviser may take into account
the sale of Fund shares by a broker in allocating brokerage transactions.
It is anticipated that the Fund's annual portfolio turnover rate will not
exceed 40%. The portfolio turnover rate is calculated by dividing the lesser of
sales or purchases of portfolio securities by the average monthly value of the
Fund's portfolio securities. For purposes of this calculation, portfolio
securities exclude securities having a maturity when purchased of one year or
less. The turnover rate has a direct effect on the transaction costs (including
brokerage costs) to be borne by the Fund.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Purchase and redemptions are discussed in the Prospectus under the headings
"Purchase of Shares," "Redemption of Shares," and "Net Asset Value", and that
information is incorporated herein by reference.
The Fund reserves the right to suspend or postpone redemptions during any
period when: (i) trading on the New York Stock Exchange is restricted, as
determined by the Securities and Exchange Commission, or that Exchange is closed
for other than customary weekend and holiday closing; (ii) the Securities and
Exchange Commission has by order permitted such suspension or postponement for
the protection of shareholders; or (iii) an emergency, as determined by the
Securities and Exchange Commission, exists, making disposal of portfolio
securities or valuation of net assets of the Fund not reasonably practicable.
The Fund may, at its discretion, redeem an investor's shares if the net
asset value of such shares is less than $ 500; provided that involuntary
redemptions will not result from fluctuations in the value of an investor's
shares. In addition, the Fund may redeem the shares of any investor who has
failed to provide the Fund with a certified taxpayer identification number or
11
<PAGE>
such other tax-related certifications as the Fund may require. A notice of
redemption, sent by first-class mail to the investor's address of record, will
fix a date not less than 30 days after the mailing date, and shares will be
redeemed at the net asset value at the close of business on that date unless
sufficient additional shares are purchased to bring the aggregate account value
up to $500 or more, or unless a certified taxpayer identification number (or
such other information as the Fund has requested) has been provided, as the case
may be. A check for the redemption proceeds payable to the investor will be
mailed to the investor at the address of record.
PRICING OF SHARES
As indicated under "Net Asset Value" in the Prospectus, the Fund's net
asset value per share for the purpose of pricing purchase and redemption orders
is determined at or about 4:00 p.m. Eastern Standard Time on each day the Fund
is open for business and the New York Stock Exchange is open for trading. Net
asset value will not be determined on the following holidays: New Year's Day,
Martin Luther King, Jr. Day, Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and the Monday's
before New Year's Day, Independence Day, and Christmas Day if any of these
holidays fall on a Tuesday, and the Friday's after New Year's Day, Independence
Day, or Christmas Day if any of these holidays falls on a Thursday, and the
Friday after Thanksgiving Day. The value of portfolio securities that are
traded on stock exchange outside the United States are based upon the price on
the exchange as of the close of business of the exchange immediately preceding
the time of valuation.
TAX STATUS
The Fund intends to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, the Fund generally must, among other things, (a) derive in each
taxable year at least 90% of its gross income from dividends, interest, payments
with respect to certain securities loans, and gains from the sale or other
disposition of stock, other securities or other income derived with respect to
its business of investing in such stock or other, securities; (b) derive in each
taxable year less than 30% of its gross income from the sale or other
disposition of assets held less than three months, (i) stock or securities; and
(c) diversify its holdings so that, at the end of each fiscal
12
<PAGE>
quarter, (i) at least 50% of the market value of the Fund's assets is
represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with cash other securities
limited, in respect of any one issuer, to an amount not greater than 5% of the
value of the Fund's total assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities of any one issuer (other than U.S. Government
securities and the securities of other regulated investment companies).
As a regulated investment company, the Fund generally will not be subject
to U.S. Federal income tax on its income and gains that it distributes to
shareholders, if at least 90% of its investment company taxable income (which
includes, among other items, dividends, interest and the excess of any short-
term capital gains over long-term capital losses) for the taxable year is
distributed. The Fund intends to distribute substantially all of such income.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax at
the Fund level. To avoid the tax, the Fund must distribute during each
calendar year, (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses) for a one-year period generally ending on October 31 of the calendar
year, and (3) all ordinary income and capital gains for previous years that were
not distributed during such years. To avoid application of the excise tax, the
Fund intends to make distributions in accordance with the calendar year
distribution requirements. A distribution will be treated as paid on December
31 of the current calendar year if it is declared by the Fund in October,
November or December of the year with a record date in such
13
<PAGE>
a month and paid by the Fund during January of the following year. Such
distributions will be taxable to shareholders in the calendar year the
distributions are declared, rather than the calendar year in which the
distributions are received.
