[LOGO]
Santa Barbara Group
of Mutual Funds
The Bender Growth Fund
Annual Report
March 31, 1999
<PAGE>
LETTER TO SHAREHOLDERS
FROM THE CO-CHAIRMEN OF THE SANTA BARBARA GROUP OF MUTUAL FUNDS
Dear fellow shareholders,
The past twelve months have proved to be very profitable for all of us as
shareholders of The Bender Growth Fund. For the twelve months ended March 31,
1999, The Bender Growth Fund appreciated 19.54% (Class C shares) and 21.18%
(Class Y shares) versus 18.47% for the S&P 500. In addition, for calendar year
1998, The Bender Growth Fund appreciated 33.09% (Class C) and 34.74% (Class Y)
versus 28.57% for the S&P 500. The Bender Growth Fund outperformed the S&P 500
in calendar year 1998, when 88% of all domestic equity funds failed to do so.
Equally important are the after-tax returns of The Bender Growth Fund. Many of
us own The Bender Growth Fund in taxable accounts. In this volatile investment
market, many mutual fund managers buy and sell securities at a more frenetic
pace. Increased portfolio turnover causes many funds to declare large capital
gains distributions. The Bender Growth Fund has made no capital gains
distributions in 1997 and 1998 making it one of the most tax efficient mutual
funds in the country. There is no better feeling for a long-term investor than
to have to pay little or no capital gains tax on his or her investment holdings.
Outstanding performance and no capital gains distributions in 1997 and 1998 have
made this time period particularly profitable for all of us.
In a continuing effort to enhance performance, the majority of shareholders
voted in October of 1998 to lower the expenses of The Bender Growth Fund. We
want to convey our thanks to each shareholder for the large return of proxies.
Your votes were extremely important to us and we want to thank you for your
support.
As we move forward, our goal is to continue to develop a quality mutual fund
company. Another development in 1998 provides for the availability of the Bender
Growth Fund's daily Net Asset Value (NAV). The NAV may be found at
ROBERTBENDER.COM. The website also offers additional information including
market commentary from Bob and Reed Bender.
As always, we are very thankful for your business. Without your support,
patience and referrals, The Bender Growth Fund would be a much smaller and less
successful mutual fund today. With the combination of your support and the
investment expertise of Robert Bender & Associates, we anticipate a very
profitable future!
Thanks again for all your support!
Sincerely,
/s/ Steven W. Arnold /s/ John P. Odell
Steven W. Arnold John P. Odell
Co-Chairman Co-Chairman
Page 1
<PAGE>
LETTER FROM THE INVESTMENT ADVISOR
Dear fellow shareholders,
Computing has become an indispensable part of business worldwide. As information
technology has delivered on its promise of greater efficiency and productivity,
companies have enthusiastically increased technology budgets. Companies are now
generating, capturing and storing data at an incredible rate. With the current
push towards Internet based technologies such as e-commerce, data generation is
exploding. The ability to store, backup, and manage data is becoming mission
critical to business.
Many existing storage management architectures are ill suited to handle the
massive volume of data expected to be generated over the next several years.
Companies are finding that their existing networks are overtaxed with this flood
of data and are seeking solutions to this ever-growing problem. We believe a
significant new storage architecture called a Storage Area Network, or SAN will
emerge as an industry standard, and that both Legato Systems and Network
Appliance are well positioned to benefit from this transformation.
Storage Area Networks deliver a key element to storage management-continuous
automated backup for less money and in less time. Storage Area Networks are
dedicated networks used solely for storage management. They are separate from
yet still connected to a companies operational network. Very simply, SAN's allow
storage software to be removed from servers and be imbedded directly into
routers, switches and fibre optics. By removing the storage software layer,
server resources are expanded and the storage management process is accelerated.
Many of the limitations of today's storage technologies are directly related to
hard cable connections which can limit both transmission speeds and distances
between servers and storage devices. Yet a new technology called fibre-channel
allows for high speed network connections and the ability to locate storage
devices anywhere in the network. Fibre-channel is the technology that has helped
fuel the emergence of SAN's.
