Registration No. 2-67610
File No. 811-03054
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 18 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 18 [X]
THE MATTERHORN GROWTH FUND, INC.
(Exact name of registrant as specified in charter)
301 Oxford Valley Road, Suite 802B
Yardley, Pennsylvania 19067
(Address of principal executive offices)
Telephone number (including area code): (215) 321-7110
GREGORY A. CHURCH, PRESIDENT
301 Oxford Valley Road, Suite 802B
Yardley, Pennsylvania 19067
(Name and address of agent for service of process)
Copies to:
MICHAEL GLAZER, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER
555 South Flower Street, 23rd Floor
Los Angeles, California 90071
It is proposed that this filing will become effective (check
appropriate box):
[X] Immediately upon filing pursuant to paragraph (b)
[ ] On (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On (date) pursuant to paragraph (a) of Rule 485
[ ] This post-effective amendment designated a new
effective date for a previously filed post-effective
amendment.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933:
Registrant has adopted the indefinite registration procedure. Registrant's Rule
24f-2 Notice was last filed on August 29, 1996.
<PAGE>
PROSPECTUS
November 1, 1996
THE MATTERHORN GROWTH FUND, INC.
301 Oxford Valley Road, Suite 802B, Yardley, PA. 19067
(Toll Free - 1-800-637-3901)
Price Quote Information
1-800-543-2875
A NO-LOAD FUND
Matterhorn Growth Fund, Inc. ("Fund") seeks long-term capital appreciation
for shareholders through investment in the securities, principally common
stocks, of companies, the earnings and stock prices of which are expected by the
Fund's investment adviser to grow faster than the average rate of companies in
the Standard & Poor's 500 Stock Price Index.
The Fund's expense ratio for the previous fiscal year is higher than that
realized by most investment companies. Shareholders should carefully consider
the effects of the Fund's expense ratio on an investment in Fund shares (see
"Summary of Expenses," page 3).
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know prior to investing. Investors are advised to
read this Prospectus and retain it for future reference. Additional information
about the Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information dated November 1, 1996 and is available
without charge upon request to the Fund at the address or telephone numbers
shown above. The Statement of Additional Information is hereby incorporated by
reference into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF EXPENSES.................................................. 3
FINANCIAL HIGHLIGHTS................................................. 4
THE MATTERHORN GROWTH FUND, INC...................................... 5
INVESTMENT OBJECTIVE AND POLICIES.................................... 5
RISK FACTORS......................................................... 5
Equity Securities ............................................. 5
Non-Diversified Status......................................... 6
Leverage....................................................... 6
Foreign Securities ............................................ 7
Over-the-Counter Securities ................................... 7
Convertible Debentures and Warrants............................ 7
"Restricted Securities" and Illiquid Assets.................... 7
Options........................................................ 8
MANAGEMENT OF THE FUND............................................... 8
Investment Adviser............................................. 8
Administrator ................................................. 9
Co-Distributors................................................ 9
Distribution Plan.............................................. 9
PURCHASE OF SHARES................................................... 10
By Mail........................................................ 10
By Bank Wire................................................... 10
Through Broker-Dealers......................................... 10
General........................................................ 11
REDEMPTION OF SHARES................................................. 11
Redemptions by Mail............................................ 11
Redemptions by Telephone, Telegram or Overseas Cable........... 11
General........................................................ 12
SHAREHOLDER SERVICES................................................. 13
Transfer of Shares............................................. 13
Check-A-Matic Plan............................................. 13
Systematic Withdrawal Program.................................. 13
OPERATION OF THE FUND................................................ 13
Net Asset Value................................................ 13
Dividends, Distributions and Taxes............................. 14
Brokerage...................................................... 15
ADDITIONAL INFORMATION............................................... 15
Transfer and Shareholder Service Agent......................... 15
Custodian...................................................... 15
Accountants.................................................... 15
Reports........................................................ 15
Retirement Plans............................................... 15
Capital Stock ................................................. 15
Performance Information ....................................... 16
Additional Information ........................................ 16
2
<PAGE>
SUMMARY OF EXPENSES
The following information is based on the expenses of the Fund for its
fiscal year ended June 30, 1996, restated to reflect the Fund's current expense
arrangement (see "Management of the Fund," page 8).
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of the offering price)...................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of the offering price)...................... None
Deferred Sales Load............................................ None
Redemption Fees................................................ None
Annual Fund Operating Expenses
(as a percentage of average net assets)*
Management Fees................................................ 1.00%
12b-1 Fees..................................................... 0.25%
Other Expenses................................................. 2.75%
----
Total Fund Operating Expenses.................................. 4.00%
====
* Actual Total Fund Operating Expenses were 4.23% for the fiscal year
ended June 30, 1996. As of March 15, 1996 the Fund entered into a new
investment advisory agreement which requires its investment adviser to
limit future annual Fund operating expenses, for the two-year period ended
March 15, 1998, to 4.0% of the Fund's average annual net assets. (See
"Management of the Fund," page 8.)
Example
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period, or
alternatively, no redemption:
$40 $122 $205 $421
</TABLE>
This table is provided to assist the investor in understanding the various
costs and expenses that an investor in the Fund would bear, directly or
indirectly. The example given above should not be considered as a
representation of past or future expenses. Actual expenses may be greater
or less than those shown above. Similarly, the annual rate of return
assumed in the example is not an estimate or guarantee of future
investment performance.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights have been audited by McGladrey & Pullen,
LLP, independent accountants to the Fund, whose report thereon was unqualified.
The information should be read in conjunction with the financial statements and
notes thereto, which appear in the Fund's annual report to shareholders
incorporated by reference in the Fund's Statement of Additional Information.
Further information about the Fund's performance is included in its annual
report which may be obtained without charge by writing to the address or calling
the telephone number on the Prospectus cover page.
<TABLE>
<CAPTION>
Years Ended June 30,
-------------------------------------------------------------------------------------------
1996 1995 1994 1993* 1992* 1991* 1990*
<S> <C> <C> <C> <C> <C> <C> <C>
Per share operating
performance (for a
share outstanding
throughout the year)
Net asset value,
beginning of year $ 6.88 $ 5.87 $ 7.09 $ 6.30 $ 5.80 $ 5.63 $ 5.01
-------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment loss (.12) (.17) (.17) (.04) (.07) (.06) (.02)
Net realized and unrealized
gain (loss) on investments .85 1.28 .71 1.77 .57 .23 .64
-------------------------------------------------------------------------------------------
Total from investment
operations .73 1.11 .54 1.73 .50 .17 .62
-------------------------------------------------------------------------------------------
Less distributions:
Distribution from net
realized gains (.61) (.10) (1.76) (.94) -- -- --
-------------------------------------------------------------------------------------------
Total distributions (.61) (.10) (1.76) (.94) -- -- --
-------------------------------------------------------------------------------------------
Net asset value, end of year $ 7.00 $ 6.88 $5.87 $ 7.09 $ 6.30 $ 5.80 $ 5.63
===========================================================================================
Total return 11.60% 19.32% 5.60% 28.89% 8.62% 3.02% 12.38%
Ratios/supplemental data:
Net Assets, end of year
(000 omitted) $8,816 $8,993 $ 8,201 $ 8,048 $ 4,430 $4,122 $ 4,407
Ratios to average net assets:
Expenses (excluding interest) 4.21% 4.62% 4.87% 4.27% 5.17% 4.42% 4.17%
Interest expense .02 .56 .14 .12 .16 -- .11
-------------------------------------------------------------------------------------------
Total expenses 4.23% 5.18% 5.01% 4.39% 5.33% 4.42% 4.28%
===========================================================================================
Net investment loss (1.64) (2.50) (2.77) (.62) (1.11) (1.19) (.44)
===========================================================================================
Portfolio turnover rate 88.32% 72.11% 160.06% 167.27% 135.89% 87.02% 234.84%
===========================================================================================
BANK LOANS
Amount outstanding at
end of year (000) $ -- $ 366 $ 27 $ -- $ -- $ -- $ --
Average amount of bank loans
outstanding during the year
(monthly average) (000) $ 12 $ 456 $ 44 $ 49 $ 54 $ -- $ 59
Average number of shares
outstanding during the year
(monthly average) (000) 1,306 1,369 1,268 773 662 758 853
Average amount of debt per
share during the year $ 0.01 $ 0.33 $ 0.03 $ 0.06 $ 0.08 $ 0.00 $ 0.07
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------
1989* 1988*+ 1987+
<S> <C> <C> <C>
Per share operating
performance (for a
share outstanding
throughout the year)
Net asset value,
beginning of year $ 4.09 $ 7.21 $ 6.42
-------------------------------------
Income from investment
operations:
Net investment loss (.10) (.26) (.73)
Net realized and unrealized
gain (loss) on investments 1.02 (2.86) 1.52
-------------------------------------
Total from investment
operations .92 (3.12) .79
-------------------------------------
Less distributions:
Distribution from net
realized gains -- -- --
-------------------------------------
Total distributions -- -- --
-------------------------------------
Net asset value, end of year $ 5.01 $ 4.09 $ 7.21
=====================================
Total return 22.49% (43.27%) 12.31%
Ratios/supplemental data:
Net Assets, end of year
(000 omitted) $ 4,341 $ 4,128 $12,089
Ratios to average net assets:
Expenses (excluding interest) 4.19% 3.39% 2.46%
Interest expense .49 2.49 2.89
-------------------------------------
Total expenses 4.68% 5.88% 5.35%
=====================================
Net investment loss (2.13) (5.23) (4.88)
=====================================
Portfolio turnover rate 237.54% 81.16% 97.67%
Average commission rate paid
=====================================
BANK LOANS
Amount outstanding at
end of year (000) $ 344 $ -- $ 5,902
Average amount of bank loans
outstanding during the year
(monthly average) (000) $ 153 $ 1,835 $ 4,769
Average number of shares
outstanding during the year
(monthly average) (000) 912 1,215 1,842
Average amount of debt per
share during the year $ 0.17 $ 1.51 $ 2.59
</TABLE>
* Based on average month-end shares outstanding.
+ On March 15, 1996 Matterhorn Asset Management became the Fund's investment
adviser. From September 27, 1988 to March 15, 1996, MDB Asset Management
Corp. was the Fund's investment adviser.
4
<PAGE>
THE MATTERHORN GROWTH FUND, INC.
The Fund is an open-end, non-diversified, management investment company,
incorporated on May 2, 1980 in the State of Maryland, and was formerly known as
The 44 Wall Street Equity Fund, Inc. The Fund's offices are located at 301
Oxford Valley Road, Suite 802B, Yardley, Pennsylvania 19067.
As an investment company, the Fund invests the monies received from the
sale of its stock in other securities. As an open-end investment company, the
Fund will pay any investor net asset value for the investor's shares upon demand
for redemption of such shares (see "REDEMPTION OF SHARES," page 11).
The Fund invests primarily in common stocks of U.S. corporations and in
securities having investment characteristics similar to common stocks (i.e.,
warrants and convertible debentures). However, the Fund may also engage in
transactions in exchange listed securities options and may invest up to 10% of
its assets in the securities of issuers domiciled in foreign countries.
INVESTMENT OBJECTIVE AND POLICIES
The sole objective of the Fund is to achieve capital appreciation through
investment in the securities of companies, the earnings and stock prices of
which are expected by the Fund's investment adviser to grow faster than the
average rate of companies in the Standard & Poor's 500 Stock Price Index. The
generation of current income is not a primary criterion for selecting portfolio
investments. While the Fund will seek to invest in the securities of companies
undervalued by the marketplace, the Fund nevertheless intends to invest in
companies with assets which its investment adviser, Matterhorn Asset Management
Corporation ("Asset Management"), deems sufficiently valuable to support the
Fund's investment.
The Fund intends to be fully invested in common stocks and other
securities having investment characteristics similar to common stocks (i.e.,
warrants and convertible debentures). The Fund may for defensive purposes from
time to time, when Asset Management determines that market conditions warrant,
temporarily invest an unlimited portion of its assets in U.S. Government
securities, repurchase agreements collateralized by U.S. Government securities,
or high grade commercial paper (rated either A-1 by Standard & Poor's
Corporation or Prime-1 by Moody's Investors Service, Inc.). At such times as the
Fund assumes a defensive posture which prompts the Fund to invest a substantial
portion of its assets in the interest bearing instruments described above, the
Fund will not then be pursuing its primary method for seeking its investment
objective of capital appreciation.
RISK FACTORS
The Fund has certain features involving risk, which may be viewed as being
more speculative than features found in other investment companies, and there
can be no assurance that the Fund will achieve its investment objective. Except
when described herein as a "fundamental policy", the policies so described are
not fundamental policies and may be changed at any time without shareholder
vote. For a list of certain of the Fund's fundamental policies see the Fund's
Statement of Additional Information under the caption "Investment Limitations."
Equity Securities
Like all equity securities, the value of the common stocks purchased by
the Fund will vary from time to time based on a variety of factors, including
general market and economic conditions as well as the earnings and prospects of
the issuers. In addition, the Fund has no restriction on the market
capitalization (the market value of the outstanding stock) of any issuer in
which it invests. Accordingly, the Fund's portfolio investments may include the
common stocks of
5
<PAGE>
large, established companies with market capitalizations in excess of $1
billion, as well as smaller companies with market capitalizations as low as $100
million. Smaller companies often have limited product lines, markets or
financial resources, and may be dependent upon one or few key persons for
management. The securities of such companies may be subject to more volatile
market movements than securities of larger, more established companies, both
because the securities typically are traded in lower volume and because the
issuers typically are more subject to changes in earnings and prospects. To the
extent that the Fund's portfolio is invested in smaller capitalization
companies, its net asset value per share can be expected to experience
above-average fluctuations.
Non-Diversified Status
The Fund is a non-diversified investment company. This means that the Fund
is not restricted by the provisions of the Investment Company Act of 1940 with
respect to the diversification of its investments. As a matter of fundamental
policy, however, as to 50% of the Fund's total assets the Fund will not invest
in individual companies in which the Fund has invested 5% in value of its assets
or has acquired more than 10% of the outstanding voting securities of such
company, measured at the time of each such investment. In addition, it generally
will be the Fund's intention to adhere to the diversification requirements of
the Internal Revenue Code applicable to regulated investment companies (see
"Dividends, Distributions and Taxes," page 14). This means that the limitations
described in this paragraph would be applicable and calculated at the close of
each fiscal quarter. Moreover, no more than 25% of the Fund's total assets may
be invested in the securities of any one issuer, or two or more issuers which
are engaged in similar or related trades or businesses.
As a matter of investment strategy, the Fund will not purchase the
securities of any issuer as to which the Fund has invested 10% in value of its
assets or has acquired more than 10% of the outstanding voting securities of
such company, measured at the time of each such investment.
Because the Fund's "non-diversified status" permits the investment of a
greater portion of the Fund's assets in the securities of individual companies
than would be permissible under a "diversified status", the Fund's
"non-diversified status" is considered to subject the Fund to a greater degree
of risk than a "diversified" investment company. The Fund reserves the right to
operate as a diversified investment company if such a course appears desirable
in the opinion of management, in which event 75% in value of the Fund's total
assets would have to be invested in companies in which the Fund had not invested
5% or more in value of its assets and in which the Fund did not own 10% or more
of the company's outstanding voting securities. Once diversified as a result of
a change in policy, the Fund may not thereafter resume nondiversified operations
without approval by the holders of a majority of its shares.
Leverage
The Fund may leverage by borrowing from banks and investing the borrowed
funds, but does not currently intend to do so. To the extent that borrowed money
is utilized, the Fund's net asset value per share will tend to appreciate or
depreciate more rapidly than would otherwise be the case.
Pursuant to the provisions of the Investment Company Act of 1940, the Fund
may borrow only from banks, and only if immediately after such borrowing the
value of the assets of the Fund (including the amount borrowed), less its
liabilities (not including any borrowings), is at least three times the amount
of its borrowing. The amount of any borrowing would also be limited by the
applicable regulations of the Federal Reserve Board. If, due to market
fluctuations or other reasons, the value of the Fund's assets, computed as
provided above, becomes at any time less than three times the amount of its
outstanding bank debt, the Fund, within three days (not including Sundays and
holidays),
6
<PAGE>
would be required to reduce its bank debt to the extent necessary to meet the
required 300% net asset coverage.
Foreign Securities
Investments will be made primarily in securities of companies domiciled in
the United States, but the Fund has authority to make investments in securities
of issuers domiciled in any foreign country. Such securities involve risks that
are different from those of domestic issuers, including possibly different or
adverse political and economic developments and consequences, and also involve
such other considerations as the then current exchange rate if such issuer pays
interest or dividends in a foreign currency. Not more than 10% in value of the
Fund's investments may be made in the securities of issuers domiciled in foreign
countries, and such investments only will consist of foreign securities either
listed on a U.S. securities exchange or traded in the U.S. over-the-counter
market. (For further information on foreign securities, see the Fund's Statement
of Additional Information under the caption "Investment Objective and
Policies.")
Over-the-Counter Securities
The Fund may invest in over-the-counter securities, as well as in
securities listed on a national securities exchange. Over-the-counter securities
may not be traded every day or in the volume typical of securities trading on a
national securities exchange. As a result, disposition by the Fund of portfolio
securities to meet shareholder redemptions or for other purposes may require the
Fund to sell such securities at a discount from market prices, to sell during
periods when such disposition is not otherwise desirable, or to make many small
sales over a lengthy period of time.
