<PAGE>
SEFTON FUNDS
SEMI-ANNUAL REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 1996
[Graphic]
<PAGE>
FUND PHILOSOPHY
U.S. GOVERNMENT FUND
The Sefton U.S. Government Fund's investment objective is to provide investors
with as high a level of current income as is consistent with preservation of
capital. The Fund pursues this objective in a consistently prudent and diverse
manner. The Fund is an intermediate-term bond fund and will have an average
maturity between 5 and 10 years. At all times the Fund will have a minimum of
65% of its assets in U.S. Government or U.S. Government Agency securities.
CALIFORNIA TAX-FREE FUND
The Sefton California Tax-Free Fund's investment objective is to provide
investors with as high a level of current income, exempt from both Federal and
California state personal income taxes, as is consistent with the preservation
of capital. The Fund will have an average maturity of 10 or more years. The
Fund generally will not purchase bond issues subject to the Alternative Minimum
Tax.
EQUITY VALUE FUND
The Sefton Equity Value Fund's objective is to provide investors with long-term
capital appreciation. The Fund pursues this objective by investing primarily in
common stocks of both domestic and foreign companies. The Fund may invest in
large, well-established companies and smaller companies with market
capitalization exceeding $50 million. Income generation is a secondary
consideration for the Fund. However, the Fund may purchase dividend paying
stocks of particular issuers when the issuer's dividend record may, in the
Adviser's opinion, have a favorable influence on the market value of the
securities.
CONTENTS
Letter from the Chairman 1
Economic Review 2
Fund Manager Interviews
U.S. Government Fund 3
California Tax-Free Fund 4
Equity Value Fund 6
Definition of Common Terms 8
Financial Statements
U.S. Government Fund 11
California Tax-Free Fund 17
Equity Value Fund 23
Notes to Financial Statements 30
<PAGE>
[Photograph]
HARLEY K. SEFTON
CHAIRMAN, SEFTON FUNDS TRUST
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
SEFTON CAPITAL MANAGEMENT
Prior to founding Sefton Capital Management., Mr. Sefton was President of First
Interstate Capital Management, Inc. (formerly San Diego Financial Capital
Management, Inc., a wholly owned subsidiary of San Diego Trust & Savings Bank).
There he was instrumental in creating the Pacifica Family of Mutual Funds which
achieved $1.2 billion in assets under management. Mr. Sefton was also associated
with San Diego Trust & Savings Bank for almost 20 years, where he most recently
served as Vice Chairman of the Board and Executive Vice President/Division
Manager of Financial Services. Mr. Sefton received his B.A. in History from the
University of San Diego.
DEAR SHAREHOLDER:
It has been an eventful year for us at Sefton Capital Management and for
the Sefton Funds.
First, in order to better reflect our ties to the San Diego community, we
changed the name of our mutual funds from the Kennebec Funds to the SEFTON FUNDS
and the name of our investment advisory firm from Kennebec Capital Management to
Sefton Capital Management. In addition, we moved our offices this year to the
Fifth Avenue Financial Centre, which San Diegans may recognize as the "Mr. A's
Building".
The Sefton Funds continue to perform well. Calendar year-to-date through
September 30, 1996, the Equity Value Fund has returned 17.02% compared to 13.47%
for the S&P 500 stock index. And despite the adverse effects of rising interest
rates, the Sefton California Tax-Free Fund has generated a positive total return
calendar year-to-date of 1.85% over this period compared to a 1.20% return for
the average California Tax-Free mutual fund in the Morningstar universe. Both
funds have earned "A" ratings from the Wall Street Journal for their one year
total returns relative to competing funds within their objective.
We have very much enjoyed the opportunity to work with you in helping to
achieve your investment goals and hope that you have found the relationship
beneficial as well.
Sincerely,
/s/ Harley K. Sefton
Harley K. Sefton
Chairman
<PAGE>
OVERALL ECONOMIC REVIEW
The U.S. economy appears to be slowing from its strong first half pace. The
preliminary report on third quarter Gross Domestic Product showed the economy
growing at a 2.2% pace, consistent with its long-run potential growth rate of
2.5%. This slower growth rate is welcome news to the financial markets, which
have been concerned over potential inflationary pressures and the possibility of
a tightening of monetary policy by the Federal Reserve.
This more reserved growth rate, combined with a recent slowdown in consumer
spending and borrowing should result in lower interest rates in the months to
come. Lower interest rates, in turn, should provide further fuel for the U.S.
equity market, whose fundamentals remain positive. Rising corporate profit
margins, rising corporate earnings, low inflation, lower interest rates, rising
stock valuations, a strong demand for equities and a prolonged economic
expansion all point to another positive year for U.S. equities in 1997.
SEFTON U.S GOVERNMENT FUND AND SEFTON CALIFORNIA TAX-FREE FUND
[Photograph]
TED J. PIORKOWSKI, C.F.A.
VICE PRESIDENT AND FUND MANAGER
(U.S. GOVERNMENT & CALIFORNIA TAX-FREE FUND)
Joining Sefton Capital Management at its inception, Mr. Piorkowski was
previously with First Interstate Capital Management, Inc. (formerly San Diego
Financial Capital Management, Inc., a wholly owned subsidiary of San Diego Trust
& Savings Bank) as Vice President and Portfolio Manager for six years. Mr.
Piorkowski functioned as a fixed-income Portfolio Manager for the Pacifica
Mutual Funds, managing $350 million in assets. His responsibilities also
included independent credit analysis and review, short-term liquidity management
and individual issue management. He was also associated with San Diego Trust &
Savings Bank as an Accounting Officer in the Comptroller's office for two years.
Mr. Piorkowski received his B.S. in Finance and an M.B.A. from San Diego State
University. He received his Chartered Financial Analyst designation in 1991 and
is a member of the Financial Analysts Society of San Diego.
2
<PAGE>
SEFTON U.S GOVERNMENT FUND
AN INTERVIEW WITH TED PIORKOWSKI, FUND MANAGER
Q. HOW DID THE SEFTON U.S. GOVERNMENT FUND PERFORM?
A. For the six month period ended September 30, 1996, the Sefton U.S. Government
Fund had a total return of 1.38%. Calendar year-to-date the total return was
- -1.24%. The one year total rate of return was 3.14%. Year-to-date interest rates
in the fund's average maturity range have risen more than 1% causing the market
value of the bonds in the Fund to decline.
Q. HOW IS THE FUND CURRENTLY STRUCTURED?
A. The Fund currently has an average portfolio maturity of 7.4 years. We
consider this a neutral position. Relative to broad fixed income indices, our
sector allocation favors treasury/agency issues over corporate bonds. We have a
market weighting in the mortgage sector.
Q. WHAT IS YOUR INTEREST RATE OUTLOOK?
A. We currently have a neutral interest rate bias, as reflected in the Fund's
average portfolio maturity positioning. We believe that current market
uncertainties concerning interest rates and relevant risk/reward opportunities
support this outlook.
Q. WHAT ARE THE MAJOR ISSUES CONCERNING BONDS FOR 1997?
A. Bonds will be focused on the strength of the economy, inflation signs and
the actions of the Federal Reserve. At this time we think that the economy will
continue to show ambiguous signs about economic strength and favorable inflation
signs. This should keep the Fed on hold well into 1997.
FUND HIGHLIGHTS AS OF SEPTEMBER 30, 1996
Net Assets $20,616,196
SECTOR DIVERSIFICATION SIGNIFICANT HOLDINGS
---------------------- --------------------
U.S. Treasury Note 6.25%
Due 02/15/2003
[Pie Chart] U.S. Treasury Note 7.50%
Due 02/15/2005
AGENCY 7%
CORPORATE 8% FHLMC 8.53%
MORTGAGE 24% Due 02/02/2005
TREASURY 55%
OTHER 6% FHLMC 7.50%
Due 04/01/2014
3
<PAGE>
SEFTON CALIFORNIA TAX-FREE FUND
AN INTERVIEW WITH TED PIORKOWSKI, FUND MANAGER
Q. HOW DID THE SEFTON CALIFORNIA TAX-FREE FUND PERFORM?
A. For the six months ended September 30, 1996, the Sefton California Tax-Free
Fund had a total return of 3.38%. Calendar year-to-date the total return was
1.85%. The one year total rate of return was 6.71%. This compares favorably to
the return of the average California Municipal Bond Fund in the Morningstar
universe of 3.11% for the six months ended September 30, 1996, 1.20% calendar
year-to-date and 5.95% for one year.
