<PAGE>
EAGLE GROWTH SHARES, INC.
PRESIDENT'S LETTER - January 8, 1996
Dear Shareholders,
The bond market and the stock markets continued their winning ways in the
second half of our fiscal year. The continued easing of the Federal Reserve
has allowed a continuing decline in interest rates causing a sharp gain in
bond prices and triggering a significant rally in the stock market. The
financial markets have been dynamic in 1995, we think 1996 will be a year
finding good stock selection most important. Interest rates are moving more
slowly now than over the last few months; we continue to watch them carefully.
The smooth throttling of the country's economic engine is a difficult task.
Inflation is under control and, if a danger lurks, a no growth economy is the
bigger threat. Heavy consumer debt, sluggish job growth, and a poor Christmas
selling season are indicators of underlying problems which may result in slow
economic performance in 1996. We shall be watching closely.
In the last half of our fiscal year, we eliminated positions in Arrow
Electronics, Gupta Corporation, First Financial Management, and International
Cablecasting Technologies. We increased our position in Oryx Energy.
Your fund declared a capital gains distribution of 87.5 cents per share. The
Fund's total return was 17.53% over fiscal 1995. The Standard and Poor's 500
Index* increased 36.93% over the same time period.
We face the new year with caution, but remain alert to opportunities.
Very truly yours,
/s/ Donald H. Baxter
Donald H. Baxter
President
Comparison of the change in value of $10,000 investment in Eagle Growth Shares
and the Standard and Poors Index*
<TABLE>
<CAPTION>
The printed report shows a line graph with the following points.
EAGLE
GROWTH S&P
SHARES INDEX
<S> <C> <C>
5/01/87** $ 9,150 $10,000
11/30/87 $ 6,850 $ 8,137
11/30/88 $ 9,041 $10,032
11/30/89 $15,105 $13,124
11/30/90 $11,344 $12,664
11/30/91 $14,552 $15,238
11/30/92 $11,671 $18,049
11/30/93 $16,968 $19,868
11/30/94 $14,430 $20,079
11/30/95 $16,960 $27,495
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns as of 11/30/95
1 YEAR 5 YEARS Since 5/1/87
-----------------------------
<S> <C> <C> <C>
N.A.V. Only 17.53% 8.38% 7.45%
S.E.C. Standardized 7.54% 6.76% 6.35%
</TABLE>
Past performance is not predictive of future performance.
* The Standard & Poors 500 Composite Stock Index is a widely recognized
unmanaged index of common stock prices. Performance figures include the
change in value of the stocks in the index and reinvestment of dividends.
** Mr. Donald H. Baxter became the Fund's portfolio manager on May 1, 1987.
Previous periods during which the Fund was advised by another investment
advisor are not shown.
<PAGE>
EAGLE GROWTH SHARES, INC.
PORTFOLIO OF INVESTMENTS - NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Shares Value
- -------- ----------
COMMON STOCKS - 78.3 %
<C> <S> <C>
AIRLINES - 2.8%
3,000 Atlantic Southeast Airlines.......................... $ 78,750
----------
BANKS - 4.2%
4,000 First Hawaiian Inc................................... 117,000
----------
CABLE TELEVISION - 1.3%
2,000 *Tele-Communications Inc. Class "A"................... 37,000
----------
COMMUNICATIONS - 7.3%
2,000 *Cellular Communications, Intl........................ 95,750
4,000 *Commnet Cellular, Inc................................ 108,500
----------
204,250
----------
CONSTRUCTION - 5.2%
1,500 *Jacobs Engineering Group, Inc........................ 36,188
5,000 Lennar Corp.......................................... 110,625
----------
146,813
----------
COSMETICS - 3.9%
4,000 Maybelline Inc....................................... 108,000
----------
ELECTRONICS - 4.8%
1,500 *Arrow Electronics Inc................................ 69,937
1,200 Cubic Corp........................................... 28,650
1,200 *Tech -Sym Corp....................................... 35,850
----------
134,437
----------
ENTERTAINMENT - 3.7%
500 *Liberty Media Inc.................................... 14,000
1,500 Walt Disney Production Co............................ 90,188
----------
104,188
----------
FINANCIAL SERVICES - 21.7%
1,500 Federal Home Loan Corp............................... 115,500
3,171 First Data Corp...................................... 225,141
5,000 Greentree Financial Corp............................. 141,250
2,000 Household International, Inc......................... 125,000
----------
606,891
----------
Shares Value
- -------- ----------
FOOD - 4.2%
5,000 McCormick & Co. Inc.................................. 118,125
----------
INSURANCE - 4.3%
4,400 Leucadia National Corp............................... 121,000
----------
OIL & NATURAL GAS - 6.1%
3,000 Apache Corp.......................................... 79,875
7,000 *Oryx Energy Co....................................... 91,875
----------
171,750
----------
PUBLISHING - 3.8%
3,000 Belo A. H. Corp...................................... 106,875
----------
REAL ESTATE INVESTMENT TRUSTS - 5.0%
10,000 United Dominion Realty Trust, Inc.................... 141,250
----------
Total Value of Common Stocks (cost $1,507,040)....... 2,196,329
----------
Principal
Amount
- ---------
SHORT-TERM INVESTMENTS - 20.9%
$585M U.S. Treasury Bill 4.75% due 12/7/95
(cost $584,537)...................................... 584,537
----------
Total Value of Investments(cost $2,091,577).... 99.2% 2,780,866
Other Assets, Less Liabilities................. 0.8 23,491
------ ----------
Net Assets.....................................100.0% $2,804,357