CURRENTLY FLUCTUATIONS -- "SECTION 988" GAINS OR LOSSES
Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the Fund accrues income or other receivables
or accrues expenses or other liabilities denominated in a foreign currency and
the time the Fund actually collects such receivables or pays such liabilities
generally are treated as ordinary income or ordinary loss. Similarly, on
disposition of debt securities and certain other instruments denominated in a
foreign currency, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security and the date of
disposition also are treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "section 988" gains or losses, may increase or
decrease the amount of the Fund's investment company taxable income to be
distributed to its shareholders as ordinary income. If section 988 losses
exceed other net investment income during a taxable year, the Fund generally
would not be able to make ordinary dividend distributions, or distributions made
before the losses were realized would be recharacterized as return of capital to
shareholders for federal income tax purposes, rather than as an ordinary
dividend, reducing each shareholder's basis in his Fund shares, or as capital
gain.
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in shares of foreign corporations which may be
classified under the Code as passive foreign investment companies ("PFICs"). In
general, a foreign corporation is classified as a PFIC if at least one-half of
its assets constitute investment-type assets or 75% or more of its gross income
is investment-type income. If the Fund receives a so-called "excess
distribution" with respect to PFIC stock, the Fund itself may be subject to a
tax on a portion of the excess distribution, whether or not the corresponding
income is distributed by the Fund to shareholders. In general, under the PFIC
rules, an excess distribution is treated as having been realized ratably over
the period during which the Fund held the PFIC shares. The Fund itself will be
subject to tax on the portion, if any, of an excess distribution that is so
allocated to prior Fund taxable years and an interest factor will be added to
the tax, as if the tax had been payable in such prior taxable years. Certain
distributions from a PFIC as well as gain from the sale of PFIC shares are
treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
excess distributions might have been classified as capital gain.
14
<PAGE>
The Fund may be eligible to elect alternative tax treatment with respect to
PFIC shares. Under an election that currently is available in some
circumstances, the Fund generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis regardless of
whether distributions are received from the PFIC in a given year. If this
election were made, the special rules, discussed above, relating to the taxation
of excess distributions, would not apply. In addition, another election may be
available that would involve marking to market the Fund's PFIC shares at the end
of each taxable year (and on certain other dates prescribed in the Code), with
the result that unrealized gains are treated as though they were realized. If
this election were made, tax at the fund level under the PFIC rules would
generally be eliminated, but the Fund could, in limited circumstances, incur
nondeductible interest charges. In addition, other elections may become
available that would affect the tax treatment of PFIC shares held by the Fund.
The Fund's intention to qualify annually as a regulated investment company may
limit its elections with respect to PFIC shares.
Because the application of the PFIC rules may affect, among other things,
the character of gains, the amount of gain or loss and the timing of the
recognition of income with respect to PFIC shares, as well as subject the Fund
itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a Fund that did not invest in PFIC shares.
In addition, investment income and gains received by the Fund from sources
outside the United States may be subject to foreign taxes which were withheld at
the source. Since the percentage of the Fund's total assets which will be
invested in foreign stocks and securities will not be more than 50%, any foreign
tax credits or deductions associated with such foreign taxes will not be
available for use by its shareholders. The effective rate of foreign taxes to
which the Fund will be subject depends on the specific countries in which the
Fund's assets will be invested and the extent of the assets invested in each
such country and therefore cannot be determined in advance.
15
<PAGE>
DISTRIBUTIONS
Distributions of investment company taxable income are taxable to a U.S.
shareholder as ordinary income, whether paid in cash or shares. Dividends paid
by the Fund to a corporate shareholder, to the extent such dividends are
attributable to dividends received from U.S. corporations by the Fund, may
qualify for the dividends received deduction. However, the revised alternative
minimum tax applicable to corporations may reduce the value of the dividends
received deduction. Distributions of net capital gains (the excess of net long-
term capital gains over net short-term capital losses), if any, designated by
the Fund as capital gain dividends, are taxable as long-term capital gains,
whether paid in cash or in shares, regardless of how long the shareholder has
held the Fund's shares and are not eligible for the dividends received
deduction. Shareholders receiving distributions in the form of newly issued
shares will have a cost basis in each share received equal to the net asset
value of a share of the Fund on the distribution date. Shareholders will be
notified annually as to the U.S. federal tax status of distributions and
shareholders receiving distributions in the form of newly issued shares will
receive a report as to the net asset value of the shares received.
