(JEFFERSON FUNDS LOGO)
ANNUAL REPORT
OCTOBER 31, 2000
December 20, 2000
Dear Fellow Investors,
Enclosed is the annual report for the year ended October 31, 2000. We are
pleased to announce that, since our last letter to investors, Jefferson
Advisers, Inc. has become the sponsor of the Jefferson Fund Group Trust.
Jefferson Advisers, Inc., through their capital management affiliates have
agreed to provide expanded financial and marketing support for the funds. In
addition, we have entered into a new distribution agreement with Quasar
Distributors, LLC, the broker dealer affiliate of Firstar Corporation. This
change will consolidate our entire back office operation under the Firstar
umbrella. These changes will allow the Jefferson Funds to be more responsive to
shareholder needs and have a more efficient fully integrated back office.
JEFFERSON GROWTH & INCOME FUND
In the past year performance for the Jefferson Fund Growth and Income Fund has
improved relative to the broader market. For the year ended October 31, 2000,
the Growth & Income Fund was up 10.9%. This compares to a 1.04% return for the
Value Line Composite for the same period. Since October 31, 2000 the major
market averages have all moved lower with most of the Indexes making highs for
the year during March. Market leadership that was confined to short list of
technology and Internet stocks has vanished. The broader list of small and
medium sized companies, which did not participate in the appreciation enjoyed
by their technology company counterparts, continued to struggle while making
modest gains. This general market decline has created a condition where many
companies are selling at substantial valuation discounts and offer excellent
investment opportunities.
To the extent that this market decline seems persistent, we have adjusted the
portfolio of the Growth and Income Fund to take advantage of market volatility.
We continue to focus on the stocks of small and medium sized companies which
show compelling valuation characteristics, but since late in 1999, we have
attempted to focus on those value stocks that have also been displaying
improving price momentum patterns. In addition, we are also working to stay
fully invested in order to maximize shareholder returns.
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 any general market strength to
reposition the portfolio into stronger sectors with better long term growth
prospects. Although volatility of the markets and the Fund has increased, we
continue to believe this is the correct strategy in the current market
environment.
THE JEFFERSON REIT PORTFOLIO
In the financial sector, Real Estate Investment Trusts (REIT's), in particular
performed much better during 2000, than they compared to 1999. This has also
been the case with the Jefferson REIT Fund during the year 2000. For the fiscal
year ended October 31, 2000, the Jefferson REIT Portfolio advanced 21.24%. This
compares to a return of 18.29% for the NAREIT Equity Index, our benchmark, which
is an unmanaged index of all publicly traded equity Real Estate Investment
Trusts calculated by the National Association of Real Estate Investment Trusts.
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 that he has personally made a number of
investments in the sector.
The Jefferson REIT Fund, introduced in February 1999, 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 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, strong domestic economic conditions have led to increased demand
for space and higher rents in most markets. These positive supply and demand
factors generally have lead to higher real estate valuations and generally
higher REIT prices.
During the fiscal year, the REIT portfolio remained invested in geographic
markets that showed strong growth in demand for real estate while having supply
constraints and low vacancy rates. Among our principal markets are San Francisco
and San Jose, California; New York City, Boston and Chicago. The outlook in
these markets continues to very positive.
We have avoided markets such as Atlanta and Dallas that show much weaker real
estate fundamentals.
As always, we continue to appreciate the support of our investors and look
forward to a prosperous New Year.
Sincerely,
/s/Richard P. Imperiale
Richard P. Imperiale
Chairman
GROWTH & INCOME FUND
Date Class A Class A - No-Load Russell 2000
---- ------- ----------------- ------------
9/1/95 $9,450 $10,000 $10,000
10/31/95 $9,488 $10,040 $9,723
10/31/96 $10,588 $11,205 $11,337
10/31/97 $12,236 $12,948 $14,662
10/31/98 $11,378 $12,040 $12,926
10/31/99 $12,616 $13,350 $14,848
10/31/00 $13,991 $14,806 $17,433
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). 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, 2000 the Growth & Income Fund has
chosen to use the Russell 2000 Index as its comparison benchmark.
