(JEFFERSON FUNDS LOGO)
SEMI-ANNUAL REPORT
APRIL 30, 1999
June 10, 1999
Dear Fellow Investors,
Enclosed is the semiannual report for the period ended April 28, 1999. Since our
last letter to shareholders, I'm pleased to report some significant developments
that will benefit all shareholders. On February 28, we introduced two new funds
into the Jefferson Family to expand the investment options available to all
Jefferson Investors.
First, is the Jefferson REIT Fund, which is designed to provide shareholders
with the option of investing in a diversified portfolio of real estate holdings
through the funds ownership of publicly traded equity Real Estate Investment
Trust's (REIT's). REIT's are an emerging asset class that continues to gain
popularity with investors as a liquid alternative to direct real estate
ownership. Historically, equity REIT's have provided very competitive long-term
rates of return with attractive dividend yields and a low correlation to both
stocks and bonds. The Jefferson REIT fund allows investors to participate in a
high quality portfolio of real estate that is diversified by geographic region
and property type. REIT's have enjoyed recent media attention as a result of the
legendary value investor Warren Buffet announcing that he has personally made a
number of investments in the sector.
The other new fund, Jefferson Regional Bank Fund, was introduced to allow
investors to capitalize on the continuing trend of consolidation among small and
medium sized regional banks and thrifts. This trend is expected to accelerate
before the year end 2000, as a result of changes in how banks will be required
to account for merger transactions. The Bank Fund is managed by Marshall Capital
Management, Inc. the investment advisory affiliate of Howe Barnes Investments of
Chicago. The fund will invest primarily in securities of regional banks and
lending institutions.
In prior shareholder letters we concluded that a defensive portfolio posture was
more appropriate given the market environment. That posture proved timely as a
broad based decline in the value of small and medium sized companies occurred
during most of 1998 and early 1999. We took advantage of this weakness in the
market to expand the fund's holdings in common stocks and convertible bonds on a
highly selective basis.
Last year we also pointed out the very narrow in breadth of the stock market.
The 50 largest capitalization stocks of the S&P 500 provided most of the total
return for the S&P 500 during 1998. Broader market indices, such as the Value
Line Composite and the Russell 2000 have shown far lower returns for the same
period. Large company valuations are very high by historic standards and market
volatility continues to be high. Small and medium sized companies have more
reasonable valuation characteristics but continue to under-perform their larger
counterparts. We expected this performance gap to narrow and the valuation
difference between larger and smaller companies becomes more in line with
historic norms. I'm glad to report that since early April this gap in valuation
has begun to close benefiting many of the stocks in which the fund is invested.
It's too early to determine if this is a temporary condition, or the start of a
sustained rally in small and medium sized companies. The valuation gap is so
wide that we believe it's the latter.
The Jefferson Growth and Income Fund paid an income dividend of $.14 and $.10
for Class A and Class B shares during the period, respectively. It also paid a
capital gain dividend of $.44 for Class A and Class B shares during the period.
The Regional Bank Fund paid an income dividend of $.10 for Class A shares during
the period. The REIT Fund also paid an income dividend of $.02 for Class A
shares during the period.
We hope you'll review the new fund offerings available under the Jefferson
umbrella and consider them as potential additions to your investment portfolio.