If the net asset value of shares is reduced below a shareholder's cost as a
result of a distribution by the Fund, such distribution generally will be
taxable even though it represents a return of invested capital. Investors
should be careful to consider the tax implications of buying shares just prior
to distribution. The price of shares purchased at this time may reflect the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution which generally will be taxable to
them.
DISPOSITION OF SHARES
Upon a redemption, sale or exchange of his or her shares, a shareholder
will realize a taxable gain or loss depending upon his or her basis in the
shares. Such gain or loss will be treated as capital gain or loss if the shares
are capital assets in the shareholder's hands and generally will be long-term or
short-term, depending upon the shareholder's holding period for the shares. Any
loss realized on a redemption, sale or exchange will be disallowed to the extent
the shares disposed of are replaced (including
16
<PAGE>
through reinvestment of dividends) within a period of 61 days beginning 30 days
before and ending 30 days after the shares are disposed of. In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a shareholder on the sale of Fund shares held by the
shareholder for six months or less will be treated for tax purposes as a long-
term capital loss to the extent of any distributions of capital gain dividends
received or treated as having been received by the shareholder with respect to
such shares.
BACKUP WITHHOLDING
The Fund will be required to report to the Internal Revenue Service (the
"IRS") all distributions as well as gross proceeds from the redemption of the
Fund's shares, except in the base of certain exempt shareholders. All such
distributions and proceeds will be subject to withholding of federal income tax
at a rate of 31% ("backup withholding") in the case of non-exempt shareholders
if (1) the shareholder fails to furnish the fund with and to certify the
shareholder's correct taxpayer identification number or social security number,
(2) the IRS notifies the shareholder or the Fund that the shareholder has failed
to report properly certain interest and dividend income to the IRS and to
respond to notices to that effect, or (3) when required to do so, the
shareholder fails to certify that he or she is not subject to backup
withholding. If the withholding provisions are applicable, any such
distributions or proceeds, whether reinvested in additional shares or taken in
cash, will be reduced by the amounts required to be withheld.
OTHER TAXATION
Distributions may also be subject to additional state, local and foreign
taxes depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ significantly from
those summarized above. This discussion does not purport to deal with all of
the tax consequences applicable to the Fund or shareholders. Shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Fund.
DISTRIBUTION OF FUND SHARES
Ascher/Decision Services, Inc. serves as the Fund's Distributor pursuant to
a Distribution Contract ("Distribution Contract") with the Fund. The
Distributor is not obligated to sell any specific amount of Fund shares.
17
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include its yield and total return in
advertisements, sales literature, or reports to shareholders or prospective
investors.
Quotations of yield for the Fund will be based on all investment income per
share during a particular 30-day (or one accrued during the period ("net
investment income"), and are computed by dividing net investment income by the
maximum offering price per share on the last day of the period, according to the
following formula:
6
2 [ (a-b + 1) - 1]
-------
cd
where a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends; and,
d = the maximum offering price per share on the last day of the
period.
Quotations of average annual total return for the Fund will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the Fund over periods of 1, 5, and 10 years (up to the life of the
Fund), calculated pursuant to the following formula:
n
P (1 + T) = ERV
where P = a hypothetical initial payment of $1,000;
T = the average annual total return;
n = the number of years; and,
ERV = the ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period.
Quotations of aggregate total return for the Fund may be shown for periods of
less than one year, calculated pursuant to the following formula: P (1 + T) =
ERV, where P and ERV have the same meaning as indicated above, and T = the
aggregate total return. All total return figures reflect the deduction of Fund
expenses on an annual basis, and assume that all dividends and
18
<PAGE>
distributions are reinvested when paid. Quotations of total return may also be
shown for other periods.