Convertible Debentures and Warrants
The Fund may invest in convertible debentures and warrants. Convertible
debentures are interest-bearing securities which may be converted into shares of
the issuer's common stock at the option of the holder. Convertible debentures
generally pay interest and provide for participation in the appreciation of the
underlying common stock, but at a lower level of risk because the yield is
higher and the security is senior to common stock. The value of a convertible
security is a function of its "investment value" (determined by its yield in
comparison with the yields of other securities of comparable maturity and
quality that do not have a conversion privilege) and its "conversion value" (the
security's worth, at market value, if converted into the underlying common
stock). The credit standing of the issuer and other factors may also affect the
investment value of a convertible security. Like other debt securities, the
market value of convertible debentures tends to vary inversely with the level of
interest rates. A convertible security may be subject to redemption at the
option of the issuer at a fixed price and, if it is called for redemption, the
Fund will be required to permit the issuer to redeem the security, convert it
into the underlying common stock, or sell it to a third party.
The Fund may invest up to 5% of its assets in warrants, which may be
exercised to acquire a predetermined number of shares of the issuer's common
stock at the option of the holder during a specified time period and at a
specified price. However, not more than 2% of the Fund's net assets may be
invested in warrants not listed on a national securities exchange. (For further
information on warrants, see the Fund's Statement of Additional Information
under the caption "Investment Objective and Policies.")
"Restricted Securities" and Illiquid Assets
The Fund has authority to invest up to 5% of its net assets in illiquid
assets. Illiquid assets consist of assets which are not readily marketable, and
may include (i) repurchase agreements, the maturity of which exceeds seven days,
(ii) securities as to which no "bid" has been made or as to which trading has
been suspended, (iii) securities which may require registration under the
Securities Act of 1933 prior to sale to the public (i.e., "restricted
securities") and (iv) securities of unseasoned issuers (for this purpose, an
unseasoned issuer is an entity which has been in operation for less than
7
<PAGE>
three years, including all predecessors). Illiquid assets, if acquired, will be
valued at fair value as determined in good faith by the Board of Directors of
the Fund. (For further information on restricted securities, see the Fund's
Statement of Additional Information under the caption "Investment Objective and
Policies.")
Options
The Fund may engage in transactions in exchange listed stock options. A
stock option is a right to buy or sell a particular stock at a certain price for
a limited period of time. Options consist of puts, calls or combinations
thereof. A call option gives the purchaser the right, but not the obligation, to
buy from the seller (or "writer") during the term of the option a designated
security at an agreed upon price. Conversely, a put gives the purchaser the
right, but not the obligation, to sell the designated security to the seller of
the option at an agreed upon ("exercise") price. The Fund may purchase or write
options, limited to "covered" put and call options. The writer of the option
must own the underlying security (or have segregated assets sufficient to
purchase the underlying security) in order for the Fund to write the applicable
option contract.
Some of the strategies employed with options may be considered to be
speculative. One type of transaction which is inherently speculative is the
purchase of calls. With the purchase of a call, the Fund could lose, and would
be "at risk" for, the amount of the premium paid for the call if the underlying
security does not rise above the "exercise" price during the life of the call.
Accordingly, the Fund will follow the practice of limiting the net "at risk"
amounts with respect to the purchase of puts or calls to 10% of the Fund's net
assets, determined on the date of purchase.
The use of certain strategies involving options may tend to limit any
potential gain which might result from an increase in the value of any such
position. The ability of the Fund to utilize these strategies successfully will
depend upon the ability of the Fund's investment adviser to forecast pertinent
market movements, which cannot be assured.
MANAGEMENT OF THE FUND
Investment Adviser
Pursuant to an investment advisory agreement dated March 15, 1996, Asset
Management renders investment advice to and provides supervisory management
services for the Fund, subject to the control and overall supervisory authority
of the Fund's Board of Directors. Asset Management is a New York corporation
formed in March 1988, and is owned by Sheldon E. Goldberg and Gregory Church.
Mr. Goldberg is the chairman and Mr. Church is the President of Asset
Management. Mr. Church is the President, Secretary and a director of the Fund.
Asset Management is registered as an investment adviser under the Investment
Advisers Act of 1940.
Mark D. Beckerman has served as the Portfolio Manager of the Fund since
September 1988. From September 1988 to March 1996, he was the President and sole
shareholder of Asset Management. Since the acquisition of Asset Management by
Messrs. Goldberg and Church in March 1996, he has been employed as Portfolio
Manager by Asset Management.
Asset Management provides the Fund with advice and recommendations with
respect to investments, investment policies, the purchase and sale of portfolio
securities and management of the cash balances of and credit extended to the
Fund. For its services, Asset Management is compensated at the annual rate of 1%
of the value of the Fund's average daily net assets, payable monthly. The rate
of compensation remains constant whether or not there are fluctuations in the
Fund's net assets. Such annual rate is higher than the rate paid by most
registered investment companies, but is similar to the rate contracted for by
other mutual funds with comparable investment policies.
8
<PAGE>
Except as described below, the Fund will pay all of its expenses,
including commissions, interest, taxes, legal and accounting fees, fees of
custodians, transfer agents, registrars and dividend disbursing agents,
registration and filing fees, the cost of stock certificates, costs in
connection with annual or special meetings of shareholders (including the
preparation and distribution of proxy soliciting materials), fees and expenses
of Fund directors who are not "interested persons" (as defined in the Investment
Company Act of 1940) of Asset Management, office space, office furnishings,
office supplies and office equipment, including telephone service, insurance
premiums, printing costs (which do not include printed material sent to persons
who are not shareholders), 12b-1 fees, travel expenses, salaries and related
compensation of any non-officer employees, postage, association dues and
extraordinary and non-recurring expenses.
Pursuant to its investment advisory agreement with the Fund, Asset
Management has agreed until March 15, 1998 to limit the Fund's annual operating
expenses (excluding interest, taxes, brokerage commissions and other portfolio
transaction expenses, capital expenditures and extraordinary expenses) to 4% of
the Fund's average annual net assets. Asset Management will reimburse the Fund
for expenses in excess of this limitation.
Administrator
Investment Company Administration Corporation, a Delaware corporation, is
the Administrator of the Fund. Pursuant to an administration agreement with the
Fund, and subject to the supervision of the Board of Directors of the Fund, the
Administrator supervises the overall administration of the Fund. Its
responsibilities include preparing and filing all documents required for
compliance by the Fund with applicable laws and regulations, arranging for the
maintenance of books and records of the Fund and supervision of other
organizations that provide services to the Fund. Certain officers of the Fund
are also provided by the Administrator. For the services it provides to the
Fund, the Administrator receives a monthly fee at the annual rate of 0.10% of
the Fund's average daily net assets, subject to a minimum annual fee of $40,000.
Co-Distributors
Cumberland Brokerage Corporation ("Cumberland") and Bainbridge & Co.
("Bainbridge") act as co-distributors for shares of the Fund. Both Cumberland
and Bainbridge are registered with the Securities and Exchange Commission as
broker-dealers under the Securities Exchange Act of 1934. Cumberland is a New
Jersey corporation controlled by Sheldon E. Goldberg (an officer and shareholder
of Asset Management) and his wife. Bainbridge is a Pennsylvania corporation
controlled by Gregory Church (an officer and director of the Fund and Asset
Management) and his wife.
Cumberland and Bainbridge act as co-distributors for shares of the Fund
pursuant to a distribution agreement dated March 15, 1996, which was initially
approved by the Fund's Board of Directors on November 29, 1995. Fund shares are
sold to the public at net asset value, without any sales charge or commission.
Cumberland and Bainbridge pay the cost of sales material, including the cost of
printing prospectuses other than those used to register Fund shares or otherwise
comply with Federal or state law or sent to existing shareholders.
Distribution Plan
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 permits
an investment company such as the Fund to use its assets to pay the expenses of
distributing its shares if it complies with the various conditions of the Rule.
In accordance with the Rule, the Fund has adopted a Distribution Plan which,
among other things, permits the Fund to pay Cumberland and Bainbridge, the
co-distributors of Fund shares, a monthly distribution fee out of the Fund's net
assets, which may be spent on any activities or expenses primarily intended to
result in the sale of Fund shares. Under the Distribution Plan, the Fund will
pay Cumberland and Bainbridge an aggregate distribution fee which is accrued
daily and paid monthly at the rate of .25% per year of the Fund's average daily
net assets. The Distribution Plan is a "compensation"
9
<PAGE>
paid monthly at the rate of .25% per year of the Fund's average daily net
assets. The Distribution Plan is a "compensation" plan, which means that the
distribution fees paid by the Fund are intended to compensate Cumberland and
Bainbridge for services rendered, even if the amounts paid exceed their actual
expenses (in which case Cumberland and Bainbridge would realize a profit). The
Distribution Plan provides for quarterly written reports to the Board of
Directors of expenditures pursuant to the Distribution Plan, including the
purposes of such expenditures.
The Board of Directors, including a majority of the directors who are not
"interested persons" of the Fund (as defined in the Investment Company Act of
1940) and who have no direct or indirect financial interest in the operation of
the Distribution Plan, adopted the Distribution Plan on November 29, 1995 after
determining that there is a reasonable likelihood that the Plan is in the best
interests of and will benefit Fund shareholders. Any change in the Distribution
Plan that would materially increase the distribution costs requires shareholder
approval; otherwise, the Distribution Plan may be amended by the directors.
The Distribution Plan may be terminated by the vote of a majority of the
directors who are not "interested persons" of the Fund or by the vote of a
majority of the outstanding shares of the Fund. The Distribution Plan will
continue in effect so long as within each one-year period such continuance is
specifically approved by the vote of a majority of the directors (which also
must include a majority of the directors who are not "interested persons" of the
Fund).
PURCHASE OF SHARES
By Mail
Shares of the Fund initially may be purchased by sending a check ($1,000
minimum) together with the completed application form to the Fund, c/o American
Data Services, Inc., P.O. Box 64-1122, Cincinnati, Ohio 45264-1122. Subsequent
investments may be made by mailing a check ($100 or more) together with the
detachable stub from the Transaction Advice (see "General," page 11). Mail
orders without payment enclosed will not be accepted. Third-party checks will
not be accepted for payment of purchase orders.
By Bank Wire
Shares of the Fund may be purchased by bank wire. Investors establishing
new accounts, prior to sending the bank wire, should telephone American Data
Services, Inc. at 1-800-637-3901 in order to obtain an account number. The wire
order must contain registration instructions (i.e., full names of all investors,
address, social security number or other taxpayer identification number and
account number for new accounts, or only the account number for existing
accounts.) The name of the Fund must appear on the wire for proper credit. The
investor must have the bank wire order transmitted to Star Bank, N.A.
Cinti/Trust, ABA #0420-0001-3, Attn: Matterhorn Growth Fund, Inc., DDA
#483897641, Account Name ________________________, Shareholder Account
No._________________. Wire orders received by American Data Services, Inc. will
be executed at the Fund's net asset value per share as next determined after
receipt of the wired funds. Banks may charge fees for wiring funds.
Through Broker-Dealers
Investors may, if they so desire, purchase Fund shares through registered
broker-dealers. Such broker-dealers may make a reasonable charge to the investor
for their services. Such fees and services may vary among broker-dealers, and
such broker-dealers may impose higher initial or subsequent investment
requirements than those established by the Fund. Services provided by
broker-dealers may include the ability to establish a margin account and to
borrow on the value of the Fund shares in that account. Broker-dealers are
responsible for forwarding payment promptly to American Data Services, Inc.
10
<PAGE>
General
Purchase orders received, either by the Fund's transfer agent or the
investor's broker-dealer, prior to the close of trading business on the New York
Stock Exchange (currently 4:00 P.M., Eastern time) on a given day will be
executed at the net asset value per share computed as of the close of business
on that day.
Conditional purchase orders will not be accepted. All checks should be
made payable to the Fund and should be drawn on a U.S. bank. Checks drawn on a
foreign bank will not be accepted unless provision is made for payment through a
U.S. bank in U.S. dollars. If payment for any purchase order is not received as
specified herein, or if the investor's check is not honored upon presentment,
the order is subject to cancellation, and the purchaser's existing account with
the Fund immediately will be charged for any loss incurred. The Fund reserves
the right to accept orders at its office, to waive the minimum and maximum
limitations for purchase orders, to reject any order in whole or in part, to
suspend or modify the continuous offering of its shares without prior notice.
Although telephone service is provided, investors should be aware that telephone
lines are not available at all times, and usually are busy shortly prior to 4:00
P.M., Eastern time. Therefore, investors are urged to place wire orders as early
in the day as possible.
Each investor will be sent a Transaction Advice by the Fund's transfer
agent in lieu of a certificate, reflecting full and fractional shares, unless a
certificate is specifically requested in writing by all registered owners. It is
recommended to all shareholders that a certificate not be requested unless
needed for a specific purpose. This eliminates the trouble and expense of
safeguarding the stock certificate and the cost of a lost instrument bond in the
event of loss or destruction and is a condition to the election of telephone
service.
REDEMPTION OF SHARES
Redemptions by Mail
Shares of the Fund may be redeemed by an investor by mail by writing
directly to the transfer agent, American Data Services, Inc., 24 West Carver
Street, 2nd Floor, Huntington, New York 11743, and enclosing a duly endorsed
share certificate, if issued. There are no special forms for redemption.
However, a written request for redemption must be signed by all owners, with all
such signatures guaranteed, as described below. In the case of shares held by a
corporation, the redemption request must be signed in the name of the
corporation by an officer whose title must be stated, and a by-law provision or
resolution of the Board of Directors, recently certified, authorizing the
officer to so act must be furnished. In the case of a trust or partnership, the
signature must be that of a trustee or partner in whose name the account is
registered, and must include the title of the person signing. If the trustee's
or partner's name is not registered on the account, a recently certified copy of
the trust instrument or partnership agreement must be furnished to the Fund's
transfer agent. Investors can obtain a signature guarantee from most banks,
credit unions or savings associations, or from broker-dealers, national
securities exchanges, registered securities associations or clearing agencies
deemed to be eligible guarantor institutions. A notary public is not acceptable.
Shareholders residing abroad may obtain a signature verification from any U.S.
Consulate under official seal.
Redemptions by Telephone, Telegram or Overseas Cable
Shares of the Fund may be redeemed by an investor by calling American Data
Services, Inc., the Fund's transfer agent, at 1-800-637-3901, or by sending a
telegram or overseas cable to American Data Services, Inc., 24 West Carver
Street, 2nd Floor, Huntington, New York 11743. In order to utilize the procedure
for redemption by telephone, telegram or overseas cable, a shareholder
previously must have elected this option in writing, the shareholder account
previously must have been opened by and be reflected as such in the computer
records of the Fund's transfer agent, the shares being redeemed must be held by
the transfer agent and the redemption proceeds must be transmitted directly to
the shareholder's
11
<PAGE>
predesignated account at a domestic bank (see "General," page 12). Neither the
Fund nor its transfer agent will be liable for acting upon any instruction it
reasonably believes to be genuine and in accordance with the procedures
described herein.
A shareholder may elect at any time to use the telephone redemption
service, which includes redemptions by telegram or overseas cable. Such election
may be made on the initial application form or on other forms prescribed by the
Fund. Any changes or exceptions to the original election must be made in
writing, with signatures guaranteed, and will be effective upon receipt by the
transfer agent. When utilizing the telephone redemption service, the shareholder
must give the full name, number of shares to be redeemed (if less than all
remaining shares) and account number, or the redemption request will not be
processed. For a redemption by overseas cable, you must also include the Fund
name. Redemptions by telegram or overseas cable will not become effective until
the writing constituting the telegram or overseas cable is received by the
Fund's transfer agent.
The Fund reserves the right to change or discontinue without prior notice
the procedures for or availability of telephone service for redemption requests.
Although telephone service is provided, investors should be aware that telephone
lines are not available at all times, usually are busy shortly prior to 4:00
P.M., Eastern time and may not be available during periods of severe market or
economic conditions. Therefore, investors are urged to place telephone orders as
early in the day as possible.
General
The redemption price for shares upon written request, telegram, overseas
cable or telephone redemption will be the net asset value per share as next
determined after receipt of such request in good order by the Fund's transfer
agent (see "Net Asset Value," page 13). The proceeds of all redemptions will be
mailed or wired, as elected by the shareholder, on the next business day after
redemption if being transmitted to the investor's account at the broker-dealer
through which the Fund shares were purchased, or on the third business day after
the redemption if being transmitted otherwise. However, redemption proceeds will
not be transmitted until the investor's check for the purchase of Fund shares
has cleared, which may take up to 15 days from the time the check is received.
Where a shareholder simultaneously redeems shares for which payment has been
made and shares for which the shareholder's check has not cleared, the
shareholder authorizes the Fund to delay transmittal of that portion of the
redemption proceeds equal to the amount of the check which has not then cleared
until the shareholder's check has cleared, but such portion of the redemption
proceeds will be transmitted promptly after such clearance. Where a shareholder
has elected to have the redemption proceeds transmitted directly to the
shareholder's predesignated account at a domestic bank, the proceeds will be
wired if the account is at a commercial bank and will be sent by mail if the
account is at a savings bank or if the proceeds are less than $1,000. The Fund's
transfer agent will not honor any redemption request that contains a restriction
as to the time, date or share price at which the redemption is to be effective.