Q. HOW IS THE FUND CURRENTLY STRUCTURED?
A. The Fund currently has an average portfolio maturity of 16.6 years. The Fund
continues its "essential service" bias for most given bond issues. The Fund
reflects this "essential service" bias in its sector allocation. Currently, the
major sector allocations include: waste, water, education, transportation and
power. Also, the Fund currently has 61% of its portfolio securities enhanced
with municipal bond insurance.
Q. WHAT ARE THE MAJOR ISSUES CONCERNING CALIFORNIA TAX-FREE BONDS FOR 1997?
A. First would be the overall level of interest rates in the taxable bond
market and then the strength of the California economy. The California economy
continues to improve and provide an improving credit quality base for many bond
issues. Also, ballot propositions and state-funded transfer payments to counties
will be areas where we will be watching with great interest.
FUND HIGHLIGHTS AS OF SEPTEMBER 30, 1996
Net Assets $43,809,703
SECTOR DIVERSIFICATION SIGNIFICANT HOLDINGS
---------------------- --------------------
California Educational
[Pie Chart] Facilities-Pomona College
6.125%, Due 02/15/08
FLOATERS 1% Marin Municipal Water District
EDUCATION 13% 5.55%, Due 07/01/13
PRISONS 2%
WATER 15% M-S-R Public Power Agency
CERTIFICATES OF 6.00%, Due 07/01/20
PARTICIPATION 4%
TRANSPORTATION 11% San Diego County Regional
HOUSING 5% Transportation District Comm.
POWER 10% 5.00%, Due 04/01/07
GENERAL
OBLIGATIONS 7%
HEALTH 8%
MISC. REVENUES 10%
WASTE 14%
4
<PAGE>
SEFTON EQUITY VALUE FUND
[Photograph]
THOMAS C. BOWDEN, C.F.A.
VICE PRESIDENT AND FUND MANAGER
(EQUITY VALUE FUND)
Mr. Bowden joined Sefton Capital Management in February 1995 after serving as
Vice President and Portfolio Manager (Equity) with First Interstate Capital
Management, Inc. (formerly San Diego Financial Capital Management, Inc., a
wholly owned subsidiary of San Diego Trust & Savings Bank) for nine years.
During that time, he worked in the areas of equity analysis, trading and
portfolio management. In addition, Mr. Bowden was co-manager of the Pacifica
Equity Value and Pacifica Balanced Mutual Funds, managing over $250 million in
assets. During his tenure, he was involved in account management for
individuals, corporations and foundations. Previously, Mr. Bowden was a
Commercial Loan Officer with Bank of America for two years. He received his
B.S. in Finance and Business Economics from the University of Southern
California and an M.B.A. from the University of Chicago. He received his
Chartered Financial Analyst designation in 1989. Mr. Bowden is also a member of
the Financial Analysts Society of San Diego.
[Photograph]
LEIF O. SANCHEZ, C.F.A.
VICE PRESIDENT AND FUND MANAGER
(EQUITY VALUE FUND)
Mr. Sanchez established the equity department at Sefton Capital Management in
February 1995 after ten years as Vice President and Portfolio Manager with First
Interstate Capital Management, Inc. (formerly San Diego Financial Capital
Management, Inc., a wholly owned subsidiary of San Diego Trust & Savings Bank).
During that time he worked in the areas of equity analysis, trading and
portfolio management. Most recently, he was Co-Manager of the Pacifica Equity
Value and Pacifica Balanced Mutual Funds, managing over $250 million in assets.
He was also involved in the management of accounts for individuals, corporations
and foundations. Mr. Sanchez received a B.A. in Engineering from Harvard
University in Cambridge, Massachusetts and obtained his Chartered Financial
Analyst designation in 1989. Mr. Sanchez is also a member of the Financial
Analysts Society of San Diego.
5
<PAGE>
SEFTON EQUITY VALUE FUND
AN INTERVIEW WITH THOMAS BOWDEN AND LEIF SANCHEZ, FUND MANAGERS
Q. LEIF AND TOM, HOW HAS THE SEFTON EQUITY VALUE FUND PERFORMED?
A. During the first six months of the Fund's fiscal year, on a total return
basis (price change plus reinvested dividends) the Fund was up 7.51%. We are
satisfied with this return as the six months was a difficult period for
investors using a "value" methodology. In addition, we are pleased to report
that the Fund generated a total return of 17.02% for the first nine months of
1996. This compares to a return of 13.47% for the S&P 500 Stock Index.
Q. WHAT WERE SOME OF THE STOCKS THAT CONTRIBUTED TO THE RECENT RESULTS?
A. Top performers in the Fund during 1996 included: American Stores, Gateway
2000 (sold), Nuevo Energy (sold), SGS-Thomson Microelectronics and Swift Energy
(sold).
Q. WHAT ARE THE CHARACTERISTICS OF THE STOCKS YOU BUY?
A. We are "value" investors, which means that we look for situations where we
believe the stock price of a company does not adequately reflect the positive
fundamentals that the company possesses. Most of our larger capitalization
holdings are companies that are contrarian in nature because they are involved
in unglamorous, out-of-favor industries. Many of the smaller companies that we
buy are overlooked, neglected or misunderstood by the vast majority of
investors. Frequently, the stocks we buy have already suffered a dramatic price
decline or prolonged period of underperformance that leaves them attractively
priced relative to their peer group. In addition, most of our stocks have a
catalyst present that we expect will unlock their potential within the next
twelve months. Examples of typical catalysts would be things such as new
management, new products, major cost-cutting or a cyclical surge in
profitability. In summary, we look for stocks that possess low relative
valuation multiples and a catalyst that will help them reach normal valuation
levels within a year.
Q. HOW DO YOU MANAGE RISK IN THE FUND?
A. One of the primary advantages of stock investing with a "value" approach is
that it should limit the overall downside risk of a portfolio. In other words,
stocks that are relatively underpriced should have less distance to fall in a
market correction than stocks which are fully priced. We seek a favorable
balance between risk and reward by constructing a Fund with high liquidity and a
broad diversification of industries and sectors. For example, no more than 5% of
the Fund's net assets will generally be invested in a single security and no
economic sector will generally exceed 20% of the Fund's net assets. On occasion
foreign stocks are held, but they will generally amount to less than 10% of net
assets.
6
<PAGE>
SEFTON EQUITY VALUE FUND
AN INTERVIEW WITH THOMAS BOWDEN AND LEIF SANCHEZ, FUND MANAGERS (CONTINUED)
Q. HOW DO YOU DETERMINE WHEN TO SELL A STOCK?
A. Regardless of whether a stock has gone up or down, it is sold out of the
Fund when the stock no longer appears to be undervalued relative to its peer
group or the broad market. We may also sell a stock if an original catalyst for
higher prices no longer seems plausible or imminent. As a final risk control
measure, we sell any stock that declines by 15% from our cost or during the
course of a calendar year.
Q. WHAT RECENT CHANGES HAVE YOU MADE IN THE FUND AND HOW ARE YOU POSITIONED?
A. Activity levels in the Fund were fairly normal over the past two quarters,
despite the volatility in the financial markets. We increased our exposure to
the Utilities/REIT sector and the Services sector while decreasing our weight in
the Manufacturing, Energy and Finance sectors. At this time, the Fund has no
large or extreme sector exposures. Currently, we favor the Consumer Staples,
Services, Finance and Utilities/REIT areas of the market. We have only a
moderate weighting in the Healthcare and Manufacturing sectors.