Sincerely,
/s/ Richard P. Imperiale
Richard P. Imperiale
Chairman
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
GROWTH & REGIONAL REIT
INCOME FUND BANK FUND FUND
----------- --------- ----
<S> <C> <C> <C>
ASSETS:
Investments, at current value
(cost $8,402,757, $148, $120,550) $8,712,458 $ 148 $ 124,881
Cash -- 7,759 0
Receivable for fund shares sold -- -- 50,000
Dividends receivable 8,365 -- 304
Interest receivable 45,785 5 35
Receivable from Investment Adviser 103,614 17,660 17,615
Organization costs, net of accumulated amortization 32,662 -- --
Other assets 5,049 2,587 2,587
---------- ---------- ----------
Total Assets 8,907,933 28,159 195,422
---------- ---------- ----------
LIABILITIES:
Written options, at value (premiums received $22,985) 39,000 -- --
Payable for fund shares redeemed 6,282 -- --
Accrued expenses 45,055 17,035 17,162
---------- ---------- ----------
Total Liabilities 90,337 17,035 17,162
---------- ---------- ----------
NET ASSETS $8,817,596 $ 11,124 $ 178,260
---------- ---------- ----------
---------- ---------- ----------
NET ASSETS CONSIST OF:
Capital stock $8,719,568 $ 11,127 $ 173,625
Undistributed net investment income (loss) 6,631 (3) 304
Undistributed accumulated net realized loss on
investments and option contracts expired or closed (202,289) -- --
Unrealized net appreciation (depreciation) on:
Investments 309,701 -- --
Written options (16,015) -- 4,331
---------- ---------- ----------
Total Net Assets $8,817,596 $ 11,124 $ 178,260
---------- ---------- ----------
---------- ---------- ----------
CLASS A:
Net assets $7,552,749 $ 11,124 $ 173,221
Shares outstanding (unlimited number authorized) 684,576 1,112 16,781
Net asset value and offering price per share $ 11.03 $ 10.01 $ 10.32
---------- ---------- ----------
---------- ---------- ----------
Maximum offering price per share $ 11.67 $ 10.59 $ 10.92
---------- ---------- ----------
---------- ---------- ----------
CLASS B:
Net assets $1,264,847 $ -- $ 5,039
Shares outstanding (unlimited number authorized)1<F1> 115,323 -- 488
Net asset value and offering price per share $ 10.97 $ -- $ 10.32
---------- ---------- ----------
---------- ---------- ----------
Redemption price per share,
assuming maximum contingent deferred sales charge $ 10.42 $ -- $ 9.80
---------- ---------- ----------
---------- ---------- ----------
1<F1> No shares were issued as of April 30, 1999 for the Regional Bank Fund and the REIT Fund
</TABLE>
See notes to the financial statements.
<TABLE>
STATEMENT OF OPERATIONS
(UNAUDITED)
GROWTH & REGIONAL REIT
INCOME FUND BANK FUND FUND
SIX MONTHS ENDED MARCH 1, 19991<F2> MARCH 1, 19991<F2>
APRIL 30, 1999 APRIL 30, 1999 APRIL 30, 1999
---------------- ------------------ ------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income (net of withholding tax of $289) $ 59,834 $ -- $ 1,499
Interest income 103,262 9 68
---------- ---------- ----------
Total investment income 163,096 9 1,567
---------- ---------- ----------
EXPENSES:
Investment advisory fees 24,830 5 95
Administration fees 9,915 3,288 3,288
Shareholder servicing and accounting fees 24,777 6,980 6,980
Distribution fees -- Class A 8,690 2 39
Distribution fees -- Class B 6,628 -- --
Custody fees 2,941 598 598
Federal and state registration fees 3,354 1,325 1,325
Professional fees 15,263 4,362 4,362
Reports to shareholders 3,912 712 712
Amortization of organization costs 13,387 -- --
Trustees' fees and expenses 1,759 152 152
Other 5,836 246 246
---------- ---------- ----------
Total expense before waiver and reimbursement 121,292 17,670 17,797
Less: Waiver of expenses and reimbursement from Adviser (68,730) (17,660) (17,615)
---------- ---------- ----------
Net expenses 52,562 10 182
---------- ---------- ----------
NET INVESTMENT INCOME (LOSS): 110,534 (1) 1,385
---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments (206,250) -- --
Change in unrealized appreciation
(depreciation) on investments 1,057,523 -- 4,331
---------- ---------- ----------
Net gain on investments 851,273 -- 4,331
---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 961,807 $ (1) $ 5,716
---------- ---------- ----------
---------- ---------- ----------
1<F2> Commencement of operations
</TABLE>
See notes to the financial statements.
