(JEFFERSON LOGO)
JEFFERSON GROWTH & INCOME FUND
ANNUAL REPORT
October 31, 1997
(JEFFERSON LOGO)
JEFFERSON GROWTH & INCOME FUND
December 18, 1997
Dear Fellow Shareholders,
We are pleased to provide our annual report for the year ended October 31, 1997.
We welcome our many new shareholders. Since our last semi-annual report, fund
assets have grown from $6.4 million to $8.1 million, an increase of over 26%.
We continue to make positive investment progress in a difficult market
environment. Since our last report to shareholders on April 30, 1997, for the
six month period ended October 31, 1997, the net asset value of Class A shares
has increased from $11.21 to $12.26 and the net asset value of Class B shares
has increased from $11.16 to $12.20. The fund also paid two regular quarterly
dividends of $0.075 and $0.057 on Class A shares and $0.056 and $0.037 on Class
B shares during the period.
The largest capitalization stocks of the S&P 500 Index and the Dow Jones
Industrial Index have provided unusually high returns for the past few years
compared to long term historic results. Broader market indices, such as the
Value Line Composite and the Russell 2000 have shown far lower returns for the
same period. In the near term, we would expect this performance gap to narrow as
the valuation difference between larger and smaller companies comes more into
line with historic norms.
A slower domestic economy and pressure on corporate profits were our key
concerns in the last two reports to shareholders. The strong dollar and the
economic turmoil in Asia seem to be clouding the profit outlook for global
companies in 1998. The U.S. economy is also expected to be slower in 1998 as a
result of the same factors.
Avoiding negative earnings surprises continues to be a primary concern when
reviewing potential investment candidates. The number of negative earnings
surprises among public companies continues to rise as earnings estimates are
reduced for 1998. This environment, when coupled with high valuation levels,
makes it difficult to find new investment candidates for the portfolio.
Companies valuations are expensive by historic standards and market volatility
continues to be very high. Given these factors we continue to feel a defensive
portfolio of small and middle capitalization stocks is appropriate.
Sincerely,
/s/ Richard P. Imperiale
Richard P. Imperiale
Chairman
Class A - Class B -
date Class A No-Load Class B Value Line S&P 500 No-Load
9/01/95 $9,450 $10,000 $10,000 $10,000 $10,000 $10,000
10/31/95 $9,490 $10,040 $10,030 $11,490 $12,410 $10,030
10/31/96 $10,578 $11,194 $11,082 $11,032 $12,887 $11,082
10/31/97 $12,228 $12,940 $12,202 $14,033 $17,024 $12,711
,
This chart assumes an initial investment of $10,000, except for the Class A
shares with a front-end sales charge, made on 9/01/95 (inception). Class B
shares assume the deduction of the maximum Contingent Deferred Sales Charge
(CDSC) that would be applicable for a complete redemption that received the
price that was last calculated on October 31, 1997. Performance
reflects fee waivers in effect. In the absence of fee waivers, total return
would be reduced. Past performance is not predictive of future performance.
Investment return and principal value will fluctuate, so that your shares, when
redeemed, may be worth more or less than their original cost.
FOR PERIODS ENDED OCTOBER 31, 1997
----------------------------------
AVERAGE ANNUAL RATE OF RETURN % One Year Since Inception 9/01/95
- -------------------------------- -------- -----------------------
Jefferson Growth & Income Fund -
Class A No-Load 15.6% 12.7%
Jefferson Growth & Income Fund -
Class A*<F1> 9.2 9.8
Jefferson Growth & Income Fund -
Class B No-Load 14.7 11.7
Jefferson Growth & Income Fund -
Class B**<F2> 10.1 9.6
S&P 500 Stock Index***<F3> 32.1 27.8
Value Line Geometric Composite
Average****<F4> 27.2 17.9
*<F1>Reflects maximum front-end sales charge of 5.50%.
**<F2>Reflects maximum Contingent Deferred Sales Charge (CDSC) of 4.00%
effective on redemptions after one year.