Both Legato Systems and Network Appliance recognized the SAN market early and
optimized their products to operate on Fibre-channel. Legato's storage software
has rapidly gained market share due to its flexibility and ability to simplify
network administration. Yahoo! Recently selected Legato software to manage data
on arguably the world's busiest servers. The market for storage software is
expected to grow from 1.5 billion in 1998 to 4 billion by 2002. We believe
Legato's storage software could emerge as an industry standard.
Network Appliance approaches the SAN market from the hardware side. Their
products do one thing - move data at high speeds between disk drives and
networks by storing data in a cache system. This allows vast amounts of data to
be stored off the main network, yet be accessible at extremely high speed.
Network Appliance's products have been successful because they solve two
problems - the need for speed and the ability to scale up in size. As the SAN
market gathers momentum both Legato Systems and Network Appliance should
maintain leadership positions.
For more information on Robert Bender & Associates, please visit our website at
ROBERTBENDER.COM.
Thank you for your continued support!
Yours truly,
/s/ Robert L. Bender /s/ Reed G. Bender
Robert L. Bender Reed G. Bender
Page 2
<PAGE>
[GRAPHIC OMITTED]
GROWTH OF $10,000 FROM DECEMBER 10, 1996 THROUGH MARCH 31, 1999
March 31, 1999
--------------
Bender Growth Fund Class C $16,380
Bender Growth Fund Class Y $16,750
Standard & Poor's 500 Index $17,783
Past performance is not predictive of future results. The investment return and
principal value of an investment will fluctuate. An investor's share, when
redeemed, may be worth more or less than the original cost.
Page 3
<PAGE>
[GRAPHIC OMITTED]
INVESTMENT PERFORMANCE FOR PERIODS ENDED MARCH 31, 1999
Since Inception Last 12 Months
--------------- --------------
Bender Growth Fund Class C 63.80% 19.54%
Bender Growth Fund Class Y 67.50% 21.18%
Standard & Poor's 500 Index 77.83% 18.47%
Past performance is not predictive of future results. The investment return and
principal value of an investment will fluctuate. An investor's share, when
redeemed, may be worth more or less than the original cost.
Page 4
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
Bender Growth Fund March 31, 1999
- --------------------------------------------------------------------------------
COMMON STOCKS - 96.4% Shares Market Value
----------- ------------
COMMUNICATIONS - 1.7%
Advanced Fibre Communication * 10,770 $ 103,325
P-Com, Inc. * 11,890 90,661
-----------
193,986
-----------
COMPUTER & SERVICES - 44.6%
American Online, Inc. 4,400 642,400
CBT Group PLC ADR * 21,286 243,459
Checkpoint Software * 10,540 453,220
Cisco Systems, Inc. 5,977 654,855
Gartner Group, Inc. Class A * 8,750 197,422
Genesys Telecommunications Laboratories, Inc. * 19,090 287,543
Legato Systems, Inc. 8,260 426,422
Microsoft Corp. 4,600 412,275
Network Appliance, Inc. 16,380 829,237
Networks Associates, Inc. 4,020 123,364
Oracle Corp. 13,905 366,744
Smallworldwide PLC ADR * 18,200 109,200
Synopsys, Inc. * 7,550 405,812
-----------
5,151,953
-----------
ELECTRONIC EQUIPMENT - 9.5%
Ciena Corp. * 5,100 114,750
Sawtek, Inc. * 15,905 536,794
Uniphase Corp. * 3,860 444,383
-----------
1,095,927
-----------
MEDICAL - 2.4%
Medtronic, Inc. 3,859 276,883
-----------
OIL FIELD MACHINE & EQUIPMENT - 2.2%
Dril-Quip, Inc. * 11,310 249,527
-----------
PHARMACEUTICAL - 3.4%
Watson Pharmaceuticals, Inc. * 8,790 387,859