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
GROWTH & GROWTH & REGIONAL REIT
INCOME FUND INCOME FUND BANK FUND FUND
SIX MONTHS ENDED YEAR ENDED MARCH 1, 19991<F3>- MARCH 1, 19991<F3>-
APRIL 30, 1999 OCTOBER 31, 1998 APRIL 30, 1999 APRIL 30, 1999
---------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 110,534 $ 224,626 $ (1) $ 1,385
Net realized gain (loss) on investments (206,250) 318,750 -- --
Change in unrealized appreciation
(depreciation) on investments 1,057,523 (1,184,826) -- 4,331
---------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from operations 961,807 (641,450) (1) 5,716
---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 528,596 2,070,261 11,125 173,551
Shares issued to holders in
reinvestment of dividends 443,784 734,451 3 74
Shares redeemed (989,978) (1,238,240) -- --
---------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from capital
share transactions (17,598) 1,566,472 11,128 173,625
---------- ---------- ---------- ----------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment income (96,438) (195,094) (3) (1,081)
From net realized gains (284,551) (432,547) -- --
---------- ---------- ---------- ----------
Total distributions to
Class A shareholders (380,989) (627,641) (3) (1,081)
---------- ---------- ---------- ----------
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment income (13,181) (31,024) -- --
From net realized gains (56,711) (87,334) -- --
---------- ---------- ---------- ----------
Total distributions to
Class B shareholders (69,892) (118,358) -- --
---------- ---------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 493,328 179,023 11,124 178,260
NET ASSETS:
Beginning of year 8,324,268 8,145,245 -- --
---------- ---------- ---------- ----------
End of year (including undistributed
net investment income (loss) of $6,631,
$5,716, ($3), and $304 respectively) $8,817,596 $8,324,268 $ 11,124 $ 178,260
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
1<F3> Commenced operations
</TABLE>
See notes to the financial statements.
<TABLE>
GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
(UNAUDITED)
SEPTEMBER 1, 19951
<F4>
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
APRIL 30, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997 OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ---------------- ---------------- ---------------- ----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $10.40 $10.34 $12.26 $12.20 $10.91 $10.87 $10.04 $10.03 $10.00 $10.00
Income from investment
operations:
Net investment income 0.15 0.11 0.32 0.23 0.29 0.20 0.27 0.21 0.04 0.03
Net realized and unrealized
gains (loss) on securities 1.06 1.06 (1.09) (1.07) 1.40 1.39 0.87 0.83 0.00 0.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 1.21 1.17 (0.77) (0.84) 1.69 1.59 1.14 1.04 0.04 0.03
Less distributions:
Dividends from net
investment income (0.14) (0.10) (0.32) (0.25) (0.29) (0.21) (0.27) (0.20) 0.00 0.00
Distributions from net
realized gains (0.44) (0.44) (0.77) (0.77) (0.05) (0.05) 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.58) (0.54) (1.09) (1.02) (0.34) (0.26) (0.27) (0.20) 0.00 0.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $11.03 $10.97 $10.40 $10.34 $12.26 $12.20 $10.91 $10.87 $10.04 $10.03
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN2<F5> 11.98% 11.62% (7.01%) (7.64%) 15.56% 14.68% 11.50% 10.49% 0.40%3 0.30%3
<F6> <F6>
SUPPLEMENTAL
DATA AND RATIOS:
Net assets, in thousands,
end of period $7,553 $1,265 $6,838 $1,486 $6,815 $1,330 $4,688 $412 $1,279 $133
Ratio of net expense to
average net assets:
Before expense
reimbursement 2.81% 3.56% 2.75% 3.37% 2.96% 3.71% 5.95% 6.70% 17.35%4 18.10%4
<F7> <F7>
After expense
reimbursement 1.15% 1.90% 1.15% 1.78% 1.15% 1.90% 1.15% 1.90% 1.15%4 1.90%4
<F7> <F7>
Ratio of net investment income
to average net assets:
Before expense
reimbursement 1.13% 0.38% 1.11% 0.50% 1.01% 0.26% (1.77%) (2.52%) (14.95%)4(15.70%)4
<F7> <F7>
After expense
reimbursement 2.79% 2.04% 2.71% 2.09% 2.82% 2.07% 3.03% 2.28% 1.25%4 0.50%4
<F7> <F7>
Portfolio turnover rate5<F8> 39.32% 39.32% 136.94% 136.94% 98.37% 98.37% 131.98% 131.98% -- --
1<F4> Commencement of operations.
