(JEFFERSON FUNDS LOGO)
ANNUAL REPORT
OCTOBER 31, 1999
December 22, 1999
Dear Fellow Investors,
Enclosed is the annual report for the period ended October 31, 1999. Since our
last letter to shareholders, on April 28, the market has continued to narrow.
Market leadership is confined to a short list of select large capitalization
stocks most of which are in the technology sector. The broader list of small and
medium sized companies has not participated in the appreciation enjoyed by their
larger company counterparts. This disparity has created a condition where many
companies are selling at a substantial valuation discount to the market leaders.
In the past, portfolio managers may have seen these discounts as an opportunity
to reallocate resources into good companies with compelling valuation
characteristics; that is no longer the case. The market psychology has changed
to one that is largely oriented toward price momentum. Stocks that are not
moving up, or worse yet, those that are moving down in price are increasingly
viewed as an opportunity cost which hurt portfolio performance. In the end,
these stocks are sold to become the source of funds, which flow to that narrow
group of stocks that are going higher in price.
To the extent that this market psychology seems persistent, we have adjusted the
portfolio of the Growth and Income Fund. We continue to focus on the stocks of
small and medium sized companies which show compelling valuation
characteristics, but we are now attempting to focus on those value stocks that
have also been displaying improving price momentum patterns. We are also working
to stay fully invested in order to maximize shareholder returns.
In the financial sector, Real Estate Investment Trusts (REIT's), in particular
have declined as a result of momentum focused investing. REIT's are an emerging
asset class that continues to gain popularity with institutional 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. REIT's have
enjoyed recent media attention as a result of the legendary value investor
Warren Buffet announcing for the second time this year that he has personally
made a number of investments in the sector.
The Jefferson REIT Fund, introduced last February, is designed to provide
shareholders with the option of investing in a diversified portfolio of real
estate holdings through the Fund's ownership of publicly traded equity REIT's.
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.
The REIT asset class has never been cheaper on an absolute or relative valuation
basis. The fundamental supply outlook for real estate in most markets and
property types is very positive. Low levels of new construction and high
occupancy rates have helped to reinforce the limited supply outlook in most
locations. And, robust domestic economic conditions have led to increased demand
for space and higher rents in most markets. These positive supply and demand
factors generally lead to higher real estate valuations and higher REIT prices.
This has not been the case of late, but the positive fundamentals and low
valuations look very compelling and the market will eventually recognize these
factors.
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 and have since used the general market strength to
reposition the portfolio into stronger sectors.
The Jefferson Regional Bank Fund, which we announced (in conjunction with Howe
Barnes) as a new fund earlier this year, was never formally offered to the
public on a broad scale. We subsequently decided not to pursue this
opportunity. As a result, our agreement with Marshall Capital Management, as
Advisor to the Regional Bank Fund, has been terminated, the obligation of the
Howe Barnes Investments, Inc. (the parent company of Marshall Capital) to
reimburse the Funds to the extent that expenses exceed the Funds' stated expense
ratios ceased, and John Hawke, President of Howe Barnes, resigned from the Board
of Trustees of the Jefferson Fund Group Trust. The decision to close the
Regional Bank Fund should not effect shareholders of either the REIT Fund or
Growth and Income Fund. The expense ratio reimbursement obligation has been
assumed by Uniplan, Inc.
In the last six months, The Jefferson Growth and Income Fund paid two regular
quarterly dividends of $.06 and $.06 on Class A shares and $.04 and $.03 on
Class B shares. The Jefferson REIT fund paid two regular quarterly dividends of
$.04 and $.11 on Class A shares and $.04 and $.10 on Class B shares during the
period.
As always, we continue to appreciate the support of our investors and look
forward to a prosperous new millennium.
Sincerely,
/s/ Richard P. Imperiale
Richard P. Imperiale
Chairman
GROWTH FUND
Class A - Class B - Russell
Date Class A No-Load Class B No-Load 2000
9/1/95 $9,450 $10,000 $10,000 $10,000 $10,000
10/31/95 $9,488 $10,040 $10,030 $10,030 $9,723
10/31/96 $10,588 $11,205 $11,092 $11,092 $11,337
10/31/97 $12,236 $12,948 $12,721 $12,721 $14,662
10/31/98 $11,378 $12,040 $11,749 $11,749 $12,926
10/31/99 $12,616 $13,350 $12,634 $12,934 $16,093
This chart assumes an initial investment of $10,000, except for the Class A
shares with a front-end sales charge, made on 9/1/95 (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, 1999. 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, 1999 the Growth and Income Fund has
chosen to use the Russell 2000 Index as its comparison benchmark.
