(Jefferson Growth and Income Fund Logo)
ANNUAL REPORT
OCTOBER 31, 1998
December 23, 1998
Dear Fellow Shareholders,
Enclosed is the annual report for the year ended October 31, 1998. On behalf of
myself and the Board of Trustees, I'd like to welcome our new shareholders and
thank our existing shareholders for their continued support.
In prior shareholder letters we concluded that a defensive portfolio posture was
more appropriate given the market environment. That posture proved timely over
the last six months. Since our last report to shareholders on April 30, 1998,
through the period ended October 31, 1998, the Russell 2000, a broad based index
of small and medium sized companies, declined by 20.7%. The NAV of class A
shares declined by 15.79% and class B shares declined by 16.19%. We took
advantage of this weakness in the market to expand the fund's holdings on a
highly selective basis.
The fund also paid two regular quarterly dividends of $0.0726 and $0.0775 on
Class A shares and $0.0601 and $0.0570 on Class B shares during the period.
The stock market remains very narrow in breadth. The 50 largest capitalization
stocks of the S&P 500 have provided most of the total return for the S&P 500 for
the period. Broader market indices, such as the Value Line Composite and the
Russell 2000 have shown far lower returns for the same period. We continue to
expect this performance gap to narrow as the valuation difference between larger
and smaller companies becomes more in line with historic norms.
As we pointed out in our last letter to shareholders, a slower domestic economy
and pressure on corporate profits were our key concerns. Since then, the number
of negative earnings surprises among public companies continues to rise and we
have seen a slowing in the domestic economy.
Big company valuations are very high by historic standards and market volatility
continues to be great. Small and medium companies have more reasonable valuation
characteristics but continue to under-perform their larger counterparts. Given
these factors, we continue to feel a defensive portfolio with good current yield
to the shareholder is the best investment posture.
Sincerely,
/s/ Richard P. Imperiale
Richard P. Imperiale
Chairman
Class A - Russell Class B -
date Class A No-Load Class B 2000 No-Load S&P 500
9/1/95 $9,450 $10,000 $10,000 $10,000 $10,000 $10,000
10/31/95 $9,490 $10,040 $9,530 $9,723 $10,030 $12,410
10/31/96 $10,591 $11,204 $10,692 $11,337 $11,092 $12,887
10/31/97 $12,239 $12,948 $12,321 $14,662 $12,721 $17,024
10/31/98 $11,380 $12,040 $11,449 $12,926 $11,749 $20,769
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, 1998. 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.
As of the fiscal period ended October 31, 1998 the Fund has chosen to use the
Russell 2000 index as it's comparison benchmark. In the prior fiscal period the
Fund used the S&P 500 as it's comparison benchmark. The change was made because
the profile of the securities in the Russell 2000 more closely resembles the
profile of the securities in the Fund.
FOR PERIODS ENDED OCTOBER 31, 1998
- ------------------------------------------------------------------------------
SINCE INCEPTION
AVERAGE ANNUAL RATE OF RETURN % ONE YEAR 9/01/95
- ------------------------------------------------------------------------------
Jefferson Growth & Income Fund - Class A No-Load (7.01)% 6.03%
Jefferson Growth & Income Fund - Class A*<F1> (12.10) 4.16
Jefferson Growth & Income Fund - Class B No-Load (7.64) 5.22
Jefferson Growth & Income Fund - Class B (11.88)**<F2> 4.36***<F3>
Russell 2000 Index****<F4> (11.84) 8.44
S&P 500 Stock Index*****<F5> 21.99 25.96
*<F1> Reflects maximum front-end sales charge of 5.50%.
**<F2> Reflects maximum Contingent Deferred Sales Charge (CDSC) of 5.00%
effective on redemptions within one year.
***<F3> Reflects maximum Contingent Deferred Sales Charge (CDSC) of 3.00%
effective on redemptions after three years.
****<F4> The Russell 2000 Index consists of the smallest 2,000 companies in the
Russell 3000 Index, which represents approximately 10% of the total
market capitalization of small and medium size public companies.