The right of redemption may be suspended or the payment date postponed
during any period when: (a) the New York Stock Exchange is closed for other than
customary weekend and holiday closings; (b) trading on the New York Stock
Exchange is restricted, as determined by the Securities and Exchange Commission;
(c) an emergency as defined by rules of the Securities and Exchange Commission
exists; or (d) the Commission has, by order, permitted such suspension. In case
of suspension of the right of redemption, the shareholder may withdraw the
request for redemption or the shareholder will receive payment of the net asset
value next determined after the suspension has been terminated.
The Fund has the right to involuntarily redeem after written notice the
shares of an investor, the aggregate value of whose shares is less than $500 due
to redemptions. Notice of redemption will be given by first class mail to the
investor at the address on the Fund's records. The notice will fix a date of not
less than 30 days in advance of the date on which it was mailed, and the shares
will be redeemed at net asset value as of the close of business on that date,
unless before then the investor purchases sufficient additional shares. A check
for the proceeds of redemption, which may be less
12
<PAGE>
or more than the purchase price of the shares, will be mailed to the investor at
the address of record.
SHAREHOLDER SERVICES
Transfer of Shares
To transfer Fund shares from an existing account, a letter requesting the
transfer signed by each registered owner must be sent directly to the Fund's
transfer agent, American Data Services, Inc., 24 West Carver Street, 2nd Floor,
Huntington, New York 11743. The letter should give the full name, address and
social security number (or taxpayer identification number) of the transferee. A
stock power signed by each registered owner, with signatures guaranteed, must
accompany the letter. A notary public is not an acceptable guarantor. A new
application completed in its entirety and signed by the new owner also is
required. Application forms may be obtained by calling the Fund at
1-800-637-3901 (toll-free).
Check-A-Matic Plan
For the convenience of shareholders, the Fund offers a preauthorized check
service under which a check is automatically drawn on the shareholder's personal
checking account each month for a predetermined amount (but not less than $100),
as if the shareholder had written it himself. Upon receipt of the check, the
Fund automatically invests the money in additional shares of the Fund at the
current offering price. There is no charge by the Fund for this service.
Shareholders may terminate their participation by notifying the Transfer Agent
in writing.
Systematic Withdrawal Program
As another convenience, the Fund offers a Systematic Withdrawal Program
whereby shareholders may request that a check drawn in a predetermined amount be
sent to them each month or calendar quarter. A shareholder's account must have
Fund shares with a value of at least $10,000 in order to start a Systematic
Withdrawal Program, and the minimum amount that may be withdrawn each month or
quarter under the Systematic Withdrawal Program is $100. This Program may be
terminated or modified by a shareholder or the Fund at any time without charge
or penalty.
A withdrawal under the Systematic Withdrawal Program involves a redemption
of shares, and may result in a gain or loss for federal income tax purposes. In
addition, if the amount withdrawn exceed the dividends credited to the
shareholder's account, the account ultimately may be depleted.
OPERATION OF THE FUND
Net Asset Value
The net asset value of the Fund's shares will be determined as of the
close of trading on the New York Stock Exchange (which currently is 4:00 P.M.,
Eastern time) on each day on which the New York Stock Exchange is open for
trading and on which there is a sufficient degree of trading in the Fund's
portfolio of investments that such net asset value might be materially affected
by the changes in the underlying values of such portfolio securities. Net asset
value per share will be computed by dividing the market value of all securities
and other assets, less liabilities, by the number of the Fund's outstanding
shares. Such determination is made by valuing portfolio securities listed or
traded on a national securities exchange on which the security is primarily
traded at the last sale price, or if there has been no sale that day, at the
mean between the last bid and asked prices. Securities traded in the
over-the-counter market are valued at their last bid
13
<PAGE>
price, and all other portfolio securities and assets, including restricted
securities, will be valued at fair value as determined in good faith by or under
the direction of the Board of Directors.
Dividends, Distributions and Taxes
The policy of the Fund is to distribute at least annually substantially
all of its net ordinary income and net realized capital gains, if any. In so
doing, the Fund intends to comply with Subchapter M of the Internal Revenue
Code, which relieves complying investment companies which distribute
substantially all of their net income from Federal income tax on the amount
distributed. The Fund qualified as a regulated investment company during the
year ended June 30, 1996, and it intends to so qualify in future years if it is
in the best interests of Fund shareholders to do so.
It is the present policy of the Fund to declare and pay annually net
ordinary income as dividends and to declare and distribute annually all net
capital gains realized in excess of all then available capital loss
carryforwards. These dividends and distributions are payable in Fund shares,
although shareholders may elect to receive such dividends and distributions in
cash upon written request to the Fund, which request must be received by the
Fund prior to the close of business on or before the record date for payment of
the particular dividend or distribution. Checks issued pursuant to a
shareholder's request for payment in cash of a dividend or distribution are sent
by first class mail to the shareholder's address as reflected in the transfer
agent's records. If any such check is returned to the Fund, it automatically
will be deemed to be a request by the shareholder to reinvest those proceeds and
all future dividends and distributions in Fund shares unless and until the
shareholder subsequently elects in writing to be paid in cash. All dividends and
distributions are taxable to the shareholder whether received in cash or in Fund
shares. Reinvestment in Fund shares of the dividend or distribution will be made
on the payable date.
Distributions of dividends and short-term capital gains are taxable to a
shareholder as ordinary income. The dividends (but not the capital gains)
qualify for the 70% dividends received deduction for corporations, unless they
are derived from interest or other non-dividend income or dividends from foreign
corporations.
In January of the year after the distribution, the Fund will send
shareholders a Form 1099, notifying shareholders of the status of each
distribution for Federal income tax purposes.
In the event a shareholder fails to furnish a taxpayer identification
number and to certify to the accuracy thereof, or the Internal Revenue Service
notifies the Fund that a shareholder's taxpayer identification number is
incorrect or that withholding is otherwise required, the Fund will commence
withholding on such shareholder's account. Once withholding is established, all
withheld amounts will be paid to the Internal Revenue Service, from whom such
shareholder should seek any refund. If withholding is commenced with respect to
any shareholder account, the shareholder should consult with the shareholder's
attorney or tax adviser or contact the Internal Revenue Service directly. In
addition, the IRS levies a fine for each incorrect or uncertified taxpayer
identification number. Any such fine levied against the Fund will be assessed
against the shareholder account responsible therefore.
Any dividend or distribution declared shortly after an investor has
purchased Fund shares will have the effect of reducing the net asset value of
the investor's shares by the amount of the dividend or distribution. Such a
dividend or distribution, although in a sense a return of capital, is subject to
taxation, as described above.
Brokerage
Decisions to buy and sell securities on behalf of the Fund are made by
Asset Management. The commission rate on all exchange orders is subject to
negotiation, and Asset Management will be responsible for negotiating such
commission rates on behalf of the Fund. In selecting brokers or dealers to
execute portfolio transactions for the Fund, an attempt will
14
<PAGE>
be made to negotiate the best commission rate among those brokers or dealers who
in the opinion of Asset Management can obtain best price and execution for the
Fund. Subject to the foregoing, in the allocation of portfolio brokerage
business, Asset Management may consider the extent to which brokers sell Fund
shares. In addition, as authorized by Section 28(e) of the Securities Exchange
Act of 1934, Asset Management also may consider research and brokerage services
provided by brokers, and is authorized to cause the Fund to pay to a broker a
commission rate or amount in excess of the rate or amount another broker would
have charged for effecting that transaction if Asset Management determines in
good faith that such rate or amount of commission is reasonable in relation to
the value of the research and brokerage services provided. Research services
include investment recommendations, statistical research and other services,
including economic and market information. Such research and brokerage services
are considered to be in addition to and not in lieu of the services required to
be performed by Asset Management under its contract with the Fund. Research
services furnished by brokers and dealers through whom the Fund effects
securities transactions may be used by Asset Management in servicing all of the
accounts of Asset Management, just as any research services provided by such
brokers and dealers with respect to securities transactions for such other
accounts may be used by Asset Management in servicing the Fund. Section 17(e) of
the Investment Company Act of 1940 limits to "the usual and customary broker's
commission" the amount which can be paid by the Fund to affiliated persons
acting as broker in connection with transactions effected on a securities
exchange.
Transactions in a security traded over-the-counter normally will be
made through broker-dealers in which the Fund will receive best excution. The
Fund will not engage in any transaction in which Asset Management, Cumberland or
Bainbridge would be a principal. Cumberland and Bainbridge have advised the Fund
that they will not receive reciprocal brokerage business as a result of
brokerage business placed or principal transactions made by the Fund with
others.
ADDITIONAL INFORMATION
Transfer and Shareholder Service Agent. American Data Services, Inc., 24 West
Carver Street, 2nd Floor, Huntington, New York 11743 acts as shareholder
servicing and transfer agent for the Fund. Questions concerning shareholder
accounts should be directed to The Matterhorn Growth Fund, Inc., c/o American
Data Services, Inc., 24 West Carver Street, 2nd Floor, Huntington, New York
11743, or call 1-800-637-3901. Telephone requests for information of a
confidential nature will be answered by letter to the shareholder's address of
record. Procedural inquiries will be answered immediately.
Custodian. Star Bank, 425 Walnut St., Cincinnati, Ohio 45202 serves as custodian
of the Fund's cash and securities.
Accountants. McGladrey & Pullen, LLP will serve as the independent certified
public accountants for the Fund and will examine and report on the Fund's
financial condition.
Reports. Each shareholder will receive semi-annual and annual financial reports
of the Fund. Annual financial reports will be audited.
Retirement Plans. The Fund has available for investors a prototype retirement
plan, a prototype Individual Retirement Account ("IRA") and a tax sheltered
retirement plan in accordance with Section 403(b) of the Internal Revenue Code
for employees of public school systems and certain other charitable
organizations. For further information or application forms for these retirement
plans, please write or call the Fund at the address or telephone numbers shown
on the cover page.
Capital Stock. The authorized capital of the Fund consists of 100,000,000 shares
of common stock, par value $.001 each. Currently, all Fund shares are of the
same class with equal voting rights. The Board of Directors has the authority to
issue additional classes of shares if deemed desirable. Fund shares have
non-cumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of directors can elect all of the directors
if they choose to do
15
<PAGE>
so, and in such event the holders of the remaining shares so voting will not be
able to elect any directors. Shares of the Fund have equal rights with respect
to dividends, assets and liquidation. Shares are fully paid and nonassessable
when issued, are transferable without restriction, and have no preemptive or
conversion rights.
As a Maryland corporation, the Fund is not required to hold annual
meetings of shareholders except when required by the Investment Company Act of
1940. The Fund has undertaken that, (i) if requested to do so by the holders of
at least 10% of the Fund's then outstanding shares, it will call a meeting of
shareholders for the purpose of voting upon the removal of any director, and
(ii) it will assist in the communication with Fund shareholders, to the extent
required by Section 16(c) of the Investment Company Act of 1940.
Performance Information. From time to time the Fund may advertise its total
return. These figures are based on historical earnings and are not intended to
indicate future performance. Total return shows how much an investment in the
Fund would have increased (or decreased) over a specified period of time (i.e.,
one, five or ten years or since the inception of the Fund) assuming that all
distributions and dividends by the Fund to investors of the Fund were reinvested
on the reinvestment dates during the period. Total return does not take into
account any federal or state income taxes which may be payable by the investor.
The Fund also may include comparative performance information in advertising or
marketing Fund shares. Such performance information may include data from Lipper
Analytical Services, Inc., other industry publications, business periodicals,
rating services and market indices.
Additional Information. This Prospectus, including the Statement of Additional
Information which has been incorporated by reference herein, does not contain
all the information set forth in the Registration Statement filed by the Fund
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended. Copies of the Fund's Registration Statement may be obtained at a
reasonable charge from the Commission or may be examined, without charge, at the
office of the Commission in Washington, D.C.
No dealer, salesman, or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer contained in this Prospectus, and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Fund. This Prospectus does not constitute an
offering in any state or jurisdiction in which such offering may not lawfully be
made.
16
<PAGE>
INVESTMENT ADVISER
Matterhorn Asset Management Corporation
301 Oxford Valley Road, Suite 802B
Yardley, Pennsylvania 19067
CO-DISTRIBUTORS
Bainbridge & Co.
301 Oxford Valley Road, Suite 801B
Yardley, Pennsylvania 19067
Cumberland Brokerage Corporation
614 Landis Avenue
Vineland, New Jersey 08360
CUSTODIAN
Star Bank
425 Walnut St.
Cincinnati, Ohio 45202
TRANSFER AGENT
American Data Services, Inc.
24 West Carver Street, 2nd Floor
Huntington, New York. 11743
1-800-637-3901
AUDITORS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017
[MATTERHORN GROWTH FUND, INC. LOGO]
Prospectus
November 1, 1996
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1996
THE MATTERHORN GROWTH FUND, INC.
301 Oxford Valley Road, Suite 802B, Yardley, Pennsylvania 19067
(Toll Free - 1-800-637-3901)
Price Quote Information
1-800-543-2875
The Matterhorn Growth Fund, Inc. ("Fund") seeks long-term capital
appreciation for shareholders through investment in the securities, principally
common stocks, of companies, the earnings and stock prices of which are expected
by the Fund's investment adviser to grow faster than the average rate of
companies in the Standard & Poor's 500 Stock Price Index.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. RATHER, IT SHOULD
BE READ IN CONJUNCTION WITH THE FUND'S PROSPECTUS DATED NOVEMBER 1, 1996, A COPY
OF WHICH MAY BE OBTAINED FROM THE FUND AT THE ADDRESS AND THE TELEPHONE NUMBERS
SHOWN ABOVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES CONTAIN INFORMATION
WHICH MAY BE OF INTEREST TO INVESTORS.
B - 1
<PAGE>
INVESTMENT ADVISER TRANSFER AGENT
Matterhorn Asset Management Corporation American Data Services, Inc.
301 Oxford Valley Road, Suite 802B 24 West Carver Street, 2nd Floor
Yardley, Pennsylvania 19067 Huntington, New York 11743
1-800-637-3901
CO-DISTRIBUTORS
Cumberland Brokerage Corporation Bainbridge & Company
614 Landis Avenue 301 Oxford Valley Road, Suite 801-B
Vineland, New Jersey 08360 Yardley, Pennsylvania 19067
CUSTODIAN AUDITORS
Star Bank McGladrey & Pullen, LLP
425 Walnut St 555 Fifth Avenue
Cincinnati, Ohio 45202 New York, New York 10017
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
SUMMARY................................................................ B-3
INVESTMENT OBJECTIVE AND POLICIES...................................... B-4
Warrants............................................. B-4
Defensive Investments ............................... B-4
Non-Liquid Assets ................................... B-5
Foreign Securities................................... B-6
Securities Options................................... B-6
Investment Limitations............................... B-8
Leverage............................................. B-9
MANAGEMENT OF THE FUND................................................. B-10
Investment Adviser................................... B-10
Administrator........................................ B-11
Directors and Officers of the Fund................... B-12
CO-DISTRIBUTORS........................................................ B-13
Distribution Agreement............................... B-13
Distribution Plan.................................... B-13
Brokerage............................................ B-14
SPECIAL ACCOUNTS....................................................... B-14
Check-A-Matic Plan................................... B-14
Self-Employed Retirement Plan ("Keogh").............. B-15
Individual Retirement Accounts ("IRA")............... B-15
Tax Sheltered Retirement Plan ("403(b)")............. B-15
Systematic Withdrawal Program........................ B-115
TAXES.................................................................. B-16
Special Tax Considerations........................... B-17
PERFORMANCE INFORMATION................................................ B-19
Total Return......................................... B-19
Comparison to Indices and Rankings................... B-19
- -------------------------------------------------------------------------------
No dealer, salesman, or other person has been authorized to give any
information or to make any representations other than those contained in the
Prospectus in connection with the offer contained in the Prospectus, and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Fund. The Prospectus does not constitute an
offering in any state or jurisdiction in which such offering may not lawfully be
made.
B - 2
<PAGE>
SUMMARY
The Matterhorn Growth Fund, Inc. (the "Fund") was organized as a
Maryland corporation on May 2, 1980. From its inception to March 14, 1996, the
Fund was known as The 44 Wall Street Equity Fund, Inc.
The Fund is an open-end, non-diversified investment company which seeks
long-term capital appreciation for its shareholders through investment in the
securities (principally common stocks, but also may include warrants and
onvertible debentures) of companies, the earnings and stock prices of which are
expected by the Fund's investment adviser to grow faster than the average rate
of companies in the Standard & Poor's 500 Stock Price Index. The Fund may engage
in transactions in exchange listed options, may obtain leverage by borrowing
from banks, and may invest up to 5% of its assets in warrants (up to 2% of the
net assets in unlisted warrants).
Fund shares may be purchased by mail through its transfer agent,
American Data Systems, Inc. at the address listed on the back cover page, or by
telephone (toll-free 1-800-637-3901), telegram or overseas cable (see "PURCHASE
OF SHARES," page __). There is no sales charge or commission, and Fund shares
are sold at net asset value. Shares are redeemable by mail or by telephone at
their net asset value, as next determined after receipt of a redemption request.
The minimum initial investment is $1,000, and subsequent investments may be made
at any time in amounts of $100 or more.