FUND HIGHLIGHTS AS OF SEPTEMBER 30, 1996
Net Assets $43,364,108
SECTOR DIVERSIFICATION TOP TEN HOLDINGS
---------------------- ----------------
1. International Business
[Pie Chart] Machines 4.3%
2. Chase Manhattan Corp 3.7%
CASH 13.2% 3. Bristol-Myers Squibb Co. 3.3%
SERVICES 10.4% 4. Kroger Co. 3.3%
FINANCE 13.2% 5. Repsol S.A. 2.8%
BASIC INDUSTRY 6.2% 6. CSX Corp. 2.7%
UTILITIES/REITS 12.0% 7. Ryder Systems Inc. 2.7%
TECHNOLOGY 9.1% 8. Seagate Technology 2.6%
CONSUMER STAPLES 10.6% 9. Eckerd Corporation 2.6%
MANUFACTURING 5.5% 10. Great Atlantic & Pacific Tea 2.4%
CONSUMER CYCLICALS 7.8%
HEALTH CARE 4.8%
ENERGY 7.2%
7
<PAGE>
DEFINITION OF COMMON TERMS
GAIN (OR LOSS)
If a stock or bond appreciates in price, there is an unrealized gain; if it
depreciates there is an unrealized loss. A gain or loss is "realized" upon the
sale of a security; if a Fund's net gains exceed net losses, there may be a
capital gain distribution to shareholders. There could also be an ordinary
income distribution if the net gain is short term or no distribution if there is
a capital loss carryover.
DIVIDEND
Net income distributed to shareholders generated by securities in a Fund.
The Sefton U.S. Government Fund and the Sefton California Tax-Free Funds pay
dividends monthly. The Sefton Equity Value Fund pays dividends quarterly.
NET ASSET VALUE (NAV) PER SHARE
Total market value of all securities and other assets held by a Portfolio,
minus liabilities, divided by the number of shares outstanding. It is the value
of a single share of a mutual fund on a given day. The total market value of
your investment would be the NAV multiplied by the number of shares you own. NAV
generally fluctuates daily for all the Sefton Funds.
CERTIFICATES OF PARTICIPATION
Certificates of participation (COPs), or lease-secured bonds, represent a
bondholder's proportionate interest in rental payments made under a municipal
lease contract. The payments are normally made pursuant to a lease and trust
agreement. This type of tax-exempt municipal leasing has become an attractive
alternative to traditional bond financing.
INSURED BONDS
Insured Bonds refer to municipal obligations which are covered by an
insurance policy issued by independent insurance companies. The policies insure
the payment of principal and interest of the issuer. Examples of such companies
would be MBIA (Municipal Bond Investors Assurance Corporation), AMBAC (AMBAC
Indemnity Corporation) or FGIC (Federal Guaranty Insurance Company). Bonds
insured by MBIA, AMBAC and FGIC are rated AAA.
GENERAL OBLIGATION BONDS
General obligation bonds (GOs) are debts backed by the general taxing power
of the issuer. Payment of the obligation may be backed by a specific tax or the
issuer's general tax fund. Examples of GOs include sidewalk bonds, sewer bonds,
street bonds and so on. These bonds are also known as full faith and credit
bonds because the debt is a general obligation of the issuer.
REVENUE BONDS
Revenue Bonds are issued to provide capital for the construction of a
revenue-producing facility. The interest and principal payments are backed to
the extent that the facility
8
<PAGE>
DEFINITION OF COMMON TERMS (CONTINUED)
REVENUE BONDS (CONTINUED)
produces revenue to pay. Examples of revenue bonds include toll bridges, roads,
parking lots and ports. The municipality is not obligated to cover debt payments
on revenue bonds in default.
BOND RATINGS
The quality of bonds can, to some degree, be determined from the ratings of
the two most prominent rating services: Moody's and Standard & Poor's. The
ratings are used by the government and industry regulatory agencies, the
investing public, and portfolio managers as a guide to the relative security and
value of each bond. The ratings are not used as an absolute factor in
determining the strength of the pledge securing a particular issue. However,
since Moody's and Standard & Poor's rate bonds on a fee basis, some issuers
choose not to be rated. Many non-rated issues are sound investments.
DESCRIPTION OF MOODY'S BOND RATINGS:
Excerpts from Moody's description of its four highest bond ratings are
listed as follows: Aaa - judged to be the best quality and they carry the
smallest degree of investment risk; Aa - judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally know as
high grade bonds; A - possess many favorable investment attributes and are to be
considered as "upper medium grade obligations"; Baa - considered to be medium
grade obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Other Moody's bond descriptions
include: Ba - judged to have speculative elements, their future cannot be
considered as well assured; B - generally lack characteristics of the desirable
investment; Caa - are of poor standing. Such issues may be in default or there
may be present elements of danger with respect to principal or interest; Ca -
speculative in a high degree, often in default; C - lowest rated class of bonds,
regarded as having extremely poor prospects.
Moody's also supplies numerical indicators 1, 2 and 3 to rating categories.
The modifier 1 indicates that the security is in the higher end of its rating
category; the modifier 2 indicates a mid-range ranking; and modifier 3 indicates
a ranking toward the lower end of the category.
DESCRIPTION OF S&P'S BOND RATINGS:
Excerpts from S&P's description of its four highest bond ratings are listed
as follows: AAA - highest grade obligations, in which capacity to pay interest
and repay principal is extremely strong; AA - also qualify as high grade
obligations, having a very strong capacity to pay interest and repay principal,
and differs from AAA issues only in a small degree; A - regarded as upper medium
grade, having a strong capacity to pay interest and repay principal, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories;
BBB - regarded as having an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate
9
<PAGE>
DEFINITION OF COMMON TERMS (CONTINUED)
DESCRIPTION OF S&P'S BOND RATINGS (CONTINUED)
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories. This group is the
lowest which qualifies for commercial bank investment. BB, B, CCC, CC -
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with terms of the obligations; BB indicates the highest
grade and CC the lowest within the speculative rating categories.
S&P applies indicators "+," no character, and "-" to its rating categories.
The indicators show relative standing within the major rating categories.
DESCRIPTION OF MOODY'S RATINGS OF NOTES AND VARIABLE RATE DEMAND INSTRUMENTS:
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or MIG. Such ratings recognize the
differences between short-term credit and long-term risk. Short-term ratings on
issues with demand features (variable rate demand obligations) are
differentiated by the use of the VMIG symbol to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and payments
relying on external liquidity.
MIG 1/VMIG 1: This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This denotes high quality. Margins of protection are ample
although not as large as in the preceding group.
TOTAL RETURN
Total return measures a Portfolio's performance over a stated period of
time, taking into account the combination of dividends paid and the gain or loss
in the value of the securities held in the Portfolio. It may be expressed on an
average annual basis or a cumulative basis (total change over a given period).
Whenever a Portfolio, other than a Money Market Portfolio, reports any type
of performance, it must also report the average annual total return according to
the standardized calculation developed by the SEC. This standardized calculation
was introduced to help investors compare different mutual funds on an equal
performance basis. The SEC average annual total return calculation includes the
effects of all of the fund's fees and expenses, and assumes the reinvestment of
all dividends and capital gains.