***<F3>The S&P 500 Stock Index is an index of unmanaged groups of 500 selected
common stocks, most of which are listed on the New York Stock Exchange. The
Index is heavily weighted toward stocks with large market capitalizations and
represents approximately two-thirds of the total market value of all domestic
common stocks. An investment cannot be made directly in an index.
****<F4>The Value Line Geometric Composite Average is an equally weighted price
index of approximately 1,700 NYSE, AMEX and over-the-counter stocks tracked by
the "The Value Line Investment Survey."
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
ASSETS:
Investments, at current value (cost $7,645,234) $8,066,224
Dividends receivable 10,365
Interest receivable 35,106
Receivable for capital shares sold 84,423
Receivable from Distributor 3,728
Organization costs, net of accumulated amortization 58,484
Other assets 18,509
-----------
Total Assets 8,276,839
-----------
LIABILITIES:
Bank overdraft 103,337
Accrued expenses 28,257
-----------
Total Liabilities 131,594
-----------
NET ASSETS $8,145,245
===========
NET ASSETS CONSIST OF:
Capital stock $7,176,296
Undistributed net investment income 17,447
Undistributed accumulated net realized gains on investments
and option contracts expired or closed 530,512
Unrealized net appreciation on investments 420,990
-----------
Total Net Assets $8,145,245
===========
CLASS A:
Net assets $6,815,275
Shares outstanding (unlimited number authorized) 555,985
Net asset value and redemption price per share $12.26
===========
Maximum offering price per share $12.97
===========
CLASS B:
Net assets $1,329,970
Shares outstanding (unlimited number authorized) 109,031
Net asset value and offering price per share $12.20
===========
Redemption price per share, assuming maximum
contingent deferred sales charge $11.59
======
See notes to the financial statements.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
INVESTMENT INCOME:
Dividend income (net of withholding tax of $1,131) $120,259
Interest income 137,937
---------
Total investment income 258,196
--------
EXPENSES:
Investment advisory fees 38,956
Administration fees 21,286
Shareholder servicing and accounting costs 55,159
Distribution fees -- Class A 14,289
Distribution fees -- Class B 7,758
Custody fees 9,393
Federal and state registration fees 7,140
Professional fees 23,808
Reports to shareholders 4,281
Amortization of organization costs 4,170
Trustees' fees and expenses 5,093
Other 7,121
--------
Total expenses before waiver and reimbursement 198,454
Less: Waiver of expenses and reimbursement from Distributor (117,913)
---------
Net expenses 80,541
---------
NET INVESTMENT INCOME 177,655
---------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 499,294
Net realized gain on option contracts expired or closed 16,322
Change in unrealized appreciation on investments 197,932
---------
Net gain on investments 713,548
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $891,203
=========
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
OPERATIONS:
Net investment income $177,655 $89,249
Net realized gain on investments 499,294 20,069
Net realized gain on option contracts
closed or expired 16,322 5,909
Change in unrealized appreciation on investments 197,932 222,254
----------- ----------
Net increase in net assets resulting
from operations 891,203 337,481
----------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 3,545,172 3,594,458