FOR PERIODS ENDED OCTOBER 31, 1999
SINCE INCEPTION
AVERAGE ANNUAL RATE OF RETURN % ONE YEAR 9/1/95
Jefferson Growth & Income Fund - Class A No-Load 10.88% 7.17%
Jefferson Growth & Income Fund - Class A*<F1> 4.73 5.74
Jefferson Growth & Income Fund - Class B No-Load 10.09 6.37
Jefferson Growth & Income Fund - Class B 5.09**<F2> 5.77***<F3>
Russell 2000 Index****<F4> 24.50 12.10
*<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.
REGIONAL BANK FUND
Date Class A Class A - No-Load S&P Banks Index
3/1/99 $9,450 $10,000 $10,000
3/31/99 $9,469 $10,020 $10,014
4/30/99 $9,478 $10,030 $10,824
5/31/99 $9,469 $10,020 $9,942
6/30/99 $9,459 $10,010 $10,682
7/31/99 $9,469 $10,020 $9,799
8/31/99 $9,545 $10,100 $9,350
9/30/99 $9,598 $10,157 $8,758
10/31/99 $9,674 $10,238 $10,183
This chart assumes an initial investment of $10,000, except for the Class A
shares with a front-end sales charge, made on 3/1/99 (inception). 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, 1999 the Regional Bank Fund has chosen
to use the S&P Banks Index as its comparison benchmark.
FOR PERIODS ENDED OCTOBER 31, 1999
RATE OF RETURN % SINCE INCEPTION 3/1/99
Jefferson Regional Bank Fund - Class A No-Load 2.38%
Jefferson Regional Bank Fund - Class A*<F5> (3.26)
S&P Banks Index**<F6> (1.83)
*<F5> Reflects maximum front-end sales charge of 5.50%.
**<F6> The Standard & Poor's Bank Composite is a capitalization-weighted
index of all the stocks in the Standard & Poor's 500 that are involved
in the business of banking.
REIT FUND
Class A - Class B - NAREIT
Date Class A No-Load Class B No - Load Equity Index
3/1/99 $9,450 $10,000 $10,000
3/31/99 $9,158 $9,691 $10,000
4/30/99 $9,855 $10,428 $10,000 $10,000 $10,949
5/31/99 $10,055 $10,640 $10,203 $10,203 $11,190
6/30/99 $9,953 $10,533 $10,092 $10,092 $11,009
7/31/99 $9,637 $10,198 $9,781 $9,781 $10,659
8/31/99 $9,532 $10,087 $9,674 $9,674 $10,523
9/30/99 $9,152 $9,684 $9,292 $9,292 $10,123
10/31/99 $8,947 $9,468 $8,132 $9,086 $9,874
This chart assumes an initial investment of $10,000, except for the Class A
shares with a front-end sales charge, made on 3/1/99 (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, 1999. 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, 1999 the REIT Fund has chosen to use
the NAREIT Equity Index as its comparison benchmark.
FOR PERIODS ENDED OCTOBER 31, 1999
RATE OF RETURN % SINCE INCEPTION 3/1/99
Jefferson REIT Fund - Class A No-Load (5.32)%
Jefferson REIT Fund - Class A*<F7> (10.51)
Jefferson REIT Fund - Class B No-Load****<F10> (9.14)
Jefferson REIT Fund - Class B****<F10> (13.68)**<F8>
NAREIT Equity Index***<F9> (1.26)
*<F7> Reflects maximum front-end sales charge of 5.50%.
**<F8> Reflects maximum Contingent Deferred Sales Charge (CDSC) of 5.00%
effective on redemptions within one year.
***<F9> The National Association of Real Estate Investment Trusts (NAREIT)
Total Return Equity REIT Index is a total return performance index
of all equity REITs tracked by NAREIT.