<TABLE>
FOR PERIODS ENDED OCTOBER 31, 2000
AVERAGE ANNUAL RATE OF RETURN % ONE YEAR FIVE YEAR SINCE INCEPTION 9/1/95
------------------------------- -------- --------- ----------------------
<S> <C> <C> <C>
Jefferson Growth & Income Fund - Class A No-Load 10.90% 8.07% 7.88%
Jefferson Growth & Income Fund - Class A*<F1> 4.79 6.87 6.71
Russell 2000 Index**<F2> 17.41 12.46 11.44
</TABLE>
*<F1> Reflects maximum front-end sales charge of 5.50%.
**<F2> 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.
REIT FUND
Date Class A Class A - No-Load NAREIT Equity Index
---- ------- ----------------- -------------------
3/1/99 $9,450 $10,000 $10,000
4/30/99 $9,854 $10,428 $10,900
7/31/99 $9,637 $10,198 $10,610
10/31/99 $8,947 $9,467 $9,830
1/31/00 $9,082 $9,610 $10,009
4/30/00 $9,733 $10,299 $10,901
7/31/00 $11,003 $11,643 $12,277
10/31/00 $10,848 $11,479 $11,628
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, 2000 the REIT Fund has chosen to use
the NAREIT Equity Index as its comparison benchmark.
FOR PERIODS ENDED OCTOBER 31, 2000
AVERAGE ANNUAL RATE OF RETURN % ONE YEAR SINCE INCEPTION 3/1/99
------------------------------- -------- ----------------------
Jefferson REIT Fund - Class A No-Load 21.24% 8.59%
Jefferson REIT Fund - Class A*<F3> 14.53 4.99
NAREIT Equity Index**<F4> 18.29 9.43
*<F3> Reflects maximum front-end sales charge of 5.50%.
**<F4> 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.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
GROWTH &
INCOME FUND REIT FUND
----------- ---------
ASSETS:
Investments, at current value
(cost $4,374,416, $1,312,344) $5,353,866 $1,447,160
Cash 10,565 --
Receivable for investment securities sold 294,148 --
Dividends receivable 425 1,953
Interest receivable 903 22
Receivable from Investment Adviser 76,411 31,411
Other assets 8,839 3,291
---------- ----------
Total Assets 5,745,157 1,483,837
---------- ----------
LIABILITIES:
Bank overdraft -- 7,295
Payable for investment securities purchased 337,478 --
Payable for fund shares redeemed 24,293 50,439
Accrued expenses 39,778 21,795
---------- ----------
Total Liabilities 401,549 79,529
---------- ----------
NET ASSETS $5,343,608 $1,404,308
---------- ----------
---------- ----------
NET ASSETS CONSIST OF:
Capital Stock $4,896,049 $1,301,986
Undistributed net investment income -- 18,478
Undistributed accumulated net
realized loss on investments (531,891) (50,972)
Unrealized net appreciation of investments 979,450 134,816
---------- ----------
Total Net Assets $5,343,608 $1,404,308
---------- ----------
---------- ----------
Shares outstanding (unlimited number authorized) 449,566 132,006
Net asset value and offering price per share $ 11.89 $ 10.64
---------- ----------
---------- ----------
Maximum offering price per share $ 12.58 $ 11.26
---------- ----------
---------- ----------
See notes to the financial statements.
STATEMENT OF OPERATIONS
<TABLE>
GROWTH & INCOME FUND REIT FUND
FISCAL YEAR ENDED FISCAL YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 2000
-------------------- -----------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend income $ 68,126 $ 90,239
Interest income 48,691 7,865
Other income 1,298 --
-------- --------
Total investment income 118,115 98,104
-------- --------
EXPENSES:
Investment advisory fees 35,831 8,405
Administration fees 20,001 19,997
Shareholder servicing and accounting fees and expense 46,837 27,733
Distribution fees - Class A 14,083 3,245
Distribution fees - Class B 3,401 1,029
Custody fees 5,560 2,885
Federal and state registration fees 4,500 3,538
Professional fees 24,526 14,214
Reports to shareholders 4,865 1,824
Amortization of organization costs 23,754 --
Trustees' fees and expenses 2,518 2,097
Miscellaneous 10,578 1,498
-------- --------
Total expense before waiver and reimbursement 196,454 86,465
Less: Waiver of expenses and reimbursement from Adviser (47,543) (56,171)
-------- --------
Net expenses 148,911 30,294
-------- --------
NET INVESTMENT INCOME (LOSS) (30,796) 67,810
-------- --------
REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on investments (180,066) (52,649)
Net change in unrealized appreciation (depreciation) of investment 706,800 260,674
-------- --------
Net gain on investments 526,734 208,025
-------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $495,938 $275,835
-------- --------
-------- --------
</TABLE>
See notes to the financial statements.