Shares issued to holders in reinvestment
of dividends 177,534 78,069
Shares redeemed (1,388,874) (243,803)
----------- ----------
Net increase in net assets resulting
from capital share transactions 2,333,832 3,428,724
----------- ----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income (139,528) (72,952)
From net realized gains (23,710) --
----------- ----------
Total distributions to Class A shareholders (163,238) (72,952)
----------- ----------
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income (13,897) (5,582)
From net realized gains (2,292) --
----------- ----------
Total distributions to Class B shareholders (16,189) (5,582)
----------- ----------
TOTAL INCREASE IN NET ASSETS 3,045,608 3,687,671
NET ASSETS:
Beginning of year 5,099,637 1,411,966
----------- ----------
End of year (including undistributed net investment
income of $17,447 and $15,765, respectively) $8,145,245 $5,099,637
=========== ===========
See notes to the financial statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SEPTEMBER 1, 1995 1<F5>
YEAR ENDED YEAR ENDED THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996 OCTOBER 31, 1995
------------------ ------------------ ------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
-------- -------- -------- -------- -------- --------
<S>
PER SHARE DATA: <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.91 $10.87 $10.04 $10.03 $10.00 $10.00
Income from investment operations:
Net investment income 0.29 0.20 0.27 0.21 0.04 0.03
Net realized and unrealized gains on securities 1.40 1.39 0.87 0.83 -- --
------- ------- ------- ------- ------- -------
Total from investment operations 1.69 1.59 1.14 1.04 0.04 0.03
Less distributions:
Dividends from net investment income (0.29) (0.21) (0.27) (0.20) -- --
Distributions from net realized gains (0.05) (0.05) -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions (0.34) (0.26) (0.27) (0.20) -- --
------- ------- ------- ------- ------- -------
Net asset value, end of period $12.26 $12.20 $10.91 $10.87 $10.04 $10.03
======= ======= ======= ======= ======= =======
TOTAL RETURN 2<F6> 15.56% 14.68% 11.50% 10.49% 0.40%3 0.30%3
SUPPLEMENTAL DATA AND RATIOS: <F7> <F7>
Net assets, in thousands, end of period $6,815 $1,330 $4,688 $412 $1,279 $133
Ratio of net expenses to average net assets:
Before expense reimbursement 2.96% 3.71% 5.95% 6.70% 17.35%4 18.10%4
<F8> <F8>
After expense reimbursement 1.15% 1.90% 1.15% 1.90% 1.15%4 1.90%4
Ratio of net investment income <F8> <F8>
to average net assets:
Before expense reimbursement 1.01% 0.26% (1.77%) (2.52%) (14.95%)4 (15.70%)4
<F8> <F8>
After expense reimbursement 2.82% 2.07% 3.03% 2.28% 1.25%4 0.50%4
<F8> <F8>
Portfolio turnover rate 5<F9>, 6<F10> 98.37% 98.37% 131.98% 131.98% -- --
Average commission rate paid 6<F10>, 7<F11> $0.0765 $0.0765 $0.0884 $0.0884 -- --
1<F5>Commencement of operations.
2<F6>The total return calculation does not reflect the 5.5% front end sales
charge for Class A or the 5% CDSC on Class B.
3<F7>Not annualized.
4<F8>Annualized.
5<F9>During the period ended October 31, 1995, there were no sales of
securities.
6<F10>Portfolio turnover and average commission rate paid is calculated on the
basis of the Fund as a whole without distinguishing between classes of shares
issued.
7<F11>Average commission rate disclosure not required for the period ended
October 31, 1995.
See notes to the financial statements.