*****<F5> 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.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS:
Investments, at current value (cost $8,671,785) $7,907,949
Dividends receivable 10,818
Interest receivable 33,693
Receivable for investments sold 530,957
Receivable for fund shares sold 19,095
Organization costs, net of accumulated amortization 46,049
Receivable from Adviser 85,823
Other assets 11,954
----------
Total Assets 8,646,338
----------
LIABILITIES:
Payable for investments purchased 290,117
Accrued expenses and other payables 31,953
----------
Total Liabilities 322,070
----------
NET ASSETS $8,324,268
----------
----------
NET ASSETS CONSIST OF:
Capital stock $8,737,165
Undistributed net investment income 5,716
Undistributed accumulated net realized gains on investments 345,223
Unrealized net appreciation (depreciation) on investments (763,836)
----------
Total Net Assets $8,324,268
----------
----------
CLASS A:
Net assets $6,838,386
Shares outstanding (unlimited number authorized) 657,685
Net asset value and redemption price per share $10.40
----------
----------
Maximum offering price per share $11.01
----------
----------
CLASS B:
Net assets $1,485,882
Shares outstanding (unlimited number authorized) 143,753
Net asset value and offering price per share $10.34
----------
----------
Redemption price per share, assuming maximum
contingent deferred sales charge $ 9.82
----------
----------
See notes to the financial statements.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Dividend income (net of withholding tax of $1,735) $ 167,390
Interest income 165,513
-----------
Total investment income 332,903
-----------
EXPENSES:
Investment advisory fees 51,704
Administration fees 20,111
Shareholder servicing and accounting costs 52,641
Distribution fees -- Class A 15,099
Distribution fees -- Class B 12,208
Custody fees 6,341
Federal and state registration fees 9,305
Professional fees 36,891
Reports to shareholders 8,155
Amortization of organization costs 12,435
Trustees' fees and expenses 6,163
Other 14,987
-----------
Total expenses before waiver and reimbursement 246,040
Less: Waiver of expenses and reimbursement from Adviser (137,763)
-----------
Net expenses 108,277
-----------
NET INVESTMENT INCOME 224,626
-----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments 318,750
Change in unrealized appreciation (depreciation)
on investments (1,184,826)
-----------
Net gain (loss) on investments (866,076)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (641,450)
-----------
-----------
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
---------------- ----------------
OPERATIONS:
Net investment income $ 224,626 $ 177,655
Net realized gain on investments 318,750 499,294
Net realized gain on option contracts
closed or expired -- 16,322
Change in unrealized appreciation
(depreciation) on investments (1,184,826) 197,932
----------- -----------
Net increase (decrease) in net assets
resulting from operations (641,450) 891,203
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 2,070,261 3,545,172
Shares issued to holders in
reinvestment of dividends 734,451 177,534
Shares redeemed (1,238,240) (1,388,874)
----------- -----------
Net increase in net assets resulting
from capital share transactions 1,566,472 2,333,832
----------- -----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income (195,094) (139,528)
From net realized gains (432,547) (23,710)
----------- -----------
Total distributions to Class A
shareholders (627,641) (163,238)
----------- -----------
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income (31,024) (13,897)
From net realized gains (87,334) (2,292)
----------- -----------
Total distributions to Class B
shareholders (118,358) (16,189)
----------- -----------
TOTAL INCREASE IN NET ASSETS 179,023 3,045,608
NET ASSETS:
Beginning of year 8,145,245 5,099,637
----------- -----------
End of year (including undistributed
net investment income of $5,716 and
$17,447, respectively) $8,324,268 $8,145,245
----------- -----------
----------- -----------
See notes to the financial statements.
FINANCIAL HIGHLIGHTS
<TABLE> SEPTEMBER 1, 19951<F5>
YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
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
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $12.26 $12.20 $10.91 $10.87 $10.04 $10.03 $10.00 $10.00
Income from investment operations:
Net investment income 0.32 0.23 0.29 0.20 0.27 0.21 0.04 0.03
Net realized and unrealized
gains (loss) on securities (1.09) (1.07) 1.40 1.39 0.87 0.83 -- --
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations (0.77) (0.84) 1.69 1.59 1.14 1.04 0.04 0.03
Less distributions:
Dividends from net investment income (0.32) (0.25) (0.29) (0.21) (0.27) (0.20) -- --
Distributions from net realized gains (0.77) (0.77) (0.05) (0.05) -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total distributions (1.09) (1.02) (0.34) (0.26) (0.27) (0.20) -- --
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $10.40 $10.34 $12.26 $12.20 $10.91 $10.87 $10.04 $10.03
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN2<F6> (7.01%) (7.64%) 15.56% 14.68% 11.50% 10.49% 0.40%3<F7> 0.30%3<F7>
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of period $6,838 $1,486 $6,815 $1,330 $4,688 $412 $1,279 $133
Ratio of net expenses to average net assets:
Before expense reimbursement 2.75% 3.37% 2.96% 3.71% 5.95% 6.70% 17.35%4<F8> 18.10%4<F8>
After expense reimbursement 1.15% 1.78% 1.15% 1.90% 1.15% 1.90% 1.15%4<F8> 1.90%4<F8>
Ratio of net investment income
to average net assets:
Before expense reimbursement 1.11% 0.50% 1.01% 0.26% (1.77%) (2.52%) (14.95%)4<F8>(15.70%)4<F8>
After expense reimbursement 2.71% 2.09% 2.82% 2.07% 3.03% 2.28% 1.25%4<F8> 0.50%4<F8>
Portfolio turnover rate5<F9> 136.94% 136.94% 98.37% 98.37% 131.98% 131.98% -- --
</TABLE>
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. Portfolio turnover rate is calculated on the basis of the
Fund as a whole without distinguishing between classes of shares issued.