10
<PAGE>
SEFTON U.S. GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996
ASSETS
Investments, at value (cost-$20,319,318) $20,453,876
Cash 562
Interest receivable 269,243
Organizational costs, net of accumulated amortization 28,247
Prepaid expenses 1,235
- --------------------------------------------------------------------------------
Total Assets 20,753,163
- --------------------------------------------------------------------------------
LIABILITIES
Payables:
Investment advisory fee 5,939
Administration 1,622
Dividends 98,329
Other 31,077
- --------------------------------------------------------------------------------
Total Liabilities 136,967
- --------------------------------------------------------------------------------
NET ASSETS $20,616,196
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $20,375,912
Undistributed net investment income 15
Accumulated net realized gain from investment transactions 105,711
Net unrealized appreciation of investments 134,558
- --------------------------------------------------------------------------------
NET ASSETS $20,616,196
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Shares of beneficial interest outstanding 1,694,690
- --------------------------------------------------------------------------------
Net asset value, offering, and redemption price per share $12.17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
11
<PAGE>
SEFTON U.S. GOVERNMENT FUND
STATEMENT OF INVESTMENTS
September 30, 1996
<TABLE>
<CAPTION>
Face Value Market Value*
- ---------- -------------
<S> <C> <C>
CORPORATE BONDS 7.58%
- ----------------------------------------------------------------------------------------
FINANCE 7.58%
- ----------------------------------------------------------------------------------------
$500,000 Integra Bank, MTN,
6.55%, 06/15/00 $ 494,448
500,000 Lehman Brothers Holdings,
8.75%, 05/15/02 532,341
500,000 Salomon Inc,
9.25%, 05/01/01 536,605
----------
TOTAL CORPORATE BONDS
(Cost $1,528,992) 1,563,394
----------
MORTGAGE-BACKED SECURITIES 23.98%
- ----------------------------------------------------------------------------------------
754,708 Federal Home Loan Mortgage Corp,
7.50%, 07/01/09 763,055
1,646,049 Federal Home Loan Mortgage Corp,
7.50%, 04/01/14 1,650,642
855,858 Federal National Mortgage Association,
7.00%, 05/01/14 839,999
729,083 Federal National Mortgage Association,
8.00%, 01/01/15 740,727
969,442 Federal Home Loan Mortgage Corp,
7.00%, 04/01/16 948,890
----------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $4,940,338) 4,943,313
----------
U.S GOVERNMENT AGENCIES 6.97%
- ----------------------------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp,
8.625%, 11/29/04 522,416
875,000 Federal Home Loan Mortgage Corp,
8.53%, 02/02/05 914,036
----------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $1,423,868) 1,436,452
----------
U.S. GOVERNMENT TREASURIES 54.62%
- ----------------------------------------------------------------------------------------
6,000,000 U.S. Treasury Strip
0.00%, 05/15/20 1,113,144
1,000,000 U.S. Treasury Bonds,
7.25%, 05/15/16 1,021,250
U.S. Treasury Notes:
1,000,000 7.75%, 02/15/01 1,049,062
2,000,000 7.50%, 05/15/02 2,094,374
1,800,000 6.25%, 02/15/03 1,771,875
1,000,000 7.25%, 08/15/04 1,035,312
1,000,000 7.875%, 11/15/04 1,073,437
</TABLE>
12
<PAGE>
SEFTON U.S. GOVERNMENT FUND
STATEMENT OF INVESTMENTS (CONTINUED)
September 30, 1996
<TABLE>
<CAPTION>
Face Value Market Value*
- ---------- --------------
<S> <C> <C>
U.S. GOVERNMENT TREASURIES (continued)
- ----------------------------------------------------------------------------------------
U.S. Treasury Notes:
$ 2,000,000 7.50%, 02/15/05 $ 2,103,124
--------------
TOTAL U.S. GOVERNMENT TREASURIES
(Cost $11,176,981) 11,261,578
--------------
REPURCHASE AGREEMENT
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS 6.06%
- ----------------------------------------------------------------------------------------
1,249,000 Repurchase agreement with State Street
Bank & Trust Company, 4.00%, dated 9/30/96
and maturing 10/01/96, collateralized by
U.S. Treasury Bonds, 10.375%, due 11/15/12
with a value of $1,274,965
(Cost $1,249,139) 1,249,139
--------------
TOTAL INVESTMENTS
(Cost $20,319,318) 99.21% $20,453,876
Other Assets in Excess of Liabilities 0.79% 162,320
--------------------------
NET ASSETS 100.00% $20,616,196
--------------------------
--------------------------
</TABLE>
* See Note 1 to Financial Statements.
13
<PAGE>
SEFTON U.S. GOVERNMENT FUND
STATEMENT OF OPERATIONS
For the Six Months Ended September 30, 1996
INVESTMENT INCOME
Interest $666,554
- --------------------------------------------------------------------------------
Total Investment Income 666,554
- --------------------------------------------------------------------------------
EXPENSES
Investment advisory fee 58,605
Administration 19,599
Fund accounting 14,603
Legal 9,900
Audit 7,793
Custodian 10,981
Amortization of organization costs 3,902
Transfer agency 10,301
Printing 1,456
Insurance 1,805
Registration 605
Trustees fee 966
Other 1,735
- --------------------------------------------------------------------------------
Total Expenses 142,251
- --------------------------------------------------------------------------------
Expenses waived by:
Investment adviser (24,419)
Administrator (6,904)
- --------------------------------------------------------------------------------
Net Expenses 110,928
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 555,626
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions (35,085)
- --------------------------------------------------------------------------------
Unrealized appreciation of investments:
Beginning of period 381,466
End of period 134,558
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (246,908)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (281,993)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $273,633
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
14
<PAGE>
SEFTON U.S. GOVERNMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six Months Ended For the Period Ended
September 30, 1996 March 31, 1996 (1)
------------------ ------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income $555,626 $1,061,238
Net realized gain/(loss) from investment transactions (35,085) 175,584
Net change in unrealized appreciation (246,908) 381,466
- --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 273,633 1,618,288
Dividends to shareholders from net investment income (555,611) (1,061,238)
Distributions to shareholders from net realized gain
from investment transactions - (34,788)
- --------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities (281,978) 522,262
- --------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Proceeds from sale of shares 1,958,263 25,698,168
Net asset value of shares issued to shareholders from
reinvestment of dividends and distributions 20,190 17,651
- --------------------------------------------------------------------------------------------------------
1,978,453 25,715,819
Cost of shares redeemed (176,627) (7,175,070)
- --------------------------------------------------------------------------------------------------------
Change in net assets from beneficial interest
transactions 1,801,826 18,540,749
- --------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 1,519,848 19,063,011
NET ASSETS:
Beginning of period 19,096,348 33,337(2)
- --------------------------------------------------------------------------------------------------------
End of period 20,616,196 $19,096,348
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fund commenced operations April 3, 1995.
(2) Initial Capitalization.
See Notes to Financial Statements.
15
<PAGE>
SEFTON U.S. GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
<TABLE>
<CAPTION>
For the Six Months Ended For the Period Ended
September 30, 1996 March 31, 1996 (1)
------------------ ------------------
<S> <C> <C>
Net asset value - beginning of period $12.35 $12.00
- --------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income 0.35 0.71
Net realized and unrealized gain from investment
transactions (0.18) 0.37
- --------------------------------------------------------------------------------------------------------
Total income from investment operations 0.17 1.08
- --------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders
Dividends from net investment income (0.35) (0.71)
Distributions from net realized gain from
investment transactions - (0.02)
- --------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.18) (0.73)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Net asset value - end of period $12.17 $12.35
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total return 1.38%(2) 9.06%(2)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $20,616 $19,096
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.13%(3) 1.02%(3)
- --------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net
assets 5.67%(3) 5.68%(3)
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets without
fee waivers 1.45%(3) 1.39%(3)
- --------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net
assets without fee waivers 5.35%(3) 5.31%(3)
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate (4) 10.77%(3) 45.41%(3)
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fund commenced operations April 3, 1995.
(2) Total return is not annualized.
(3) Annualized
(4) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with maturity dates of one year or less at the time of
acquisition) for the period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the period ended
September 30, 1996 were $2,152,480 and $999,317, respectively.
See Notes to Financial Statements.