</TABLE>
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
NUMBER
OF SHARES VALUE
--------- ------
COMMON STOCKS -- 57.5%
Apparel -- 1.3%
21,000 Tultex Corporation *<F12> $105,000
----------
Chemicals -- 1.7%
15,000 NOVA Corporation 135,000
----------
Energy -- 2.1%
6,000 Occidental Petroleum
Corporation 167,250
----------
Entertainment & Leisure -- 2.3%
10,000 Harveys Casino Resorts 188,750
----------
Financial Services -- 3.0%
7,500 A.G. Edwards, Inc. 246,094
----------
Food, Beverage & Tobacco -- 4.2%
5,000 Bob Evans Farms, Inc. 94,687
3,000 Dole Food Company, Inc. 132,938
4,550 McCormick and Company, Inc. 113,750
----------
341,375
----------
Health Care Services -- 1.4%
3,700 Integrated Health Services, Inc. 117,475
----------
Insurance -- 1.5%
3,300 American Financial Group, Inc. 125,606
----------
Lodging -- 2.6%
10,000 Choice Hotels
International, Inc. *<F12> 175,625
3,333 Sunburst Hospitality Corp. *<F12> 33,747
----------
209,372
----------
Manufacturing -- 8.6%
10,000 Ennis Business Forms, Inc. 105,000
2,750 Hillenbrand Industries, Inc. 117,562
11,300 Hurco Companies, Inc. *<F12> 94,638
7,250 International Game Technology 185,328
13,000 Universal Forest Products, Inc. 195,000
----------
697,528
----------
Metals and Mining -- 1.3%
20,000 Free State Consolidated
Gold Mines Limited -- ADR 102,500
----------
Real Estate Investment Trusts -- 11.4%
9,500 Berkshire Realty
Company, Inc. 105,687
5,550 BRE Properties, Inc. -- Class A 152,278
7,700 Burnham Pacific
Properties, Inc. 112,612
4,000 Hospitality Properties Trust 142,250
3,500 Manufactured Home
Communities, Inc. 87,500
6,775 Merry Land & Investment
Company, Inc. 147,780
2,000 Prentiss Properties Trust 56,875
4,600 Public Storage, Inc. 126,500
----------
931,482
----------
Retail - General -- 9.0%
4,200 American Stores Company 107,887
8,000 Office Depot, Inc. *<F12> 165,000
2,000 J.C. Penney Company, Inc. 117,375
10,000 Paul Harris Stores, Inc. *<F12> 183,750
4,800 Toys "R" Us, Inc. *<F12> 163,500
----------
737,512
----------
Telecommunication Equipment -- 3.8%
10,000 Comdial Corporation *<F12> 113,750
7,100 Scientific-Atlanta, Inc. 131,794
10,000 TII Industries, Inc. *<F12> 62,500
----------
308,044
----------
Transportation -- 3.3%
2,100 Federal Express Corporation *<F12> 140,175
2,000 GATX Corporation 129,125
----------
269,300
----------
TOTAL COMMON STOCKS
(Cost $4,264,787) 4,682,288
----------
PREFERRED STOCKS -- 7.4%
Bank & Bank Holding Companies -- 1.5%
5,000 First Source Capital Trust II **<F13> 125,000
----------
Real Estate -- 1.6%
5,350 Oasis Residential, Inc. -
Convertible Preferred **<F13> 130,072
----------
Technology -- 2.2%
2,000 Microsoft Corporation -
Convertible Preferred 176,500
----------
Utilities -- 2.1%
2,250 Niagara Mohawk Power **<F13> 167,625
----------
TOTAL PREFERRED STOCK
(Cost $598,709) 599,197
----------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS AND NOTES -- 9.8%
Bank & Bank Holding Companies -- 1.9%
$150,000 Norwest Corporation **<F13>
7.68%, 05/10/02 151,933
----------
Consumer Durable -- 0.3%
20,000 BankAmerica Corporation
8.125%, 02/01/02 21,323
----------
Finance Company -- 1.5%
15,000 Ford Capital B.V.
9.125%, 05/01/98 15,236
100,000 General Motors
Acceptance Corporation
7.50%, 11/04/97 100,000
10,000 Norwest Financial, Inc.
6.50%, 11/15/97 10,002
----------
125,238
----------
Food, Beverage & Tobacco -- 0.6%
50,000 Phillip Morris Companies Inc.