See notes to the financial statements.
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
NUMBER
OF SHARES VALUE
--------- -----
COMMON STOCKS -- 49.3%
Apparel -- 0.7%
45,000 Tultex Corporation*<F10> $ 59,063
-----------
Chemicals -- 1.6%
5,000 IMC Global Inc. 130,000
-----------
Energy -- 6.4%
4,020 Texaco Inc. 238,436
10,600 Transcanada Pipelines LTD 162,313
5,000 Ultramar Diamond
Shamrock Corporation 134,688
-----------
535,437
-----------
Entertainment & Leisure -- 9.1%
5,000 Anchor Gaming *<F10> 254,375
10,000 Harvey Casinos Resort 254,375
26,000 Sunterra Corporation *<F10> 247,000
-----------
755,750
-----------
Health Care Services -- 1.7%
23,000 Utah Medical Products, Inc. *<F10> 140,875
-----------
Manufacturing -- 3.4%
10,000 Ennis Business Forms, Inc. 100,000
25,500 Noble Internation LTD *<F10> 184,875
-----------
284,875
-----------
Metals and Mining -- 1.0%
1,000 Aluminum Company of America 79,250
-----------
Real Estate Investment Trusts -- 10.5%
6,000 Alexandria Real
Estate Equities, Inc. 160,125
5,000 Great Lakes REIT, Inc. 82,187
17,135 Grove Property Trust 175,634
10,000 Hospitality Properties Trust 265,000
7,000 Public Storage, Inc. 186,813
-----------
869,759
-----------
Retail - General -- 2.0%
10,000 Claire's Stores, Inc. $ 169,375
-----------
Telecommunication Equipment -- 0.8%
30,000 TII Industries, Inc. *<F10> 63,749
-----------
Transportation -- 10.5%
4,200 FDX Corporation *<F10> 220,763
4,000 GATX Corporation 138,000
9,500 Ryder System, Inc. 233,938
10,000 Sea Containers LTD 283,750
-----------
876,451
-----------
Utilities -- 1.6%
4,000 SCANA Corporation 135,250
-----------
TOTAL COMMON STOCKS
(COST $4,845,320) 4,099,834
-----------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS AND NOTES -- 10.5%
Finance Company -- 1.5%
$ 20,000 BankAmerica Corporation
8.125%, 2/1/02 21,585
100,000 Lehman Brothers Holdings, Inc.
8.375%, 2/15/99 100,542
-----------
122,127
-----------
Food & Beverage -- 3.0%
250,000 General Foods
6.000%, 6/15/01 254,198
-----------
Industrial -- 6.0%
200,000 Masotech, Inc. **<F11>
4.500%, 12/15/03 162,250
100,000 Micron Technology, Inc. **<F11>
7.000%, 7/1/24 101,391
300,000 Veterinary Centers of America **<F11>
5.250%, 5/1/06 234,750
-----------
498,391
-----------
TOTAL CORPORATE BONDS AND
NOTES (COST $894,219) 874,716
-----------
U.S. GOVERNMENT AGENCY -- 3.9%
24,533 Federal National Mortgage
Association (FNMA) -- 0.3%
Pass-Thru Certificates
Pool #050737, 6.00%, 05/01/00 24,486
Federal Home Loan
Bank (FHLMC) -- 3.6%
300,000 6.270%, 2/26/03 300,395
-----------
TOTAL U.S. GOVERNMENT AGENCY
(COST $323,728) 324,881
-----------
SHORT-TERM INVESTMENTS -- 31.3%
Variable Rate Demand Notes -- 31.3%
$400,780 American Family
Financial Services 400,780
394,648 General Mills, Inc. 394,648
400,016 Firstar Bank Milwaukee, N.A. 400,016
400,050 Pitney Bowes, Inc. 400,050
386,588 Sara Lee Corporation 386,588
377,077 Warner - Lambert Corporation 377,077
249,359 Wisconsin Electric Power
Company 249,359
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,608,518) 2,608,518
-----------
TOTAL INVESTMENTS -- 95.0%
(COST $8,671,785) 7,907,949
-----------
Liabilities in Excess of
Other Assets (5.0%) 416,319
-----------
TOTAL NET
ASSETS -- 100.0% $8,324,268
-----------
-----------
*<F10> Non-income producing security.