In reports or other communications to shareholders or in advertising
material, the Fund's performance may be compared with that of other mutual funds
listed in the rankings prepared by Lipper Analytical Services, Inc. or similar
independent services that monitor the performance of mutual funds or with other
appropriate indices of investment securities such as the Standard & Poor's 500
Composite Stock Price Index and the Dow Jones Industrial Average. The
performance information may also include evaluations of the Fund published by
nationally recognized financial publications such as Barron's, Business Week,
CDA Investment Technologies, Inc., Forbes, Fortune, Institutional Investor,
Investor's Daily, Kiplinger's Personal Finance Magazine, Money, Morningstar
Mutual Fund Values, The New York Times, USA Today and The Wall Street Journal.
The Investment Adviser may also report to shareholders or to the public in
advertisements on the comparative performance or standing of the Investment
Adviser in relation to other money managers. Such comparative information may
be compiled or provided by independent ratings services or by news
organizations. Any performance information, whether related to the Fund or the
Investment Adviser, should be considered in light of the Fund's investment
objectives and policies, characteristics and quality of the Fund's portfolio,
and the market conditions during the given time period, and should not be
considered to be representative of what may be achieved in the future.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectus do not contain
all the information included in the Fund's registration statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 with respect
to the securities offered hereby, certain portions of which have been omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
The registration statement, including the exhibits filed therewith, may be
examined at the offices of the Securities and Exchange Commission in Washington,
D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract of other documents referred to are not necessarily complete, and, in
such instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respect by such reference.
19
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of the Bender Growth Fund:
We have audited the accompanying statement of net assets of the Bender
Growth Fund (the "Fund"), as of March 31, 1997, and the related statements of
operations, changes in net assets, and financial highlights for the period
December 10, 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 Bender Growth Fund at March 31, 1997, and the results of its operations,
changes in net assets, and financial highlights for the period December 10,
1996 (inception) to March 31, 1997, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Los Angeles, California
May 22, 1997
F-1
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
STATEMENT OF NET ASSETS
MARCH 31, 1997
THE BENDER GROWTH FUND
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ----------
<S> <C> <C>
COMMON STOCKS (93.0%)
AUTOMOTIVE (2.4%)
Autozone* 3,890 $ 87,525
----- ----------
COMMUNICATIONS (10.7%)
Abacus Direct* 4,550 96,687
Ascend Communications* 2,110 85,983
P-Com* 3,610 93,860
Sawtek* 3,665 105,369
----- ----------
381,399
----------
COMPUTERS & SERVICES (37.6%)
CBT Group PLC ADR* 2,378 118,603
Checkpoint Software* 5,540 113,570
Cisco Systems* 2,270 109,244
Gartner Group, C1 A* 3,680 79,580
Hummingbird Communications* 3,960 103,950
Informix* 3,225 48,777
Legato Systems* 4,960 82,578
Microsoft* 1,150 105,441
Network Appliance* 3,105 100,912
Oracle* 3,050 117,615
Sun Microsystems* 2,980 86,047
Synopsys* 3,600 90,000
Verifone* 2,970 97,268
Versatility* 9,490 92,528
----- ----------
1,346,113
----------
DRUGS (2.9%)
Watson Pharmaceuticals* 2,850 101,888
----- ----------
MEDICAL (9.1%)
Arterial Vascular Engineering* 6,620 115,850
Gulf South Medical Supply* 5,440 105,400
Quintiles Transnational* 1,920 103,440
----- ----------
324,690
----------
MISCELLANEOUS BUSINESS SERVICES (5.5%)
Forrester Research* 5,400 98,550
Paychex 2,420 99,523
----- ----------
198,073
----------
RETAIL (21.8%)
Bed Bath & Beyond* 4,165 100,741
CDW Computer Centers* 2,200 99,137
Fastenal 2,670 93,450
Home Depot 2,020 108,070
Kohl's* 2,390 101,276
Lone Star Steakhouse* 3,920 89,670
Outback Steakhouse* 4,440 88,800
Starbucks* 3,310 98,059
----- ----------
779,203
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
STATEMENT OF NET ASSETS--(CONTINUED)
MARCH 31, 1997
BENDER GROWTH FUND
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------- ----------