====== ==========
</TABLE>
* Non-income producing security
See notes to financial statements
2
<PAGE>
EAGLE GROWTH SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES - NOVEMBER 30, 1995
<TABLE>
<S>
ASSETS <C> <C>
Investments in securities, at value
(identified cost $2,091,577) (Note 1-A)... $2,780,866
Cash........................................ 50,901
Dividends receivable........................ 1,675
Other assets................................ 320
----------
TOTAL ASSETS............................. 2,833,762
LIABILITIES
Payable for capital stock redeemed.......... $ 27,634
Accrued expenses............................ 1,771
----------
TOTAL LIABILITIES........................ 29,405
----------
NET ASSETS..................................... $2,804,357
==========
NET ASSET VALUE PER SHARE
($2,804,357 / 219,178 shares outstanding)
10,000,000 shares authorized, $0.10 par
value (Note 2)............................. $12.79
======
NET ASSETS CONSIST OF:
Capital paid in............................. $1,921,214
Accumulated net realized gain on investment
transactions.............................. 193,854
Net unrealized appreciation in value of
investments............................... 689,289
----------
TOTAL.................................... $2,804,357
==========
SAMPLE PRICE COMPUTATION
Net asset value per share................... $12.79
Sales commission: 8 1/2% of offering price* 1.19
------
Offering price (adjusted nearest cent) ..... $13.98
======
Redemption price............................ $12.79
======
</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 - YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest................................... $ 33,120
Dividends.................................. 22,677
TOTAL INCOME......................... $ 55,797
Expenses (Note 4):
Transfer agent and dividend disbursing
agent's fees and expenses............ 37,054
Investment advisory fee .................. 19,256
Professional fees......................... 18,149
Registration fees......................... 11,258
Custodian fees............................ 8,925
Administrative fee (Note 4)............... 6,418
Reports and notices to shareholders....... 5,302
Other expenses............................ 7,735
--------
TOTAL EXPENSES....................... 114,097
Less: Investment advisory and
administative fees reimbursed.. (25,674)
Custodian fees paid indirectly. (999) 87,424
-------- --------
INVESTMENT INCOME-NET................ (31,627)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 3):
Net realized gain on investment securities. 194,043
Net unrealized appreciation of investmenent
securities............................ 250,329
--------
Net gain on investments.............. 444,372
--------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................... $412,745
========
</TABLE>
See notes to financial statements
4
<PAGE>
EAGLE GROWTH SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS -
YEARS ENDED NOVEMBER 30, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss............................ $ (31,627) $ (43,599)
Net realized gain on investment securities..... 194,043 10,186
Net unrealized appreciation (depreciation) of
investment securities....................... 250,329 (367,178)
---------- ----------
Net increase (decrease) in net assets
resulting from operations................. 412,745 (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)................. 81,437 23,554
---------- ----------
Net increase (decrease) in net assets....... 483,934 (427,225)
NET ASSETS
Beginning of year.............................. 2,320,423 2,747,648
---------- ----------
End of year.................................... $2,804,357 $2,320,423
========== ==========
</TABLE>
See notes to financial statements
5
<PAGE>
EAGLE GROWTH SHARES,INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Eagle Growth Shares, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as a diversified open-end management investment company.
The Fund's investment objective is to achieve growth of capital. The following
is a summary of significant accounting policies consistently followed by the
Fund in the preparation of its financial statements.
A. Security Valuation - securities listed on national exchanges or the
NASDAQ National Market System are valued at the closing sales price on
November 30, 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 - during the current year a net operating loss
amounting to $31,627 was reclassified from undistributed net investment income
to capital paid in. Net investment loss, net realized gain on investments,
and net assets were not affected by this change.
2. CAPITAL STOCK
At November 30, 1995 there were 219,178 shares outstanding. Transactions
in capital stock were as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------------------------------
Shares Amount Shares Amount
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Capital stock sold...... 51,630 $ 603,696 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.. (45,547) (531,288) (20,017) (242,079)
------- --------- ------- ---------
Net increase ....... 6,905 $ 81,437 2,386 $ 23,554
======= ========= ======= =========
</TABLE>
6
<PAGE>
EAGLE GROWTH SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. PURCHASES AND SALES OF SECURITIES
For the year ended November 30, 1995, purchases and sales of securities,
other than United States Government obligations and short-term notes,
aggregated $1,492,313 and $924,902 respectively.
