<PAGE>
STONEBRIDGE
AGGRESSIVE
GROWTH FUND, INC.
ANNUAL REPORT
FOR THE YEAR ENDED
OCTOBER 31, 1997
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
OFFICERS AND DIRECTORS
Richard C. Barrett, CHAIRMAN, BOARD OF DIRECTORS
AND VICE PRESIDENT
John G. Ayer, PRESIDENT AND DIRECTOR
Charles E. Woodhouse, VICE PRESIDENT AND DIRECTOR
Debra L. Newman, VICE PRESIDENT AND TREASURER
Craig B. Burger, VICE PRESIDENT
Chad S. Christensen, VICE PRESIDENT
James V. Hyatt, SECRETARY
Selvyn B. Bleifer, DIRECTOR
Charles F. Haas, DIRECTOR
William H. Taylor, DIRECTOR
Marvin Freedman, DIRECTOR
INVESTMENT ADVISER
STONEBRIDGE CAPITAL MANAGEMENT, INCORPORATED
1801 Century Park East, Suite 1800
Los Angeles, California 90067
TRANSFER AGENT
NATIONAL FINANCIAL DATA SERVICES
1004 Baltimore, Dwight 4,
Kansas City, Missouri 64105
CUSTODIAN
FIFTH THIRD BANK
Fifth Third Center,
Cincinnati, Ohio 45263
ADMINISTRATOR AND DISTRIBUTOR
ALPS MUTUAL FUNDS SERVICES, INC.
370 Seventeenth Street, Suite 3100
Denver, Colorado 80202
LEGAL COUNSEL
PAUL, HASTINGS, JANOFSKY & WALKER
555 S. Flower Street, 23rd Floor
Los Angeles, California 90071
INDEPENDENT AUDITORS
HEIN + ASSOCIATES LLP
717 Seventeenth Street, Suite 1600
Denver, Colorado 80202
This report and its financial statements are submitted for the general
information of the shareholders of the Fund. The report is not authorized for
distribution to prospective investors in the Fund unless preceded or accompanied
by an effective prospectus.
<PAGE>
LETTER TO SHAREHOLDERS
Dear Fellow Shareholders:
The enclosed annual report covers Stonebridge Aggressive Growth Fund Inc.'s
fiscal year ended October 31, 1997. During this period the Fund achieved a
total return of 22.89% as compared to the New York Stock Exchange Composite
Index with income return of 28.48% and the Russell 2000 Index with income (small
caps) return of 27.22%. On October 31, 1997, the Fund's net asset value per
share was $13.27.
The Year in Review
Equity markets around the world largely continued their pattern of volatility.
The U.S. economy remained relatively strong. We realized substantial gains in
stocks such as Amgen, Applied Materials, Opal, Microsoft, Hutchinson Technology,
Verifone, Vitesse Semiconductors and Ultratech Stepper. Some losses were
realized in a limited number of small (microcap) companies as we took deliberate
action to move away from the limited liquidity associated with these issues.
Companies such as Nicollet Process Engineering, U-ship, Coffee People, Medi-Ject
and Daw Technologies were therefore eliminated from the portfolio. Net capital
gains realized totaled in excess of $900,000 for the year.
We established new positions in Qualcomm, Cisco, ASM Lithography, Hummingbird
Communications, and Rational Software and increased our holdings in Vicor,
Chiron, and La Jolla Pharmaceutical. Turnover of the equities held by the Fund
was 88%. On October 31, 1997, the Fund's largest industry exposures were in
Computer Software at 18.6%, Medical/Biotechnology at 15.7%, Computer Hardware at
11.7%, Semiconductors at 10.0%, and Data Communications and Networking at 7.4%.
The financial turmoil in Asia has affected markets worldwide. The Stonebridge
Aggressive Growth Fund does not have any direct exposure to Asian securities.
However many U.S. based companies, including those whose securities are held by
our Fund, have meaningful exposure to those markets. This is the direct result
of the globalization of their supplier and customer base. For the past several
years, the Asian region has proved to be a source of dramatic growth due to the
rapid pace of its economic expansion.
Volatility, while uncomfortable in the short term, can create opportunity in the
intermediate to long term. We expect to be able to purchase high quality,
growth companies at attractive valuations to the benefit of our shareholders.