The Fund has available for its investors the following specialized
accounts: a Check-A-Matic Plan, retirement plans and a Systematic Withdrawal
Program. (See "SPECIAL ACCOUNTS," page B-14).
The Fund has certain features involving greater risk, which may be viewed
as being more speculative, than features found in other investment companies.
Such features include the Fund's non-diversified status (see "Investment
Objectives and Policies," page B-14), the Fund's ability to utilize leverage
(see "Leverage," page B-9) and the Fund's ability to invest in exchange listed
options, warrants, foreign securities, securities of unseasoned issuers and
"restricted" securities (see "Investment Objectives and Policies," page B-4).
The Fund relies on the investment advice of Matterhorn Asset Management
Corporation ("Asset Management"), which receives for its services a monthly fee
equal to the annual rate of 1% of the Fund's average net assets. While such
annual rate of compensation is higher than the average rate paid by most
registered investment companies, the Fund believes that the rate is comparable
to that charged to investment companies which also seek to achieve their
investment objective by employing those investment techniques utilized by the
Fund. All Fund expenses are payable by the Fund, except that until March 15,
1998 Asset Management is required to reimburse the Fund for expenses in excess
of 4% of average daily net assets. Expenses payable by the Fund include legal
and accounting fees, custodial and transfer agency fees, registration and filing
fees, brokerage commissions, interest, taxes, office facilities, 12b-1 fees,
travel, printing, postage, clerical and administrative salaries and expenses of
an extraordinary and nonrecurring nature.
The Fund has relied upon the investment advice of Asset Management
since September 1988. From September 1988 to March 1996, Asset Management was
wholly owned by Mark D. Beckerman, its then President and Portfolio
B - 3
<PAGE>
Manager. In March 1996, ownership of Asset management was transferred to Sheldon
E. Goldberg and Gregory Church. Mr. Beckerman continues to serve as the Fund's
Portfolio Manager pursuant to a five-year employment agreement.
The Fund's financial statements for the fiscal year ended June 30, 1996
are incorporated by reference to the Fund's 1996 Annual Report to Shareholders.
A copy of the Fund's Annual Report can be obtained at no charge by calling the
toll free number on page 1 or writing the Fund at its address on page 1.
INVESTMENT OBJECTIVE AND POLICIES
---------------------------------
The Fund's sole objective is to achieve capital appreciation through
investment in the securities of companies, the earnings and stock prices of
which are expected by the Fund's investment adviser to grow faster than the
average rate of companies in the Standard & Poor's 500 Stock Price Index. The
Fund intends to be fully invested in common stocks and other securities having
investment characteristics similar to common stocks (i.e., warrants and
convertible debentures). The Fund may invest in privately offered and
over-the-counter securities as well as in securities listed on a national
securities exchange. Asset Management will utilize research, financial analysis
and other tools of business evaluation for selecting companies and industries
with above average performance or prospects.
While the rate of portfolio turnover will not be a limiting factor when
portfolio changes are deemed appropriate, given the Fund's investment objective,
its annual portfolio turnover rate generally should not exceed 100%. For fiscal
years 1994, 1995 and 1996, the Fund's annual portfolio turnover rates were
160.1%, 72.1% and 88.3%, respectively. Portfolio turnover rates exceeding 100%,
as occurred in fiscal 1994, tend to increase the amount of brokerage commissions
paid, and should they occur in the future could adversely impact upon the Fund's
ability to meet one of the requirements for qualifying as a regulated investment
company under the Internal Revenue Code, which is that gains realized on
securities held for less than three months must be limited to 30% of the Fund's
gross income.
Warrants
- --------
The Fund may invest up to 5% of its assets in warrants. Such warrants
may be unlisted (over-the-counter) or listed on a national securities exchange.
Warrants convey no rights to dividends, ownership or voting rights but only an
option to purchase equity securities of the issuer at a fixed price for a fixed
period of time. If such securities appreciate, the warrants may be exercised or
sold at a gain, but a loss will be incurred if such securities decrease in value
or the term of the warrant expires before it is exercised. Thus, warrants are
considered speculative.
Defensive Investments
- ---------------------
The Fund may invest for defensive purposes in U.S. Government
securities, repurchase agreements collateralized by U.S. Government securities,
or high grade commercial paper.
B - 4
<PAGE>
Securities issued or guaranteed by the U.S. Government or its agencies
and instrumentalities in which the Fund may invest include U.S. Treasury
securities, which differ only in their interest rates, maturities and times of
issuance. Treasury bills have initial maturities of one year or less; Treasury
notes have initial maturities of one to ten years; and Treasury bonds generally
have initial maturities of more than ten years. Some obligations issued or
guaranteed by U.S. Government agencies and instrumentalities, for example,
Government National Mortgage Association ("GNMA") pass-through certificates, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal Home Loan Banks, by the right of the issuer to borrow money
from the Treasury; others, such as those issued by the Federal National Mortgage
Association, by the discretionary authority of the U.S. Government to purchase
certain obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of the
agency or instrumentality. While the U.S. Government provides financial support
to U.S. Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so, since it is not so obligated by law. The Fund
will invest in securities issued or guaranteed by U.S. Government agencies and
instrumentalities only when Asset Management is satisfied that the credit risk
with respect to the issuer is minimal.
In a repurchase agreement, the Fund purchases securities and the seller
agrees to repurchase them from the Fund at a mutually agreed-upon time and
price. The period of maturity is usually overnight or a few days, although it
may extend over a number of months. The resale price is in excess of the
purchase price, reflecting an agreed-upon rate of return effective for the
period of time the Fund's money is invested in the security. The Fund's
repurchase agreements will at all times be fully collateralized in an amount at
least equal to 102% of the purchase price, including accrued interest earned on
the underlying securities. The instruments held as collateral are valued daily
and, if the value of the instruments declines, the Fund will require additional
collateral. If the seller defaults and the value of the collateral securing the
repurchase agreement declines, the Fund may incur a loss. If bankruptcy
proceedings are commenced with respect to the seller, realization upon the
collateral by the Fund may be delayed or limited. The Fund will only enter into
repurchase agreements involving securities in which it could otherwise invest
and with selected financial institutions and brokers and dealers which meet
certain creditworthiness and other criteria.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Non-Liquid Assets
- -----------------
The Fund has authority to invest up to 5% of its net assets in
non-liquid assets. Investments in unseasoned issuers are subject to a greater
degree of risk than investment in seasoned issuers, because of the lack of
earnings or operating histories. The restrictions upon the disposition of
"restricted" securities may adversely affect their liquidity and marketability.
Non-liquid assets, if acquired, will be valued at fair value as determined in
good faith by the Board of Directors of the Fund, and the value of "restricted"
securities may be less than the market value of unrestricted securities of the
same type.
B - 5
<PAGE>
Foreign Securities
- ------------------
Investments will be made primarily in securities of companies domiciled
in the United States. Although the Fund has authority to make investments in
securities of issuers domiciled in any foreign country, the Fund currently
intends to exercise such authority only as to foreign issuers whose securities
are traded in the U.S. securities markets through dollar-denominated American
Depository Receipts ("ADRs"). ADRs are certificates issued by an American bank
to evidence ownership of original foreign shares. The original foreign stock
certificate is deposited with a foreign branch or correspondent bank of the
issuing American bank. ADRs are considered to be "sponsored" when the foreign
issuer has designated a single U.S. financial institution to act as the transfer
agent for that ADR. Unsponsored ADRs are organized independently and without the
cooperation of the foreign issuer of the underlying securities; as a result,
available information regarding the issuer may not be as current as for
sponsored ADRs, and the prices of unsponsored ADRs may be more volatile than if
they were sponsored by the issuers of the underlying securities.
The securities of foreign issuers involve risks that are different from
those of domestic issuers, including possibly different or adverse political and
economic developments, possible imposition of governmental restrictions and
possible curtailment of dividends or principal, subject to currency blockage, at
the source, and also involve such other considerations as the then current
exchange rate if such issuer does not pay interest or dividends, as the case may
be, in U.S. dollars. In addition, it may be more difficult to obtain and enforce
a judgment against a foreign issuer, there may be less publicly available
information about the foreign issuer and foreign issuers generally are not
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic issuers.
Not more than 10% in value of the Fund's investments may be made in the
securities of issuers domiciled in foreign countries.
Securities Options
- ------------------
The Fund has authority to engage in transactions in exchange listed
securities options, as such transactions are currently defined and may be
defined in the future, and not just the particular types of options transactions
which are described herein merely by way of example. Listed options are issued
by the Options Clearing Corporation the "OCC"), which guarantees the performance
of the obligations of the parties to such options.
Among the reasons why the Fund may purchase a call option is to achieve
a greater amount of leverage than would otherwise be possible by buying the
underlying stock. This is so because only the amount of the "premium" need be
paid when purchasing a call, rather than the full purchase price for the
underlying stock. On the other hand, one reason why the Fund may engage in the
selling (or "writing") of call options is to earn the premium income. The risk
to the Fund in the purchase of calls is the loss of the premium paid if the
price of the security has not risen during the term of the option. The risk to
the Fund for writing calls is that the Fund could lose any price appreciation on
the securities upon which calls have been written when those calls are exercised
by the purchasers.
B - 6
<PAGE>
The Fund will only write "covered calls." This means that the Fund must
own the underlying security in order for the Fund to write the applicable
options contract, or must have the absolute right to acquire the underlying
security without additional cash consideration (or, if additional cash
consideration is required, cash or cash equivalents in such amount are held in a
segregated account by the Fund's Custodian).
Another strategy involving options which the fund may use is the
purchase of put options. The principal reason why the Fund may purchase puts
would be to reduce the risk in any investment position taken by the Fund in any
security. This strategy would allow the Fund to continue holding a particular
security for any anticipated further price appreciation and at the same time
would protect the Fund from any decline in the value of the security. However,
such a strategy would effectively increase the cost of a security by the cost of
the option and thereby reduce the return, if any, on that security.
In addition to purchasing puts, the Fund also may write covered puts. A
put option is "covered" if the Fund holds cash or liquid high-grade debt
securities in a segregated account with its Custodian in an amount sufficient to
acquire the security, or holds a put option on the same security with the same
or a greater exercise price (or with a lesser price and with the balance
maintained as cash or liquid high grade debt securities). The principal reason
for the Fund to write a put would be to earn the premium income thereon. The
Fund has not written any puts since the inception of its authority to engage in
transactions in exchange listed securities options.
The Fund may also engage in options transactions in various
combinations, two of which are known as "spreads" and "straddles". A spread
involves the simultaneous buying and writing of the same type of option (whether
a put or a call) on the same underlying stock, with the options having different
exercise prices or different exercise dates, or both. A straddle involves the
simultaneous buying (or writing, as the case may be) of a put and a call on the
same underlying security, usually for different exercise prices. The risks of
straddle writing are greatest where the underlying stock has a high degree of
price volatility.
A separate and additional risk to the Fund with respect to engaging in
options transactions may be that the Fund will not be able to close out its
position in a particular option if and when the Fund desires to do so. The Fund
closes out an option which it has purchased by selling an option of the same
series as the option previously purchased, and closes out an option which it has
written by buying an option of the same series as the option previously written.
The Fund's ability to close out its position as a purchaser of an exchange
listed option would be dependent upon the existence of a liquid secondary market
on option exchanges (i.e., the CBOE, the American, Pacific and Philadelphia
Stock Exchanges). Among the possible reasons for the absence of a liquid
secondary market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities; (iv)
interruption of the normal operations of an exchange; (v) inadequacy of the
facilities of an exchange or the OCC to handle current trading volume; or (vi) a
decision by one or more of the exchanges to discontinue the trading of options,
in which event the secondary market on the exchange would cease to exist,
although outstanding options on that exchange that had been listed by the OCC as
a result of trades on that exchange would generally continue to be exercisable
in accordance with their terms.
B - 7
<PAGE>
Some of the strategies employed with options may be considered to be
speculative. One type of transaction which is inherently speculative is the
purchase of calls. With the purchase of a call, the Fund is considered to be "at
risk" for the amount of the premium paid for the call if the underlying security
does not rise above the "exercise" price during the life of the call.
Accordingly, the Fund will follow the practice of limiting the net "at risk"
amounts with respect to the purchase of puts or calls to 10% of the Fund's net
assets, determined on the date of purchase.
On the other hand, certain strategies involving options are deemed to
be conservative and may tend to minimize the risk of loss due to a decline in
the value of the underlying security position. At the same time, the use of
these strategies may also tend to limit any potential gain which might result
from an increase in the value of any such position. The ability of the Fund to
utilize this strategy successfully will depend upon Asset Management's ability
to forecast pertinent market movements, which cannot be assured.
Investment Limitations
- ----------------------
Except as described below, the Fund's policies are not fundamental
policies and may be changed at any time without shareholder vote.
The Fund has adopted the following limitations, which cannot be changed
without approval of the holders of a majority of its shares. The term "majority"
means the lesser of (1) 67% of the Fund's shares present at a meeting if the
holders of more than 50% of the outstanding shares are present in person or by
proxy, or (2) more than 50% of the Fund's outstanding shares. These limitations
provide that the Fund shall not:
1. Invest in companies for the purpose of exercising management or
control or invest more than 25% of its assets in a particular industry;
2. Purchase (i) the securities of any unseasoned issuer if by reason
thereof and immediately after making such purchase the value of the Fund's
aggregate investments in the securities of all such unseasoned issuers shall
equal or exceed 5% of the Fund's total assets (for this purpose an unseasoned
issuer shall be deemed to be an entity which has been in operation for less than
three years, including all predecessors), or the equity securities of any issuer
which are not readily marketable, (ii) repurchase agreements, the maturity of
which exceeds seven days, and the aggregate of which repurchase agreements
exceeds 5% of the Fund's total assets, or (iii) "restricted" securities, except
that the Fund may invest no more than 5% of the value of its assets (at the time
of investment) in portfolio securities under circumstances in which the Fund
might not be free to sell such securities without being deemed an underwriter
for purposes of the Securities Act of 1933 and without registration of such
securities under such Act, in which case the Fund might be obliged to pay all or
part of the expenses of such registration;
3. Invest in commodities, commodity contracts or real estate, except
that the Fund may invest in securities of real estate trusts or companies;
4. Invest in interests in oil, gas or other mineral exploration or
development programs, except that the Fund may purchase marketable securities of
any issuer engaged in oil, gas or other mineral exploration or development
programs;
B - 8
<PAGE>
5. Make loans, except by the purchase of bonds or other obligations of
types commonly sold privately to financial institutions (also see 2) (the
purchase of a portion of an issue of publicly distributed bonds, debentures or
other obligations is not considered the making of a loan);
6. Borrow money, except from banks in an amount which will not cause
the Fund's net assets (including the amount borrowed) to be less than 300% of
such borrowed amount;
7. Make short sales (but if securities, such as warrants or convertible
debentures, are being tendered for conversion, the Fund may sell the securities
to be acquired, provided that upon receipt such securities are used to close the
sale);
8. Purchase or retain securities of an issuer if the officers and
directors of the Fund or Asset Management owning individually more than 1/2 of
1% of the securities of such issuer together own more than 5% of the securities
of such issuer;
9. Purchase the securities of any other investment company, except as
part of a merger, consolidation or acquisition;
10. With respect to 50% of the value of its assets, invest more than 5%
of the value of its assets in any one issuer, excluding United States Government
securities, or purchase more than 10% of the outstanding securities of any one
issuer. With respect to the other 50% of the value of its assets, the Fund will
not invest more than 25% of its assets in the securities of any one issuer or
any two or more issuers which pursuant to regulations under the Internal Revenue
Code may be deemed to be controlled by the Fund and engaged in the same or
related trades or businesses; and
11. Write, purchase or sell puts, calls or combinations thereof (this
restriction does not refer to warrants), except for puts, calls or combinations
thereof listed on any national securities exchange.
Leverage
- --------
The Fund may leverage by borrowing from banks and investing the
borrowed fund, but does not currently intend to do so.
To the extent that borrowed money is utilized and the amount borrowed
is substantial, the Fund's net asset value per share may tend to appreciate or
depreciate more rapidly than would otherwise be the case. This is the
speculative factor known as "leverage". Interest on borrowed money would be an
expense of the Fund which it would not otherwise incur, so that the Fund's net
investment income could expect to be adversely impacted during periods when the
Fund's borrowings are substantial.
The Fund may not pledge more than 75% of its assets as security for
money borrowed.
B - 9
<PAGE>
MANAGEMENT OF THE FUND
----------------------
Investment Adviser
- ------------------
Asset Management was organized in 1988 to act as investment adviser to
the Fund. Its sole client is the Fund. The amount of the advisory fee paid by
the Fund to Asset Management for the years ended June 30, 1994, 1995 and 1996
was $87,235, $82,466 and $90,749 respectively.
The Fund's investment advisory agreement with Asset Management provides
that Asset Management will not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
the agreement relates, except for losses resulting from willful misfeasance, bad
faith, or gross negligence in the performance of Asset Management's duties on
behalf of the Fund or from reckless disregard by Asset Management of its duties
under the agreement. The agreement provides that it will terminate in the event
of its assignment (as such term is defined in the Investment Company Act of
1940). The agreement may be terminated by the Board of Directors of the Fund or
vote of a majority of the outstanding voting securities of the Fund (as defined
in the 1940 Act) or Asset Management, upon 60 days' written notice, without
payment of any penalty. The agreement will continue in effect after March 15,
1998, only so long as such continuance is specifically approved at least
annually in conformity with the Investment Company Act of 1940.