2<F5> 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<F6> Not annualized.
4<F7> Annualized.
5<F8> During the period ended October 31, 1995, there were no sales of securities. Portfolio turnover rate is calculated on the
basis of the Fund as a whole without distinguishing between classes of shares issued.
</TABLE>
See notes to the financial statements.
REGIONAL BANK FUND
FINANCIAL HIGHLIGHTS
(UNAUDITED)
MARCH 1, 19991<F9>-
APRIL 30, 1999
-------------------
CLASS A
-------
PER SHARE DATA:
Net asset value, beginning of period $ 10.00
Income from investment operations:
Net investment income 0.02
Net realized and unrealized gains on securities 0.01
--------
Total from investment operations 0.03
Less distributions:
Dividends from net investment income (0.02)
Distributions from net realized gains 0.00
--------
Total distributions (0.02)
--------
Net asset value, end of period $ 10.01
--------
--------
TOTAL RETURN2<F10> 0.30%3<F11>
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of period $ 11
Ratio of net expense to average net assets:
Before expense reimbursement 2027.75%4<F12>
After expense reimbursement 1.15%4<F12>
Ratio of net investment income to average net assets:
Before expense reimbursement (2026.72%)4<F12>
After expense reimbursement (0.11%)4<F12>
Portfolio turnover rate5<F13> --
1<F9> Commencement of operations
2<F10> 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<F11> Not annualized.
4<F12> Annualized.
5<F13> During the period ended April 30, 1999, there were no sales of
securities.
See notes to the financial statements.
<TABLE>
REIT FUND
FINANCIAL HIGHLIGHTS
(UNAUDITED)
MARCH 1, 19991<F14> -
APRIL 30, 1999
---------------------------
CLASS A CLASS B
------- -------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $ 10.00 $ 10.32
Income from investment operations:
Net investment income 0.12 0.00
Net realized and unrealized gains on securities 0.30 0.00
--------- ---------
Total from investment operations 0.42 0.00
Less distributions:
Dividends from net investment income (0.10) 0.00
Distributions from net realized gains 0.00 0.00
--------- ---------
Total distributions (0.10) 0.00
--------- ---------
Net asset value, end of period $ 10.32 $ 10.32
--------- ---------
--------- ---------
TOTAL RETURN 4.28%2, 3 0.00%
<F15,F16>
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of period $ 173 $ 5
Ratio of net expense to average net assets:
Before expense reimbursement 112.77%4 0.00%6
<F17> <F19>
After expense reimbursement 1.15%4 0.00%6
<F17> <F19>
Ratio of net investment income to average net assets:
Before expense reimbursement (102.84%)4 0.00%6
<F17> <F19>
After expense reimbursement 8.78%4 0.00%6
<F17> <F19>
Portfolio turnover rate5<F18> -- --
1<F14> Commencement of operations.
2<F15> 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<F16> Not annualized.
4<F17> Annualized.
5<F18> During the period ended April 30, 1999, there were no sales of securities.
6<F19> Class B shares were not charged any expenses until May 1, 1999.
</TABLE>
See notes to the financial statements.
GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
Number
of Shares Value
--------- -----
COMMON STOCKS -- 64.8%***<F22>
Apparel -- 0.4%***<F22>
45,000 Tultex Corporation *<F20> $ 30,938
----------
Chemicals -- 2.8%***<F22>
10,000 IMC Global, Inc. 250,000
----------
Computer Software -- 2.3%***<F22>
10,000 Symantec Corporation *<F20> 198,750
----------
Construction -- 0.9%***<F22>
2,000 Jacobs Engineering Group, Inc. *<F20> 78,875
----------
Entertainment & Leisure -- 7.1%***<F22>
5,500 Anchor Gaming *<F20> 259,875
5,000 International Game Technology 88,750
26,000 Sunterra Corporation *<F20> 279,500
----------
628,125
----------
Financial Services -- 4.1%***<F22>
7,500 MGIC Investment *<F20> 364,219
----------
Industrial Supplies -- 2.5%***<F22>
1,500 Grainger WW, Inc. 75,281
2,000 Johnson Controls, Inc. 145,875
----------
221,156
----------
Manufacturing -- 13.7%***<F22>
4,000 Briggs & Stratton 263,750
6,000 Cordant Technologies 276,750
3,000 Mead Corporation 125,437
35,000 Noble International LTD *<F20> 540,312
----------
1,206,249
----------
Metals and Mining -- 0.7%***<F22>
3,000 Timken Co. 66,938
----------
Publishing -- 1.3%***<F22>
200 Washington Post -- Class B 114,800
----------
Real Estate Investment Trusts -- 13.5%***<F22>
6,000 Alexandria Real Estate
Equities, Inc. 169,125
10,000 Brandywine Realty Trust 188,750
10,000 Great Lakes REIT, Inc. 154,375
17,135 Grove Property Trust 194,911
10,000 Hospitality Properties Trust 288,125
7,000 Public Storage, Inc. 195,125
----------
1,190,411
----------
Retail - General -- 3.8%***<F22>
10,000 Claire's Stores, Inc. 331,250
----------
Telecommunication Equipment -- 2.6%***<F22>
20,000 Anicom, Inc. *<F20> 177,500
30,000 TII Industries, Inc. *<F20> 52,500
----------
230,000
----------
Transportation -- 9.1%***<F22>
2,000 FDX Corporation *<F20> 225,125
4,000 GATX Corporation 137,500
10,000 Sea Containers LTD -- Class A*<F20> 319,375
2,000 Union Pacific Corporation 120,000
----------
802,000
----------
TOTAL COMMON STOCKS
(COST $5,380,264) 5,713,711
----------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS AND
NOTES -- 17.2%***<F22>
Finance Company -- 1.9%***<F22>
$ 20,000 BankAmerica Corporation
8.125%, 2/1/02 21,120
50,000 Chase Manhattan Corp.
10.000%, 6/15/99 50,245
50,000 Salomon, Inc.
7.500%, 9/29/15 49,083
50,000 Salomon, Inc.
7.250%, 10/15/12 49,187
----------
169,635
----------
Food & Beverage -- 2.8%***<F22>
250,000 General Foods
6.000%, 6/15/01 250,312
----------
Industrial -- 12.5%***<F22>
300,000 Consorcio G Grupo Dina**<F21>
8.000%, 8/8/04 139,500
300,000 Masotech, Inc.**<F21>
4.500%, 12/15/03 243,375
200,000 Micron Tech**<F21>
7.000%, 7/1/04 198,250
300,000 Quanex Corporation**<F21>
6.880%, 6/30/07 303,750
300,000 Veterinary Centers of America**<F21>
5.250%, 5/1/06 216,375
----------
1,101,250
----------
TOTAL CORPORATE BONDS
AND NOTES (COST $1,545,605) 1,521,197
----------
U.S. GOVERNMENT AGENCY -- 0.2%***<F22>
Federal National Mortgage
Association (FNMA) -- 0.2%***<F22>
20,015 Pass-Thru Certificates
Pool #050737, 6.000%,
05/01/00 20,020
----------
TOTAL U.S. GOVERNMENT
AGENCY (COST $19,358) 20,020
----------
SHORT-TERM
INVESTMENTS --16.5%***<F22>
Variable Rate Demand Notes -- 16.5%***<F22>
144,512 American Family, Inc. 144,512
265,952 General Mills, Inc. 265,952
255,855 Pitney Bowes, Inc. 255,855
336,326 Sara Lee Corporation 336,326
222,182 Warner - Lambert Corporation 222,182
232,183 Wisconsin Corporation Central
Credit Union 232,183
520 Wisconsin Electric
Power Co. 520
----------
1,457,530
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,457,530) 1,457,530
----------
TOTAL INVESTMENTS -- 98.8%***<F22>
(COST $8,402,757) $8,712,458
----------
----------
Contracts
---------
WRITTEN OPTION CONTRACTS
2,000 Fed-Ex expiring
October 1999 at 105 $ 38,000
1,000 Anicom, Inc. expiring
September 1999 at 10 1,000
----------
39,000
----------
TOTAL OPTIONS WRITTEN
(Premiums received $22,985) $ 39,000
----------
----------
*<F20> Non-income producing security
**<F21> Convertible into common stock
***<F22> Calculated as a percentage of net assets
See notes to the financial statements.