16
<PAGE>
SEFTON CALIFORNIA TAX-FREE FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996
ASSETS
Investments, at value (cost-$42,385,345) $43,268,102
Interest receivable 781,669
Organizational costs, net of accumulated amortization 28,247
Prepaid expenses 4,450
- ---------------------------------------------------------------------------
Total Assets 44,082,468
- ---------------------------------------------------------------------------
LIABILITIES
Cash overdraft 42,798
Payables:
Investment advisory fee 13,931
Administration 3,539
Dividends 176,477
Other 36,020
- ---------------------------------------------------------------------------
Total Liabilities 272,765
- ---------------------------------------------------------------------------
NET ASSETS $43,809,703
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $42,918,429
Distributions in excess of net investment income (37)
Accumulated net realized gains 8,554
Net unrealized appreciation of investments 882,757
- ---------------------------------------------------------------------------
NET ASSETS $43,809,703
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Shares of beneficial interest outstanding 3,560,881
- ---------------------------------------------------------------------------
Net asset value, offering, and redemption price per share $12.30
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
See Notes to Financial Statements.
17
<PAGE>
SEFTON CALIFORNIA TAX-FREE FUND
STATEMENT OF INVESTMENTS
September 30, 1996
<TABLE>
<CAPTION>
Bond Ratings Market
Face Value Moody's/S&P Value*
- ---------- ----------- ------
CERTIFICATE OF PARTICIPATION 3.56%
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,500,000 West Covina, California Hospital,
Certificate of Participation, 6.50%,
08/15/14, Callable 08/15/04 @ 102.00 A/A $ 1,562,520
------------
TOTAL CERTIFICATES OF PARTICIPATION
(Cost $1,503,671) 1,562,520
------------
GENERAL OBLIGATION BONDS 6.97%
- ----------------------------------------------------------------------------------------------------
1,325,000 California State, 6.25%, 04/01/08 A1/A 1,443,707
1,500,000 San Francisco City & County Public Safety,
6.50%, 06/15/08, Callable 06/15/01 @
100.00, FGIC Aaa/AAA 1,609,125
------------
TOTAL GENERAL OBLIGATION BONDS
(Cost $2,953,183) 3,052,832
------------
LEASE REVENUE BONDS 3.52%
- ----------------------------------------------------------------------------------------------------
1,000,000 California State Public Works-Department
of Corrections, 5.25%, 12/01/08, AMBAC Aaa/AAA 1,002,150
500,000 California State Public Works Board Univ,
6.625%, 10/01/10, Callable 10/01/02 @ 102.00 A/A- 538,980
------------
TOTAL LEASE REVENUE BONDS
(Cost $1,483,077) 1,541,130
------------
REVENUE BONDS 84.71%
- ----------------------------------------------------------------------------------------------------
1,500,000 California Educational Facilities Authorities,
Santa Clara, 6.25%, 02/01/16, Callable
02/01/02 @ 102.00 A1/NR 1,550,115
1,690,000 California Educational Facilities-Pomona College,
6.125%, 02/15/08, Callable 02/15/02 @ 102.00 Aa1/AA 1,785,164
2,000,000 California Health Facilities Finance-Sutter,
7.00%, 01/01/09, Callable 01/01/99 @ 102.00,
MBIA Aaa/AAA 2,135,520
1,500,000 California Health Facilities-Scripps, 6.25%,
10/01/13, Callable 10/01/01 @ 102.00, MBIA Aaa/AAA 1,566,870
1,460,000 California Housing Finance Agency, Series F,
5.95%, 08/01/14, Callable 08/01/05 @ 102.00,
MBIA Aaa/AAA 1,474,965
800,000 California Housing Finance Agency, Series L,
5.90%, 08/01/17, Callable 02/01/06 @ 102.00,
MBIA Aaa/AAA 804,520
600,000 California Pollution Control Finance Authority,
Southern California Edison Ser-A, 3.85%,
02/28/08, (1) VMIG-1/A-1 600,000
1,000,000 California State Water Resources, 6.125%,
12/01/13, Callable 12/01/01 @ 101.50 Aa/AA 1,036,730
1,000,000 Fairfield-Suisun California Sewer, 6.25%,
05/01/16, Callable 05/01/01 @ 102.00, MBIA Aaa/AAA 1,042,310
</TABLE>
18
<PAGE>
SEFTON CALIFORNIA TAX-FREE FUND
STATEMENT OF INVESTMENTS
September 30, 1996
<TABLE>
<CAPTION>
Bond Ratings Market
Face Value Moody's/S&P Value*
- ---------- ----------- ------
REVENUE BONDS (continued)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 2,000,000 Los Angeles County Public Works Financing,
6.00%, 10/01/15, Callable 10/01/04 @ 102.00 Aa/AA $ 2,011,200
1,000,000 Los Angeles Wastewater, 6.25%, 06/01/12,
Callable 06/01/02 @ 102.00, AMBAC Aaa/AAA 1,049,190
1,700,000 Marin Municipal Water District, 5.55%,
07/01/13, Callable 07/01/03 @ 102.00 A1/AA 1,666,255
1,000,000 Mountain View Shoreline Reg Park, 5.50%,
08/01/21, MBIA Aaa/AAA 974,160
1,500,000 M-S-R Public Power Agency, 6.00%, 07/01/20,
Callable 07/01/03 @ 102.00, AMBAC Aaa/AAA 1,519,695
1,500,000 Northern California Power Agency, 6.25%,
07/01/12, Callable 07/01/02 @ 102.00, MBIA Aaa/AAA 1,574,415
2,000,000 Rancho California Water District Financing
Authority, 5.875%, 11/01/10, Callable
11/01/05 @ 102.00, FGIC Aaa/AAA 2,070,760
1,215,000 Sacramento Municipal Utility District, 5.75%,
01/01/15, Callable 01/01/04 @ 102.00, MBIA Aaa/AAA 1,214,198
1,500,000 San Diego County RTD, 5.00%, 04/01/07,
FGIC Aaa/AAA 1,476,555
1,800,000 San Francisco Airport, 5.375%, 05/01/17,
Callable 05/01/02 @ 102.00, AMBAC Aaa/AAA 1,743,300
1,500,000 San Francisco Bay Area Rapid Transit, 5.50%,
07/01/15, Callable 07/01/05 @ 101.00, FGIC Aaa/AAA 1,476,600
1,500,000 San Francisco Port Commission, 5.90%,
07/01/09, Callable 07/01/04 @ 102.00 A/BBB+ 1,504,800
1,500,000 San Francisco P.U.C. Water, 6.00%, 11/01/15,
Callable 11/01/02 @ 100.00 Aa/AA 1,504,830
1,500,000 San Jose-Santa Clara Water District Financing
Authority, 5.375%, 11/15/15. Callable 11/15/05
@ 101.00, FGIC Aaa/AAA 1,454,595
1,300,000 Sunnyvale California Financing Authority,
6.30%, 10/01/17, Callable 10/01/00 @ 102.00,
MBIA Aaa/AAA 1,354,249
1,000,000 Tulare California Sewer Revenue, 5.70%,
11/15/15, Callable 11/15/06 @ 102.00 Aaa/AAA 998,770
1,500,000 University of California Regents, 6.30%,
09/01/15, Callable 09/01/03 @ 102.00 NR/A 1,521,854
------------
TOTAL REVENUE BONDS
(Cost $36,445,414) 37,111,620
------------
TOTAL INVESTMENTS
(Cost $42,385,345) 98.76% $43,268,102
Other Assets in Excess of Liabilities 1.24% 541,601
----------------------------------
NET ASSETS 100.00% $43,809,703
----------------------------------
</TABLE>
(1) Floating rate security - rate disclosed as of September 30, 1996.
* See Note 1 to Financial Statements.