****<F10> First subscription was April 1, 1999.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
GROWTH REGIONAL REIT
FUND BANK FUND FUND
------ --------- ------
<S> <C> <C> <C>
ASSETS:
Investments, at current value $7,547,675 $ 50,848 $1,141,619
(Cost of $7,278,969, $50,848, and $1,267,477 respectively)
Cash 282,961 -- 6,158
Receivable for investments sold 715,148 -- --
Receivable for fund shares sold -- -- 16,917
Dividends receivable 9,480 -- 2,105
Interest receivable 29,405 13 571
Receivable from investment adviser 101,693 7,986 7,810
Organization costs, net of accumulated amortization 23,754 -- --
Other assets 10,983 2,667 3,704
---------- ---------- ----------
Total assets 8,721,099 61,514 1,178,884
---------- ---------- ----------
LIABILITIES:
Written options, at value (premiums received $4,100) 156 -- --
Payable for investments purchased 1,075,530 -- --
Payable for fund shares redeemed 53,089 10,023 --
Payable to custodian -- 20,585 --
Accrued expenses 50,031 22,522 24,818
Other payables 47 3,620 3,620
---------- ---------- ----------
Total liabilities 1,178,853 56,750 28,438
---------- ---------- ----------
NET ASSETS $7,542,246 $ 4,764 $1,150,446
---------- ---------- ----------
---------- ---------- ----------
NET ASSETS CONSIST OF:
Capital stock $7,615,190 $ 4,615 $1,268,919
Undistributed net investment income 6,843 149 7,595
Accumulated net realized loss on investments
and option contracts expired or closed (352,437) -- (210)
Unrealized net appreciation (depreciation) of:
Investments 268,706 (125,858)
Written options 3,944 -- --
---------- ---------- ----------
Total Net Assets $7,542,246 $ 4,764 $1,150,446
---------- ---------- ----------
---------- ---------- ----------
CLASS A:
Net assets $6,336,343 $ 4,764 $ 816,809
Shares outstanding (unlimited number authorized) 586,433 469 88,567
Net asset value per share $ 10.80 $ 10.16 $ 9.22
---------- ---------- ----------
---------- ---------- ----------
Maximum offering price per share $ 11.43 $ 10.76 $ 9.76
---------- ---------- ----------
---------- ---------- ----------
CLASS B:
Net assets $1,205,903 $ -- $ 333,637
Shares outstanding (unlimited number authorized) 112,266 -- 36,069
Net asset value per share $ 10.74 $ -- $ 9.25
---------- ---------- ----------
---------- ---------- ----------
Redemption price per share,
assuming maximum contingent deferred sales charge $ 10.20 -- $ 8.79
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to the financial statements.
STATEMENT OF OPERATIONS
<TABLE>
REGIONAL BANK FUND REIT FUND
GROWTH FUND MARCH 1, 19991<F11> MARCH 1, 19991<F11>
FISCAL YEAR ENDED THROUGH THROUGH
OCTOBER 31, 1999 OCTOBER 31, 1999 OCTOBER 31, 1999
----------------- ------------------ -----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income (net of withholding tax of
$898, $0, and $0, respectively) $ 120,931 $ -- $ 25,299
Interest income 176,042 61 3,154
Other income 929 352 --
---------- -------- ---------
Total investment income 297,902 413 28,453
---------- -------- ---------
EXPENSES:
Investment advisory fee 50,168 51 2,572
Administration fees 19,983 13,336 13,336
Shareholder servicing and
accounting fees and expenses 47,680 23,473 25,469
Distribution fees -- Class A 17,664 21 744
Distribution fees -- Class B 12,962 -- 1,308
Custody fees 5,296 2,233 4,773
Federal and state registration fees 3,174 1,596 2,034
Professional fees 29,141 16,311 12,311
Reports to shareholders 9,550 1,082 1,228
Amortization of organization costs 22,295 -- --
Trustees' fees and expenses 1,182 1,124 1,078
Other 11,862 247 671
---------- -------- ---------
Total expenses before waiver and reimbursement 230,957 59,474 65,524
Less: Waiver of expenses and reimbursement
from Adviser (125,020) (59,377) (59,592)
---------- -------- ---------
Net expenses 105,937 97 5,932
---------- -------- ---------
NET INVESTMENT INCOME 191,965 316 22,521
---------- -------- ---------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments (414,940) -- (227)
Option contracts expired or closed 48,854 -- --
Net change in unrealized appreciation
(depreciation) of investments 1,036,486 -- (125,858)
---------- -------- ---------
Net gain (loss) on investments 670,400 -- (126,085)
---------- -------- ---------
NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 862,365 $ 316 $(103,564)