REGIONAL BANK FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
- --------- -----
SHORT-TERM INVESTMENTS -- 1.3%
Variable Rate Demand Notes -- 1.3%
$ 19 General Mills, Inc. $ 18
19 Sara Lee Corporation 19
18 Pitney Bowes, Inc. 19
18 Wisconsin Electric 18
Power Co.
18 Warner - Lambert Corporation 18
19 American Family, Inc. 19
18 Firstar Bank Milwaukee, N.A. 18
19 Wisconsin Corporation 19
Central Credit Union
--------
148
--------
TOTAL SHORT-TERM
INVESTMENTS (COST $148) $ 148
--------
TOTAL INVESTMENTS -- 1.3%
(COST $148) 148
--------
Other Assets in Excess
of Liabilities (98.7%) 10,976
--------
TOTAL NET
ASSETS -- 100.0% $ 11,124
--------
--------
See notes to the financial statements.
REIT FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- ---------- ------
COMMON STOCKS -- 64.2%
Healthcare -- 2.7%
380 Meditrust Corporation $ 4,726
--------
Industrial -- 11.7%
175 Alexandria Real
Estate Equities, Inc. 4,933
225 Duke Realty Investments, Inc. 5,288
200 First Industrial Realty Trust 5,375
250 Prologis Trust 5,250
--------
20,846
--------
Office -- 11.9%
150 Boston Properties, Inc. 5,447
295 Brandywine Realty Trust 5,568
190 Equity Office Properties 5,237
325 Great Lakes REIT, Inc. 5,017
--------
21,269
--------
Residential -- 17.2%
150 Avalonbay Communities, Inc. 5,250
130 Apartment Investment 5,208
& Management
175 Chateau Properties, Inc. 5,086
120 Equity Residential 5,550
Properties Trust
240 New Plan Excel Realty Trust 4,455
250 Pacific Gulf Properties 5,203
--------
30,752
--------
Retail -- 14.7%
125 Kimco Realty Corporation 4,906
175 Simon Property Group, Inc. 5,020
150 Vornado Realty Trust 5,850
120 Weingarten Realty Inv 4,973
140 Spieker Properties, Inc. 5,495
--------
26,244
--------
Specialty -- 6.0%
190 Hospitality Properties Trust 5,474
185 Public Storage, Inc. 5,157
--------
10,631
--------
TOTAL COMMON STOCKS
(COST $110,137) 114,468
--------
SHORT-TERM INVESTMENTS -- 5.8%
Variable Rate Demand Notes -- 5.8%
3,371 General Mills, Inc. 3,371
3,339 Pitney Bowes, Inc. 3,339
3,703 Sara Lee Corporation 3,703
--------
TOTAL SHORT-TERM
INVESTMENTS (COST $10,413) 10,413
--------
TOTAL INVESTMENTS -- 70.0%
(COST $120,550) 124,881
--------
Other Assets in Excess
of Liabilities (30.0%) 53,379
--------
TOTAL NET
ASSETS -- 100.0% $178,260
--------
--------
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED)
1) ORGANIZATION
The Jefferson Fund Group Trust (the "Trust") was organized as a business trust
under the laws of Delaware on January 20, 1995 and registered under the
Investment Company Act of 1940, as amended (the "1940 Act") as an open-end
management investment company issuing its shares in series, each series
representing a distinct portfolio with its own investment objective and
policies. The series presently authorized are the Jefferson Growth and Income
Fund (the "Growth Fund"), the Jefferson Regional Bank Fund (the "Regional Bank
Fund"), and the Jefferson REIT Fund (the "REIT Fund"), collectively known as
(the "Funds").