Stonebridge Aggressive Growth Fund is a no-load, open-end investment company
which offers investors the opportunity to own a professionally managed, actively
supervised, diversified portfolio. The principal objective of the Fund is
long-term growth of capital. Current income is a secondary consideration.
1
<PAGE>
Thank you for your investment in the Stonebridge Aggressive Growth Fund. Should
you have questions or concerns, please call a Shareholder Services
Representative at 1-800-639-3635.
Sincerely,
/s/ John G. Ayer
Stonebridge Aggressive Growth Fund, Inc.
John G. Ayer, Ph.D.
President
CHANGE IN VALUE OF A $10,000 INVESTMENT IN STONEBRIDGE AGGRESSIVE GROWTH FUND,
INC. VS. NYSE COMPOSITE INDEX AND THE RUSSELL 2000 WITH INCOME FROM
NOVEMBER 1, 1987 TO OCTOBER 31, 1997
[GRAPH]
Average Annual Total Return Final Portfolio Values
Periods Ended October 31, 1997 Stonebridge Aggressive Growth Fund, Inc. $33,345
NYSE Composite Index $34,020
1 Year 5 Years 10 Years Russell 2000 $36,637
22.89% 16.16% 12.80%
2
<PAGE>
FACTS ABOUT THE FUND
When you buy shares of most mutual funds, the purchase price usually
includes a sales charge that may be as high as 8.25% of the purchase price.
These are known as "load" funds. Stonebridge Aggressive Growth Fund, Inc.
differs from these funds because it imposes no sales charge and is commonly
referred to as a "no-load" Fund. When you invest in Stonebridge Aggressive
Growth Fund, Inc., you purchase shares at net asset value since no sales
charge and no commission is paid to anyone, nothing is deducted for sales
expense from the price you pay for your shares, and every dollar you invest
in the Fund is put to work for you. The primary objective of the Fund is
long-term growth of capital. Production of short-term income is a secondary
consideration.
The Fund offers a means of participating in the expansion and profits of
the economy through a diversified common stock program, as well as an
opportunity to hedge against the continuing decline in the purchasing power of
money. Shareholders own in a single security a proportionate interest in a
continuously managed portfolio of many securities representing a cross section
of progressive American companies. After payment of operating expenses, all
income and profits realized from the Fund's investments are distributed to the
shareholders.
Investment advice is provided by the investment counseling firm of
Stonebridge Capital Management, Inc., which also acts as investment adviser on
an annual fee basis to another mutual fund, Stonebridge Growth Fund, Inc. and to
substantial individual and institutional accounts. Thus, through the medium of
the Fund, investors of more limited means are offered the benefits and
advantages of competent, qualified investment management on an economical basis.
Shares of the Fund are priced daily and fluctuate in accordance with
changes in the market value of the securities owned by the Fund. The Fund will,
at any time, repurchase its shares at the applicable net asset value per share.
3
<PAGE>
INDEPENDENT AUDITOR'S REPORT
BOARD OF DIRECTORS AND SHAREHOLDERS
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
LOS ANGELES, CALIFORNIA
We have audited the accompanying statement of assets and liabilities of
Stonebridge Aggressive Growth Fund, Inc., (the "Fund") including the
statement of investments, as of October 31, 1997, the related statement of
operations for the year then ended, the statements of changes in net assets
for the years ended October 31, 1997 and 1996, and the selected per share
data and ratios set forth under the caption "Financial Highlights" for each
of the five years in the period ended October 31, 1997. These financial
statements and per share data and ratios are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and per share data and ratios 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 per share data
and ratios 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
October 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to in the first sentence above present fairly, in all material
respects, the financial position of Stonebridge Aggressive Growth Fund, Inc. at
October 31, 1997, the results of its operations for the year then ended, the
changes in its net assets for the years ended October 31, 1997 and 1996, and the
selected per share data and ratios for each of the five years in the period
ended October 31, 1997, in conformity with generally accepted accounting
principles.