GROWTH & INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (30,796) $ 191,965
Net realized gain (loss) on investments (180,066) (366,086)
Change in unrealized appreciation (depreciation) on investments 706,800 1,036,486
---------- ----------
Net increase in net assets resulting from operations 495,938 862,365
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 1,339,967 648,639
Shares issued to holders in reinvestment of dividends 50,241 529,665
Shares redeemed (4,034,032) (2,284,817)
---------- ----------
Net decrease in net assets resulting from
capital share transactions (2,643,824) (1,106,513)
---------- ----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income (5,993) (174,218)
From net realized gains -- (284,551)
Tax return of capital (38,453) --
---------- ----------
Total distributions to Class A shareholders (44,446) (458,769)
---------- ----------
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income (856) (22,394)
From net realized gains -- (56,711)
Tax return of capital (5,450) --
---------- ----------
Total distributions to Class B shareholders (6,306) (79,105)
---------- ----------
TOTAL DECREASE IN NET ASSETS (2,198,638) (782,022)
NET ASSETS:
Beginning of year 7,542,246 8,324,268
---------- ----------
End of year (including undistributed net investment income (loss)
of $0 and $6,843, respectively) $5,343,608 $7,542,246
---------- ----------
---------- ----------
</TABLE>
See notes to the financial statements.
REIT FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
MARCH 1, 1999
YEAR ENDED THROUGH
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 67,810 $ 22,521
Net realized loss on investments (52,649) (227)
Change in unrealized appreciation (depreciation) on investments 260,674 (125,858)
---------- ----------
Net increase (decrease) in net assets resulting from operations 275,835 (103,564)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 783,312 1,259,195
Shares issued to holders in reinvestment of dividends 52,164 11,350
Shares redeemed (793,257) (68)
---------- ----------
Net increase in net assets resulting from
capital share transactions 42,219 1,270,477
---------- ----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income (49,811) (12,177)
From net realized gains -- --
Tax return of capital (8,282) --
---------- ----------
Total distributions to Class A shareholders (58,093) (12,177)
---------- ----------
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income (5,229) (4,290)
From net realized gains -- --
Tax return of capital (870) --
---------- ----------
Total distributions to Class B shareholders (6,099) (4,290)
---------- ----------
TOTAL INCREASE IN NET ASSETS 253,862 1,150,446
NET ASSETS:
Beginning of year 1,150,446 --
---------- ----------
End of year (including undistributed net investment income
of $18,478 and $7,595 respectively) $1,404,308 $1,150,446
---------- ----------
---------- ----------
</TABLE>
See notes to the financial statements.
GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ---------------- ---------------- ---------------- ----------------
CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of year $10.80 $10.40 $12.26 $10.91 $10.04
Income from investment
operations:
Net investment income (0.06) 0.25 0.32 0.29 0.27
Net realized and unrealized
gains on securities 1.23 0.86 (1.09) 1.40 0.87
------ ------ ------ ------ ------
Total from investment
operations 1.17 1.11 (0.77) 1.69 1.14
Less distributions:
Dividends from net
investment income (0.01) (0.27) (0.32) (0.29) (0.27)
Distributions from net
realized gains -- (0.44) (0.77) (0.05) --
Tax return of capital (0.07) -- -- -- --
------ ------ ------ ------ ------
Total distributions (0.08) (0.71) (1.09) (0.34) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period $11.89 $10.80 $10.40 $12.26 $10.91
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN1<F5> 10.90% 10.88% (7.01%) 15.56% 11.50%
SUPPLEMENTAL
DATA AND RATIOS:
Net assets, in thousands,
end of period $5,346 $6,336 $6,838 $6,815 $4,688
Ratio of net expense to
average net assets:
Before expense
reimbursement 3.26% 2.65% 2.75% 2.96% 5.95%
After expense
reimbursement 2.46% 1.15% 1.15% 1.15% 1.15%
Ratio of net investment income
to average net assets:
Before expense
reimbursement (1.27%) 0.91% 1.11% 1.01% (1.77%)
After expense
reimbursement (0.47%) 2.41% 2.71% 2.82% 3.03%
Portfolio turnover rate 144.26% 94.73% 136.94% 98.37% 131.98%
</TABLE>
1<F5> The total return calculation does not reflect the 5.5% front end sales
charge for Class A
See notes to the financial statements.