Costs incurred by the Trust in connection with the organization, registration
and initial public offering of shares aggregated $65,659, and are being
amortized over the period of benefit, but not to exceed sixty months from the
date the Trust commenced operations. The only series authorized at the
commencement of operations was the Growth Fund. The Regional Bank Fund and the
REIT Fund commenced operations on March 1, 1999, all organizational costs
incurred by the Trust in connection with the organization, registration and
initial public offering of these series were expensed as incurred.
The Trust is authorized to issue an unlimited number of shares without par
value, of each series. The Trust has issued two classes of shares of the Funds:
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 of 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 has identical rights and privileges.
2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds 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.
Because the REIT Fund may invest a substantial portion of its assets in Real
Estate Investment Trusts ("REITs"), the Fund may be subject to certain risks
associated with direct investments in REITs. REITs may be affected by changes
in the value of their underlying properties and by defaults by borrowers and
tenants. REITs depend generally on their ability to generate cash flow to make
distributions to shareholders, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time.
b) Federal Income Taxes -- Provision for federal income taxes or excise taxes
has not been made since the Funds have elected to be taxed as "regulated
investment companies" and intends to distribute substantially all taxable income
to their 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.
c) Income and Expenses -- The Funds are 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.
A portion of the dividend income recorded by the REIT Fund is from distributions
by publicly traded REITs and such distributions for tax purposes may consist of
capital gains and return of capital. The actual return of capital and capital
gains portions of such distributions will be determined by formal notifications
from the REITs subsequent to the calendar year-end. Distributions received from
the REITs that are determined to be a return of capital are recorded by the REIT
Fund as a reduction of the cost basis of the securities held. The character of
such distributions, for tax purposes, is determined by the REIT Fund based on
estimates and information received by the REIT Fund from the REITs.
e) Written Option Accounting -- When a 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. By writing an option, the Fund may become obligated during the
term of the option to deliver or purchase the securities underlying the option
at the exercise price if the option is exercised. Option contracts are valued
at the average of the current bid and asked priced reported on the day of
valuation. 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) 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.
g) Other -- Investment and shareholder transactions are recorded on trade date.
The Funds 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 Funds were as follows:
GROWTH FUND
CLASS A
---------------------------------------
PERIOD ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
----------------- ------------------
AMOUNT SHARES AMOUNT SHARES
-------- ------- -------- -------
Shares sold $ 481,832 46,385 $1,481,940 125,151
Shares issued
to holders in
reinvestment
of dividends 378,836 36,195 623,029 53,852
Shares
redeemed (580,966) (55,689) (929,582) (77,303)
---------- ------- ---------- -------
Net increase $ 279,702 26,891 $1,175,387 101,700
---------- ------- ---------- -------
---------- ------- ---------- -------
CLASS B
---------------------------------------
PERIOD ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
----------------- ------------------
AMOUNT SHARES AMOUNT SHARES
-------- ------- -------- -------
Shares sold $ 46,764 4,386 $588,321 50,892
Shares issued
to holders in
reinvestment
of dividends 64,948 6,229 111,422 9,657
Shares
redeemed (409,012) (39,045) (308,658) (25,827)
---------- ------- ---------- -------
Net increase $(297,300) (28,430) $391,085 34,722
---------- ------- ---------- -------
---------- ------- ---------- -------
REGIONAL BANK FUND
CLASS A
-----------------
PERIOD ENDED
APRIL 30, 1999