<S> <C> <C>
SEMICONDUCTORS (3.0%)
Intel 770 $ 107,126
------- ----------
TOTAL COMMON STOCKS
(Cost $3,976,500) 3,326,517
----------
CASH EQUIVALENT (7.5%)
United Missouri Bank AFM (Cost $267,013) 267,013 267,013
------- ----------
TOTAL INVESTMENTS (100.5%)
(Cost $4,243,513) 3,593,530
----------
OTHER ASSETS AND LIABILITIES, NET (-0.5%) (16,574)
----------
NET ASSETS:
Portfolio Shares of Y Class ($.001 par value--unlimited
authorization) based on 113,532 outstanding shares 1,117,997
Portfolio Shares of C Class ($.001 par value--unlimited
authorization) based on 320,474 outstanding shares 3,143,107
Accumulated net realized loss on investments (34,165)
Net unrealized depreciation on investments (649,983)
----------
Total Net Assets: (100.0%) $3,576,956
----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE--Y CLASS $ 8.26
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE--C CLASS $ 8.24
==========
</TABLE>
- --------
* Non-income producing security
ADR--American Depository Receipt
AFM--Automated Funds Management
C1--Class
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
BENDER
GROWTH
FUND (1)
---------
<S> <C>
INVESTMENT INCOME:
Interest Income $ 5,125
Dividend Income 353
---------
Total Investment Income 5,478
---------
EXPENSES:
Administrator Fees 18,480
Investment Advisory Fees 11,172
Custodian Fees 1,060
Transfer Agent Fees 10,217
Professional Fees 16,144
Director Fees 4,540
Registration Fees 1,859
Distribution Fees--Y Class 585
Distribution Fees--C Class 6,594
Printing Fees 2,018
Pricing Fees 504
Amortization of Deferred Organizational Costs 2,645
---------
Total Expense before Waiver of Investment Advisory Fees and
Contribution from Advisor 75,818
---------
Waiver of Investment Advisory Fees (11,172)
Contribution from Advisor (35,131)
---------
Total Expenses 29,515
---------
Net Investment Loss (24,037)
---------
Net Realized Loss on Investments (34,165)
---------
Net Unrealized Depreciation on Investments (649,983)
---------
Net Realized and Unrealized Loss on Investments (684,148)
---------
Net Decrease in Net Assets Resulting From Operations $(708,185)
=========
</TABLE>
- --------
(1) The Bender Growth Fund commenced operations on December 10, 1996.
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
BENDER
GROWTH
FUND (1)
----------
<S> <C>
INVESTENT ACTIVITIES:
Net Investment Loss $ (24,037)
Net Realized Loss on Investments (34,165)
Net Unrealized Depreciation of Investments (649,983)
----------
Decrease in Net Assets Resulting From Operations (708,185)
----------
CAPITAL SHARE TRANSACTIONS:
Y Class:
Proceeds from Shares Issued (114,467 shares) 1,127,565
Cost of Shares Redeemed (11,435 shares) (108,371)
----------
Total Y Class Transactions 1,019,194
----------
C Class:
Proceeds from Shares Issued (333,060 shares) 3,283,062
Cost of Shares Redeemed (12,586 shares) (122,115)
----------
Total C Class Transactions 3,160,947
----------
Net Increase in Net Assets from Capital Share Transactions 4,180,141
----------
TOTAL INCREASE IN NET ASSETS 3,471,956
----------
NET ASSETS:
Beginning of Period (10,500 shares) 105,000
----------
NET ASSETS:
End of Period (434,006 shares) $3,576,956
==========
</TABLE>
- --------
(1) The Bender Growth Fund commenced operations on December 10, 1996.
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT ACTIVITIES
----------------------
RATIO OF NET
RATIO OF INVESTMENT
NET RATIO OF RATIO OF EXPENSES INCOME TO
REALIZED NET EXPENSES NET TO AVERAGE AVERAGE
NET ASSET AND ASSET TO INVESTMENT NET ASSETS NET ASSETS
VALUE NET UNREALIZED VALUE NET ASSETS AVERAGE INCOME TO (EXCLUDING (EXCLUDING
BEGINNING INVESTMENT LOSS ON END OF TOTAL END OF NET AVERAGE WAIVERS AND WAIVERS AND
OF PERIOD LOSS INVESTMENTS PERIOD RETURN PERIOD ASSETS NET ASSETS CONTRIBUTIONS) CONTRIBUTIONS)
---------------------- ----------- ------ ------ ---------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bender Growth Fund
- ------------------
Y Class
For the period December 10, 1996 thru March 31, 1997:
1997 $10.00 (0.044) (1.696) $8.26 (17.40)%* $ 937,321 2.75%* (2.16)%* 7.88%* (7.29)%*
C Class
For the period December 10, 1996 thru March 31, 1997:
1997 $10.00 (0.059) (1.701) $8.24 (17.60)%* $2,639,635 3.50%* (2.88)%* 8.70%* (8.08)%*
<CAPTION>
PORTFOLIO AVERAGE
TURNOVER COMMISSION
RATE RATE(A)
--------- ----------
<S> <C> <C>
Bender Growth Fund
- ------------------
Y Class
For the period December 10, 1996 thru March 31, 1997:
1997 3% $0.0893
C Class
For the period December 10, 1996 thru March 31, 1997:
1997 3% $0.0893
</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 statement.