---------- -------- ---------
---------- -------- ---------
</TABLE>
1<F11> Inception date
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
REGIONAL BANK FUND REIT FUND
GROWTH FUND GROWTH FUND MARCH 1, 19991<F12> MARCH 1, 19991<F12>
YEAR ENDED YEAR ENDED THROUGH THROUGH
OCTOBER 31, 1999 OCTOBER 31, 1998 OCTOBER 31, 1999 OCTOBER 31, 1999
---------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 191,965 $ 224,626 $ 316 $ 22,521
Net realized gain (loss) on investments (366,086) 318,750 -- (227)
Net change in unrealized appreciation
(depreciation) of investments 1,036,486 (1,184,826) -- (125,858)
---------- ---------- -------- ----------
Net increase (decrease) in net
assets resulting from operations 862,365 (641,450) 316 (103,564)
---------- ---------- -------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 648,639 2,070,261 15,891 1,259,195
Shares issued to holders in
reinvestment of dividends 529,665 734,451 70 11,350
Shares redeemed (2,284,817) (1,238,240) (11,346) (68)
---------- ---------- -------- ----------
Net increase (decrease) in net
assets resulting from capital
share transactions (1,106,513) 1,566,472 4,615 1,270,477
---------- ---------- -------- ----------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment income (174,218) (195,094) (167) (12,177)
From net realized gains (284,551) (432,547) -- --
---------- ---------- -------- ----------
Total distributions to
Class A shareholders (458,769) (627,641) (167) (12,177)
---------- ---------- -------- ----------
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment income (22,394) (31,024) -- (4,290)
From net realized gains (56,711) (87,334) -- --
---------- ---------- -------- ----------
Total distributions to
Class B shareholders (79,105) (118,358) -- (4,290)
---------- ---------- -------- ----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS (782,022) 179,023 4,764 1,150,446
NET ASSETS:
Beginning of year 8,324,268 8,145,245 -- --
---------- ---------- -------- ----------
End of year (including undistributed
net investment income (loss) of
$6,843, $5,716, $149, and
$7,595, respectively) $7,542,246 $8,324,268 $ 4,764 $1,150,446
---------- ---------- -------- ----------
---------- ---------- -------- ----------
</TABLE>
1<F12> Inception date
See notes to the financial statements.
GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
SEPTEMBER 1, 19951<F13>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
OCTOBER 31, 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 0.25 0.19 0.32 0.23 0.29 0.20 0.27 0.21 0.04 0.03
Net realized and unrealized
gain (loss) on securities 0.86 0.83 (1.09) (1.07) 1.40 1.39 0.87 0.83 -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 1.11 1.02 (0.77) (0.84) 1.69 1.59 1.14 1.04 0.04 0.03
Less distributions:
Dividends from net
investment income (0.27) (0.18) (0.32) (0.25) (0.29) (0.21) (0.27) (0.20) -- --
Distributions from net
realized gains (0.44) (0.44) (0.77) (0.77) (0.05) (0.05) -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.71) (0.62) (1.09) (1.02) (0.34) (0.26) (0.27) (0.20) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $10.80 $10.74 $10.40 $10.34 $12.26 $12.20 $10.91 $10.87 $10.04 $10.03
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN2<F14> 10.88% 10.09% (7.01%) (7.64%) 15.56% 14.68% 11.50% 10.49% 0.40%3 0.30%3
<F15> <F15>
SUPPLEMENTAL
DATA AND RATIOS:
Net assets, in thousands,
end of period $6,336 $1,206 $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 2.65% 3.40% 2.75% 3.37% 2.96% 3.71% 5.95% 6.70% 17.35%4 18.10%4
<F16> <F16>
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
<F16> <F16>
Ratio of net investment income
to average net assets:
Before expense
reimbursement 0.91% 0.18% 1.11% 50.00% 1.01% 26.00% (1.77%) (2.52%) (14.95%)4 (15.70%)4
<F16> <F16>
After expense
reimbursement 2.41% 1.68% 2.71% 2.09% 2.82% 2.07% 3.03% 2.28% 1.25%4 0.50%4
<F16> <F16>
Portfolio turnover rate5<F17> 94.73% 94.73% 136.94% 136.94% 98.37% 98.37% 131.98% 131.98% -- --
</TABLE>
1<F13> Commencement of operations.
2<F14> 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<F15> Not annualized.
4<F16> Annualized.
5<F17> During the period ended October 31, 1995, there were no sales of long-
term 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.