Sheldon E. Goldberg and Gregory A. Church own in equal proportions an
aggregate of 76% of the outstanding shares of Asset Management. They acquired
their ownership pursuant to a Stock Purchase Agreement dated as of November 10,
1995 with Mark D. Beckerman, the prior owner of all of the outstanding shares of
Asset Management. The Stock Purchase Agreement was consummated on March 15,
1996, following Fund shareholder approval of the advisory agreement between
Asset Management and the Fund under Asset Management's new ownership structure.
Upon the consummation of the Stock Purchase Agreement, wherein Messrs. Goldberg
and Church acquired 100% of the outstanding shares of Asset Management from Mr.
Beckerman, Messrs. Goldberg and Church sold 24% of such shares to eight
individual investors. Messrs. Goldberg and Church have entered into a voting
agreement which requires them to vote jointly all shares of Asset Management
held by them.
In consideration for the transfer to Messrs. Goldberg and Church of
100% of the outstanding shares of Asset Management, Mr. Beckerman received a
five-year employment agreement with Asset Management, pursuant to which Mr.
Beckerman will continue to serve as the Portfolio Manager for the Fund. Under
the employment agreement, Asset Management will pay Mr. Beckerman annual
compensation equal to 0.75% of the first $15 million of average daily net assets
of the Fund. This amount may be proportionally reduced by the amount of any
reduction in the management fee received by Asset Management from the Fund as a
result of Asset Management's obligation to limit Fund expenses to 4% of average
daily net assets. In addition, Mr. Beckerman has an option entitling him to
acquire a 10% interest in each class of outstanding shares of Asset Management
during the fifth year of the employment agreement. Alternatively, Mr. Beckerman
may collect from Asset Management $150,000 in five equal installments beginning
on June 30, 2001. These amounts are payable to Mr. Beckerman unless he is
terminated "for cause" or he voluntarily resigns as Portfolio Manager, and are
not obligations of the Fund.
B - 10
<PAGE>
Administrator
- -------------
The Administrator of the Fund is Investment Company Administration
Corporation, 2025 East Financial Way, Suite 101, Glendora, CA 91741.
Pursuant to an administration agreement with the Fund effective March
15, 1996 (the "Administration Agreement"), the Administrator is responsible for
performing all administrative services required for the daily business
operations of the Fund, subject to the supervision of the Board of Directors of
the Fund. The Administrator has no supervisory responsibility over the
investment operations of the Fund. The management or administrative services of
the Administrator for the Fund are not exclusive under the terms of the
administration agreement and the Administrator is free to, and does, render
management and administrative services to others. For the fiscal year ended June
30, 1996, the Administrator received fees of $13,125.
In connection with its management of the corporate affairs of the Fund,
the Administrator pays the salaries and expenses of all its personnel and pays
all expenses incurred in connection with managing the ordinary course of the
business of the Fund, other than expenses assumed by the Fund as described
below.
Under the terms of the Administration Agreement, the Fund is
responsible for the payment of the following expenses: (a) the fees and expenses
incurred by the Fund in connection with the management of the investment and
reinvestment of its assets, (b) the fees and expenses of directors and officers
of the Fund who are not affiliated with the Administrator, Asset Management or
the co-distributors, (c) out-of-pocket travel expenses for the officers and
directors of the Fund and other expenses of Board of Director meetings, (d) the
fees and certain expenses of the Custodian, (e) the fees and expenses of the
Transfer and Dividend Disbursing Agent that relate to the maintenance of each
shareholder account, (f) the charges and expenses of the Fund's legal counsel
and independent accountants, (g) brokerage commissions and any issue or transfer
taxes chargeable to the Fund in connection with securities transactions, (h) all
taxes and corporate fees payable by the Fund to federal, state and other
governmental agencies, (i) the fees of any trade association of which the Fund
may be a member, (j) the cost of maintaining the Fund's existence,(k) taxes and
interest, (l) the cost of fidelity and liability insurance, (m) the fees and
expenses involved in registering and maintaining the registration of the Fund
and of its shares with the Commission and registering the Fund as a broker or
dealer and qualifying their shares under state securities laws, including the
preparation and printing of the Fund's registration statement, prospectuses and
statements of additional information, (n) allocable communication expenses with
respect to investor services and all expenses of shareholders' and Board of
Directors' meetings and of preparing, printing and mailing prospectuses and
reports to shareholders, (o) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the business of
the Fund, and (p) expenses assumed by the Fund pursuant to any plan of
distribution adopted in conformity with Rule 12b-1 under the Investment Company
Act.
The Administration Agreement provides that the Administrator will not
be liable for any error of judgment or for any loss suffered by the Fund in
connection with the matters to which the Administration Agreement relates,
except a loss resulting from the Administrator's willful misfeasance, bad faith,
gross negligence or reckless disregard of its
B - 11
<PAGE>
duties. The Administration Agreement will terminate automatically if
assigned,and may be terminated without penalty by either the Administrator or
the Fund (by the Board of Directors of the Fund or vote of a majority of the
outstanding voting securities of the Fund, as defined in the Investment Company
Act of 1940),upon 60 days' written notice. The Administration Agreement will
continue in effect only so long as such continuance is specifically approved at
least annually in conformity with the Investment Company Act of 1940.
Directors and Officers of the Fund
- ----------------------------------
The following persons are directors and officers of the Fund:
GREGORY A. CHURCH, 40, President, Secretary and Director, 301 Oxford
Valley Road, Yardley, Pennsylvania 19067. President, Church Capital Management,
Inc.(formerly G. A. Church & Company)(registered investment advisers) since June
1987; Chairman, Bainbridge & Co. (registered broker-dealer) since October 1994.
R. BARRY BORDEN, 57, Director, P.O. Box 677, Bala Cynwyd, Pennsylvania
19004. President, LMA Group, Inc. (general management consulting) since April
1990.
KEVIN M. COVERT, 38, Director, 76 Euclid Avenue, Haddonfield, New
Jersey 08083. Shareholder, Kulzer & DiPadova, P.A. (law firm) since 1984.
DOMINICK A. CRUCIANI, JR., M.D., 65, Director, 1360 Wyoming Avenue,
Scranton, Pennsylvania 18503. Physician since 1958. A director of Cumberland
Growth Fund, Inc. from October 1989 to September 1992.
GERALD PRINTZ, 39, Director, 4450 Hickory Ridge Road, Jackson, Missippi
39211. President, AMSADOR, Ltd. (computer security and disaster recovery
planning consultant), since March 1994; consultant, IBM, 1988 to February 1994.
ERIC M. BANHAZL, 40, Treasurer, 2025 East Financial Way, Suite 101,
Glendora, California 91741. Senior Vice President, Robert H. Wadsworth &
Associates, Inc. (consultants) and Investment Company Administration Corporation
since March 1990; Formerly Vice President, Huntington Advisors, Inc. (investment
advisor).
Attendance fees of $250 per meeting have been authorized for those
Directors who are not "interested persons" (as such term is defined in the
Investment Company Act of 1940) of Asset Management, Cumberland or Bainbridge.
Set forth below is the compensation in tabular form for the fiscal year
ended June 30, 1996 of the directors of the Fund who are not "interested
persons" of the Fund as defined in the Investment Company Act of 1940.
- -------------
*Mr. Church is an "interested persons" of the Fund, as defined in the
Investment Company Act of 1940.
B - 12
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total
Person Compensation Retirement Annual Compensation
from Benefits Benefits from
Registrant Accrued as Upon Registrant
Part of Fund Retirement and Fund
Expenses Complex
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
R. Barry $ 250 0 0 $ 250
Borden
(Director)
Kevin M. $ 500 0 0 $ 500
Covert
(Director)
Dominick A. $ 750 0 0 $ 750
Cruciani, Jr.
(Director)
Gerald $ 500 0 0 $ 500
Printz
(Director)
</TABLE>
As of October 15, 1996, to the best of the knowledge of the Fund, the Board of
Directors and officers of the Fund, as a group, owned of record 1.58% of the
Fund's outstanding shares.
CO-DISTRIBUTORS
---------------
Distribution Agreement
- ----------------------
Pursuant to their distribution agreements with the Fund, each of the
co-distributors has agreed to use its best efforts to effect sales of shares of
the Fund, but is not obligated to sell any specified number of shares. The
distribution agreement contains provisions with respect to renewal and
termination similar to those in the investment advisory agreement discussed
above. Pursuant to the distribution agreement, the Fund has agreed to indemnify
the co-distributors to the extent permitted by applicable law against certain
liabilities under the Securities Act of 1933.
Distribution Plan
- -----------------
Under a Distribution Plan for the Fund adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 and the distribution agreements, each
co-distributor incurs the expense of distributing shares of the Fund. The
Distribution Plan provides for compensation to each of the co-distributors for
the services it provides, and the costs and expenses it incurs, related to
marketing shares of the Fund. The co-distributor is paid for: (a)expenses
incurred in connection with advertising and marketing shares of the Fund,
including but not limited to any advertising by radio, television, newspapers,
magazines, brochures, sales literature, telemarketing or direct mail
solicitations; (b) periodic payments of fees
B - 13
<PAGE>
or commissions for distribution assistance made to one or more securities
brokers, dealers or other industry professionals such as investment advisers,
accountants, estate planning firms and the co-distributor itself in respect of
the average daily value of shares owned by clients of such service
organizations, and (c) expenses incurred in preparing, printing and distributing
the Fund's prospectuses and statements of additional information. For the fiscal
year ended June 30, 1996, distribution fees paid by the Fund totaled $6,755.
Brokerage
- ---------
The aggregate brokerage commissions paid by the Fund during the fiscal
years ended June 30, 1994, 1995 and 1996 were $45,780, $22,640 and $27,296,
respectively, of which $44,432 (97.06%), $22,292 (28.46%) and $1,896 (6.95%),
respectively, was paid to firms which provided research or other services to
Asset Management.
Rule 17e-1 under the 1940 Act provides that a commission, fee or other
remuneration does not exceed the usual and customary broker's commission if it
is "reasonable and fair compared to the commission, fee or other remuneration
received by other brokers in connection with comparable transactions involving
similar securities being purchased or sold on a securities exchange during a
comparable period of time...." Rule 17e-1 also requires the Board of Directors
of the Fund, including a majority of the directors who are not "interested
persons" (as defined in the 1940 Act)of the Fund,of Asset Management,of
Cumberland or of Bainbridge, to adopt procedures reasonably designed to provide
that the commissions paid are consistent with the above standard, to assure that
the procedures continue to be appropriate, and to determine at least quarterly
that the transactions have been effected in compliance with those procedures.
During the fiscal year ended June 30, 1996, gross commissions aggregating $9,056
were paid to Beckerman and Company,Inc., a broker-dealer which previously was an
affiliated entity of the Fund; these transactions represented 33.18% of the
aggregate dollar amount of the Fund's commission transactions for such year.
With respect to purchase orders for Fund shares which are paid for by
check, if the check is not honored upon presentment, the purchase order is
subject to cancellation, and the purchaser's account with the Fund immediately
is charged for any loss incurred. In the event the shareholder's account balance
is insufficient to cover the loss, Cumberland or Bainbridge is required
immediately to reimburse the Fund for the difference;conversely, if the
cancellation results in a gain, Cumberland or Bainbridge will be entitled to
such gain, as they shall determine.
SPECIAL ACCOUNTS
----------------
Check-A-Matic
- -------------
The Automatic Accumulation Plan is a convenient method for purchasing
shares ($1,000 minimum and $100 each subsequent investment) on a regular basis
without the need to write and mail a check each time. Upon completion of the
form which pertains to the Check-A-Matic Plan, the investor designates
Cumberland or Bainbridge, through their agent, American Data Services, Inc., by
pre-authorized checks, to charge the regular bank account of the shareholder on
a specific date in each month or quarter to
B - 14
<PAGE>
provide automatic additions at net asset value to the account of such
shareholder. The Check-A-Matic Plan may be changed or cancelled at any time upon
receipt by the Fund's transfer agent of written instructions or an amended
application from the shareholder, with signatures guaranteed. It will be
terminated automatically whenever a check is returned as being uncollected for
any reason.
Self-Employed Retirement Plan ("Keogh")
Individual Retirement Accounts ("IRA")
Tax Sheltered Retirement Plan ("403(b)")
- ----------------------------------------
For those self-employed individuals who wish to purchase shares of the
Fund in connection with a retirement plan, the Fund has available a prototype
retirement Plan and Custodial Agreement. Alternatively, self-employed
individuals may establish their own retirement plan and invest in shares of the
Fund. Fund shares may also be purchased through an Individual Retirement
Account("IRA") established under the Employee Retirement Income Security Act of
1974("ERISA"). ERISA also permits employees of public school systems and
employees of certain other charitable organizations to enter into tax sheltered
plans in accordance with Section 403(b) of the Internal Revenue Code. Share
purchases under retirement plans, IRA accounts and 403(b) accounts are made at
net asset value per share. Star Bank serves as the custodian under such
retirement plans. Accumulated contributions in existing retirement plans may be
transferred to the Fund's retirement plans with the necessary letters of
transmittal. The minimum initial investment for all Fund retirement programs is
$1,000 and $100 for subsequent investments. Except for "roll-overs", payment
must accompany the establishment of the plan and the purchase of Fund shares
thereunder. All share redemptions under these plans will be made at net asset
value. For further information concerning the Fund's retirement plans, including
the fees of the custodian, write or telephone the Fund.
Because adoption of these retirement plans may involve important tax
considerations or consequences, including the imposition of a tax penalty for
early withdrawals, consultation with an attorney or qualified tax adviser
regarding the retirement plan is recommended.
Systematic Withdrawal Program
- ------------------------------
An Automatic Cash Withdrawal Plan (the "Withdrawal Plan") is available
to any investor who purchases a minimum of $10,000 of Fund shares or who has
acquired Fund shares which have attained a total net asset value of $10,000.
Upon adoption of the Withdrawal Plan and surrender of the investor's stock
certificates, if any, an account will be set up and maintained in the investor's
name. American Data Systems, Inc. will liquidate a sufficient number of shares
on the 26th calendar day of the month preceding such monthly or quarterly
distribution to provide for periodic payments to the investor of $25 or any
multiple of $5 above that amount. If the 26th calendar day is not a business
day, the shares will be liquidated on the next business day. The plan will be
continued until the investor's shares have been fully liquidated, either the
Fund or American Data Services, Inc. gives written notice of termination, or the
investor requests that the plan be terminated. The investor may request at any
time that payments be changed from monthly to quarterly, or from quarterly to
monthly, or have payments increased or decreased to $25 or any multiple of $5
above that amount. The investor also may request that a specified amount be
liquidated or that the Withdrawal Plan be terminated and the remaining
B - 15
<PAGE>
shares be delivered to the investor.
All dividends and distributions declared on shares held in the
Withdrawal Plan account are reinvested at net asset value, and additional shares
so acquired are added to the share balance in the account. To the extent that
withdrawals exceed income, such excess represents a return of principal.
TAXES
-----
The Fund intends to comply with Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), if it is in the best interests of Fund
shareholders to do so, which relieves complying investment companies which
distribute substantially all of their net income of federal income tax on the
amount distributed. For its taxable year ended June 30, 1996, the Fund qualified
for treatment as a regulated investment company under Subchapter M.
As a regulated investment company, the Fund will not be liable for
federal income tax on its income and gains provided it distributes all of its
income and gains currently. Qualification as a regulated investment company
under the Code requires, among other things, that the Fund (a) derive at least
90% of its gross income from dividends, interest, payments with respect to
securities loans, and gains from the sale or other disposition of securities or
foreign currencies, or other income (including, but not limited to, gains from
options), derived with respect to its business of investing in such securities;
(b) derive less than 30% of its gross income from the sale or other disposition
of stock, securities, options, and certain other investments held less than
three months; (c) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the Fund's assets is
represented by cash, U.S. Government securities and securities of other
regulated investment companies, and other securities (for purposes of this
calculation generally limited, in respect of any one issuer, to an amount not
greater than 5% of the market value of the Fund's assets and 10% of the
outstanding voting securities of such issuer) and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government or foreign government securities or the securities of other
regulated investment companies), or two or more issuers which the Fund controls
and which are determined to be engaged in the same or similar trades or
businesses; and (d) distribute at least 90% of its investment company taxable
income (which includes dividends, interest, and net short-term capital gains in
excess of net long-term capital losses each taxable year).