8.625%, 03/01/99 51,571
----------
Industrial -- 1.9%
175,000 IVAX Corporation --
Convertible **<F13>
6.50%, 11/15/01 153,125
----------
Telephone -- 1.2%
100,000 New England Telephone
and Telegraph
5.05%, 10/01/98 99,283
----------
Utility - Electric -- 2.4%
150,000 Detroit Edison **<F13>
6.40%, 10/01/98 150,130
25,000 Minnesota Power and Light **<F13>
6.50%, 01/01/98 25,004
25,000 Ohio Power Company **<F13>
6.75%, 03/01/98 25,017
----------
200,151
----------
TOTAL CORPORATE BONDS
AND NOTES (COST $798,585) 802,624
----------
U.S. GOVERNMENT AGENCY -- 7.8%
Federal National Mortgage
Association (FNMA)
Pass-Thru Certificates
100,000 5.23%, 11/25/98 **<F13> 99,503
500,000 8.59%, 02/03/05 **<F13> 500,957
35,034 Pool #050737,
6.00%, 05/01/00 34,845
----------
TOTAL U.S. GOVERNMENT AGENCY
(COST $636,343) 635,305
----------
SHORT-TERM INVESTMENTS -- 16.5%
Variable Rate Demand Notes
384,000 American Family
Financial Services 384,000
384,000 Johnson Controls, Inc. 384,000
186,079 Pitney Bowes, Inc. 186,079
392,731 Wisconsin Electric
Power Company 392,731
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,346,810) 1,346,810
----------
TOTAL INVESTMENTS -- 99.0%
(COST $7,645,234) 8,066,224
----------
Other Assets less
Liabilities -- 1.0% 79,021
----------
TOTAL NET
ASSETS -- 100.0% $8,145,245
==========
*<F12>Non-income producing security.
**<F13>Callable.
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 1997
1) ORGANIZATION
The Jefferson Growth & Income Fund (the "Fund") is a mutual fund created by The
Jefferson Fund Group Trust (the "Trust") which was organized as a business trust
under the laws of Delaware on January 20, 1995. The Fund is one of a series
issued by the Trust, which is an open-end management company registered under
the Investment Company Act of 1940, as amended.
Between the date of organization and the commencement of operations on September
1, 1995, the Fund had no operations other than incurring organizational
expenses. These costs aggregated $65,659, which were paid by Rodman & Renshaw,
Inc. and are being amortized over the period of benefit, but not to exceed sixty
months from the date the Fund commenced operations.
The Trust is authorized to issue an unlimited number of shares without par
value. The Trust has issued two classes of shares in the Fund: Class A and
Class B. The Class A shares are subject to a service organization fee of 0.25%
pursuant to Rule 12b-1 and a front-end sales charge imposed at the time of
purchase in accordance with the Fund's prospectus. The maximum front-end sales
charge is 5.50% of the offering price or 5.82% of the net asset value. The
Class B shares are subject to a service organization fee of 0.25% and
distribution fees of 0.75% pursuant to Rule 12b-1. Certain of the Class B
shares are subject to a contingent deferred sales charge (CDSC) upon redemption
from the Fund within seven years from the time of the original purchase. Each
class of shares of the Fund has identical rights and privileges.
2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. These policies are in
conformity with generally accepted accounting principles.
a) Investment Valuation -- Securities which are traded on a national or
recognized stock exchange are valued at the last sale price on the securities
exchange on which such securities are primarily traded. Exchange-traded
securities for which there were no transactions that day are valued at the most
recent bid prices. Securities traded on only over-the-counter markets are
valued on the basis of closing over-the-counter bid prices. Instruments with a
remaining maturity of 60 days or less are valued on an amortized cost basis.
Securities for which market quotations are not readily available, and securities
which are restricted as to resale are valued at fair value as determined by the
investment adviser under the supervision of the Board of Trustees. Portfolio
securities which are primarily traded on foreign securities exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, except when an occurrence subsequent to the time a value
was so established is likely to have changed such value.
b) Federal Income Taxes -- Provision for federal income taxes or excise taxes
has not been made since the Fund has elected to be taxed as a "regulated
investment company" and intends to distribute substantially all taxable income
to its shareholders and otherwise comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies.