HEIN + ASSOCIATES LLP
Denver, Colorado
December 1, 1997
4
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS
OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE*
------ -----
<S> <C> <C>
COMMONSTOCKS (84.4%)
BASIC MATERIALS (0.6%)
SPECIALTY CHEMICALS (0.6%)
Cyanotech Corporation**. . . . . . . . . . . . . . 7,000 $29,969
----------
TOTAL BASIC MATERIALS. . . . . . . . . . . . . . . 29,969
----------
CAPITAL GOODS (3.3%)
ELECTRICAL/ELECTRONICS (2.6%)
Planar Systems, Inc. **. . . . . . . . . . . . . . 4,000 44,500
Woodhead Industries, Inc.. . . . . . . . . . . . . 5,000 97,500
----------
142,000
----------
MACHINERY (0.7%)
Asahi/America, Inc.**. . . . . . . . . . . . . . . 5,000 36,250
----------
TOTAL CAPITAL GOODS. . . . . . . . . . . . . . . . 178,250
----------
CONSUMER CYCLICALS (3.3%)
AUTOMOTIVE EQUIPMENT (1.1%)
TBC Corporation**. . . . . . . . . . . . . . . . . 6,000 61,500
RETAIL - GENERAL (2.2%)
Casey's General Stores, Inc. . . . . . . . . . . . 2,500 60,313
Inacom Corporation** . . . . . . . . . . . . . . . 2,000 61,625
----------
TOTAL CONSUMER CYCLICALS . . . . . . . . . . . . . 183,438
----------
CONSUMER STAPLES (18.5%)
PHARMACEUTICALS (2.8%)
Bio Rad Labs Class "A"** . . . . . . . . . . . . . 4,000 99,000
Fuisz Technologies, Inc. Limited** . . . . . . . . 5,000 50,625
----------
149,625
----------
MEDICAL/BIOTECHNOLOGY (15.7%)
Alkermes Inc.**. . . . . . . . . . . . . . . . . . 3,000 68,250
Chiron Corporation** . . . . . . . . . . . . . . . 10,000 192,500
Gilead Sciences, Inc.**. . . . . . . . . . . . . . 4,000 136,500
Immunex Corporation**. . . . . . . . . . . . . . . 2,000 128,000
Interferon Sciences, Inc.**. . . . . . . . . . . . 3,750 34,687
La Jolla Pharmaceutical Co.**. . . . . . . . . . . 15,000 75,000
Martek Biosciences Corporation** . . . . . . . . . 8,000 89,000
Mentor Corporation . . . . . . . . . . . . . . . . 2,500 91,094
Onyx Pharmaceuticals, Inc.** . . . . . . . . . . . 5,000 38,125
----------
TOTAL CONSUMER STAPLES . . . . . . . . . . . . . . $1,002,781
----------
</TABLE>
5
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, CONTINUED
OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE*
------ -----
<S> <C> <C>
COMMONSTOCKS (CON'T.)
FINANCIAL (3.4%)
BANKS (3.4%)
Popular, Inc.. . . . . . . . . . . . . . . . . . . 4,000 184,000
----------
TOTAL FINANCIAL. . . . . . . . . . . . . . . . . . 184,000
----------
TECHNOLOGY (54.0%)
COMPUTER HARDWARE (11.7%)
Cyberguard Corporation** . . . . . . . . . . . . . 6,000 49,500
Hutchinson Technology, Inc.**. . . . . . . . . . . 4,000 105,500
In Focus Systems, Inc.** . . . . . . . . . . . . . 5,000 163,750
Seagate Technology** . . . . . . . . . . . . . . . 4,000 108,500
Sequent Computer Systems, Inc.** . . . . . . . . . 10,000 209,375
----------
636,625
----------
COMPUTER SOFTWARE (18.6%)
Adobe Systems,Inc. . . . . . . . . . . . . . . . . 3,000 143,249
Analogy, Inc.**. . . . . . . . . . . . . . . . . . 10,000 59,374
Hummingbird Communications** . . . . . . . . . . . 3,000 107,250
McAfee Associates, Inc.**. . . . . . . . . . . . . 1,000 49,750
Microsoft Corporation**. . . . . . . . . . . . . . 1,500 195,000
Oracle Corporation** . . . . . . . . . . . . . . . 4,500 161,016
Orcad Inc.** . . . . . . . . . . . . . . . . . . . 12,000 105,750
Rational Software Corporation**. . . . . . . . . . 16,000 146,000
Red Brick Systems, Inc.**. . . . . . . . . . . . . 6,000 47,250
----------
1,014,639
----------
DATA COMMUNICATION & NETWORKING (7.4%)
Ascend Communications, Inc.**. . . . . . . . . . . 3,000 81,000
Cisco Systems,Inc.** . . . . . . . . . . . . . . . 1,000 82,031
Qualcomm Incorporated**. . . . . . . . . . . . . . 2,000 112,750
3Com Corporation** . . . . . . . . . . . . . . . . 3,000 124,313
----------
400,094
----------
DESIGN & MANUFACTURING AUTOMATION (1.5%)
Cognex Corporation** . . . . . . . . . . . . . . . 3,000 80,250
----------
ELECTRONICS (4.8%)
Vicor Corporation**. . . . . . . . . . . . . . . . 8,000 258,000
----------
SEMICONDUCTORS (10.0%)
Adflex Solutions, Inc**. . . . . . . . . . . . . . 2,500 55,625
ASM Lithography Holding**. . . . . . . . . . . . . 1,000 73,250
Cymer, Inc.**. . . . . . . . . . . . . . . . . . . 2,000 45,750
</TABLE>
6
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, CONTINUED
OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE*
------ -----
<S> <C> <C>
COMMONSTOCKS (CON'T.)