-----------
RETAIL - 19.9%
Bed Bath & Beyond, Inc. 11,870 433,255
CDW Computer Centers, Inc. 4,970 342,930
Fastenal Co. 7,440 260,865
Home Depot, Inc. 7,720 480,570
Kohl's Corp. 6,040 428,085
Starbucks Corp. 12,660 355,271
-----------
2,300,976
-----------
SERVICES - 12.7%
Abacus Direct Corp. * 7,400 606,800
Forrester Research, Inc. * 8,100 246,038
Quintiles Transnational Corp. * 9,070 342,393
Paychex, Inc. 6,045 286,760
-----------
1,481,991
-----------
TOTAL COMMON STOCKS
(Cost $7,198,887) 11,139,102
-----------
CASH EQUIVALENT - 3.4%
United Missouri Bank AFM (Cost $388,002) 388,002 388,002
-----------
TOTAL INVESTMENTS - 99.8%
(Cost $7,586,889) 11,527,104
-----------
OTHER ASSETS LESS LIABILITIES - 0.2% 29,306
-----------
NET ASSETS - 100% $11,556,410
===========
* Non-income producing security
ADR - American Depository Receipt, AFM - Automated Funds Management, PLC -
Public Limited Company
The accompanying notes are an integral part of the financial statements. See
accompanying notes to financial Statements
Page 5
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments in Securities at Market Value
(identified cost $7,586,889) (Note 1) ...................... $11,527,104
Cash ......................................................... 815
Receivables:
Dividends and Interest ..................................... 1,292
Capital Stock Sold ......................................... 24,412
Due from Advisor ............................................. 34,807
Prepaid expenses and other assets ............................ 45,161
-----------
TOTAL ASSETS ....................................... 11,633,591
-----------
LIABILITIES
Capital Stock Redeemed ....................................... 35,738
Accrued Distribution Fees .................................... 39,117
Other Liabilities ............................................ 2,326
-----------
TOTAL LIABILITIES .................................. 77,181
-----------
NET ASSETS ...................................................... $11,556,410
===========
CLASS A SHARES (NOTE 1):
Net Assets (Unlimited shares of $0.001 par beneficial
interest authorized; 2,111 shares outstanding) ............ $ 32,595
===========
Net Asset Value and Redemption Price Per Class A Share
($32,595 / 2,111 shares) .................................. $ 15.44
===========
Offering Price Per Share ($15.44 / 0.9425) .................... $ 16.38
===========
CLASS Y SHARES (NOTE 1):
Net Assets (Unlimited shares of $0.001 par beneficial
interest authorized;166,937 shares outstanding) ........... $ 2,780,576
===========
Net Asset Value and Redemption Price Per Class A Share
($2,780,576 / 166,937 shares) ............................. $ 16.64
===========
CLASS C SHARES (NOTE 1):
Net Assets (Unlimited shares of $0.001 par beneficial
interest authorized; 537,086 shares outstanding) .......... $ 8,743,239
===========
Net Asset Value and Offering Price Per Class C Share
($8,743,239 / 537,086 shares) ............................. $ 16.27
===========
Redemption Price Per Share ($16.27 * 0.99) .................... $ 16.11
===========
SOURCE OF NET ASSETS At March 31, 1999, net assets consisted of:
Paid-in Capital ............................................ 7,029,165
Accumulated Net Realized Gain on Investments ............... 587,030
Net Unrealized Appreciation on Investments ................. 3,940,215
-----------
NET ASSETS ......................................... $11,556,410
===========
The accompanying notes are an integral part of the financial statements.