At November 30, 1995, the cost of investments for Federal income tax
purposes was $2,091,577. Accumulated net unrealized appreciation on
investments was $689,289 consisting of $691,844 gross unrealized appreciation
and $2,555 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 the Fund's month-end net asset values.
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 year ended November 30, 1995, BFC reimbursed all
advisory and administrative fees amounting to $19,256 and $6,418,
respectively.
BFC also serves as the underwriter of the Fund. For the year ended
November 30, 1995, BFC received $278 in commissions from the sale of Fund
shares.
During the year ended November 30, 1995, directors of the Fund who are not
affiliated with BFC received directors fees aggregating $1,150. Also, the Fund
paid legal fees of $1,288 to Parson & Brown. Donald P. Parson, a partner of
the firm, is a director of the Fund.
The Fund's Custodian has provided credits in the amount of $999 against
custodian charges based on the uninvested cash balances of the Fund. Had these
cash balances been invested (rather than offsetting custodian charges) they
could have been used to produce income. The Fund maintains cash balances as
part of normal operations to meet shareholder redemptions and other
liablities.
5. YEAR-END DISTRIBUTION
Realized gains from security transactions are distributed to shareholders
in December following the end of the fiscal year. A distribution of $.875 a
share from realized gains was declared on December 11, 1995. The distribution
is payable on December 29, 1995 to shareholders of record on December 26,
1995.
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 returns, ratios to average net
assets and other supplemental data for each year indicated.
<TABLE>
<CAPTION>
Year Ended November 30,
-----------------------------------------------------------------------------------------
PER SHARE DATA 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- -------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year. $10.93 $13.09 $13.41 $11.72 $ 9.35 $12.48 $ 7.47 $ 5.66 $ 7.06 $ 7.67
INCOME FROM INVESTMNET OPERATIONS
Net Investment Income (Loss)....... (0.14) (0.21) (0.19) (0.07) 0.03 0.23 0.01 (0.09) (0.05) 0.01
Net Gains or Losses on Securities
(both realized & unrealized)..... 2.05 (1.71) 0.43 1.78 2.56 (3.33) 5.00 1.90 (1.26) (0.26)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From Investment Operations... 1.91 (1.92) 0.24 1.71 2.59 (3.10) 5.01 1.81 (1.31) (0.25)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM:
Net Investment Income.............. -- -- -- 0.02 0.12 -- -- -- 0.01 0.13
Net Realized Gains................. 0.05 0.24 0.56 -- -- -- -- -- 0.08 0.23
Return of Capital.................. -- -- -- -- 0.10 0.03 -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions................ 0.05 0.24 0.56 0.02 0.22 0.03 -- -- 0.09 0.36
Net Asset Value, End of Year....... $12.79 $10.93 $13.09 $13.41 $11.72 $ 9.35 $12.48 $ 7.47 $ 5.66 $ 7.06
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%)................... 17.53 (14.95) 1.78 14.56 28.28 (24.90) 67.07 31.98 (18.78) (3.52)
- ------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year
(in thousands)................... $2,804 $2,320 $2,748 $2,947 $3,152 $2,818 $3,965 $1,763 $2,068 $3,646
Ratio to Average Net Assets:
Expenses (%)..................... 3.44 3.71 2.67 2.50 2.51 1.52 1.53 1.52 1.51 1.50
Net Income (Loss) (%)............ (1.27) (1.77) (1.30) (0.58) 0.24 2.05 0.03 (0.71) (0.46) 0.14
Ratio to Average Net Assets before
expense reimbursements (Note 4)
Expenses (%)..................... 4.44 4.71 3.67 3.33 3.30 2.62 1.93 1.94 2.00 1.50
Net Income (Loss) (%)............ (2.27) (2.77) (2.30) (1.41) (0.56) 0.95 (0.38) (1.12) (0.94) 0.14
Portfolio Turnover Rate (%)........ 51 51 66 7 82 40 7 7 349 304
</TABLE>
* Calulated without sales charge.
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 November 30,
1995, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the years 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 November 30, 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 November 30, 1995, and the results of its
operations, changes in its net assets and financial highlights for the years
presented, in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
December 22, 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>
Eagle Growth Shares, Inc.
1200 North Federal Highway
[LOGO] Suite 424
Boca Raton, FL 33432
(407) 395-2155
[LOGO]
OFFICERS EAGLE
Donald H. Baxter GROWTH
Chairman and President SHARES,INC.
Ronald F. Rohe
Vice President/Secretary/Treasurer
ADMINISTRATIVE STAFF
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 ANNUAL
REPORT
November 30, 1995
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 shareholder unless preceded
or accompanied by an effective prospectus.