The Fund generally will be subject to a nondeductible excise tax of 4%
to the extent that it does not meet certain minimum distribution requirements as
of the end of each calendar year. To avoid the tax, the Fund must distribute
during each calendar year an amount equal to the sum of (1) at least 98% of its
ordinary income and net capital gain (not taking into account any capital gains
or losses as an exception) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (and adjusted for certain ordinary
losses) for the twelve month period ending on October 31 of the calendar year,
and (3) all ordinary income and capital gains for previous years that were not
distributed during such years. A distribution will be treated as paid on
December 31 of the calendar year if it is declared by the Fund in October,
November, or December of that year to shareholders of record on a date in such a
month and paid by the Fund during January of the following year. Such
B - 16
<PAGE>
distributions will be taxable to shareholders (other than those not subject to
federal income tax) in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
Dividends paid by the Fund from ordinary income, and distributions of
the Fund's net realized short-term capital gains, are taxable to its
shareholders as ordinary income. Distributions to corporate shareholders will be
eligible for the 70% dividends received deduction to the extent that the income
of the Fund is derived from dividends on common or preferred stock of domestic
corporations. Dividend income earned by the Fund will be eligible for the
dividends received deduction only if the Fund has satisfied a 46-day holding
period requirement with respect to the underlying portfolio security (91 days in
the case of dividends derived from preferred stock). In addition, a corporate
shareholder must have held its shares in the Fund for not less than 46 days (91
days in the case of dividends derived from preferred stock) in order to claim
the dividend received deduction. Not later than 60 days after the end of its
taxable year, the Fund will send to its shareholders a written notice
designating the amount of any distributions made during such year which may be
taken into account by its shareholders for purposes of such deduction provisions
of the Code. Net capital gain distributions are not eligible for the dividends
received deduction.
Under the Code, any distributions designated as being made from net
capital gains are taxable to the Fund's shareholders as long-term capital gains,
regardless of the holding period of such shareholders. Such distributions of net
capital gains will be designated by the Fund as a capital gains distribution in
a written notice to its shareholders which accompanies the distribution payment.
Any loss on the sale of shares held for less than six months will be treated as
a long-term capital loss for federal tax purposes to the extent a shareholder
receives net capital gain distributions on such shares. The maximum federal
income tax rate applicable to long-term capital gains is currently 28% for
individual shareholders and 35% for corporate shareholders. Dividends and
distributions are taxable as such whether received in cash or reinvested in
additional shares of a Portfolio.
Any loss realized on a sale, redemption or exchange of shares of the
Fund by a shareholder will be disallowed to the extent the shares are replaced
within a 61-day period (beginning 30 days before the disposition of shares).
Shares purchased pursuant to the reinvestment of a dividend will constitute a
replacement of shares.
Special Tax Considerations
- --------------------------
The options contracts used by the Fund are "section 1256 contracts."
Any gains or losses on section 1256 contracts are generally credited 60%
long-term and 40% short-term capital gains or losses ("60/40") although gains
and losses from hedging transactions may be treated as ordinary in character.
Also, section 1256 contracts held by the Fund at the end of each taxable year
(and, for purposes of the 4% excise tax, on certain other dates as prescribed
under the Code) are "marked to market" with the result that unrealized gains or
losses are treated as though they were realized and the resulting gain or loss
is treated as ordinary or 60/40 gain or loss, depending on the circumstances.
B - 17
<PAGE>
Generally, the hedging transactions and certain other transactions in
options undertaken by the Fund may result in "straddles" for U.S. federal income
tax purposes. The straddle rules may affect the character of gains (or losses)
realized by the Fund. In addition, losses realized by the Fund on positions that
are part of a straddle may be deferred under the straddle rules, rather than
being taken into account in calculating the taxable income for the taxable year
in which such losses are realized. Because only a few regulations implementing
the straddle rules have been promulgated, the tax consequences of transactions
in options, futures and forward contracts to the Portfolio are not entirely
clear. The transactions may increase the amount of short-term capital gain
realized by the Portfolio which is taxed as ordinary income when distributed to
shareholders.
The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
operate to accelerate the recognition of gains or losses from the affected
straddle positions. Because applications of the straddle rules may affect the
character of gains or losses, defer losses and/or accelerate the recognition of
gains or losses from the affected straddle positions, the amount which must be
distributed to the shareholders, and which will be taxed to shareholders as
ordinary income or long-term capital gain, may be increased or decreased
substantially as compared to a fund that did not engage in such hedging
transactions.
The 30% limit on gains from the disposition of certain options
contracts held less than three months and the qualifying income and
diversification requirements applicable to the Funds' assets may limit the
extent to which the Fund will be able to engage in option transactions.
The Fund may be required to withhold for U.S. federal income taxes 31%
of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Corporate shareholders and certain other
shareholders specified in the Code generally are exempt from such backup
withholding. Backup withholding is not an additional tax. Any amounts withheld
may be credited against the shareholder's U.S. federal tax liability.
The Fund may also be subject to state or local taxes in certain other
states where it is deemed to be doing business. Further, in those states which
have income tax laws, the tax treatment of the Fund and of the shareholders of
the Fund with respect to distributions by the Fund may differ from federal tax
treatment. Distributions to shareholders may be subject to additional state and
local taxes. Shareholders should consult their own tax advisers regarding
specific questions as to federal, state or local taxes.
B - 18
<PAGE>
PERFORMANCE INFORMATION
-----------------------
The Fund may from time to time advertise total return, compare Fund
performance to various indices, and publish rankings of the Fund prepared by
various ranking services. Any performance information should be considered in
light of the Fund's investment objective and policies, characteristics and
quality of the its portfolio, and the market conditions during the given time
period, and should not be considered to be representative of what may be
achieved in the future.
Total Return
- ------------
The total return for the Fund is computed by assuming a hypothetical
initial payment of $1,000. It is assumed that all investments are made at net
asset value and that all of the dividends and distributions by the Fund over the
relevant time periods are invested at net asset value. It is then assumed that,
at the end of each period, the entire amount is redeemed without regard to any
redemption fees or costs. The average annual total return is then determined by
calculating the annual rate required for the initial payment to grow to the
amount which would have been received upon redemption. Total return does not
take into account any federal or state income taxes.
Total return is computed according to the following formula:
n
P(1 + T) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the period
(or fractional portion thereof) of a hypothetical $1,000
payment made at the beginning of the
period
Total returns for the Fund for the periods indicated are set forth below: one
year ended June 30, 1996 - 11.60%; five years ended June 30, 1996 - 14.50%; from
September 28, 1988 (inception) to June 30, 1996 - 14.18%
Comparison to Indices and Rankings
- ----------------------------------
Performance information for the Fund may be compared to various
unmanaged indices, such as the Standard & Poor's 500 Stock Price Index, the Dow
Jones Industrial Average, and indices prepared by Lipper Analytical Services.
Unmanaged indices generally do not reflect deductions for administrative and
management costs and expenses.
Performance rankings are prepared by a number of mutual fund ranking
entities that are independent of the Fund and its affiliates. These entities
categorize and rank funds by various criteria, including fund type, performance
over a given period of years, total return, standardized yield, variations in
sales charges and risk/reward considerations.
B - 19
<PAGE>
THE MATTERHORN GROWTH FUND, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) The following financial statement is included in
Part A of the Registration Statement:
Financial Highlights
The following financial statements were included
in the Registrant's Annual Report to Shareholders for the fiscal year ended June
30,1996 and are incorporated into Part B of the Registration Statement by
reference:
Accountant's Report
Statements of Assets and Liabilities at June 30,
1996
Statements of Operations for the year ended June
30, 1996
Statements of Changes In Net Assets for the year
ended June 30, 1995 and 1996
Statement of Portfolio of Investments in
Securities as at June 30, 1996
Notes to Financial Statements
(b) Exhibits:
(1) (a) Copy of the charter (a)
(b) Amendment to the Charter
dated March 15, 1996 (d)
(2) Copies of the existing By-Laws or
instruments corresponding thereto (d)
(4) Specimen Share Certificate (d)
(5) Investment Advisory Agreement Relating
to the management of the assets of the
Registrant
(6) Distribution Agreement between the
Registrant and Cumberland Brokerage
Corporation and Bainbridge & Company,
Inc., the co-distributors (d)
1
<PAGE>
(8) Custody Agreement between the
Registrant and Star Bank (d)
(9) (a) Administration Agreement between
the Registrant and Investment
Company Administration Corporation
(d)
(b) Transfer Agent and Service
Agreement between the Registrant
and American Data Services, Inc.
(d)
(c) Fund Accounting Service Agreement
between the Registrant and
American Data Services, Inc.(d)
(10) An opinion and consent of counsel as
to the legality of the securities
being registered, indicating whether
they will when sold be legally issued,
fully paid and non-assessable (c)
(11) Consent of Independent Accountants
(12) Annual Report to Shareholders for the
fiscal year ended June 30, 1996
(15) Distribution Plan (b)
(16) Schedule of Performance Computation
(17.1) Power of Attorney of Gregory A. Church
(17.2) Power of Attorney of R. Barry Borden
(17.3) Power of Attorney of Kevin M. Covert
(17.4) Power of Attorney of Gerald Printz
(17.5) Power of Attorney of Dominick A.
Cruciani, Jr.
(27) Financial Data Schedule
- -----------------
(a)Incorporated by reference to Pre-Effective Amendment No.1 to the Registrant's
Registration Statement on Form N-1, filed on October 7, 1980.
2
<PAGE>
(b)Incorporated by reference to the Registrant's Notice and Proxy Statement
dated January 15, 1996.
(c)Incorporated by reference to Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A, filed on November 12, 1991.
(d)Incorporated by reference to Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on Form N-1A, filed on January 17, 1996, and
not refiled pursuant to Rule 483(d)(3)(ii) under the Securities Act of 1933.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not Applicable.
Item 26. Number of Holders of Securities.
Number of Record Holders
------------------------
Title of Class as of October 15, 1996
-------------- ----------------------
Common Stock 2,275
Item 27. Indemnification
Article V of Registrant's By-Laws provides as follows:
The Corporation shall not be responsible or liable in any event for any
neglect or wrong-doing of any officer, agent, employee, Manager or Principal
Underwriter of the Corporation, nor shall any Director be responsible for the
act or omission of any other Director, and the Corporation out of its assets
shall indemnify and hold harmless each and every Director from and against any
and all claims and demands whatsoever arising out of or related to each
Directors's performance of his duties as a Director of the Corporation; provided
that nothing herein contained shall indemnify, hold harmless or protect any
Director from or against any liability to the Corporation or any Shareholder to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Corporation or the Directors or any of them in connection with the
Corporation shall be conclusively deemed to have been issued, executed or done
only in or with respect to their or his capacity as Directors or Director, and
such Directors or Director shall not be personally liable thereon.
3
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
During the two fiscal years ended June 30, 1995 and June 30, 1996, the
Fund's investment adviser, Matterhorn Asset Management Corporation, has engaged
principally in the business of providing investment advisory services to
registered investment companies. All of the additional information required by
this Item 28 with respect to Matterhorn Asset Management Corporation is set
forth in the Form ADV, as amended, of Matterhorn Asset Management Corporation
(File No. 801-32050), which is incorporated herein by reference.
Item 29. Principal Underwriters.
(a) Neither Cumberland Brokerage Corporation nor Bainbridge & Company acts as
principal underwriter, depositor or investment adviser to any other investment
company.
(b) The following information is provided with respect to each director, officer
or partner of Cumberland Brokerage Corporation and Bainbridge & Company:
4
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Position of Offices
Business Address Offices with with Registrant
---------------- ---- ---------------
Underwriter
-----------
<S> <C> <C>
Gregory A. Church Director and Director, President
Bainbridge & Co. Chairman and Secretary
301 Oxford Valley
Rd., Suite 801B
Yardley, PA 19067
Maureen A. Church Director None
Bainbridge & Co.
Melinda P. Berardino Director, Chief None
Bainbridge & Co. Executive Officer,
Chief Financial
Officer
Sheldon E. Goldberg Director and None
Cumberland Brokerage President
Corp.
614 Landis Ave.
Vineland, NJ 08360
Ellyn H. Bruce Executive Vice None
Cumberland Brokerage President
Corp.
Robert B. Solms Vice President None
Cumberland Brokerage
Corp.
Antonia A. Alperin Secretary None
Cumberland Brokerage
Corp.
</TABLE>
c. Not applicable
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by
the Fund pursuant to Section 31(a) of the Investment Company Act of 1940 and
Rules 31a-1 to 31a-3 promulgated thereunder, are maintained at the following
locations: Matterhorn Growth Fund, Inc., 301 Oxford Valley Road, Suite 802B,
Yardley, Pennsylvania 19067, and 95 Briar Road, Nanuet, New York 10954;
Investment Company Administration Corporation, 2025 East Financial Way, Suite
101, Glendora, California 91741; and American Data Services, Inc., 24 West
Carver Street, Huntington, New York 11743.
5
<PAGE>
Item 31. Management Services.
Not Applicable.
Item 32. Undertakings
The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest Annual Report to
Shareholders, upon request and without charge.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 18 to the Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of Glendora,
and State of California, on the 31st day of October, 1996. The undersigned
hereby certifies that this Amendment meets all of the requirements for
effectiveness pursuant to Rule 485 (b) under the Securities Act of 1933.
THE MATTERHORN GROWTH FUND, INC.
BY: /s/ Gregory A. Church
---------------------------------
Gregory A. Church
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 18 to the Registration Statement has been signed
below by the following persons in the capacitates and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/Gregory A. Church President, Secretary October 31, 1996
- ------------------------------ and Director
Gregory A. Church
/s/ R. Barry Borden* Director October 31, 1996
- ------------------------------
R. Barry Borden
/s/ Kevin M. Covert* Director October 31, 1996
- ------------------------------
Kevin M. Covert
/s/ Dominick A. Cruciani, Jr.* Director October 31, 1996
- ------------------------------
Dominick A. Cruciani, Jr.
/s/Gerald Printz* Director October 31, 1996
- ------------------------------
Gerald Printz
/s/ Eric M. Banhazl Chief Financial and
- ------------------------------ Accounting Officer October 31, 1996
Eric M. Banhazl
* By /s/ Eric M. Banhazl
----------------------------------------
Eric M. Banhazl, Attorney-in-Fact
under powers of attorney as filed
with this Post-Effective Amendment No. 18
to the Registration Statement
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Exhibit
- -------------- -------
5 Investment Advisory Agreement
11 Consent of Independent Auditors
16 Schedule for Computation of Performance
Quotations
17.1 Power of Attorney of Gregory A. Church
17.2 Power of Attorney of R. Barry Borden
17.3 Power of Attorney of Kevin M. Covert
17.4 Power of Attorney of Gerald Printz
17.5 Power of Attorney of Dominick A. Cruciani, Jr.
27 Financial Data Schedule
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated March 15 , 1996 between THE MATTERHORN GROWTH
FUND, INC., a Maryland corporation (the "Fund"), and MATTERHORN ASSET MANAGEMENT
CORPORATION, a New York corporation (the "Adviser").
WHEREAS, the Fund is engaged in business as an open-end,
non-diversified investment company and is registered as such under the
Investment Company Act of 1940, as amended;
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires the Adviser to render investment
advisory services to the Fund in the manner and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Fund and the Adviser agree as follows:
1. Duties and Responsibilities of Adviser.
A. Investment Advisory Services. The Adviser will act as
investment adviser to the Fund and will supervise and direct the investments of
the Fund in accordance with the Fund's investment objectives, policies and
limitations, as provided in the Fund's prospectus or other governing
instruments, as amended from time to time, the Investment Company Act of 1940,
as amended (the "Act"), and the Rules and Regulations of the Securities and
Exchange Commission thereunder, as amended from time to time, and such other
limitations as the Fund may impose by notice in writing to the Adviser. The
Adviser shall obtain and evaluate such information relating to the economy,
industries, businesses, securities and securities markets as it may deem
necessary or useful in the discharge of its obligations hereunder and shall
formulate and implement a continuing program for the management of the assets
and resources of the Fund in a manner consistent with its investment objectives.
In furtherance of this duty, the Adviser is authorized, in its discretion and
without prior consultation with the Fund, to (i) buy, sell, exchange, convert,
lend and otherwise trade in any stocks, bonds and other securities and
investment assets; and (ii) place orders and negotiate the commissions (if any)
for the execution of transactions in securities with or through such brokers,
dealers, underwriters or issuers as the Adviser may select. The investment
policies and all other actions of the Fund are and shall at all times be subject
to the control and direction of the Fund's Board of Directors.
B. Management Services. Subject to the control and direction of
the Board of Directors of the Fund, the Adviser shall provide the Fund with
supervisory management services. The Adviser shall monitor the financial,
accounting and
-i-
<PAGE>
EXHIBIT 5
administrative functions of the Fund, maintain liaison with custodians,
depositories, transfer and pricing agents, dealers, insurers and other agents of
or providers of services to the Fund and assist in the coordination of their
activities on behalf of the Fund.
C. Reports to the Fund. The Adviser shall furnish to the Fund
such information, reports, evaluations, analyses and opinions as the Fund may,
at any time or from time to time, reasonably request or as the Adviser may deem
to be desirable.
2. Allocation of Expenses. The Adviser shall pay all compensation, fees
and expenses of the officers and directors of the Fund who are interested
persons of the Adviser. The Fund shall bear and pay all costs and expenses of
its operations and business, other than those expressly stated to be payable by
the Adviser hereunder, including but not limited to (i) brokerage commissions
and other costs incident to the purchase or sale of securities, (ii) interest
and taxes, (iii) legal and accounting fees and expenses, (iv) fees of
custodians, transfer agents, registrars and dividend disbursing agents, (v)
costs of printing, issuing and registering transfer of stock certificates, (vi)
costs in connection with annual or special meetings of shareholders, including
the preparation, printing and distribution of proxy soliciting materials, (vii)
insurance premiums, (viii) the cost of preparing and printing prospectuses,
statements of additional information and supplements thereto, (ix) postage, (x)
compensation of all non-officer employees and compensation, fees and expenses of
officers and directors who are not interested persons of the Adviser, (xi)
office space, officer furnishings, office supplies and office equipment,
including telecommunications equipment and service, (xii) association fees and
dues, (xiii) publications, (xiv) fees and expenses relating to the registration
or qualification of Fund shares under Federal and state securities laws and (xv)
expenses of an extraordinary and non-recurring nature, including the costs of
actions, suits or proceedings to which the Fund is a party and the expenses
which the Fund may incur as a result of its legal obligations to provide
indemnification to its officers, directors and agents.