19
<PAGE>
SEFTON CALIFORNIA TAX-FREE FUND
STATEMENT OF OPERATIONS
For the Six Months Ended September 30, 1996
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest $1,231,010
- -------------------------------------------------------------------------------------
Total Investment Income 1,231,010
- -------------------------------------------------------------------------------------
EXPENSES
Investment advisory fee 128,958
Administration 42,986
Fund accounting 14,882
Legal 20,062
Audit 7,793
Custodian 9,863
Amortization of organization costs 3,902
Transfer agency 10,531
Printing 3,143
Insurance 2,093
Registration 2,015
Trustees fee 2,121
Other 4,209
- -------------------------------------------------------------------------------------
Total Expenses 252,558
- -------------------------------------------------------------------------------------
Expenses waived by:
Investment adviser (42,968)
Administrator (21,914)
- -------------------------------------------------------------------------------------
Net Expenses 187,676
- -------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,043,334
- -------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 8,693
- -------------------------------------------------------------------------------------
Unrealized appreciation of investments:
Beginning of period 505,735
End of period 882,757
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation 377,022
- -------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 385,715
- -------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,429,049
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
SEFTON CALIFORNIA TAX-FREE FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six Months Ended For the Period Ended
September 30, 1996 March 31, 1996 (1s)
------------------ -------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income $1,043,334 $1,843,435
Net realized gain from investment transactions 8,693 22,588
Net change in unrealized appreciation 377,022 505,735
- --------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,429,049 2,371,758
Dividends to shareholders from net investment income (1,043,334) (1,843,435)
Distributions to shareholders from net realized
gains from investment transactions - (22,588)
Distribution to shareholders in excess of net investment
income (37) -
Distribution to shareholders in excess of net realized gains - (139)
- --------------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities 385,678 505,596
- --------------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Proceeds from sale of shares 823,434 43,276,260
Net asset value of shares issued to shareholders
from reinvestment of dividends and distributions 7,970 8,890
- --------------------------------------------------------------------------------------------------------------
831,404 43,285,150
Cost of shares redeemed - (1,231,462)
- --------------------------------------------------------------------------------------------------------------
Change in net assets from beneficial interest
transactions 831,404 42,053,688
- --------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 1,217,082 42,559,284
NET ASSETS:
Beginning of period 42,592,621 33,337(2)
- --------------------------------------------------------------------------------------------------------------
End of period $43,809,703 $42,592,621
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fund commenced operations April 3, 1995.
(2) Initial Capitalization.
See Notes to Financial Statements.
21
<PAGE>
SEFTON CALIFORNIA TAX-FREE FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
<TABLE>
<CAPTION>
For the Six Months Ended For the Period Ended
September 30, 1996 March 31, 1996 (1)
------------------ ------------------
<S> <C> <C>
Net asset value - beginning of period $12.19 $12.00
- -------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income 0.30 0.58
Net realized and unrealized gain from investment
transactions 0.11 0.20
- -------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.41 0.78
- -------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders
Dividends from net investment income (0.30) (0.58)
Distributions to shareholders from net realized gains
from investment transactions - (0.01)
- -------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.30) (0.59)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Net asset value - end of period $12.30 $12.19
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Total return 3.38%(2) 6.60%(2)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $43,810 $42,593
- -------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.87%(3) 0.83%(3)
- -------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net
assets 4.85%(3) 4.83%(3)
- -------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets without
fee waivers 1.17%(3) 1.16%(3)
- -------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net
assets without fee waivers 4.55%(3) 4.51%(3)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (4) 24.12%(3) 93.90%(3)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fund commenced operations April 3, 1995.
(2) Total return is not annualized.
(3) Annualized.
(4) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with maturity dates of one year or less at the time of
acquisition) for the period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the period ended
September 30, 1996 were $5,962,524 and $5,123,673, respectively.
See Notes to Financial Statements.
22
<PAGE>
SEFTON EQUITY VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments, at value (cost-$38,501,862) $43,563,595
Cash 60
Dividends receivable 70,796
Organizational costs, net of accumulated amortization 28,247
Prepaid expenses 4,533
- -------------------------------------------------------------------------------------
Total Assets 43,667,231
- -------------------------------------------------------------------------------------
LIABILITIES
Payables:
Investments purchased 242,500
Investment advisory fee 35,089
Administration 3,403
Other 22,131
- -------------------------------------------------------------------------------------
Total Liabilities 303,123
- -------------------------------------------------------------------------------------
NET ASSETS $43,364,108
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $34,742,815
Undistributed net investment income 3,407
Accumulated net realized gain from investment transactions 3,556,153
Net unrealized appreciation of investments 5,061,733
- -------------------------------------------------------------------------------------
NET ASSETS $43,364,108
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 2,718,359
- -------------------------------------------------------------------------------------
Net asset value, offering, and redemption price per share $15.95
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
SEFTON EQUITY VALUE FUND
STATEMENT OF INVESTMENTS
September 30, 1996
Shares Market Value*
- ------ -------------
COMMON STOCKS 86.77%
- -------------------------------------------------------------------------------
CONSUMER CYCLICALS 7.79%
- -------------------------------------------------------------------------------
30,000 Dillard Department Stores $ 967,500
70,000 Fedders Corp 420,000
15,000 J.C. Penney Company Inc 811,875
12,200 May Department Stores 593,225
25,500 Waban Inc** 583,312
-------------
3,375,912
-------------
CONSUMER STAPLES 10.64%
- -------------------------------------------------------------------------------
39,700 Eckerd Corp** 1,111,600
40,000 Great Atlantic & Pacific Tea 1,035,000
31,500 Kroger Co** 1,409,625
7,000 Philip Morris Companies Inc 628,250
25,000 Suiza Foods** 431,250
-------------
4,615,725
-------------
SERVICES 10.35%
- -------------------------------------------------------------------------------
10,000 AMR Corp** 796,250
23,000 CSX Corp 1,161,500
25,000 Illinois Central Corp 790,625
21,900 Royal Caribbean Cruises Ltd 583,088
39,100 Ryder Systems Inc 1,158,338
-------------
4,489,801
-------------
HEALTH CARE 4.83%
- -------------------------------------------------------------------------------
15,000 Bristol-Myers Squibb Co 1,445,625
41,000 Medeva PLC- Sponsored ADR 650,875
-------------
2,096,500
-------------
BASIC INDUSTRY 6.24%
- -------------------------------------------------------------------------------
6,500 Aluminum Co of America 383,500
11,000 Inco Ltd 338,250
10,000 International Paper Co 425,000
6,000 Phelps Dodge Corp 384,750
15,000 PPG Industries 815,625
7,000 Reynolds Metals Co 357,875
-------------
2,705,000
-------------
24
<PAGE>
SEFTON EQUITY VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED)
September 30, 1996
Shares Market Value*
- ------ -------------
MANUFACTURING 5.46%
- -------------------------------------------------------------------------------
31,500 Dana Corp $ 952,875
35,100 Mark IV Industries 763,425
13,000 Tenneco Inc 651,625
-------------
2,367,925
-------------
TECHNOLOGY 9.07%
- -------------------------------------------------------------------------------
15,000 International Business Machines 1,867,500
20,000 Seagate Technology** 1,117,500
20,000 SGS Thomson Microelectronics** 947,500
-------------
3,932,500
-------------
ENERGY 7.19%
- -------------------------------------------------------------------------------
50,000 Dailey Petroleum Services Corp** 437,500
20,000 Forasol - Foramer NV 242,500
36,000 Repsol S.A.- ADR 1,192,500
30,000 St. Mary Land & Exploration 495,000
34,600 Union Texas Petroleum Holdings 748,225
-------------
3,115,725
-------------
FINANCE 13.24%
- -------------------------------------------------------------------------------
20,000 Allmerica Property & Casualty 580,000
13,000 American Financial Group, Inc 409,500
10,000 BankAmerica Corp 821,250
20,000 Chase Manhattan Corp 1,602,500
19,000 Reliastar Financial Corp 902,500
20,000 Selective Insurance Croup Inc 670,000
30,000 Unicom Corp 753,750
-------------
5,739,500
-------------
UTILITIES/REITs 11.96%
- -------------------------------------------------------------------------------
31,700 Entergy Corp 855,900
55,000 Equity Inns Inc 687,500
25,000 GPU Inc 768,750
40,000 Ohio Edison 775,000
15,000 Reckson Associates Realty Corp 556,875
18,400 TriNet Corporate Realty Trust 584,200
60,000 Westcoast Energy Inc 960,000
-------------
5,188,225
-------------
25
<PAGE>
SEFTON EQUITY VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED)
September 30, 1996
Face Value Market Value*
- ---------- --------------
TOTAL COMMON STOCKS
(Cost $32,565,079) 37,626,813
--------------
REPURCHASE AGREEMENT
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS 13.69%
- -------------------------------------------------------------------------------
$ 5,936,000 Repurchase agreement with State
Street Bank & Trust Company, 4.75%,
dated 9/30/96 and maturing 10/01/96,
collateralized by U.S. Treasury
Notes, 6.00%, due 11/30/97 with a
value of $6,057,869 (Cost $5,936,783)
$ 5,936,783
--------------
TOTAL INVESTMENTS
(Cost $38,501,862) 100.46% $43,563,595
Liabilities in Excess of Other Assets (0.46)% (199,487)