REGIONAL BANK FUND
FINANCIAL HIGHLIGHTS
MARCH 1, 19991<F18>
THROUGH
OCTOBER 31, 1999
-------------------
CLASS A
-------
PER SHARE DATA:
Net asset value, beginning of period $10.00
Income from investment operations:
Net investment income 0.38
Net realized and unrealized gain (loss) on securities (.15)
------
Total from investment operations 0.23
Less distributions:
Dividends from net investment income (0.07)
Distributions from net realized gains --
------
Total distributions (0.07)
------
Net asset value, end of period $10.16
------
------
TOTAL RETURN2<F19>,3<F20> 2.38%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of period $ 5
Ratio of net expenses to average net assets:
Before expense reimbursement 701.10%4<F21>
After expense reimbursement 1.15%4<F21>
Ratio of net investment income to average net assets:
Before expense reimbursement (696.22%)4<F21>
After expense reimbursement 3.73%4<F21>
Portfolio turnover rate5<F22> --
1<F18> Commencement of operations.
2<F19> 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<F20> Not annualized.
4<F21> Annualized.
5<F22> During the period ended October 31, 1999, there were no purchases or
sales of long-term securities.
See notes to the financial statements.
REIT FUND
FINANCIAL HIGHLIGHTS
MARCH 1, 19991<F23>
THROUGH
OCTOBER 31, 1999
-------------------------
CLASS A CLASS B5<F27>
------- -------------
PER SHARE DATA:
Net asset value, beginning of period $10.00 $10.32
Income from investment operations:
Net investment income 0.30 0.19
Net realized and unrealized gain
(loss) on securities (0.82) (1.13)
------ ------
Total from investment operations (0.52) (0.94)
Less distributions:
Dividends from net investment income (0.26) (0.13)
Distributions from net realized gains -- --
------ ------
Total distributions (0.26) (0.13)
------ ------
Net asset value, end of period $ 9.22 $ 9.25
------ ------
------ ------
TOTAL RETURN2<F24>,3<F25> (5.32%) (9.14%)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of period $ 817 $ 334
Ratio of net expenses to average net assets:
Before expense reimbursement 12.71%4<F26> 20.90%
After expense reimbursement 1.15%4<F26> 1.90%
Ratio of net investment income
to average net assets:
Before expense reimbursement (6.20%)4<F26>(14.09%)
After expense reimbursement 5.36%4<F26> 4.91%
Portfolio turnover rate 1.36%3<F25> 1.36%3<F25>
1<F23> Commencement of operations.
2<F24> 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<F25> Not annualized.
4<F26> Annualized.
5<F27> Class B did not have shareholders until April 1, 1999.
See notes to the financial statements.
GROWTH FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
NUMBER
OF SHARES VALUE
--------- -----
COMMON STOCKS -- 75.9%***<F30>
Apparel -- 3.8%***<F30>
15,000 Luxottica Group S.P.A. $ 287,812
----------
Capital Goods -- 4.2%***<F30>
4,000 Dover Co. 170,250
4,000 Molex, Inc. 146,000
----------
316,250
----------
Chemicals -- 2.2%***<F30>
13,000 IMC Global, Inc. 165,750
----------
Communications & Media -- 1.8%***<F30>
4,000 Infinity Broadcasting*<F28> 138,250
----------
Computer Software -- 12.5%***<F30>
6,000 BSquare Corporation*<F28> 237,375
8,000 Symantec Corporation*<F28> 382,000
2,500 Syntel, Inc.*<F28> 20,625
6,000 Xircom, Inc.*<F28> 302,625
----------
942,625
----------
Energy -- 3.7%***<F30>
4,000 El Paso Energy Corporation 164,000
2,000 Murphy Oil Corporation 112,125
----------
276,125
----------
Entertainment & Leisure -- 11.6%***<F30>
5,500 Anchor Gaming*<F28> 335,500
15,000 International Game Technology 279,375
26,000 Sunterra Corporation*<F28> 260,000
----------
874,875
----------
Financial Services -- 10.0%***<F30>
8,000 Associated Bank Corporation 307,750
7,500 MGIC Investment*<F28> 448,125
----------
755,875
----------
Food & Beverage -- 2.5%***<F30>
6,000 Vornado Realty Trust 190,125
----------
Health Care -- 1.7%***<F30>
10,000 Bindley Western Inds. 125,625
----------
Manufacturing -- 8.1%***<F30>
9,000 Cordant Technologies, Inc. 280,688
22,000 Noble International LTD*<F28> 332,750
----------
613,438
----------
Real Estate Investment Trusts -- 7.6%***<F30>
10,000 Great Lakes REIT, Inc. 144,375
10,000 Hospitality Properties Trust 211,250
28,500 Misson West Properties 219,094
----------
574,719
----------
Transportation -- 6.2%***<F30>
4,000 FDX Corporation*<F28> 172,250
10,000 Sea Containers LTD -- Class A*<F28> 292,500
----------
464,750
----------
TOTAL COMMON STOCKS
(COST $5,377,522) 5,726,219
----------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS AND
NOTES -- 13.5%***<F30>
Finance Company -- 0.6%***<F30>
$ 50,000 Salomon, Inc.