The Adviser hereby agrees to reimburse the Fund if and to the
extent (limited to the amount of the advisory fee during the year) that Fund
expenses exceed the limitation specified in any statute or regulation of the
most restrictive state in which Fund shares are and continue to be registered or
qualified at such time, provided and to the extent that any other entity, such
as any principal underwriter for Fund shares, does not so reimburse the Fund. In
addition, if in the twelve month period commencing on the date of execution
hereof, or in the twelve month period commencing on the first anniversary of the
date of execution hereof, the aggregate operating expenses of the Fund (as
hereafter defined) exceed 4.0% of the average daily net assets of the Fund for
such period, the Adviser shall reimburse the Fund for such excess operating
expenses. Such operating expense reimbursement, if any, shall be paid on a
monthly basis. As used herein, the term "operating expenses" of the Fund for a
fiscal period shall mean all expenses of the Fund for such period, including
expenses pursuant to any plan of distribution adopted in accordance with Rule
12b-1 under the Act, but excluding interest, taxes, brokerage commissions and
other portfolio transaction
-ii-
<PAGE>
EXHIBIT 5
expenses, capital expenditures and expenses of an extraordinary and
non-recurring nature.
3. Advisory Fee. For the services to be rendered and the expenses
assumed and to be paid by the Adviser as provided herein, the Fund will pay to
the Adviser compensation at the annual rate of one percent of the value of the
Fund's net assets, computed in the manner set forth below and payable on the
last business day of the month in which such portion of the management fee is
earned. Such compensation will be calculated on the basis of the average of the
valuations of the net assets of the Fund made as of the close of business on the
last business day of each month during the period for which such compensation is
paid.
4. Brokerage. Subject to the approval of the Board of Directors of the
Fund, the Adviser, in carrying out its duties under Paragraph 1.A, may cause the
Fund to pay a broker-dealer (including a broker-dealer which is an affiliated
person of the Fund or Adviser) which furnishes brokerage or research services
(as such services are defined under Section 28(e) of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act")) a higher commission than that
which might be charged by a broker-dealer which does not furnish brokerage or
research services or which furnishes brokerage or research services deemed to be
of lesser value, if such commission is deemed reasonable in relation to the
brokerage and research services provided by the broker-dealer, viewed in terms
of either that particular transaction or the overall responsibilities of the
Adviser with respect to the accounts as to which it exercises investment
discretion (as such term is defined under Section 3(a)(35) of the Exchange Act).
5. Adviser's Use of the Services of Others. The Adviser may (at its
cost except as contemplated by Paragraph 4) employ, retain or otherwise avail
itself of the services or facilities of other persons or organizations for the
purpose of providing the Adviser or the Fund with such statistical or other
factual information, advice or assistance as the Adviser may deem necessary,
appropriate or convenient for the discharge of its obligations hereunder or
otherwise helpful to the Fund.
6. Securities Transactions. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Adviser nor any
affiliated person will act as a principal.
7. Services to Other Clients. The services of the Adviser to the Fund
hereunder are not to be deemed exclusive, and the Adviser will be free to render
similar services to others so long as its services hereunder are not impaired
thereby.
8. Limitation on Share Transactions. Neither the Adviser nor any of its
officers or employees will take any long or short position in the capital stock
of the Fund; but this prohibition shall not prevent the purchase by or for the
Adviser or any of its officers or employees of shares of the capital stock of
the Fund at the price at which such shares are offered to the public at the
moment of purchase; provided, that (i) such
-iii-
<PAGE>
EXHIBIT 5
purchase is to be made for investment purposes only, and (ii) if any shares of
stock so purchased are resold or redeemed within two months after the date of
purchase, such fact will be immediately reported to the Fund.
9. Adverse Interests. Subject to and in accordance with the Articles of
Incorporation and By-Laws of the Fund and the Certificate of Incorporation and
By-Laws of the Adviser, it is understood that directors, officers, agents, and
shareholders of the Fund are or may be interested in the Adviser (or any
successor thereof) as directors, officers or stockholders, or otherwise, that
directors, officers, agents and stockholders of the Adviser are or may be
interested in the Fund as stockholder or otherwise, and that the effect of any
such adverse interests shall be governed by such charter documents and by-laws.
10. Limitation on Liability. Neither the Adviser nor any of its
officers, directors or employees, nor any person performing executive,
administrative, trading or other functions for the Fund (at the direction or
request of the Adviser) or the Adviser in connection with the Adviser's
discharge of its obligations undertaken or reasonably assumed with respect to
this agreement, shall be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except for loss resulting from willful misfeasance, bad
faith, or gross negligence in the performance of its or his duties on behalf of
the Fund or from reckless disregard by the Adviser or such person of the duties
of the Adviser under this Agreement.
11. Term of Agreement. This agreement shall become effective and its
term shall commence as of the date hereof. Unless sooner terminated as provided
in Paragraphs 12 and 13 below, this agreement shall continue in force until the
date of the next annual meeting of shareholders of the Fund or until the second
anniversary of the execution hereof, whichever is sooner, and from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually by a majority of the Board of Directors who are not parties to
this agreement or interested persons of the Fund or the Adviser or by vote of a
majority of the outstanding voting securities of the Fund and a majority of
those directors who are not parties to this agreement or interested persons of
the Fund or the Adviser.
12. Termination. This agreement may be terminated at any time by the
Fund upon 60 days' written notice to the Adviser, without payment of penalty, by
vote of the Board of Directors of the Fund or by vote of a majority of the
outstanding securities of the Fund. This agreement may also be terminated at any
time by the Adviser upon 60 days' written notice to the Fund.
13. Amendment or Assignment. This agreement may not be amended,
transferred, assigned, sold or in any manner hypothecated or pledged without the
affirmative vote of the holders of a majority of the outstanding voting
securities of the
-iv-
<PAGE>
EXHIBIT 5
Fund; and this agreement shall automatically and immediately terminate in the
event of its assignment.
14. Interpretation. Nothing herein contained will be deemed to require
the Fund to take any action contrary to its Articles of Incorporation or By-Laws
or any applicable statute or regulation or to relieve or deprive the Board of
Directors of the Fund of its responsibility for and control of the conduct of
the affairs of the Fund.
15. Definitions. Any questions of interpretation of any term or
provision of this agreement having a counterpart in or otherwise derived from a
term or provision of the Act shall be resolved by reference to such term or
provision of the Act and to interpretations thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission
validly issued pursuant to the Act. Specifically, the terms "vote of a majority
of the outstanding voting securities," "interested person," "assignment," and
"affiliated person," as used in Paragraphs 2, 4, 6, 11, 12 and 13 hereof, shall
have the meanings assigned to them by Section 2(a) of the Act. In addition,
where the effect of a requirement of the Act reflected in any provision of this
agreement is relaxed by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or of general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
IN WITNESS WHEREOF, each of the parties hereto has caused this
instrument to be executed on its behalf on the day and year first above written.
THE MATTERHORN GROWTH FUND, INC.
By /s/Gregory A. Church
-----------------------------------------
President
MATTERHORN ASSET MANAGEMENT CORPORATION
By /s/Sheldon E. Goldberg
-----------------------------------------
B-i
EXHIBIT 11
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
The Matterhorn Growth Fund, Inc.
We hereby consent to the use of our report dated July 25, 1996 on the
financial statements of The Matterhorn Growth Fund, Inc., referred to therein in
Post-Effective Amendment No. 18 to the Registration Statement on Form N-1A File
No. 2-67610, as filed with the Securities and Exchange Commission.
/s/ McGladrey & Pullen, LLP
New York, New York
October 30, 1996
----------------
3
[MATTERHORN GROWTH FUND, INC. LOGO}
Dear Shareholders,
At a special meeting on March 14, 1996 shareholders approved a change in
name from The 44 Wall Street Equity Fund to The Matterhorn Growth Fund.
Shareholders also approved Matterhorn Asset Management Corporation as the new
Investment Advisor to the Fund. We look forward to serving the Matterhorn Growth
Fund and its shareholders and are confident that changes which have already been
initiated will have a positive impact on the Fund.
As discussed in our semi - annual report broad market trends are not
expected to push the market up in 1996 like they did in 1995, a year in which
the Fund appreciated 25.28%. However, by utilizing a "growth at a reasonable
price" philosophy and seeking out underfollowed and undervalued small
capitalization stocks we were able to appreciate 10.24% for the semi - annual
period from January 1, 1996 to June 30, 1996. This return exceeded the
performance of the Standard & Poor's 500 which rose 10.10% over the same time
period. For the fiscal year ended June 30, 1996 the Fund gained 11.60%.
The volatility that the market has experienced since June 30 might push the
Fund in either direction by year end. In fact, since the beginning of the
calendar year the Fund hit a high of $7.30 (up 14.96%). However, a call for
fluctuating prices in the future is guaranteed to be a prescient forecast. The
most important thing for investors to do is to keep their eye on the longer term
trends in place which we continue to be very optimistic about. The economy is
growing but not too rapidly. Productivity boosts should result in healthy
increases in corporate earnings while at the same time moderate inflation should
allow interest rates to remain moderate.
We have constructed a portfolio that should provide investors with
excellent long term appreciation and moderate downside risk. During the period
we chose to concentrate investments primarily in technology, health care, real
estate, financial services and gaming.
Among the major holdings in the technology field were Sterling Software,
National Data Corp. and Microchip Technology, Inc. which have worked out well to
date.
In health care we favored Maxxim Medical, United Health Care, and GranCare
Inc. which dampened overall performance but we feel are poised to improve.
In real estate our principal investments were in smaller companies such as
Americana Hotels & Realty Corp., One Liberty Properties and Mark Centers Trust.
These stocks were steady performers as the value of their underlying real estate
has been appreciating.
<PAGE>
Financial Services companies such as Dean Witter Discover and Chase
Manhattan Corp. also helped the portfolio. These are interest rate sensitive
stocks, meaning they generally appreciate when interest rates decline.
Finally, our gaming stocks also had a positive impact on the portfolio. In
particular Sodak Gaming proved a rewarding investment.
We appreciate your interest in The Matterhorn Growth Fund and will continue
to do our best to provide for capital appreciation of your holdings.
Sincerely Yours,
<TABLE>
<CAPTION>
<S> <C> <C>
Gregory A. Church Sheldon E. Goldberg Mark Beckerman
/s/Gregory A. Church /s/Sheldon E. Goldberg /s/Mark Beckerman
President Chairman Portfolio Manager
Matterhorn Growth Fund Matterhorn Asset Management Corp. Matterhorn Growth Fund
</TABLE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE MATTERHORN
GROWTH FUND AND THE S&P 500 INDEX.
<TABLE>
<CAPTION>
09/27/88* 06/30/89 06/30/90 06/30/91 06/30/92 06/30/93 06/30/94 06/30/95 06/30/96
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Matterhorn Growth Fund $10,000 $12,279 $13,799 $14,216 $15,441 $19,902 $21,017 $25,085 $27,996
S&P 500 Stock Index $10,000 $12,131 $14,161 $15,222 $17,250 $19,601 $19,875 $25,046 $31,566
In Dollars
</TABLE>
*Previous periods during which the Fund was advised by another advisor are not
shown. Past performance is not predictive of future performance.
Annual Average Total Return Periods Ended June 30, 1996.
1 Year 11.60%
5 Years 14.50%
Inception (9/27/88)* 14.18%
<PAGE>
The Matterhorn Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS at June 30, 1996
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 84.85% Market Value
- --------------------------------------------------------------------------------
Airline Transport: 0.44%
4,000 Frontier Airlines* ........................... $ 38,500
--------
Automobile Parts: .63%
2,500 Breed Technology ............................. 55,937
--------
Banking: 3.78%
2,500 Chase Manhattan Corp. ........................ 176,562
2,525 First Chicago NBD Corp. ...................... 98,791
2,500 Signet Banking ............................... 58,125
--------
333,478
--------
Beverage: 1.86%
3,000 Cadbury Schweppes PLC, ADR ................... 96,750
1,500 Panamerican Beverages, Inc. .................. 67,125
--------
163,875
--------
Broadcast / Cable TV: 4.92%
5,000 Comcast U.K. Cable Partners Ltd., ADR* ....... 62,500
20,000 Jones Intercable, Inc., Class A* ............. 262,500
152,000 Spectravision, Inc. Rights, Expires 10/8/1997* 0
3,000 Telecommunications, Inc., Class A* ........... 54,000
3,000 US West Media Group* ......................... 54,750
--------
433,750
--------
Computer Peripherals: 1.33%
2,000 Sun Microsystems* ............................ 117,500
--------
Computer Software & Services: 5.66%
5,000 Alpharel, Inc.* .............................. 29,687
2,500 National Data Corp. .......................... 85,625
2,500 Platinum Technology, Inc.* ................... 37,500
4,500 Sterling Software, Inc.* ..................... 346,500
--------
499,312
--------
Consumer Services: 0.44%
2,500 Kinder Care Learning Centers, Inc.* .......... 38,437
--------
3
<PAGE>
The Matterhorn Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS at June 30, 1996, Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Diversified: 6.78%
160,000 China Industrial Group, Inc.* ................ $ 135,000
57,004 United Capital Corp.* ........................ 463,158
--------
598,158
--------
Drugs: 0.02%
25 Merck & Co., Inc. ............................ 1,616
--------
Environmental: 0.53%
2,500 Trigen Energy ................................ 47,187
--------
Financial Services: 3.76%
5,000 Dean Witter Discover ......................... 286,250
2,500 SPS Transaction Services, Inc.* .............. 45,000
--------
331,250
--------
Food Wholesalers: 0.00%
1 Richfood Holdings, Inc. ...................... 32
--------
Hotel / Gaming: 10.62%
6,077 Grand Casinos* ............................... 156,483
10,000 GTECH Holdings Corp.* ........................ 296,250
6,500 Sodak Gaming, Inc.* .......................... 198,250
10,000 Trump Hotel & Casino* ........................ 285,000
--------
935,983
--------
Industrial Services: 1.50%
5,000 Sport Supply Group ........................... 30,625
4,000 World Color Press* ........................... 101,500
--------
132,125
--------
Insurance: 2.40%
5,000 John Alden Financial ......................... 110,625
5,000 Stewart Information Services Corp. ........... 100,625
--------
211,250
--------
Manufactured Housing / Rec Vehicles: 0.44%
3,000 National RV Holdings, Inc.* .................. 39,000
--------
4
<PAGE>
The Matterhorn Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS at June 30, 1996, Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Maritime: 1.08%
5,000 Sea Containers, Ltd., Class A .. $ 95,000
--------
Medical Services: 6.71%
2,500 Caremark International ........ 63,125
5,000 GranCare, Inc.* ............... 99,375
10,000 Maxxim Medical, Inc.* ......... 171,250
1,500 Sierra Health Services* ....... 47,250
3,000 United Health Care ............ 151,500
2,500 Value Health* ................. 59,063
--------
591,563
--------
Petroleum: 0.99%
1,000 Exxon Corp. ................... 86,875
--------
Real Estate Investment Trust: 15.91%
267,300 Americana Hotel & Realty Corp.* 367,538
5,000 Chicago Dock & Canal Trust SBI 73,125
28,600 Mark Centers Trust ............ 296,725
50,000 One Liberty Properties, Inc. .. 665,625
--------
1,403,013
--------
Recreational: 1.40%
5,000 WMS Industries, Inc.* ......... 123,125
--------
Restaurants: 1.84%
1,000 Host Marriott Services* ....... 7,250
18,500 Spaghetti Warehouse, Inc.* .... 99,438
3,000 Wendy's International ......... 55,875
--------
162,563
--------
Retailing: 6.24%
40,000 The First Years, Inc. ......... 550,000
--------
Semiconductor: 2.69%
5,000 Elamex, S.A. de C.V.* ............. 48,750
2,500 LSI Logic Corp.* .................. 65,000
5,000 Microchip Technology, Inc.* ....... 123,750
--------
237,500
--------
5
<PAGE>
The Matterhorn Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS at June 30, 1996, Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
Telecommunications Services: 2.88%
5,000 MCI Communications Corp. ......................... $ 127,500
3,000 Sprint Corp. ..................................... 126,000
-----------
253,500
-----------
Total Common Stocks (cost $7,151,791) ............ 7,480,529
-----------
PREFERRED STOCKS: 4.56%
- -------------------------------------------------------------------------------
Maritime: 1.07%
2,000 Sea Containers, Ltd, Class E ..................... 94,000
-----------
Real Estate Investment Trust: 2.66%
14,100 One Liberty Properties, Inc. ..................... 234,413
-----------
Restaurants: 0.83%
6,000 Flagstar Cos, Inc. ............................... 73,500
-----------
Total Preferred Stocks (cost $440,958) ........... 401,913
-----------
Principal
Amount BONDS: 3.69%
- --------------------------------------------------------------------------------
Financial Services: 0.01%
$ 850 Everen Capital Corp., 13.50%, due 9/15/2007 . 914
-----------
Medical Services: 3.68%
300,000 Maxxim Medical, Inc., 6.75%, due 3/1/2003 ........ 324,375
-----------
Total Bonds (cost $299,000) ...................... 325,289
-----------
REPURCHASE AGREEMENTS: 9.98%
- --------------------------------------------------------------------------------
880,000 Star Bank Repurchase Agreement, 5.0%, due 7/1/1996,
collateralized by $1,430,479 GNMA, 7.0% due 5/20/2022,
(cost $880,000) .................................. 880,000
-----------
6
<PAGE>
The Matterhorn Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS at June 30, 1996, Continued
- --------------------------------------------------------------------------------
Shares PUT OPTIONS PURCHASED: 0.79% Market Value
- --------------------------------------------------------------------------------
Common Stocks / Expiration Date / Exercise Price
- --------------------------------------------------------------------------------
50 Sterling Commerce 7/20/1996 / $40.00 ............. $ 21,562
50 Sterling Commerce 10/19/1996 / $40.00 ............ 48,125
----------
69,687
----------
Total (cost $47,700) ............................. 69,687
----------
Total Investment in Securities (cost $8,819,449+): 103.87% 9,157,418
Liabilities less Other Assets: (3.87)% ........... (341,610)
----------
Total Net Assets: 100.0% ......................... $8,815,808
==========
*Non-income producing security.