<PAGE>
BENDER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
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 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.
F-7
<PAGE>
BENDER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1997
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.
$24,037 relating to permanent differences attributable to cumulative net
operating losses of the Bender Growth Fund as of March 31, 1997, has been
reclassified from that portfolio's accumulated net investment losses to paid-
in capital. This reclassification has no effect on net assets or net asset
value per share.
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 $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 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 1.25% of the average daily
net assets of the Fund. The Advisor has agreed to waive a portion of their
fees in order to limit the operating expenses of the Fund to 2.5% of average
net assets.
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 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 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.
F-8
<PAGE>
BENDER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1997
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 December 10, 1996 to
March 31, 1997, were $4,080,000 and $69,000, respectively.
As of March 31, 1997, net unrealized depreciation on investment securities
for book and federal income tax purposes aggregated $650,000 of which $37,000
related to appreciated securities and $687,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities for the period from December 10, 1996 to March 31, 1997.
The Fund had capital loss carry forwards at March 31, 1997, to the extent
provided in the regulations for Federal income tax in the amount of $34,000
which is available to offset future taxable gains through 2005.
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.
F-9
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
(b) Exhibits (the number of each exhibit relates to the exhibit
designation in Form N-1A):
(1)(a) Articles of Incorporation*
(b) Articles of Amendment*
(2) By-Laws*
(2)(c) Articles Supplementary***
(3) Not Applicable
(4) Not Applicable
(5)(a) Form of Investment Advisory Agreement***
(b) Form of Sub Advisory Agreement***
(6) Form of Distribution Agreement**
(7) Not Applicable
(8) Custodial Agreement**
(9)(a) Form of Transfer Agency and Service Agreement**
(10) Opinion of Counsel**
(10)(b) Consent of Counsel**
(11) Consent of Independent Auditors
(12) Not Applicable
(13) Initial Capital Agreement**
(14) Not Applicable
(15) Service and Distribution Plan***
(16) Not Applicable
(17) Not Applicable
(18) Multi-Class Plan**
- --------------------
* Filed in the Registrant's initial Registration Statement on December 30,
1992 and incorporated by reference herein.
** Filed in Pre-effective Amendment No. 4 on October 4, 1996 and
incorporated herein by this reference.
*** Filed in Post Effective Amendment No. 1 on October 24, 1996 and
incorporated herein by this reference.
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
-------------------------------------------------------------
None
Item 26. Number of Holders of Securities.
-------------------------------
As of the date of this Registration Statement, there are two hundred
eighteen shareholders of record of Registrant's C Class shares and
fifty-eight shareholders of the Y Class shares.
Item 27. Indemnification.
---------------
Reference is made to Article 7.6 in the Registrant's Articles of
Incorporation, which are incorporated by reference herein.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Fund's Articles of Incorporation,
its By-Laws or otherwise, the Registrant is aware that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such directors, officers or
controlling persons in connection with shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a Court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 28. Business and Other Connections of the Fund Manager and Investment
-----------------------------------------------------------------
Adviser
-------
FUND MANAGER
------------
SBG Capital Management, Inc.
----------------------------
<TABLE>
<CAPTION>
Name Position with Other Affiliations
- ---- ------------- ------------------
Fund Manager
------------
<S> <C> <C>
Stephen Y. Ascher Chief Executive Director, Chief Executive
Officer, Chief Officer, Chief Financial
Financial Officer Officer, Treasurer of the
Company
Steven W. Arnold President, Secretary Director, Chief Financial
Officer, Secretary of the
</TABLE>
<PAGE>
Company
INVESTMENT ADVISER
------------------
Robert Bender & Associates
--------------------------
<TABLE>
<CAPTION>
Name Position with Advisor Other Affiliations
- ---- --------------------- ------------------
<S> <C> <C>
Robert L. Bender Director, President, Director of the Company
Treasurer
Reed G. Bender Vice President None
Sandra M. Bender Secretary None
</TABLE>
Item 29. Principal Underwriters
----------------------
(a) Ascher/Decision Services, Inc. ("Ascher") serves as Distributor
of shares of the Fund.