7.50%, 09/29/2015 49,642
----------
Food & Beverage -- 3.3%***<F30>
250,000 General Foods
6.00%, 06/15/2001 247,664
----------
Industrial -- 9.6%***<F30>
300,000 Masotech, Inc.**<F29>
4.50%, 12/15/2003 234,000
300,000 Quanex Corporation**<F29>
6.88%, 06/30/2007 286,125
300,000 Veterinary Centers of America**<F29>
5.25%, 05/01/2006 203,250
----------
723,375
----------
TOTAL CORPORATE BONDS
AND NOTES (COST $1,101,127) 1,020,681
----------
U.S. GOVERNMENT AGENCY -- 0.2%***<F30>
Federal National Mortgage
Association (FNMA) -- 0.2%***<F30>
15,647 Pass-Thru Certificates
Pool #050737, 6.00%,
05/01/2000 15,588
----------
TOTAL U.S. GOVERNMENT
AGENCY (COST $15,133) 15,588
----------
SHORT-TERM
INVESTMENTS -- 10.4%***<F30>
Variable Rate Demand Notes -- 10.4%***<F30>
156,315 General Mills, Inc. 156,315
115,091 Pitney Bowes, Inc. 115,091
155,401 Sara Lee Corporation 155,401
119,344 Warner-Lambert Corporation 119,344
121,928 Wisconsin Corporation Central
Credit Union 121,928
117,107 Wisconsin Electric Power Co. 117,108
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $785,187) 785,187
----------
TOTAL INVESTMENTS
(COST $7,278,969) $7,547,675
----------
----------
CONTRACTS
(100 SHARES
PER CONTRACT)
- -------------
WRITTEN OPTION CONTRACTS
25 Associated Bank expiring
December 1999 at 45 $ 156
----------
TOTAL OPTIONS WRITTEN
(Premiums received $4,100) $ 156
----------
----------
*<F28> Non-income producing security
**<F29> Convertible into common stock
***<F30> Calculated as a percentage of net assets
See notes to the financial statements.
REGIONAL BANK FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
PRINCIPAL
AMOUNT VALUE
--------- -----
U.S. GOVERNMENT AGENCY -- 1,067.3%
$ 51,000 U.S. Treasury Bill
0.00%, 11/26/1999 $ 50,848
--------
TOTAL U.S. GOVERNMENT
AGENCY (COST $50,848) 50,848
--------
TOTAL INVESTMENTS
(COST $50,848) 50,848
--------
*<F31> Calculated as a percentage of net assets
See notes to the financial statements.
