<PAGE>
EAGLE GROWTH SHARES, INC.
PRESIDENT'S LETTER -- July 6, 1995
Dear fellow shareholders,
The bond market and the stock market have given an impressive
performance during the first half of our fiscal year. After keeping
conditions tight through much of 1994, the Federal Reserve allowed a
substantial drop in interest rates causing a sharp gain in bond prices
and triggering a rally in the stock market.
The Federal Reserve is trying to do the nearly impossible--slow the
economy to an acceptable growth rate without causing a recession and
without starting an inflationary surge. Recent data on housing starts
indicate a likely near term firming of the economy and a lowering of
inventory levels in the manufacturing sector. The Federal Reserve may
still see the need to lower rates. Recent economic data indicate the
much sought after soft landing may occur. Quite an accomplishment! In
view of declining interest rates we established positions in Federal
Home Loan, First Hawaiian Inc., Green Tree Financial, Household
International, and homebuilder Lennar. In the technology arena, we
invested in Arrow Electronics and Gupta Corporation. In the general
area of communications, we added DMX Inc., A.H. Belo Company, and
Commnet Cellular. Apache and Oryx Energy won our attention in the
energy sector. Maybelline caught our investment eye when it opened a
plant in southern China.
We look forward to the coming months providing us new opportunities in
what has been a truly exciting year. We were 86.5% invested in common
stocks as of May 31, 1995.
Very truly yours,
/s/ Donald H. Baxter
Donald H. Baxter
President
<PAGE>
EAGLE GROWTH SHARES, INC.
PORTFOLIO OF INVESTMENTS - MAY 31, 1995
<TABLE>
<CAPTION>
Shares Value
------ ----------
<C> <S> <C>
COMMON STOCKS--86.5%
AIRLINES -- 2.9%
3,000 Atlantic Southeast Airlines................................ $ 72,375
----------
BANKS -- 4.5%
4,000 First Hawaiian Inc......................................... 111,500
----------
CABLE TELEVISION--1.7%
2,000 *Tele-Communications Inc.
Class "A"................................................. 42,250
----------
COMMUNICATIONS--10.7 %
2,000 *Cellular Communications, Intl. ........................... 92,750
4,000 *Commnet Cellular, Inc..................................... 107,500
30,000 *DMX Inc................................................... 63,750
----------
264,000
----------
COMPUTERS--SOFTWARE--1.9%
5,000 *Gupta Corp. .............................................. 46,250
----------
CONSTRUCTION--5.3%
1,500 *Jacobs Engineering Group, Inc............................. 32,813
5,000 Lennar Corp. .............................................. 97,500
----------
130,313
----------
COSMETICS--3.3%
4,000 Maybelline Inc. ........................................... 80,500
----------
ELECTRONICS--8.0%
3,000 *Arrow Electronics Inc. ................................... 138,000
1,200 Cubic Corp................................................. 27,900
1,200 *Tech-Sym Corp............................................. 30,900
----------
196,800
----------
ENTERTAINMENT--3.4%
1,500 Walt Disney Production Co.................................. 83,437
----------
Shares Value
------ ---------
FINANCIAL SERVICES--19.8%
1,500 Federal Home Loan Corp. ................................. $102,187
2,500 First Financial Management Corp.......................... 177,500
2,500 Green Tree Financial Corp................................ 109,063
2,000 Household International, Inc............................. 98,750
---------
487,500
---------
FOOD--4.3%
5,000 McCormick & Co. Inc. .................................... 105,000
---------
INSURANCE--4.2%
2,200 Leucadia National Corp................................... 103,400
---------
OIL & NATURAL GAS--7.0%
3,000 Apache Corp. ............................................ 87,000
6,000 *Oryx Energy Co.......................................... 86,250
---------
173,250
---------
PUBLISHING--3.8%
1,500 Belo A. H. Corp.......................................... 94,125
---------
REAL ESTATE INVESTMENT TRUSTS--5.7%
10,000 United Dominion Realty Trust, Inc........................ 140,000
---------
Total Value of Common Stocks (cost $1,707,586)........... 2,130,700
---------
Principal
Amount
---------
SHORT-TERM INVESTMENTS--13.8%
$340M U.S. Treasury Bill
5.45% due 6/1/95
(cost $340,000)......................................... 340,000
---------
Total Value of Investments
(cost $2,047,586)........................................... 100.3% 2,470,700
Excess of Liabilities over
Other Assets................................................ (0.3) (8,255)
----- ----------
NET ASSETS................................................... 100.0% $2,462,445
===== ==========
</TABLE>
* Non-income producing security.