Generally accepted accounting principles require that permanent differences
between financial reporting and tax reporting be reclassified between various
components of net assets. On the Statement of Assets and Liabilities, as a
result of permanent book-to-tax differences, undistributed net investment income
has been decreased by $22,548, undistributed accumulated net realized gains on
investments has been increased by $14,920 and capital stock has been increased
by $7,628.
c) Income and Expenses -- The Fund is charged for those expenses that are
directly attributable to the portfolio, such as advisory, administration and
certain shareholder service fees. Net investment income other than class
specific expenses, and realized and unrealized gains and losses are allocated
daily to each class of shares based upon the relative net asset value of
outstanding shares at the beginning of the day (after adjusting for the current
capital share activity of the respective class).
d) Distributions to Shareholders -- Dividends from net investment income are
declared and paid on a calendar quarter basis. Distributions of net realized
capital gains, if any, will be declared at least annually.
e) Written Option Accounting -- When the Fund sells an option, an amount equal
to the premium received by the Fund is included in the Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current value of the
option written. When an option expires on its stipulated expiration date or the
Fund enters into a closing purchase transaction, the Fund realizes a gain or
loss if the cost of the closing purchase transaction differs from the premium
received when the option was sold without regard to any unrealized gain or loss
on the underlying security, and the liability related to such option is
eliminated. When an option is exercised, the Fund realizes a gain or loss from
the sale of the underlying security, and the proceeds from such sale are
increased by the premium originally received.
f) Futures Contracts -- The Fund may utilize futures contracts to a limited
extent for hedging purposes. The primary risks associated with the use of
futures contracts include an imperfect correlation between the change in market
value of the securities held by the Fund and the prices of futures contracts and
the possibility of an illiquid market. Futures contracts are valued based upon
their quoted daily settlement prices. Changes in initial settlement value are
accounted for as unrealized appreciation (depreciation) until the contracts are
terminated at which time realized gains and losses are recognized.
g) Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent 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.
h) Other -- Investment and shareholder transactions are recorded on trade date.
The Fund determines the gain or loss realized from the investment transactions
by comparing the original cost of the security lot sold with the net sale
proceeds. Dividend income is recognized on the ex-dividend date and interest
income is recognized on an accrual basis.
3) CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
CLASS A
---------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
--------------------- ---------------------
AMOUNT SHARES AMOUNT SHARES
-------- ------- -------- -------
Shares sold $2,692,390 231,580 $3,245,931 309,269
Shares issued
to holders in
reinvestment
of dividends 161,536 13,899 72,487 6,887
Shares
redeemed (1,358,912) (118,993) (148,321) (14,019)
---------- ---------- ---------- ---------
Net increase $1,495,014 126,486 $3,170,097 302,137
========== ========= ========== =========
CLASS B
--------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
-------------------- --------------------
AMOUNT SHARES AMOUNT SHARES
------- ------- ------- -------
Shares sold $852,782 72,259 $348,527 33,239
Shares issued
to holders in
reinvestment
of dividends 15,998 1,374 5,582 532
Shares
redeemed (29,962) (2,462) (95,482) (9,156)
--------- -------- --------- --------
Net increase $838,818 71,171 $258,627 24,615
========= ======== ========= ========
4) INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, by the Fund for the year ended October 31, 1997, were as follows:
PURCHASES SALES
--------- ------
U.S. Government $504,688 $6,810
Other $6,364,898 $4,776,431
At October 31, 1997, gross unrealized appreciation and depreciation of
investments for federal income tax purposes was as follows:
Appreciation $664,546
(Depreciation) (233,239)
--------
Net unrealized appreciation
on investments $431,307
========
At October 31, 1997, the cost of investments for federal income tax purposes was
$7,634,917.
Transactions in call options written during the year ended October 31, 1997 were
as follows:
NUMBER
(100 SHARES
PER CONTRACT) PREMIUMS
------------- --------
Options outstanding
at beginning of year 78 $13,208
Options written during
the year 263 38,947
Options expired (30) (2,039)
Options exercised (151) (28,399)
Options closed (160) (21,717)
------ --------
Options outstanding
at end of year 0 $0
===== ========
5) INVESTMENT ADVISORY AND OTHER
AGREEMENTS
Pursuant to its Advisory Agreement with the Fund, the Adviser is entitled to
receive a fee, calculated daily and payable monthly, at the annual rate of 0.60%
as applied to the Fund's daily net assets.
