[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
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AUDITORS
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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.
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[THE MATTERHORN GROWTH FUND, INC. LOGO]
Annual Report
June 30, 1996