-----------------------------
NET ASSETS 100.00% $43,364,108
-----------------------------
-----------------------------
* See Note 1 to Financial Statements
** Denotes non-income producing security.
26
<PAGE>
SEFTON EQUITY VALUE FUND
STATEMENT OF OPERATIONS
For the Six Months Ended September 30, 1996
INVESTMENT INCOME
Dividends $455,945
Interest 82,902
- --------------------------------------------------------------------------------
Total Investment Income $538,847
- --------------------------------------------------------------------------------
EXPENSES
Investment advisory fee 196,678
Administration 39,336
Fund accounting 14,882
Legal 13,961
Audit 7,793
Custodian 12,098
Amortization of organization costs 3,902
Transfer agency 11,847
Printing 2,721
Insurance 2,071
Registration 1,578
Trustees fee 1,831
Other 2,017
- --------------------------------------------------------------------------------
Total Expenses 310,715
- --------------------------------------------------------------------------------
Expenses waived by Administrator (13,901)
- --------------------------------------------------------------------------------
Net Expenses 296,814
NET INVESTMENT INCOME 242,033
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 2,839,278
- --------------------------------------------------------------------------------
Unrealized appreciation of investments:
Beginning of period 5,171,818
End of period 5,061,733
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (110,085)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 2,729,193
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,971,226
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
27
<PAGE>
SEFTON EQUITY VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six Months Ended For the Period Ended
September 30, 1996 March 31, 1996 (1)
------------------------ ---------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income $242,033 $430,601
Net realized gain from investment transactions 2,839,278 716,875
Net change in unrealized appreciation (110,085) 5,171,818
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,971,226 6,319,294
- --------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (234,155) (430,601)
Distributions to shareholders in excess of net investment
income - (4,471)
- --------------------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities 2,737,071 5,884,222
- --------------------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Proceeds from sale of shares 4,665,574 31,921,516
Net asset value of shares issued to shareholders from
reinvestment of dividends and distributions 52,688 38,478
- --------------------------------------------------------------------------------------------------------------------
4,718,262 31,959,994
Cost of shares redeemed (417,193) (1,551,574)
- --------------------------------------------------------------------------------------------------------------------
Change in net assets from beneficial interest
transactions 4,301,069 30,408,420
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 7,038,140 36,292,642
NET ASSETS:
Beginning of period 36,325,968 33,326(2)
- --------------------------------------------------------------------------------------------------------------------
End of period $43,364,108 $36,325,968
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
(1) Fund began operations April 3, 1995.
(2) Initial Capitalization
See Notes to Financial Statements.
28
<PAGE>
SEFTON EQUITY VALUE FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
For the Six Months Ended For the Period Ended
September 30, 1996 March 31, 1996 (1)
------------------------ ---------------------
<S> <C> <C>
Net asset value - beginning of period $14.92 $12.00
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income 0.09 0.21
Net realized and unrealized gain on investments 1.03 2.92
- -----------------------------------------------------------------------------------------------------------------
Total income from investment operations 1.12 3.13
- -----------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment
income (0.09) (0.21)
- -----------------------------------------------------------------------------------------------------------------
Net asset value - end of period $15.95 $14.92
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Total return 7.51%(2) 26.31%(2)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $43,364 $36,326
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.51%(3) 1.55%(3)
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net
assets 1.23%(3) 1.68%(3)
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets without
fee waivers 1.58%(3) 1.66%(3)
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net
assets without fee waivers 1.16%(3) 1.57%(3)
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (4) 78.20%(3) 62.76%(3)
- -----------------------------------------------------------------------------------------------------------------
Average Commission Rate 6.1059% 6.0700%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fund began operations April 3, 1995.
(2) Total return is not annualized.
(3) Annualized.
(4) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with maturity dates of one year or less at the time of
acquisition for the period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the period ended
September 30, 1996 were $15,168,151 and $13,883,265, respectively.
See Notes to Financial Statements.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Sefton Funds Trust (the "Trust"), formerly known as Kennebec Funds Trust,
was organized on January 6, 1995 as a Delaware business trust. The Trust is
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
as an open-end management investment company. The Trust offers three series of
shares - Sefton U.S. Government Fund, Sefton California Tax-Free Fund, and
Sefton Equity Value Fund (the "Funds"). The Funds commenced investment
operations on April 3, 1995. The assets for each series are segregated and
accounted for separately.
The Funds, for book and tax purposes, have a fiscal year-end of March 31.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by each Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. The
actual results could differ from those estimates.
a. INVESTMENT VALUATION: Marketable securities are valued at the last sales
price on the principal exchange or market on which they are traded; or, if there
were no sales that day, the closing bid prices are used. Securities for which
market quotations are not readily available are valued at their fair market
value as determined in good faith by or under the direction of the Board of
Trustees. Short-term securities having a remaining maturity of 60 days or less
are valued at amortized cost which approximates market value.
b. REPURCHASE AGREEMENTS: Repurchase agreements are fully collateralized by
U.S. government securities. All collateral is held by the Trust's custodian and
is monitored daily to ensure that the collateral's market value equals at least
100% of the repurchase price under the agreement. However, in the event of
default or bankruptcy by the counterparty to the agreement, realization and/or
retention of the collateral may be subject to legal proceeding. Each Fund's
policy is to limit repurchase agreement transactions to those parties deemed by
the Fund's Investment Adviser to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES: The Funds have made no provision for federal
income tax for the six months ended September 30, 1996. The Funds intend to
distribute to shareholders all taxable investment income and realized gains and
otherwise comply with the Internal Revenue Code applicable to regulated
investment companies.
d. SECURITIES TRANSACTIONS: Securities transactions are accounted for on
the date the securities are purchased or sold (trade date).
e. ORGANIZATION COSTS: Each of the Funds have deferred certain
organizational costs of $38,529. Such costs are being amortized over a 60 month
period from the commencement of operations.
f. INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date.
Interest income, which includes amortization of premium and accretion of
discount, is accrued and recorded daily.
g. DIVIDENDS, DISTRIBUTIONS AND EXPENSES: The Sefton Equity Value Fund
will distribute net investment income quarterly. The Sefton U.S. Government
Fund and Sefton California Tax-Free Fund will declare and pay dividends from net
investment income daily and monthly, respectively. Distributions of net
realized gains, if any, are declared at least once a year. Each Fund bears
expenses incurred specifically on its behalf as well as a portion of general
expenses.
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
h. CAPITAL ACCOUNTS: The Funds follow the provisions of the AICPA's
Statement of Position 93-2 "Determination , Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital Distributions by
Investment Companies" ("SOP"). The purpose of this SOP is to report
undistributed net investment income and accumulated net realized gain or loss in
such a manner as to approximate amounts available for future distributions to
shareholders, if any.