Page 6
<PAGE>
<TABLE>
<CAPTION>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Bender Growth Fund
- ------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
INVESTMENT ACTIVITIES: March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Net Investment Loss $ (369,302) $ (186,963)
Net Realized Gain (Loss) on Investments 765,803 (144,608)
Net Change in Unrealized Appreciation (Depreciation) of Investments 1,478,382 3,111,816
------------ ------------
Net Increase (Decrease) in Net Assets Resulting From Operations 1,874,883 2,780,245
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Class A:
Proceeds from Shares Issued (2,111 and 0 shares, respectively) 33,034 --
Cost of Shares Redeemed -- --
------------ ------------
Total Class A Transactions 33,034 --
------------ ------------
Class Y:
Proceeds from Shares Issued (33,713 and 84,043 shares, respectively) 515,973 915,570
Cost of Shares Redeemed (34,879 and 29,360 shares, respectively) (512,309) (301,972)
------------ ------------
Total Class Y Transactions 3,664 613,598
------------ ------------
Class C:
Proceeds from Shares Issued (136,533 and 245,728 shares, respectively) 1,891,693 2,774,788
Cost of Shares Redeemed (93,347 and 71,888 shares, respectively) (1,287,019) (705,432)
------------ ------------
Total Class C Transactions 604,674 2,069,356
------------ ------------
Net Increase in Net Assets From Capital Share Transactions 641,372 2,682,954
------------ ------------
TOTAL INCREASE IN NET ASSETS 2,516,255 5,463,199
------------ ------------
NET ASSETS:
Beginning of Year (662,529 and 434,006 shares, respectively) 9,040,155 3,576,956
------------ ------------
NET ASSETS:
End of Year (706,598 and 662,529 shares, respectively) $ 11,556,410 $ 9,040,155
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 7
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended March 31, 1999
- --------------------------------------------------------------------------------
Bender Growth Fund
INVESTMENT INCOME:
Interest Income $ 14,465
Dividend Income 3,038
-----------
Total Investment Income 17,503
-----------
EXPENSES:
Investment Advisory Fees 81,359
Administration Fees 30,082
Accounting and pricing 8,242
Custodian Fees 5,025
Transfer Agent Fees 47,718
Professional Fees 15,649
Trustee Fees 4,429
Registration Fees 5,198
Service Fees - Class A 54
Service Fees - Class Y 23,939
Service Fees - Class C 73,783
Distribution Fees - Class A 12
Distribution Fees - Class Y 5,907
Distribution Fees - Class C 71,898
Printing Expense 9,387
Amortization of Deferred Organizational Costs 4,013
Miscellaneous Expenses 110
-----------
Total Expenses 386,805
-----------
Net Investment Loss (369,302)
-----------
Net Realized Gain on Investments 765,803
Change in Net Unrealized Appreciation of Investments 1,478,382
-----------
Net Realized and Unrealized Gain on Investments 2,244,185
-----------
Net Increase in Net Assets
Resulting from Operations $ 1,874,883
===========
The accompanying notes are an integral part of the financial statements.
Page 8
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
CLASS Y
----------------------------------------------------
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR DECEMBER 10, 1996*
ENDED ENDED TO
MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1997
-------------- -------------- --------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.74 $ 8.26 $ 10.00
--------- --------- ---------
Income From Investment Operations:
Net investment income (0.47) (0.22) (0.04)
Net gains (losses) on securities
(both realized and unrealized) 3.37 5.70 (1.70)
--------- --------- ---------
Total from investment operations 2.90 5.48 (1.74)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 16.64 $ 13.74 $ 8.26
========= ========= =========
TOTAL RETURN 21.11% 66.34% (17.40)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $ 2,781 $ 2,312 $ 937
Ratio of expenses to average net assets:
Before expense reimbursement 3.49% 4.59% 7.88%1
After expense reimbursement 3.49% 2.75% 2.75%1
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement (4.74)% (4.34)% (7.29)%1
After expense reimbursement (4.74)% (2.50)% (2.16)%1
Portfolio turnover rate 24.91% 7.44% 3.00%
</TABLE>
1 Annualized
* The Bender Growth Fund commenced operations on December 10, 1996.
Total return is for the period indicated and has not been annualized.
The accompanying notes are an integral part of the financial statements.