REIT FUND
FINANCIAL HIGHLIGHTS
<TABLE>
MARCH 1, 19991<F6>
YEAR ENDED THROUGH
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- ----------------
CLASS A CLASS A
------- -------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $ 9.22 $10.00
Income from investment operations:
Net investment income 0.49 0.30
Net realized and unrealized gains (losses) on securities 1.41 (0.82)
------ ------
Total from investment operations 1.90 (0.52)
Less distributions:
Dividends from net investment income (0.41) (0.26)
Distributions from net realized gains -- --
Tax return of capital (0.07) --
------ ------
Total distributions (0.48) (0.26)
------ ------
Net asset value, end of period $10.64 $ 9.22
------ ------
------ ------
TOTAL RETURN2<F7> 21.24% (5.32%)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of period $1,404 $817
Ratio of net expense to average net assets:
Before expense reimbursement 6.13% 12.71%4<F9>
After expense reimbursement 2.11% 1.15%4<F9>
Ratio of net investment income to average net assets:
Before expense reimbursement 0.89% (6.20%)4<F9>
After expense reimbursement 4.91% 5.36%4<F9>
Portfolio turnover rate 15.17% 1.36%3<F8>
</TABLE>
1<F6> Commencement of operations.
2<F7> The total return calculation does not reflect the 5.5% front end sales
charge for Class A.
3<F8> Not annualized.
4<F9> Annualized.
See notes to the financial statements.
GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
NUMBER
OF SHARES VALUE
--------- -----
COMMON STOCKS -- 93.37%*<F11>
Aerospace -- 3.64%*<F11>
3,000 Embraer - Empresa Brasileira
de Aeronautica S.A. ADR**<F12> $ 86,813
3,000 Lockheed Martin Corporation 107,550
----------
194,363
----------
Application Software -- 10.45%*<F11>
1,000 Electronic Arts Inc.**<F12> 50,000
5,000 Rational Software
Corporation**<F12> 298,438
2,000 Siebel Systems, Inc.**<F12> 209,875
----------
558,313
----------
Chemicals -- 2.43%*<F11>
2,944 Cabot Microelectronics
Corporation**<F12> 130,088
----------
Computer Integrated -- 4.27%*<F11>
5,000 Mentor Graphics
Corporation**<F12> 117,187
1,000 Mercury Interactive
Corporation**<F12> 111,000
----------
228,187
----------
Computer Software -- 8.14%*<F11>
3,000 BEA Systems, Inc.**<F12> 215,250
1,000 Business Objects S.A. ADR**<F12> 78,797
1,000 VERITAS Software
Corporation**<F12> 141,016
----------
435,063
----------
Electronics -- 3.84%*<F11>
3,000 AVX Corporation 85,875
2,250 Orbotech, Ltd.**<F12>f<F13> 119,109
----------
204,984
----------
Entertainment & Leisure -- 14.72%*<F11>
5,500 Anchor Gaming**<F12> 467,156
14,000 Pinnacle Entertainment, Inc. 319,375
----------
786,531
----------
Financial Services -- 5.10%*<F11>
4,000 MGIC Investment Corporation 272,500
----------
Medical -- 12.86%*<F11>
1,000 ALZA Corporation**<F12> 80,937
2,500 Beckman Coulter, Inc. 175,156
4,000 Vertex Pharmaceuticals Inc.**<F12> 372,437
500 Wellpoint Health
Networks Inc.**<F12> 58,469
----------
686,999
----------
Network Products -- 2.47%*<F11>
1,000 VeriSign, Inc.**<F12> 132,000
----------
Oil Company -- 4.47%*<F11>
2,000 Anadarko Petroleum
Corporation 128,100
2,000 Apache Corporation 110,625
----------
238,725
----------
Real Estate Investment Trusts -- 16.12%*<F11>
4,000 AMB Property Corporation 94,000
2,000 Avalonbay Communities, Inc. 91,875
28,500 Mission West Properties Inc. 382,969
3,700 SL Green Realty Corporation 99,206
1,800 Spieker Properties, Inc. 99,675
2,700 Vornado Realty Trust 93,994
----------
861,719
----------
Telecommunications -- 4.86%*<F11>
1,500 Corning Incorporated 114,750
10,000 Harmonic Inc.**<F12> 145,000
----------
259,750
----------
TOTAL COMMON STOCKS