See notes to financial statements
2
<PAGE>
EAGLE GROWTH SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES - MAY 31, 1995
<TABLE>
<S> <C> <C>
ASSETS
Investments in securities, at value (identified cost
$2,047,586) (Note 1-A)................................ $2,470,700
Cash................................................... 17,079
Dividends receivable................................... 1,800
Other assets........................................... 709
----------
Total Assets........................................... 2,490,288
LIABILITIES
Accrued advisory and administrative fees............... $ 6,413
Other accrued expenses................................. 21,430
----------
Total Liabilities...................................... 27,843
----------
NET ASSETS.............................................. $2,462,445
==========
NET ASSET VALUE PER SHARE
($2,462,445/213,815 shares outstanding)
10,000,000 shares authorized, $0.10 par value (Note 2). $ 11.52
==========
NET ASSETS CONSIST OF:
Capital paid in........................................ $1,888,056
Undistributed net investment income (deficit).......... (31,653)
Accumulated net realized gain on investment transac-
tions................................................. 182,928
Net unrealized appreciation in value of investments.... 423,114
----------
Total.................................................. $2,462,445
==========
Net asset value per share.............................. $ 11.52
Sales commission: 8 1/2% of offering price*............ 1.07
----------
Offering price (adjusted to nearest cent).............. $ 12.59
==========
Redemption price....................................... $ 11.52
==========
</TABLE>
*On purchases of $10,000 or more the offering price is reduced.
See notes to financial statements
3
<PAGE>
EAGLE GROWTH SHARES, INC.
STATEMENT OF OPERATIONS Six Months Ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest................................................... $20,009
Dividends.................................................. 8,950
-------
TOTAL INCOME............................................. $ 28,959
Expenses:
Transfer agent and dividend disbursing agent's fees and
expenses.................................................. 24,992
Investment advisory fee (Note 4)........................... 9,092
Professional fees.......................................... 8,972
Custodian fees............................................. 8,710
Registration fees.......................................... 5,891
Reports and notices to shareholders........................ 3,120
Administrative fee (Note 4)................................ 3,031
Other expenses............................................. 2,513
-------
TOTAL EXPENSES........................................... 66,321
Less: Portion of expenses reimbursed (Note 4)........... 5,709 60,612
------- --------
INVESTMENT INCOME--NET................................... (31,653)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 3):
Net realized gain on investment securities................. 183,117
Net unrealized depreciation of investment securities....... (15,846)
-------
Net gain on investments.................................. 167,271
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $135,618
========
</TABLE>
See notes to financial statements
4
<PAGE>
EAGLE GROWTH SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MAY 31, NOVEMBER 30,
1995 1994
---------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss.................................. $ (31,653) $ (43,599)
Net realized gain on investment securities........... 183,117 10,186
Net unrealized depreciation of investment securities. (15,846) (367,178)
---------- ----------
Net increase (decrease) in net assets resulting from
operations......................................... 135,618 (400,591)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments..................... (10,248) (50,188)
CAPITAL SHARE TRANSACTIONS
Increase in net assets resulting from capital share
transactions (Note 2)............................... 16,652 23,554
---------- ----------
Net increase (decrease) in net assets............... 142,022 (427,225)
NET ASSETS
Beginning of period.................................. 2,320,423 2,747,648
---------- ----------
Ending of period..................................... $2,462,445 $2,320,423
========== ==========
</TABLE>
See notes to financial statements
5
<PAGE>
EAGLE GROWTH SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940, as a
diversified open-end management investment company.
A. Security Valuation - securities listed on national exchanges or the NASDAQ
National Market System are valued at the closing sales price on May 31, 1995.
Securities traded over-the-counter and securities not traded that day are
valued at the prevailing quoted bid price. Short-term obligations are stated at
amortized cost which approximates fair value.