**<F11> Convertible.
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 1998
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, 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 $10,239, undistributed accumulated net realized gains on
investments has been increased by $15,842 and capital stock has been decreased
by $5,603. These differences relate to adjustments to REIT securities and
exclusion of certain organization costs for tax purposes.
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. There were no options traded
during the period.
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 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, 1998 OCTOBER 31, 1997
------------------- -------------------
AMOUNT SHARES AMOUNT SHARES
-------- ------- -------- -------
Shares sold $1,481,940 125,151 $2,692,390 231,580
Shares issued to
holders in
reinvestment
of dividends 623,029 53,852 161,536 13,899
Shares
redeemed (929,582) (77,303) (1,358,912) (118,993)
---------- -------- ---------- --------
Net increase $1,175,387 101,700 $1,495,014 126,486
---------- -------- ---------- --------
---------- -------- ---------- --------
CLASS B
-------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
------------------- -------------------
AMOUNT SHARES AMOUNT SHARES
-------- ------- -------- -------
Shares sold $ 588,321 50,892 $852,782 72,259
Shares issued
to holders in
reinvestment
of dividends 111,422 9,657 15,998 1,374
Shares
redeemed (308,658) (25,827) (29,962) (2,462)
---------- ------- ---------- ------
Net increase $ 391,085 34,722 $838,818 71,171
---------- ------- ---------- ------
---------- ------- ---------- ------
4) INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, by the Fund for the year ended October 31, 1998, were as follows:
PURCHASES SALES
------------ -----
U.S. Government $300,000 $611,048
Other $19,603,083 $18,469,602
At October 31, 1998, gross unrealized appreciation and depreciation of
investments for federal income tax purposes was as follows:
Appreciation $ 154,979
(Depreciation) (915,150)
------------
Net unrealized appreciation
on investments $ (760,171)
------------
------------
At October 31, 1998, the cost of investments for federal income tax purposes was
$8,668,120.
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 entered into a distribution and servicing agreement on May 7, 1998
with Adviser Dealer Services, Inc. (the "Distributor"). Adviser Dealer
Services, Inc. replaced Rodman & Renshaw, Inc. as 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.
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 Adviser may waive or
may reimburse the Fund for the amount of such excess. Accordingly, for the year
ended October 31, 1998, the Adviser has waived and reimbursed the Fund $137,763.
The Distributor received front-end sales charges on Class A shares and
contingent deferred sales charges on Class B shares of $683 and $0,
respectively, for the year ended October 31, 1998. 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.
6) DISTRIBUTIONS
a) Thirty-six percent of the dividends paid during the fiscal year ended
October 31, 1998, qualifies for the dividend received deduction available to
corporate shareholders.
b) One hundred percent of the capital gain dividends to be paid are hereby
designated as long term for tax purposes.
REPORT OF INDEPENDENT ACCOUNTANTS
NOVEMBER 13, 1998
The Shareholders and Board of Trustees
The Jefferson Fund Group Trust
We have audited the accompanying statement of assets and liabilities of
Jefferson Growth & Income Fund (the "Fund"), a series of The Jefferson Fund
Group Trust, including the schedule of investments, as of October 31, 1998, and
the related statement of operations for the year then ended, statements of
changes in net assets and financial highlights for each of the years in the two-
year period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatements. 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 custodian 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of October 31, 1998 and the results of its operations for the year then
ended, changes in its net assets and the financial highlights for each of the
years in the two-year period then ended, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Morwick LLP
Milwaukee, Wisconsin
November 13, 1998
(Jefferson Growth and Income Fund Logo)
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