(COST $4,009,772) 4,989,222
----------
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENTS -- 6.82%*<F11>
Variable Rate Demand Notes#<F14> -- 6.82%*<F11>
$191,547 American Family Financial
Services Inc., 6.22% 191,547
163,511 Sara Lee Corporation, 6.22% 163,511
9,586 Wisconsin Corporate Central
Credit Union, 6.29% 9,586
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $364,644) 364,644
----------
TOTAL INVESTMENTS
(COST $4,374,416) 5,353,866
----------
LIABILITIES IN EXCESS
OF OTHER ASSETS -- (.19%)*<F11> (10,258)
----------
TOTAL NET
ASSETS -- 100.0% $5,343,608
----------
----------
*<F11> Calculated as a percentage of net assets.
**<F12> Non-income producing security.
F<F13> Foreign Security.
ADR American Depositary Receipt.
#<F14> Variable rate demand notes are considered short-term obligations and
are payable on demand. Interest rates change periodically on
specified dates. The rates listed are as of October 31, 2000.
See notes to the financial statements.
REIT FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
NUMBER
OF SHARES VALUE
--------- -----
COMMON STOCKS -- 103.02%*<F15>
Healthcare -- 3.58%*<F15>
2,526 Healthcare Realty Trust, Inc. $ 50,362
----------
Industrial -- 22.23%*<F15>
2,200 AMB Property Corporation 51,700
1,100 Alexandria Real Estate
Equities, Inc. 37,263
1,100 CenterPoint Properties Trust 48,881
2,100 Duke-Weeks Realty Corporation 49,744
1,500 First Industrial Realty Trust, Inc. 46,313
2,110 PS Business Parks, Inc. 55,388
1,000 Public Storage, Inc. 22,500
16 Public Storage, Inc. -- Class A 363
----------
312,152
----------
Office -- 29.78%*<F15>
1,200 Boston Properties, Inc. 48,600
1,800 Brandywine Realty Trust 34,425
1,500 CarrAmerica Realty Corporation 44,344
1,600 Equity Office Properties Trust 48,200
2,100 Great Lakes REIT, Inc. 35,569
5,000 Mission West Properties Inc. 67,187
1,300 Prentiss Properties Trust 32,988
1,300 SL Green Realty Corp. 34,856
1,300 Spieker Properties, Inc. 71,987
----------
418,156
----------
Residential -- 21.70%*<F15>
1,000 Apartment Investment &
Management Company 45,687
2,000 Archstone Communities Trust 47,125
1,400 Avalonbay Communities, Inc. 64,313
800 Chateau Communities, Inc. 22,500
1,400 Equity Residential
Properties Trust 65,887
1,200 Home Properties of
New York, Inc. 32,625
1,000 Pacific Gulf Properties, Inc. 26,562
----------
304,699
----------
Retail -- 16.27%*<F15>
1,000 Chelsea GCA Realty, Inc. 32,250
1,000 General Growth Properties, Inc. 29,500
2,000 Simon Property Group, Inc. 44,625
3,000 Taubman Centers, Inc. 32,812
1,600 Vornado Realty Trust 55,700
800 Weingarten Realty Investors 33,550
----------
228,437
----------
Specialty -- 9.46%*<F15>
2,000 Hospitality Properties Trust 43,125
2,000 Pinnacle Entertainment, Inc. 45,625
1,700 Plum Creek Timber
Company Inc. 44,094
----------
132,844
----------
TOTAL COMMON STOCKS
(COST $1,311,834) 1,446,650
----------
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENTS -- 0.03%*<F15>
Variable Rate Demand Notes -- 0.03%*<F15>#<F16>
$510 Wisconsin Corporate Central
Credit Union, 6.29% 510
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $510) 510
----------
TOTAL INVESTMENTS
(COST $1,312,344) 1,447,160
----------
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (3.05)% (42,852)
----------
TOTAL NET
ASSET -- 100.00% $1,404,308
----------
----------
*<F15> Calculated as a percentage of net assets
#<F16> Variable rate demand notes are considered short-term obligations and
are payable on demand. Interest rates change periodically on
specified dates. The rate listed is as of October 31, 2000.