B. Federal Income Taxes - no provision has been made for Federal income taxes
on net income or capital gains, since it is the policy of the Fund to continue
to comply with the special provisions of the Internal Revenue Code applicable
to investment companies and to make sufficient distributions of income and
capital gains to relieve it from all, or substantially all, such taxes.
C. Distributions to Shareholders - the Fund distributes its net investment
income, if any, and net realized gains annually. Income and capital gain
distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles.
D. Other - security transactions are accounted for on the date the securities
are purchased or sold. Cost is determined, and gains and losses are based, on
the identified cost basis for both financial statement and Federal income tax
purposes. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income and estimated expenses are accrued daily.
E. Reclassifications - the Fund has adopted Statement of Position 93-2
Determination, Disclosure, and Financial Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. Accordingly, for
the year ended November 30, 1994, certain permanent book and tax differences
relating to net operating losses in the amount of $43,599 have been
reclassified to capital paid in. Net investment loss, net realized gain, and
net assets were not affected by this change.
2. CAPITAL STOCK
At May 31, 1995 there were 213,815 shares outstanding. Transactions in capital
stock were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 1995 November 30, 1994
------------------ ------------------
Shares Amount Shares Amount
------- --------- ------- ---------
<S> <C> <C> <C> <C>
Capital stock sold.................... 33,389 $ 377,807 19,044 $ 222,129
Capital stock issued in reinvestment
of net realized gain on investments.. 822 9,029 3,359 43,504
Capital stock redeemed................ (32,669) (370,184) (20,017) (242,079)
------- --------- ------- ---------
Net increase......................... 1,542 $ 16,652 2,386 $ 23,554
======= ========= ======= =========
</TABLE>
6
<PAGE>
EAGLE GROWTH SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
3. PURCHASES AND SALES OF SECURITIES
For the six months ended May 31, 1995, purchases and sales of securities,
other than United States Government obligations and short-term notes,
aggregated $1,477,633 and $698,751 respectively.
At May 31, 1995, the cost of investments for Federal income tax purposes was
$2,047,586. Accumulated net unrealized appreciation on investments was
$423,114 consisting of $473,954 gross unrealized appreciation and $50,840
gross unrealized depreciation.
4. INVESTMENT ADVISORY AND OTHER TRANSACTIONS WITH AFFILIATES
Baxter Financial Corporation (BFC), is the investment Advisor and the
Administrator of the Fund.
As investment advisor, BFC supervises the Fund's investments on a continuous
basis and provides the Fund with investment advice and recommendations for an
annual fee equal to .75% of the first $200 million of net assets, .625% of net
assets between $200 million and $400 million, and .50% of net assets in excess
of $400 million.
As the Fund's administrator, BFC is responsible for providing overall
supervision of the Fund's administrative operations and receives an annual fee
of .25% of the average net assets of the Fund.
Both the investment advisory fee and the administrative fee are payable
monthly, based on month-end net asset values of the Fund.
Pursuant to California regulations, BFC has agreed to reimburse the Fund if
and to the extent that the Fund's aggregate operating expenses (exclusive of
interest, taxes, brokerage commissions and extraordinary expenses) exceed any
limitation on expenses applicable to the Fund in California. The reimbursement
is limited to the yearly total of the advisory and administrative fees. For
the six months ended May 31, 1995, BFC reimbursed $4,282 in advisory fees and
$1,427 administrative fees.
BFC also serves as the underwriter of the Fund. For the six months ended May
31, 1995, BFC received $232 in commissions from the sale of Fund shares.
Directors of the Fund who are not affiliated with BFC received directors fees
aggregating $550.
7
<PAGE>
EAGLE GROWTH SHARES, INC.
FINANCIAL HIGHLIGHTS
The following table sets forth the per share operating performance data for a
share of capital stock outstanding, total return, ratios to average net assets
and other supplemental data for each period indicated.