(b) The directors and officers of Ascher are set forth below. Unless
otherwise indicated, their address is 333 South Grand Ave, Suite
4075, Los Angeles, California 90071.
<TABLE>
<CAPTION>
Name Positions and Positions and
- ---- ------------- -------------
Registrant Offices with Ascher Offices with Registrant
- ---------- ------------------- -----------------------
<S> <C> <C>
Stephen Y. Ascher Director, President Director, Chief
and Treasurer Executive Officer,
Chief Financial
Officer, Treasurer
Sheldyn Ascher Montagne Secretary None
John McCutcheon Director None
517-1177 W. Hastings
Vancouver, B.C. Canada
</TABLE>
(c) Not Applicable
<PAGE>
Item 30. Location of Accounts and Records
--------------------------------
The account books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of SBG Capital
Management, Inc., 333 S. Grand Avenue, Los Angeles, California 90071; the
offices of Robert Bender & Associates, 525 Starlight Crest Dr., La Canada,
California 91099 and SEI Fund Resources, 680 E. Swedesford Road, Wayne,
Pennsylvania 19087-1658.
Item 31. Management Services
-------------------
Not Applicable.
Item 32. Undertakings
------------
(a) Not Applicable.
(b) Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to
six months from the effective date of Registrant's Registration
Statement under the Securities Act of 1933.
(c) Registrant undertakes to call a meeting of Shareholders for the
purpose of voting upon the question of removal of a Director of
Directors when requested to do so by the holders of at lease 10%
of the Registrant's outstanding shares of beneficial interest and
in connection with such meeting to comply with the shareholders
communications provisions of Section 16(c) of the Investment
Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this post-
Effective Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized in the City of Los Angeles,
and State of California on this 4th day of June, 1997.
THE SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
BY: /s/ Stephen Y. Ascher
__________________________________________
Stephen Y. Ascher
Chief Executive Officer
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 2 to the Registration Statement on Form N-1A has been
signed below by the following persons on behalf of The Santa Barbara Group of
Mutual Funds, Inc. in the capacity and on the date indicated:
DATED: June 4, 1997 /s/ Stephen Y. Ascher
___________________________________
Stephen Y. Ascher, Chairman
Director, Chief Executive Officer,
Chief Financial Officer, Secretary
and Treasurer
DATED: June 4, 1997 /s/ Steven W. Arnold
___________________________________
Steven W. Arnold
Director, President, and Chief Investment
Officer, Secretary
DATED: June 4, 1997 /s/ L. David Tisdale
___________________________________
L. David Tisdale
Director
<PAGE>
DATED: June 4, 1997 /s/ Watson M. Laetsch
___________________________________
Watson M. Laetsch
Director
DATED: June 4, 1997 /s/ Hugh M. Grant
___________________________________
Hugh M. Grant
Director
DATED: June 4, 1997 /s/ John W. Svendsen
___________________________________
John W. Svendsen
Director
DATED: June 4, 1997 /s/ Robert L. Bender
___________________________________
Robert L. Bender
Director
<PAGE>
EXHIBIT (11)
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
CONSENT OF INDEPENDENT AUDITORS
Santa Barbara Group of Mutual Funds, Inc.:
We consent to (a) the use in this Post-Effective Amendment No. 2 to Registration
Statement No. 33-56546 on Form N-1A of our report dated May 22, 1997 on the
financial statements of the Bender Growth Fund of the Santa Barbara Group of
Mutual Funds, Inc. as of, and for the period ended, March 31, 1997 appearing in
Part B, the Statement of Additional Information of such Registration Statement,
(b) the reference to us under the heading "Financial Highlights" in the
Prospectus which is part of such Registration Statement, and (c) the reference
to us under the heading "Investment Advisory and Other Services" in Part B, the
Statement of Additional Information of such Registration Statement.
/s/ Deloitte & Touche LLP
Los Angeles, California
June 6, 1997