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 2000
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 & Income
Fund (the "Growth & Income 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. These costs were
amortized from the date the Trust commenced operations and became fully
amortized in 2000. The only series authorized at the commencement of operations
was the Growth & Income Fund. 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 one class of shares of the Funds:
Class A. 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.
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 accounting principles generally accepted in the United States of
America.
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.
On January 6, 2000 the Board of Trustees voted to eliminate the Class B shares
of the Jefferson Growth & Income Fund and the Jefferson REIT Fund. Thus
effective the close of business on February 14, 2000, Class B shares were
converted to Class A shares of each respective Fund. The shareholders did not
pay the contingent deferred sales charge. Class B shareholders received shares
of Class A based on their Class B balance.
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,
2000, the Growth & Income Fund and the REIT Fund had accumulated net realized
capital loss carryovers of $531,891 and $50,972, respectively. The Growth &
Income Fund and the REIT Fund have capital loss carryovers of $359,795 and $210,
respectively, which will expire on October 31, 2007. The remainder of the
carryover amounts will expire on October 31, 2008.
Generally accepted accounting principles require that permanent differences
between financial reporting and tax reporting be reclassified between various
components of net assets. These differences are due primarily to non deductible
organizational costs and net operating losses. On the statement of assets and
liabilities, as a result of permanent book-to-tax differences, undistributed net
investment income (loss) has been increased by $31,112 and $7,265 for the Growth
& Income and REIT Fund, respectively. Undistributed accumulated realized losses
on investments has decreased by $44,207 and $1,887 for the Growth & Income Fund
and the REIT Fund, respectively. Capital Stock has decreased by $75,319 and
$9,152 for the Growth & Income 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 & Income 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 were 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 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 & INCOME FUND
CLASS A
--------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
------------------ ------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
Shares sold $ 1,339,967 124,861 $ 575,170 54,954
Shares issued to
holders in reinvest-
ment of dividends 44,402 4,040 455,884 43,349
Shares redeemed (2,832,349) (265,768) (1,808,854) (169,554)
----------- ------- ----------- -------
Net decrease $(1,447,980) (136,867) $ (777,800) (71,251)
----------- ------- ----------- -------
----------- ------- ----------- -------
CLASS B
--------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
------------------- ------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
Shares sold $ -- -- $ 73,469 6,783
Shares issued to
holders in reinvest-
ment of dividends 5,839 534 73,782 7,053
Shares redeemed (1,201,683) (112,800) (475,964) (45,323)
----------- ------- ----------- -------
Net decrease $(1,195,844) (112,266) $ (328,713) (31,487)
----------- ------- ----------- -------
----------- ------- ----------- -------
On February 14, 2000 Class B Shareholders exchanged their shares for 100,204
shares of Class A, at a ratio of .99:1 shares. These shares are included above
in Class A shares sold and in Class B shares redeemed. Class B was subsequently
closed to new investors.