Page 9
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR DECEMBER 10, 1996*
ENDED ENDED TO
MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1997
-------------- -------------- --------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.61 $ 8.24 $ 10.00
--------- --------- ---------
Income From Investment Operations:
Net investment income (0.55) (0.28) (0.06)
Net gains (losses) on securities
(both realized and unrealized) 3.21 5.65 (1.70)
--------- --------- ---------
Total from investment operations 2.66 5.37 (1.76)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 16.27 $ 13.61 $ 8.24
========= ========= =========
TOTAL RETURN 19.54% 65.17% (17.60)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $ 8,743 $ 6,728 $ 2,640
Ratio of expenses to average net assets:
Before expense reimbursement 4.23% 5.34% 8.70%1
After expense reimbursement 4.23% 3.50% 3.50%1
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement (5.49)% (5.09)% (8.08)%1
After expense reimbursement (5.49)% (3.25)% (2.88)%1
Portfolio turnover rate 24.91% 7.44% 3.00%
</TABLE>
1 Annualized
* The Bender Growth Fund commenced operations on December 10, 1996.
Total return is for the period indicated and has not been annualized.
The accompanying notes are an integral part of the financial statements.
Page 10
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
CLASS A
--------------
FOR THE PERIOD
OCTOBER 1, 1998**
TO
MARCH 31, 1999
--------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
---------
Income From Investment Operations:
Net investment income (0.20)
Net gains (losses) on securities
(both realized and unrealized) 5.64
---------
Total from investment operations 5.44
---------
NET ASSET VALUE, END OF PERIOD $ 15.44
=========
TOTAL RETURN 54.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $ 33
Ratio of expenses to average net assets:
Before expense reimbursement 1.82%1
After expense reimbursement 1.82%1
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement (3.85)%1
After expense reimbursement (3.85)%1
Portfolio turnover rate 24.91%
1 Annualized
** The Bender Growth Fund Class A commenced operations on October 1, 1998.
The accompanying notes are an integral part of the financial statements.
Page 11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Bender Growth Fund - March 31, 1999
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 one fund: the
Bender Growth Fund (the "Fund"). The Company is registered to offer three
classes of shares, Class A, Class Y and Class C. The Fund's investment objective
is long-term capital appreciation.
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 not 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. 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, 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.
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.
The amounts of distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from those amounts determined under generally accepted accounting
principles. To the extent these book/tax differences are permanent, they are
charged or credited to paid-in capital in the period that the difference arises.
Net Asset Value Per Share - The net asset value per share of the Fund is
calculate each business day by dividing
Page 12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Bender Growth Fund - March 31, 1999
the total value of the Fund's assets, less liabilities, by the number of shares
outstanding. A sales charge may apply when purchasing Class A shares. Class C
shares redeemed within one year of purchase may be subject to a contingent
deferred sales charge equal to one-percent. The redemption price disclosed in
the financial statements for Class C shares, does not reflect the contingent
deferred sales charge.
Organizational Costs - Organizational costs 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. On July 15, 1998, an agreement was reached
with SEI Fund Resources to terminate the Fund's administration contract. SEI had
provided all organization services. The remaining balance due SEI for these
organization costs and the remaining balance of organization cost assets were
offset and eliminated.
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.
3. SERVICE AGREEMENTS
Pursuant to an investment advisory agreement, investment advisory services are
provided to the Company by SBG Capital Management (the "Advisor"). Under the
terms of a new investment advisory agreement effective September 30, 1998 the
Advisor receives a monthly fee at an annual rate of 0.50% of the average daily
net assets of the Fund. Prior to September 30, 1998 the Advisor received a
monthly fee at an annual rate of 1.25% The Advisor also agreed to reimburse the
Fund for other expenses as necessary in order to limit the operating expenses to
2.75% and 3.50% of average daily net assets of the Class Y and Class C shares,
respectively for periods after September 30, 1998. For the year ended March 31,
1999, the Advisor received advisory fees of $81,359.