REIT FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
NUMBER
OF SHARES VALUE
--------- -----
COMMON STOCKS -- 83.3%*<F32>
Healthcare -- 3.6%*<F32>
1,526 Healthcare Realty Trust $ 29,375
1,500 Meditrust Corporation 12,094
----------
41,469
----------
Industrial -- 10.3%*<F32>
1,100 Alexandria Real Estate
Equities, Inc. 31,625
800 Centerpoint Properties Trust 26,100
2,100 Duke-Weeks Realty Corporation 41,212
800 First Industrial Realty Trust 19,750
----------
118,687
----------
Office -- 21.1%*<F32>
1,000 Boston Properties, Inc. 29,812
1,800 Brandywine Realty Trust 30,263
1,500 Carramerica Realty Corporation 33,375
1,600 Equity Office Properties 35,400
2,100 Great Lakes REIT, Inc. 30,319
1,000 Liberty Property Trust 23,375
4,000 Mission West Properties 30,750
1,310 PSB Business Parks, Inc. 29,639
----------
242,933
----------
Residential -- 18.2%*<F32>
800 Apartment Investment &
Management 30,100
1,000 Avalonbay Communities, Inc. 32,312
800 Chateau Properties, Inc. 20,400
600 Equity Residential
Properties Trust 25,087
1,200 Home Properties of NY, Inc. 32,025
1,400 New Plan Excel Realty Trust 24,237
1,000 Pacific Gulf Properties 20,250
800 Sun Communities, Inc. 25,500
----------
209,911
----------
Retail -- 23.7%*<F32>
1,700 Bradley Real Estate, Inc. 28,475
600 Chelsea GCA Realty, Inc. 18,600
1,000 General Growth Inds. 28,938
1,300 JDN Realty Corporation 24,781
800 Kimco Realty Corporation 27,300
1,500 Simon Property Group, Inc. 34,594
1,000 Spieker Properties, Inc. 34,938
1,400 Vornado Realty Trust 44,362
800 Weingarten Realty Inv 30,600
----------
272,588
----------
Specialty -- 6.4%*<F32>
1,000 Golf Trust of America, Inc. 17,938
1,500 Hospitality Properties Trust 31,687
500 Public Storage, Inc. 12,063
500 Shurgard Storage Centers 11,813
----------
73,501
----------
TOTAL COMMON STOCKS
(COST $1,084,947) 959,089
----------
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENTS -- 15.9%*<F32>
Variable Rate Demand Notes -- 15.9%*<F32>
$ 45,787 American Family 45,787
29,683 Pitney Bowes, Inc. 29,683
45,515 Warner-Lambert Corporation 45,515
29,715 Wisconsin Corporation Central
Credit Union 29,715
31,830 Wisconsin Electric Power Co. 31,830
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $182,530) 182,530
----------
TOTAL INVESTMENTS
(COST $1,267,477) 1,141,619
----------
*<F32> Calculated as a percentage of net assets
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 1999
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"). The Regional Bank Fund ceased operations and liquidated existing
shareholders on November 1, 1999, and Marshall Capital Management, Inc. resigned
as Adviser to the Regional Bank Fund.
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 Valuations -- 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 investment 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 my 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. The Funds intend to
utilize provisions of the federal income tax laws which allow them to carry a
realized capital loss forward for eight years following the year of the loss and
offset such losses against any future realized capital gains. At October 31,
1999, the losses amounted to $359,714 for the Growth Fund and $210 for the REIT
Fund, which will expire October 31, 2007.
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 increased by $5,375, $1,570 and $1,542, for Growth, Regional Bank and
REIT Fund, respectively. Undistributed accumulated realized losses on
investments has decreased by $10,088 and $16 for the Growth and REIT Fund,
respectively. Capital Stock has decreased by $15,463, $1,570 and $1,558, for
the Growth, Regional Bank and REIT Fund, respectively.
Net investment income and realized gains and losses for federal income tax
purposes may differ from that reported on the financial statements because of
temporary book and tax basis differences. Temporary differences are primarily
the result of REIT adjustments in the Growth Fund and REIT Fund.
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 and paid 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 exercised price if the option is exercised.