+ At June 30, 1996, the cost of securities for Federal tax purposes was
$8,856,293. Unrealized appreciation and depreciation of securities, based on
cost for Federal income tax purposes, was as follows:
Gross unrealized appreciation..................... $1,439,689
Gross unrealized depreciation..................... 1,138,564
----------
Net unrealized appreciation....................... $ 301,125
==========
See notes to financial statements.
7
<PAGE>
The Matterhorn Growth Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES at June 30, 1996
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (identified cost $8,819,449) $ 9,157,418
Cash 241
Receivables:
Dividends and interest........................... 37,300
Investment securities sold....................... 97,412
Capital stock sold............................... 80,349
Other assets.......................................... 13,527
-----------
Total assets............................... 9,386,247
-----------
LIABILITIES
Payable for investment securities purchased........... 555,000
Accrued expenses and other............................ 15,439
-----------
Total liabilities................................ 570,439
-----------
NET ASSETS............................................... $ 8,815,808
===========
Net asset value, offering and redemption price per share
($8,815,808/1,259,352 shares outstanding;
100,000,000 shares authorized with $.001 par value) $7.00
=====
SOURCES OF NET ASSETS
Paid-in capital....................................... $ 7,463,528
Accumulated net investment loss....................... (148,883)
Accumulated net realized gain on investments.......... 1,163,194
Net unrealized appreciation of investments............ 337,969
-----------
Net assets................................. $ 8,815,808
===========
See notes to financial statements.
8
<PAGE>
The Matterhorn Growth Fund, Inc.
STATEMENT OF OPERATIONS - Year Ended June 30, 1996
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends........................................ $ 184,009
Interest......................................... 51,399
----------
Total investment income................. 235,408
----------
Expenses
Advisory fees (Note 3)........................... 90,749
Administration fee (Note 3)...................... 23,345
Custodian and accounting fees.................... 25,666
Transfer agent fees.............................. 58,329
Auditing fees.................................... 38,402
Legal fees....................................... 47,577
Administrative and clerical...................... 43,399
Office facilities................................ 16,565
Directors fees................................... 4,027
Registration fees................................ 7,603
12b-1 expense (Note 3)........................... 6,755
Reports to shareholders.......................... 16,338
Miscellaneous.................................... 3,721
Interest on bank loans (Note 6).................. 1,815
----------
Total expenses.......................... 384,291
----------
Net investment loss..................... (148,883)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on:
Investments...................................... 1,735,434
Options.......................................... 33,436
----------
Total net realized gain.................... 1,768,870
Unrealized depreciation of investments for the period (614,509)
----------
Net realized and unrealized gain on investments 1,154,361
----------
Net Increase in Net Assets Resulting from Operations $1,005,478
==========
See notes to financial statements.
9
<PAGE>
The Matterhorn Growth Fund, Inc.
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS Years ended June 30, 1996 and 1995.
- ------------------------------------------------------------------------------------------------------------
1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss ..................................................... $ (148,883) $ (206,229)
Net realized gain on investments ........................................ 1,768,870 438,078
Unrealized appreciation (depreciation) of investments ................... (614,509) 1,252,472
----------- -----------
Net increase in net assets resulting from operations ............... 1,005,478 1,484,321
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments ........................................ (765,908) (136,528)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............................................... 255,949 212,291
Net asset value of shares issued on reinvestment of distributions........ 727,336 128,438
Cost of shares redeemed ................................................. (1,400,287) (896,170)
----------- -----------
Net decrease from capital share transactions ............................ (417,002) (555,441)
----------- -----------
Total increase (decrease) in net assets ........................ (177,432) 792,352
NET ASSETS
Beginning of year ....................................................... 8,993,240 8,200,888
----------- -----------
End of year ............................................................. $ 8,815,808 $ 8,993,240
=========== ===========
CHANGE IN SHARES
Shares sold ............................................................. 37,245 34,909
Shares issued on reinvestment of distributions .......................... 115,085 23,100
Shares redeemed ......................................................... (200,891) (147,078)
----------- -----------
Net decrease ............................................................ (48,561) (89,069)
=========== ===========
</TABLE>
See notes to financial statements.
10
<PAGE>
The Matterhorn Growth Fund, Inc.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
- ------------------------------------------------------------------------------------------------------------
Years Ended June 30,
------------------------------------------------
1996+ 1995 1994 1993* 1992*
----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ..................... $ 6.88 $ 5.87 $ 7.09 $ 6.30 $ 5.80
------- ------- -------- -------- -------
Income from investment operations:
Net investment loss ........................... (.12) (.17) (.17) (.04) (.07)
Net realized and unrealized gain on investments .85 1.28 .71 1.77 .57
------- ------- -------- -------- -------
Total from investment operations ....................... .73 1.11 .54 1.73 .50
------- ------- -------- -------- -------
Less distributions:
Dividends from net realized gains ............. (.61) (.10) (1.76) (.94) --
------- ------- -------- -------- -------
Total distributions .................................... (.61) (.10) (1.76) (.94) --
------- ------- -------- -------- -------
Net asset value, end of year ........................... $ 7.00 $ 6.88 $ 5.87 $ 7.09 $ 6.30
======= ======= ======== ======== =======
Total return ........................................... 11.60% 19.32% 5.60% 28.89% 8.62%
Ratios/supplemental data:
Net assets, end of year (000 omitted) .................. $ 8,816 $ 8,993 $ 8,201 $ 8,048 $ 4,430
Ratio to average net assets:
Expenses (excluding interest) ................. 4.21% 4.62% 4.87% 4.27% 5.17%
Interest expense .............................. .02 .56 .14 .12 .16
------- ------- -------- -------- -------
Total expenses ................................ 4.23% 5.18% 5.01% 4.39% 5.33%
======= ======= ======== ======== =======
Net investment loss ........................... (1.64) (2.50) (2.77) (.62) (1.11)
======= ======= ======== ======== =======
Portfolio turnover rate ................................ 88.32% 72.11% 160.06% 167.27% 135.89%
======= ======= ======== ======== =======
(B) BANK LOANS
Amount outstanding at end of year (000) ................ $ -- $ 366 $ 27 $ -- $ --
Average amount of bank loans outstanding during
the year (monthly average) (000) .............. $ 12 $ 456 $ 44 $ 49 $ 54
Average number of shares outstanding during
the year (monthly average) (000)* ............. 1,306 1,369 1,268 773 662
Average amount of debt per share during the year ....... $ .01 $ .33 $ .03 $ .06 $ .08
</TABLE>
*Based on average month-end shares outstanding.
+On March 15, 1996, the investment adviser changed, and Matterhorn Asset
Management Corporation became the Fund's investment adviser.
See notes to financial statements.
11
<PAGE>
The Matterhorn Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Matterhorn Growth Fund, Inc. (the "Fund") is a Maryland corporation
incorporated on May 2, 1980 and is registered under the Investment Company Act
of 1940 as a non-diversified, open-end management investment company. The Fund
was formerly known as The 44 Wall Street Equity Fund, Inc.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities are valued daily based
upon latest closing market prices for those securities traded on
national securities exchanges, or if there has been no sale that day at
the mean between the last bid and asked prices, and at the closing bid
price for those securities traded in the over-the-counter market.
Short-term investments with less than 60 days to maturity when acquired
by the Fund are valued on an amortized cost basis. All other securities
and assets are valued at fair value, as determined in good faith by the
Board of Directors.
B. Equity Option Contracts. When the Fund writes a call option, the
premiums received are recorded as a liability and marked-to-market daily
to reflect the current value of the option written. If the written
option is not exercised prior to expiration, the premium received is
treated as realized gain. If the written option is exercised, the
premium received is added to the sale proceeds of the underlying
security.
The premium paid by the Fund for the purchase of an option is
included as an investment and is marked-to-market daily to reflect the
current value of the option purchased. If the purchased option is not
exercised prior to expiration, the premium paid is treated as realized
loss. If the Fund exercised a call option, the cost of the security is
increased by the premium paid to buy the call. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale are decreased by the premium
originally paid.
C. Security Transactions and Related Investment Income. Securities
transactions are accounted for on the trade date, and dividend income is
recorded on the ex-dividend date. Interest income is recorded on the
accrual basis. The cost of securities sold is determined on a first-in,
first out basis for both financial statement and federal income tax
purposes.
D. Federal Income Taxes. It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
shareholders. Therefore, no provision for federal income tax is
required.
E. Dividends and Distributions to Shareholders. Dividends and distributions
to shareholders are recorded on the ex-dividend date. Income
distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles.
12
<PAGE>
The Matterhorn Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
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 increases and decreases in net assets during the reporting
period. Actual results could differ from those estimates.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
A. Investment Advisory Agreements. On March 15, 1996, the Fund entered into
an Advisory Agreement with Matterhorn Asset Management Corporation (the
"Adviser") for investment advisory services, under which the Adviser
receives a fee, payable monthly, at the annual rate of 1.00% of the
Fund's daily average net assets. Prior to that date, MDB Asset
Management was the investment adviser to the Fund and also received a
1.00% annual fee rate for its services. Advisory fee paid to MDB Asset
Management for the fiscal year ended June 30, 1996 totaled $63,742.
The Fund is responsible for its own operating expenses, as defined.
Pursuant to its investment advisory agreement with the Fund, the Adviser
has agreed until March 15, 1998, to reimburse the Fund to the extent
that the Fund's operating expenses (excluding interest, taxes, brokerage
commissions and other portfolio transaction expenses, capital
expenditures and extraordinary expenses) exceeds 4% of the Fund's
average net assets. In addition, the Adviser will reimburse the Fund if
expenses exceed those limits prescribed by any state in which Fund
shares are offered for sale. Fund shares are not currently registered in
any state which requires the Fund to be reimbursed for such excess
expenses.
B. Distribution Agreements. Bainbridge & Co. ("Bainbridge") and Cumberland
Brokerage Corporation ("Cumberland") act as co-distributors for shares
of the Fund pursuant to a distribution Agreement dated March 15, 1996.
Bainbridge and Cumberland are affiliates of the Adviser. Prior to March
15, 1996, Beckerman & Company, Inc. ("BecCo") acted as the principal
underwriter for the Fund. Commissions paid to BecCo for services
rendered as a registered broker-dealer in executing portfolio trades for
the Fund amounted to $9,056 for the fiscal year ended June 30, 1996.
C. Distribution Plan. The Fund has adopted a Distribution Plan in
accordance with Rule 12b-1 under the Investment Company Act of 1940. The
Plan provides that the Fund will pay Bainbridge and Cumberland an
aggregate distribution fee, payable monthly, at the annual rate of 0.25%
of the Fund's average daily net assets. The fee is paid to Bainbridge
and Cumberland as compensations for their services rendered.
D. Administration Agreement. Pursuant to an administration agreement with
Investment Company Administration Corporation ("Administrator") entered
on March 15, 1996, the Fund pays ICAC for its services a monthly fee at
the annual rate of 0.10% of the Fund's average daily net assets, subject
to a minimum annual fee of $45,000 for the first year and $40,000
thereafter.
E. Other. The Fund pays each Directors who are not "interested persons" a
$250 attendance fee and any expenses incurred to attend the meetings.
Total fees paid to Directors for fiscal year ended June 30, 1996 are
included in the "Statement of Operations".
13
<PAGE>
The Matterhorn Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
Certain officers and Directors of the Fund are also officers and/or
Directors of the Adviser, Administrator and co-distributors.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
For the fiscal year ended June 30, 1996, purchases and sales of securities
other than short-term securities aggregated $7,412,149 and $9,525,095,
respectively.
NOTE 5 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Fund's activity during the period in writing equity call options had
off-balance-sheet risk of accounting loss. A written equity call option
obligates the Fund to deliver the underlying security upon exercise by the
holder of the option. The Fund covers options written by owning the underlying
security.
A summary of the Fund's call option transactions written for the year
follows:
Number of Premiums
Option Contracts Received
---------------- --------
Contracts outstanding at
June 30, 1995 91 $ 19,286
Options written 299 66,812
Options bought back (15) (4,844)
Options exercised (146) (29,626)
Options expired (229) (51,628)
---- -------
Contracts outstanding at
June 30, 1996 -- --
==== ====
NOTE 6 - BANK LOANS
The Fund had a $2 million secured line of credit during the year with its
former custodian bank which terminated on March 15, 1996. The interest rate
charged on borrowings was the bank's effective broker call rate plus one-half of
one percent. The weighted monthly average interest rate for the period was
8.68%.
14
<PAGE>
INDEPENDENT AUDITOR'S REPORT
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
The Matterhorn Growth Fund, Inc.
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The Matterhorn Growth Fund, Inc.,
formerly The 44 Wall Street Equity Fund, Inc., as of June 30, 1996, 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 five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material 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 June
30, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Matterhorn Growth Fund, Inc. as of June 30, 1996, the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles.
McGLADREY & PULLEN, LLP
New York, New York
July 25, 1996
<PAGE>
INVESTMENT ADVISER
Matterhorn Asset Management Corporation
301 Oxford Valley Road, Suite 802B
Yardley, Pennsylvania 19067
CO-DISTRIBUTORS
Bainbridge & Co.
301 Oxford Valley Road, Suite 801B
Yardley, Pennsylvania 19067
Cumberland Brokerage Corporation
614 Landis Avenue
Vineland, New Jersey 08360
CUSTODIAN
Star Bank
Post Office Box 1118
Cincinnati, Ohio 45201-1118
TRANSFER AGENT
American Data Services, Inc.
24 West Carver Street, 2nd Floor
Huntington, New York 11743
1-800-637-3901
AUDITORS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017
This report is intended for the shareholders of The Matterhorn Growth Fund and
should not be used as sales literature unless accompanied or preceded by a
current prospectus.
<PAGE>
[THE MATTERHORN GROWTH FUND, INC. LOGO]
Annual Report
June 30, 1996
EXHIBIT 16
SCHEDULE FOR COMPUTATION OF
PERFORMANCE QUOTATIONS OF
THE MATTERHORN GROWTH FUND, INC.
TOTAL RETURN FORMULA
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
1-, 5- or 10-year periods at the end of the
1-, 5- or 10-year periods (or fractional
portion thereof)
For the 1-year period ended June 30, 1996:
$1,000(1+T)1 = $1,116 or an annual compounded rate of 11.60%
For the 5-year period ended June 30, 1996:
$1,000(1+T)5 = $1,968 or an average annual compounded rate
of 14.50%
For the period September 30, 1988 to June 30, 1996:
$1,000(1+T)7.75 = $2800 or an average annual compounded rate
of 14.18%
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Eric M. Banhazl true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in such person's name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to the Registration Statement on Form N-1A of The Matterhorn Growth Fund, Inc.,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
9/20/96 /s/ Gregory A. Church.
- ----------------------------------- -----------------------------------------
Date: Gregory A. Church.
President, Secretary and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Eric M. Banhazl true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in such person's name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to the Registration Statement on Form N-1A of The Matterhorn Growth Fund, Inc.,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
9/20/96 /s/ R. Barry Borden
- ----------------------------------- -----------------------------------------
Date: R. Barry Borden
Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Eric M. Banhazl true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in such person's name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to the Registration Statement on Form N-1A of The Matterhorn Growth Fund, Inc.,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
9/20/96 /s/ Kevin M. Covert
- ----------------------------------- -----------------------------------------
Date: Kevin M. Covert
Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Eric M. Banhazl true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in such person's name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to the Registration Statement on Form N-1A of The Matterhorn Growth Fund, Inc.,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
9/20/96 /s/ Gerald Printz
- ----------------------------------- -----------------------------------------
Date: Gerald Printz
Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Eric M. Banhazl true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in such person's name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to the Registration Statement on Form N-1A of The Matterhorn Growth Fund, Inc.,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
10/25/96 /s/ Dominick A. Cruciani, Jr.
- ----------------------------------- -----------------------------------------
Date: Dominick A. Cruciani, Jr.
Director
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