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 the terms of a new sub-advisory agreement effective September 30, 1998,
the Sub-Advisor receives a monthly fee at an annual rate of 0.40% of the average
daily net assets of the fund and is paid by the Advisor. The Advisor is
responsible for the supervision and payment of fees to the Sub-Advisor in
connection with its services.
Under the terms of an Operational Services Agreement effective September 30,
1998, the Advisor will provide day-to-day operational services to the Fund. The
services agreement provides that the Advisor pays all fees and expenses
associated with the Fund. Under the terms of the agreement, the Fund will pay to
the Advisor the following fees: a monthly fee at an annual rate of 1.05% of the
average daily net assets of Class A, a monthly fee at an annual rate of 2.00% of
the average daily net assets of Class Y up to $2,500,000 and 1.05% in excess of
$2,500,000, and 2.00% of the average daily net assets of Class C up to
$7,500,000 and 1.10% in excess of $7,500,000. For the year ended March 31, 1999,
the Advisor received service fees of $97,776.
Effective August 1, 1998, Declaration Distributors, Inc. serves as Distributor
to the Fund pursuant to a Distribution Agreement. Under terms of the Plan, the
Distributor is paid an annual distribution fee of $20,000. Prior to August 1,
1998, Ascher/Decision Services, Inc. (formerly an affiliate of the Advisor)
served as Distributor to the Fund.
Page 13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Bender Growth Fund - March 31, 1999
Declaration Service Company serves as Administrator to and provides accounting
services 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
0.20% of the first $25 million in average daily net assets, 0.15% for the next
$25 million in average daily net assets, 0.10% for the next $50 million of
average daily net assets, and 0.10% for such daily net assets in excess of $100
million or a minimum of $75,000.
The Fund and United Missouri Bank (the "Custodian") are parties to a custodial
agreement under which the Custodian holds cash, securities and other assets of
the fund as required by the Investment Company Act of 1940. The Custodian plays
no role in determining the investment policies of the Fund or which securities
are to be purchased or sold by the Fund.
The Fund and Declaration Service Company (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 April 1, 1998 to March
31, 1999, were $2,762,272 and $2,295,373, respectively.
As of March 31, 1999, net unrealized appreciation on investment securities for
book and federal income tax purposes aggregated $3,940,215 of which $5,000,157
related to appreciated securities and $1,059,942 related to depreciated
securities. There was no difference between book and tax realized gains on
securities for the period from April 1, 1998 to March 31, 1999.
Page 14
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
To The Shareholders and
Board of Directors
Bender Growth Fund
We have audited the accompanying statement of assets and liabilities of the
Bender Growth Fund, including the schedule of portfolio investments, as of March
31, 1999,and the related state- ment of operations for the year then ended, the
statement of changes in net assets for the two years then ended, and financial
highlights for each of the two years then ended and the period from December 10,
1996 (commencement of operations) to March 31, 1997 in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of March 31, 1999 by correspon- dence 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Bender Growth Fund as of March 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for the two years then ended, and
the financial highlights for the two years then ended and for the period from
December 10, 1996 (commencement of operations) to March 31, 1997 in the period
then ended, in conformity with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
March 30, 1999
Page 15
<PAGE>
FUND MANAGER
SBG Capital Management Inc.
107 South Fair Oaks Avenue, Suite 315
Pasadena, CA 91105
INVESTMENT ADVISER
Robert Bender & Associates
525 Starlight Crest Drive
La Canada, CA 91011
TRANSFER AGENT
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
CUSTODIAN
UMB Bank
928 Grand Boulevard
Kansas City, MO 84141
PRINCIPAL UNDERWRITER
Declaration Distributors, Inc.
555 North Lane, Suite 6160
Conshohocken, PA 19428
INDEPENDENT ACCOUNTANTS
McCurdy & Company
Westlake, Ohio
For more complete information about any other fund in the Santa Barbara Group of
Mutual Funds, including charges and expenses, please call (626) 844-1441 or
(800) 723-8637 or write to Declaration Distributors, Inc. and request a free
prospectus. Read the prospectus carefully before you invest or send money.
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