REIT FUND
CLASS A
--------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
------------------- ------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
Shares sold $ 738,801 80,773 $ 889,960 87,799
Shares issued to
holders in reinvest-
ment of dividends 46,974 4,779 7,465 776
Shares redeemed (417,898) (42,113) (68) (8)
----------- ------- ----------- -------
Net increase $ 367,877 43,439 $ 897,357 88,567
----------- ------- ----------- -------
----------- ------- ----------- -------
CLASS B
--------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
------------------- ------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
Shares sold $ 44,511 4,787 $ 369,236 35,666
Shares issued to
holders in reinvest-
ment of dividends 5,190 563 3,886 403
Shares redeemed (375,359) (41,419) -- --
----------- ------- ----------- -------
Net (decrease)
increase $ (325,658) (36,069) $ 373,122 36,069
----------- ------- ----------- -------
----------- ------- ----------- -------
On February 14, 2000 Class B Shareholders exchanged their shares for 41,660
shares of Class A, at a ratio of 1.01:1 shares. These shares are included above
in Class A shares sold and in Class B shares redeemed. Class B was subsequently
closed to new investors.
4). INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, by the Funds for the year ended October 31, 2000, were as follows:
PURCHASES SALES
--------- -----
GROWTH & INCOME FUND
U.S. Government $ -- $ 15,647
Other 7,606,048 9,890,750
REIT FUND
U.S. Government $ -- $ --
Other 468,195 188,986
At October 31, 2000, gross unrealized appreciation and depreciation of
investments for federal income tax purposes was as follows:
GROWTH & INCOME FUND
Appreciation $1,073,939
(Depreciation) (94,489)
----------
Net unrealized appreciation
on investments $ 979,450
----------
----------
REIT FUND
Appreciation $ 188,425
(Depreciation) (35,131)
----------
Net unrealized appreciation
on investments $ 153,294
----------
----------
At October 31, 2000, the cost of investments for federal income tax purposes for
the Growth & Income Fund and the REIT Fund were $4,374,416 and $1,293,866,
respectively.
Transactions in call options written during the period ended October 31, 2000
for the Growth & Income Fund were as follows:
NUMBER PREMIUMS
------ --------
Options outstanding at beginning of year 2,500 $ 4,100
Options expired (2,500) (4,100)
------ -------
Options outstanding at end of year 0 $ 0
------ -------
------ -------
5). INVESTMENT ADVISORY AND OTHER
AGREEMENTS
Uniplan, Inc. is the Investment Adviser and Jefferson Advisers, Inc. is the
administrative and marketing agent for the Funds.
Pursuant to their Advisory Agreements with the Funds, the Adviser is 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 had 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. Effective on December 1, 2000 Quasar
Distributors, LLC became the new Distributor under the same terms.
Through February 2000, the Funds had an expense reimbursement plan for expenses
in excess of 1.15% of average net assets. On September 1, 2000, the Funds
adopted a plan providing that 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 2.50% of average net assets for Class A , the Advisers may waive
or may reimburse the Funds for the amount of such excess. Accordingly, for the
period ended October 31, 2000, the Advisers have waived and reimbursed the
Growth & Income Fund and REIT Fund $47,543 and $56,171, respectively.
The Distributor has not received any front-end sales charges on Class A shares
for the period ended October 31, 2000. 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.
REPORT OF INDEPENDENT ACCOUNTANTS
The Shareholders and Board of Trustees
The Jefferson Fund Group Trust:
We have audited the accompanying statements of assets and liabilities of the
Jefferson Fund Group Trust (comprising, respectively, the Jefferson Growth and
Income Fund and the Jefferson REIT Fund), collectively referred to as the
"Funds", including the schedules of investments as of October 31, 2000, and the
related statements of operations for the year 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
four-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. The accompanying financial highlights of the Jefferson
Growth and Income Fund for the year ended October 31, 1996 were audited by other
auditors who's report thereon dated November 22, 1996, expressed an unqualified
opinion.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, 2000, 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, 2000, the results of their operations for the year 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 four-year period then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/KPMG LLP
Chicago, Illinois
December 1, 2000
INVESTMENT ADVISER
Uniplan, Inc.
8112 West Bluemound Road
Suite 101
Milwaukee, WI 53213
(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
Quasar Distributors, LLC
615 East Michigan Street
Milwaukee, WI 53202
LEGAL COUNSEL
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202
INDEPENDENT ACCOUNTANTS
KPMG LLP
303 East Wacker Drive
Chicago, IL 60601