NOTE 2 - SHARES OF BENEFICIAL INTEREST
On September 30, 1996 there was an unlimited number of no par value shares
of beneficial interest authorized. Transactions in shares of beneficial
interest for the periods indicated were as follows:
<TABLE>
<CAPTION>
SEFTON U.S. GOVERNMENT FUND
FOR THE SIX MONTHS ENDED FOR THE PERIOD ENDED
SEPTEMBER 30, 1996 MARCH 31, 1996 (1)
<S> <C> <C>
Shares sold 161,839 2,107,816
- -----------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends 1,664 1,396
- -----------------------------------------------------------------------------------------------
Total 163,503 2,109,212
- -----------------------------------------------------------------------------------------------
Shares redeemed (14,626) (563,399)
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Net increase 148,877 1,545,813
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SEFTON CALIFORNIA TAX-FREE FUND
FOR THE SIX MONTHS ENDED FOR THE PERIOD ENDED
SEPTEMBER 30, 1996 MARCH 31, 1996 (1)
<S> <C> <C>
Shares sold 67,474 3,592,659
- -----------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends 655 723
- -----------------------------------------------------------------------------------------------
Total 68,129 3,593,382
- -----------------------------------------------------------------------------------------------
Shares redeemed 0 (100,630)
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Net increase 68,129 3,492,752
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SEFTON EQUITY VALUE FUND
FOR THE SIX MONTHS ENDED FOR THE PERIOD ENDED
SEPTEMBER 30, 1996 MARCH 31, 1996 (1)
<S> <C> <C>
Shares sold 308,201 2,535,361
- -----------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends 3,343 2,800
- -----------------------------------------------------------------------------------------------
Total 311,544 2,538,161
- -----------------------------------------------------------------------------------------------
Shares redeemed (27,268) (104,078)
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Net increase 284,276 2,434,083
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Fund commenced operations April 3, 1995.
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - INVESTMENT ADVISORY FEES, ADMINISTRATION FEES AND OTHER RELATED PARTY
TRANSACTIONS
Each Fund entered into an Investment Advisory Agreement with Sefton Capital
Management ("Investment Adviser"), formerly known as Kennebec Capital
Management, Inc. Pursuant to its advisory agreement with the Funds, the
Investment Adviser is entitled to an advisory fee, computed daily and payable
monthly at an annual rate of .60%, .60% and 1.00% of the average net assets for
the Sefton U.S. Government Fund, Sefton California Tax-Free Fund and Sefton
Equity Value Fund, respectively. Sefton Capital Management voluntarily waived a
portion of its advisory fee for the six months ended September 30, 1996. Mr.
Harley K. Sefton, President and CEO of the Investment Adviser, is responsible
for the day to day management of the Funds. As of September 30, 1996,
affiliates of the Funds own 95%, 95% and 90% of the Sefton U.S. Government,
Sefton California Tax-Free and Sefton Equity Value Funds' shares outstanding,
respectively.
Each Fund entered into an Administrative Services Contract with ALPS Mutual
Funds Services, Inc. ("ALPS" or "Administrator"). The Administrator is entitled
to receive a fee from the Funds for its services computed daily and payable
monthly, at an annual rate of .20% of each Fund's average daily net assets. ALPS
voluntarily waived a portion of the administration fees for the six months ended
September 30, 1996. ALPS assisted in each of the Fund's administration and
operations, including providing office space and various legal and accounting
services in connection with the regulatory requirements applicable to each Fund.
Effective January 1, 1997, ALPS will resign as Administrator and Distributor of
the Funds and will be succeeded by BISYS Fund Services.
Certain Trustees and officers of the Funds are also Members and/or officers
of Sefton Capital Management and ALPS Mutual Funds Services, Inc. All affiliated
and access persons, as defined in the 1940 Act, follow strict guidelines and
policies on personal trading as outlined in the Trust's Code of Ethics.
Trustees and officers of the Funds who are affiliated persons receive no
compensation from the Funds. Trustees who are not interested persons of the
Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $966, $2,121 and $1,831 from the Sefton U.S.
Government Fund, Sefton California Tax-Free Fund and Sefton Equity Value Fund,
respectively, for the six months ended September 30, 1996.
NOTE 4 - UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of September 30, 1996:
<TABLE>
<CAPTION>
Sefton Sefton Sefton
U.S. Government California Equity
Fund Tax-Free Fund Value Fund
---- ------------- ----------
<S> <C> <C> <C>
Gross Appreciation (excess of value over cost) $285,444 $962,156 $5,317,203
Gross Depreciation (excess of cost over value) (150,886) (79,399) (255,470)
- -------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation $134,558 $882,757 $5,061,733
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
TRUSTEES AND OFFICERS
SEFTON FUNDS
BOARD OF TRUSTEES
HARLEY K. SEFTON* Chairman of the Board; Chairman, President and Chief
Executive Officer, Sefton Capital Management, Inc.
W. ROBERT ALEXANDER* Chairman and Chief Executive Officer, ALPS Mutual Funds
Services, Inc.
GRACE EVANS CHERASHORE Chief Executive Officer, Bahia and Catamaran Hotels.
Member of the Audit Committee and the Nominating
Committee.
GORDON T. FROST, JR. President and General Manager, Frost Hardwood Lumber
Company. Member of the Audit Committee and the
Nominating Committee.
*Trustee is considered an "interested person" of the Trust as that term is
defined in the Investment Company Act of 1940.
OFFICERS
HARLEY K. SEFTON Chairman of the Board and President
THOMAS C. BOWDEN Vice President
TED J. PIORKOWSKI Vice President
LEIF O. SANCHEZ Vice President
LANI CAPOSSERE Vice President and Secretary
WILLIAM N. PASTON Vice President and Treasurer
MARK A. POUGNET Vice President, Assistant Secretary and Assistant
Treasurer
THE VIEWS EXPRESSED IN THIS REPORT WERE THOSE OF THE FUND'S PORTFOLIO MANAGERS
AS OF THE DATE SPECIFIED, AND MAY NOT REFLECT THE VIEWS OF THE PORTFOLIO
MANAGERS ON THE DATE THEY ARE FIRST PUBLISHED OR AT ANY TIME THEREAFTER. THE
VIEWS EXPRESSED IN THIS REPORT ARE INTENDED TO ASSIST SHAREHOLDERS OF THE SEFTON
FUNDS IN UNDERSTANDING THEIR INVESTMENT IN THE FUNDS AND DO NOT CONSTITUTE
INVESTMENT ADVICE: INVESTORS SHOULD CONSULT THEIR OWN INVESTMENT PROFESSIONALS
AS TO THEIR INDIVIDUAL INVESTMENT PROGRAMS.
SEFTON CAPITAL MANAGEMENT, THE INVESTMENT ADVISER TO THE SEFTON FUNDS, IS A
PRIVATELY OWNED REGISTERED INVESTMENT ADVISER. THIS MATERIAL MUST BE ACCOMPANIED
OR PRECEDED BY A PROSPECTUS. FOR MORE COMPLETE INFORMATION ABOUT THE SEFTON
FUNDS, INCLUDING CHARGES AND EXPENSES , OBTAIN A PROSPECTUS FROM ALPS MUTUAL
FUNDS SERVICES, INC., MEMBER NASD, 370 17TH STREET, SUITE 2700, DENVER, COLORADO
80202, OR CALL TOLL FREE 1-800-524-2276. READ THE PROSPECTUS CAREFULLY BEFORE
INVESTING OR SENDING MONEY.
<PAGE>
INVESTMENT ADVISER
Sefton Capital Management
2550 Fifth Avenue, Suite 808
San Diego, California 92103
ADMINISTRATOR, SPONSOR AND DISTRIBUTOR
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street, Suite 2700
Denver, Colorado 80202
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
P. O. Box 8521
Boston, Massachusetts 02266-8521
COUNSEL
Baker & McKenzie
805 Third Avenue, 30th Floor
New York, New York 10022
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
950 Seventeenth Street, Suite 2500
Denver, Colorado 80202
FOR MORE INFORMATION CALL
SEFTON FUNDS 1-800-524-2276
THESE FUNDS ARE NOT INSURED BY SEFTON CAPITAL MANAGEMENT, THE FDIC OR ANY OTHER
INSURER.
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