<TABLE>
<CAPTION>
Six Months Year Ended November 30,
Ended ---------------------------------------
PER SHARE DATA May 31, 1995 1994 1993 1992 1991 1990
- -------------- ------------ ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $10.93 $ 13.09 $13.41 $11.72 $ 9.35 $12.48
------ ------- ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income . (.15) (.21) (.19) (.07) .03 .23
Net Gains or Losses on
Securities (both
realized &
unrealized)........... .79 (1.71) .43 1.78 2.56 (3.33)
------ ------- ------ ------ ------ ------
Total From Investment
Operations............ .64 (1.92) .24 1.71 2.59 (3.10)
------ ------- ------ ------ ------ ------
LESS DISTRIBUTIONS FROM:
Net Investment Income.. -- -- -- .02 .12 --
Net Realized Gains..... .05 .24 .56 -- -- --
Return of Capital...... -- -- -- -- .10 .03
------ ------- ------ ------ ------ ------
Total Distributions.... .05 .24 .56 .02 .22 .03
------ ------- ------ ------ ------ ------
Net Asset Value, End of
Period................. $11.52 $ 10.93 $13.09 $13.41 $11.72 $ 9.35
====== ======= ====== ====== ====== ======
TOTAL RETURN* (%)....... 5.86 (b) (14.95) 1.78 14.56 28.28 (24.90)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of
Period (in thousands).. $2,462 $ 2,320 $2,748 $2,947 $3,152 $2,818
Ratio to Average Net Assets:
Expenses (%)........... 5.00 (a) 3.71 2.67 2.50 2.51 1.52
Net Investment Income
(%)................... (2.61)(a) (1.77) (1.30) (.58) .24 2.05
Ratio to Average Net
Assets before expense
reimbursement (Note 4)
Expenses (%)........... 5.47 (a) 4.71 3.67 3.33 3.30 2.62
Net Investment Income
(%)................... (3.08)(a) (2.77) (2.30) (1.41) (.56) .95
Portfolio Turnover Rate
(%).................... 47 (b) 51 66 7 82 40
</TABLE>
* Calculated without sales charge.
(a) Annualized
(b) Not Annualized
See notes to financial statements
8
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors of Eagle Growth Shares, Inc.
We have audited the accompanying statement of assets and liabilities of Eagle
Growth Shares, Inc., including the portfolio of investments as of May 31, 1995,
and the related statement of operations for the six months then ended, the
statement of changes in net assets for the six months ended May 31, 1995 and
the year ended November 30, 1994, and financial highlights for each of the
periods presented. 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 misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1995 by correspondence with the custodian. 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 Eagle
Growth Shares, Inc. at May 31, 1995, and the results of its operations, changes
in its net assets and financial highlights for the periods presented, in con-
formity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
June 20, 1995
9
<PAGE>
EAGLE GROWTH SHARES, INC.
EAGLE GROWTH SHARES, INC.
1200 North Federal Highway, Suite 424, Boca Raton, FL 33432 (407)395-2155
INVESTMENT ADVISOR, ADMINISTRATOR AND UNDERWRITER
BAXTER FINANCIAL CORP., 1200 North Federal Highway, Suite 424, Boca Raton, FL
33432
CUSTODIAN
STAR BANK, N.A., P.O. Box 640115, Cincinnati, OH 45264-0115
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
AMERICAN DATA SERVICES, INC.,
24 West Carver Street, Location #00150, Huntington, NY 11743
LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG, Malvern, PA.
AUDITORS
TAIT, WELLER & BAKER, Philadelphia, PA.
10
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[LOGO]
EAGLE GROWTH SHARES, INC.
1200 NORTH FEDERAL HIGHWAY
SUITE 424
BOCA RATON, FL 33432
(407) 395-2155
OFFICERS
Donald H. Baxter
Chairman and President
Ronald F. Rohe
Vice President/Secretary/Treasurer
Keith A. Edelman
Director of Operations
Diane M. Sarro
Director of Shareholder Services
DIRECTORS
Donald H. Baxter
Thomas J. Flaherty
James Keogh
Kenneth W. McArthur
Robert L. Meyer
Donald P. Parson
Robert A. Utting
You will find important information about EAGLE GROWTH SHARES, INC. -- its
investment policy and management, past record, the method of calculating the
per-share net asset value and the sales commission included in the public
offering price -- in the current prospectus. This report is submitted for the
general information of the Fund's shareholders. It is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
[LOGO]
EAGLE GROWTH SHARES, INC.
SEMI-ANNUAL
REPORT
May 31, 1995