The Trust has entered into a distribution and servicing agreement with Rodman &
Renshaw, Inc. (the "Distributor"). The Trust has adopted a Class A Servicing
Fee Plan whereby the Fund pays the Distributor servicing fees of up to 0.25%
annually, calculated as a percentage of the Fund's average daily net assets
attributable to Class A shares. Pursuant to the Class B distribution and
servicing agreement, the Fund is authorized to pay the Distributor a
distribution fee in an amount not to exceed on an annual basis 0.75% of the
average daily net assets of the Class B shares of the Fund and a service fee in
an amount not to exceed on an annual basis 0.25% of the average daily net asset
value of the Class B shares of the Fund. The Distributor may bear various
promotional and sales related expenses, including the cost of printing and
mailing prospectuses to persons other than shareholders.
If the aggregate annual operating expenses (excluding interest, taxes, brokerage
commissions and other costs incurred in connection with the purchase or sale of
portfolio securities, and extraordinary items) exceed 1.15% and 1.90% of average
net assets for Class A and Class B shares respectively, the Distributor may
reimburse the Fund for the amount of such excess. Accordingly, for the year
ended October 31, 1997, the Distributor reimbursed the Fund $117,913. The Fund
paid brokerage commissions of $1,375 to the Distributor during the year ended
October 31, 1997.
The Distributor received front-end sales charges on Class A shares and
contingent deferred sales charges on Class B shares of $3,403 and $889,
respectively, for the year ended October 31, 1997.
6) DISTRIBUTIONS
Twenty-eight percent of the dividends paid during the fiscal year ended October
31, 1997, qualifies for the dividend received deduction available to corporate
shareholders.
END OF NOTES TO THE FINANCIAL STATEMENTS.
Effective October 31, 1997, and ratified by the Board of Trustees on
December 18, 1997, Coopers & Lybrand L.L.P. was terminated as the Fund's
independent accountants. For the years ended October 31, 1995 through
October 31, 1996, Coopers & Lybrand L.L.P. expressed an unqualified opinion on
the Fund's financial statements. There were no disagreements between Fund
management and Coopers & Lybrand L.L.P. prior to their termination. The Board of
Trustees approved the termination of Coopers & Lybrand L.L.P. and the
appointment of KPMG Peat Marwick LLP as the Fund's independent accountants.
REPORT OF INDEPENDENT ACCOUNTANTS
OCTOBER 31, 1997
The Shareholders and Board of Trustees
The Jefferson Fund Group Trust
We have audited the accompanying statement of asset and liabilities of Jefferson
Growth and Income Fund (the "Fund"), a series of The Jefferson Fund Group Trust,
including the schedule of investments, as of October 31, 1997, and the related
statement of operations, statement of changes in net assets and financial
highlights, for the year ended October 31, 1997. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The accompanying statement of changes
in net assets and financial highlights of Jefferson Growth and Income Fund for
the year ended October 31, 1996 and the financial highlights for the period
ended October 31, 1995, were audited by other auditors whose report thereon,
dated November 22, 1996, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of securities owned,
by correspondence with the custodians and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of October 31, 1997 and the results of its operations, the changes in
its net assets and the financial highlights for the year then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
November 14, 1997
INVESTMENT ADVISER
Uniplan, Inc.
839 North Jefferson Street
Suite 201
Milwaukee, WI 53202
(800) 261-9785
ADMINISTRATOR, TRANSFER AGENT,
DIVIDEND PAYING AGENT & CUSTODIAN
Firstar Trust Company
615 East Michigan Street
Milwaukee, WI 53202
DISTRIBUTOR
Rodman & Renshaw, Inc.
233 South Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Foley & Lardner
330 North Wabash Avenue
Suite 3300
Chicago, IL 60611
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP
777 East Wisconsin Avenue
Milwaukee, WI 53202