-----------------
AMOUNT SHARES
-------- -------
Shares sold $ 11,125 1,112
Shares issued
to holders in
reinvestment
of dividends 3 --
Shares
redeemed -- --
---------- -------
Net increase $ 11,128 1,112
---------- -------
---------- -------
REIT FUND
CLASS A CLASS B
----------------- ------------------
PERIOD ENDED YEAR ENDED
APRIL 30, 1999 APRIL 30, 1999
----------------- ------------------
AMOUNT SHARES AMOUNT SHARES
-------- ------- -------- -------
Shares sold $168,551 16,773 $5,000 488
Shares issued
to holders in
reinvestment
of dividends 74 8 -- --
Shares
redeemed -- -- -- --
---------- ------- ---------- -------
Net increase $168,625 16,781 $5,000 488
---------- ------- ---------- -------
---------- ------- ---------- -------
4) INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, by the Funds for the period ended April 30, 1999, were as follows:
PURCHASES SALES
---------- -----
GROWTH FUND
U.S. Government $ -- $ 4,518
Other 3,760,369 2,781,461
REGIONAL BANK FUND
U.S. Government $ -- $ --
Other -- --
REIT FUND
U.S. Government $ -- $ --
Other 110,137 --
At April 30, 1999, gross unrealized appreciation and depreciation of investments
for federal income tax purposes was as follows:
GROWTH FUND
Appreciation $ 957,826
(Depreciation) (664,140)
------------
Net unrealized appreciation
on investments $ 293,686
------------
------------
REIT FUND
Appreciation $ 5,095
(Depreciation) (764)
------------
Net unrealized appreciation
on investments $ 4,331
------------
------------
The Regional Bank Fund held only demand notes as of the period ended April 30,
1999. The cost of the demand notes equalled the book value, therefore there
were no unrealized appreciation or depreciation.
At April 30, 1999, the cost of investments for federal income tax purposes for
the Growth Fund, Regional Bank Fund, and the REIT Fund were $8,402,757, $148 and
$120,550, respectively.
Transaction in call options written during the period ended April 30, 1999 for
the Growth Fund were as follows:
NUMBER PREMIUMS
------- ---------
Options outstanding at beginning of year 0 $ --
Options written during the year 6,200 34,760
Options expired (2,000) (950)
Options exercised 0 --
Options closed (1,200) (10,825)
------ -------
Options outstanding at end of period 3,000 $22,985
------ -------
------ -------
5) INVESTMENT ADVISORY AND OTHER AGREEMENTS
Uniplan, Inc. is the Investment Adviser for the Growth Fund and the REIT Fund.
Marshall Capital Management, Inc. is the Investment Adviser for the Regional
Bank Fund.
Pursuant to their Advisory Agreements with the Funds, the Advisers are entitled
to receive a fee, calculated daily and payable monthly, at the annual rate of
0.60% as applied to the Funds' daily net assets.
The Trust entered into a distribution and servicing agreement with Adviser
Dealer Services, Inc. (the "Distributor"). The Trust has adopted a Class A
Servicing Fee Plan whereby the Funds pay the Distributor servicing fees of up to
0.25% annually, calculated as a percentage of each Fund's average daily net
assets attributable to Class A shares. Pursuant to the Class B distribution and
servicing agreement, the Funds are 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 each 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 each Fund.
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 1.50% and 1.90% of average
net assets for Class A and Class B shares respectively, the Advisers may waive
or may reimburse the Funds for the amount of such excess. Accordingly, for the
period ended April 30, 1999, the Advisers have waived and reimbursed the Growth
Fund, Regional Bank Fund, and REIT Fund $68,730, $17,660, and $17,615,
respectively.
The Distributor has not received any front-end sales charges on Class A shares
or contingent deferred sales charges on Class B shares for the period ended
April 30, 1999. Firstar Mutual Fund Services, LLC serves as Transfer Agent,
Administrator and Accounting services agent for the Fund. Firstar Bank
Milwaukee, N.A. serves as Custodian for the Fund.
INVESTMENT ADVISER
Uniplan, Inc.
839 North Jefferson Street
Suite 201
Milwaukee, WI 53202
(800) 216-9785
ADMINISTRATOR, TRANSFER
AGENT & DIVIDEND PAYING AGENT
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
CUSTODIAN
Firstar Bank Milwaukee, N.A.
615 East Michigan Street
Milwaukee, WI 53202
DISTRIBUTOR
Adviser Dealer Services, Inc.
6000 Memorial Drive
Dublin, OH 43017
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