Option contracts are valued at the average of the current bid and asked price
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 determine 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
-------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998
------------------ ------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
Shares sold $ 575,170 54,954 $1,481,940 125,151
Shares issued to
holders in reinvest-
ment of dividends 455,884 43,349 623,029 53,852
Shares redeemed (1,808,854) (169,554) (929,582) (77,303)
----------- ------- ---------- -------
Net increase
(decrease) $ (777,800) (71,251) $1,175,387 101,700
----------- ------- ---------- -------
----------- ------- ---------- -------
CLASS B
-------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998
------------------ ------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
Shares sold $ 73,469 6,783 $ 588,321 50,892
Shares issued
to holders in
reinvestment
of dividends 73,782 7,053 111,422 9,657
Shares
redeemed (475,964) (45,323) (308,658) (25,827)
----------- ------- ---------- -------
Net increase
(decrease) $ (328,713) (31,487) $ 391,085 34,722
----------- ------- ---------- -------
----------- ------- ---------- -------
REGIONAL BANK FUND
CLASS A
------------------
PERIOD ENDED
OCTOBER 31, 1999
------------------
AMOUNT SHARES
------ ------
Shares sold $15,891 1,578
Shares issued
to holders in
reinvestment
of dividends 70 7
Shares
redeemed (11,346) (1,116)
-------- ------
Net increase $ 4,615 469
-------- ------
-------- ------
REIT FUND
CLASS A
------------------
PERIOD ENDED
OCTOBER 31, 1999
------------------
AMOUNT SHARES
------ ------
Shares sold $889,960 87,799
Shares issued
to holders in
reinvestment
of dividends 7,465 776
Shares
redeemed (68) (8)
-------- ------
Net increase $897,357 88,567
-------- ------
-------- ------
CLASS B
------------------
PERIOD ENDED
OCTOBER 31, 1999
------------------
AMOUNT SHARES
------ ------
Shares sold $369,236 35,666
Shares issued
to holders in
reinvestment
of dividends 3,886 403
Shares
redeemed -- --
-------- ------
Net increase $373,122 36,069
-------- ------
-------- ------
4) INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, by the Funds for the period ended October 31, 1999, were as
follows:
PURCHASES SALES
--------- -----
GROWTH FUND
U.S. Government $ -- $ 8,886
Other 7,373,641 6,526,113
REGIONAL BANK FUND
U.S. Government $ -- $ --
Other -- --
REIT FUND
U.S. Government $ -- $ --
Other 1,090,185 5,012
At October 31, 1999, gross unrealized appreciation and depreciation of
investments for federal income tax purposes was as follows:
GROWTH FUND
Appreciation $ 928,392
(Depreciation) (652,324)
---------
Net unrealized appreciation
on investments $ 276,068
---------
---------
REIT FUND
Appreciation $ 725
(Depreciation) (121,539)
---------
Net unrealized depreciation
on investments $(120,814)
---------
---------
The Regional Bank Fund held only U.S. Treasury Bills as of the year ended
October 31, 1999. The cost of the Treasury Bills equalled the book value,
therefore there were no unrealized appreciation or depreciation.
At October 31, 1999, the cost of investments for federal income tax purposes for
the Growth Fund, Regional Bank Fund, and the REIT Fund were $7,271,607, 50,848,
and $1,262,433, respectively.
Transactions in call options written during the year ended October 31, 1999 for
the Growth Fund were as follows:
NUMBER PREMIUMS
------ --------
Options outstanding at beginning of year -- $ --
Options written during the year 30,200 60,809
Options expired (10,600) (29,665)
Options closed (17,100) (27,044)
------- -------
Options outstanding at end of year 2,500 $ 4,100
------- -------
------- -------
5) INVESTMENT ADVISORY AND OTHER
AGREEMENTS
Uniplan, Inc. is the Investment Adviser for the Growth Fund and the REIT Fund.
Marshall Capital Management, Inc. was 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 has 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 1.15% 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 October 31, 1999, the Advisers have waived and reimbursed the
Growth Fund, Regional Bank Fund, and REIT Fund $125,020, $59,377, and $59,592,
respectively.
The Distributor received front-end sales charges on Class A shares and
contingent deferred sales charges on Class B shares of $0 and $0, respectively,
for the year ended October 31, 1999. Firstar Mutual Fund Services, LLC serves
as Transfer Agent, Administrator and Accounting services agent for the Fund.
Firstar Bank N.A. serves as Custodian for the Fund.
6) DISTRIBUTIONS
a) Twenty-nine percent of the dividends paid during the fiscal year ended
October 31, 1999, for the Jefferson Growth Fund 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
OCTOBER 31, 1999
The Shareholders and Board of Trustees
The Jefferson Fund Group Trust
We have audited the accompanying statements of assets and liabilities of
Jefferson Fund Group Trust (comprising, respectively, the Jefferson Growth and
Income Fund, the Jefferson Regional Bank Fund, and the Jefferson REIT Fund),
collectively referred to as the "Funds" including the schedules of investments
as of October 31, 1999, and the related statements of operations for the period
then ended, the statements of changes in net assets for each of the periods
presented in the two-year period then ended and the financial highlights for
each of the periods presented in the three-year period then ended. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlight 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 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 as of
October 31, 1999, 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 each
of the respective Funds constituting the Jefferson Fund Group Trust as of
October 31, 1999, the results of their operations for the period then ended, the
changes in their net assets for each of the periods presented in the two-year
period then ended, and the financial highlights for each of the periods
presented in the three-year period then ended, in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
Chicago, Illinois
December 3, 1999
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 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 LLP
303 East Wacker Drive
Chicago, IL 60601