TECHNOLOGY (CON'T)
SEMICONDUCTORS (CON'T)
Intel Corporation. . . . . . . . . . . . . . . . . 2,000 154,000
Micrion Corporation**. . . . . . . . . . . . . . . 4,000 98,000
Tegal Corporation**. . . . . . . . . . . . . . . . 10,000 68,750
Triquint Semiconductor, Inc.** . . . . . . . . . . 2,000 49,000
----------
544,375
----------
TOTAL TECHNOLOGY . . . . . . . . . . . . . . . . . 2,933,987
----------
UTILITIES (1.3%)
UTILITY-TELEPHONE (1.3%)
Metro One Telecommunications** . . . . . . . . . . 7,500 68,438
----------
TOTAL UTILITIES. . . . . . . . . . . . . . . . . . 68,438
----------
TOTAL COMMONSTOCKS(84.4%)
(Cost $3,413,216). . . . . . . . . . . . . . . . . 234,750 4,580,859
----------
CONVERTIBLE BONDS (1.9%)
VLSI Technology, 8.25%, 10/01/05 . . . . . . . . . 100,000 101,750
(Cost $99,483) ----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (8.2%)
Fannie Mae Discount Note 12/22/97. . . . . . . . . 350,000 347,435
Freddie Mac Discount Note 12/22/97 . . . . . . . . 100,000 99,267
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS . . . . . 446,702
(Cost $446,702) ----------
MUTUAL FUND (MONEY MARKET INVESTMENTS) (3.3%)
Fountain Square Money Market . . . . . . . . . . . 179,971 179,971
(Cost $179,971) ----------
TOTAL INVESTMENTS (97.8%)
(Cost $4,139,372). . . . . . . . . . . . . . . . . $5,309,282
OTHER ASSETS IN EXCESS OF LIABILITIES (2.2%) . . . . . . . . 120,521
----------
NET ASSETS (100%). . . . . . . . . . . . . . . . . . . . . . $5,428,427
----------
----------
</TABLE>
* The accompanying notes to financial statements are an integral part of the
financial statements.
** Securities on which no cash dividends were paid during the preceding twelve
(12) months.
7
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
ASSETS:
Investments, at value (Cost - see below). . . . . . . . . $ 5,309,282
Receivable for investments sold . . . . . . . . . . . . . 169,182
Dividends and interest receivable . . . . . . . . . . . . 4,900
Prepaid Bond Expenses . . . . . . . . . . . . . . . . . . 1,523
Other Assets. . . . . . . . . . . . . . . . . . . . . . . 1,141
----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . $ 5,486,028
----------
LIABILITIES:
Transfer Agent Fee. . . . . . . . . . . . . . . . . . . . $ 12,649
Management Fee**. . . . . . . . . . . . . . . . . . . . . 4,989
Custody Fee . . . . . . . . . . . . . . . . . . . . . . . 2,312
Accounting Fee. . . . . . . . . . . . . . . . . . . . . . 4,600
Legal Fee . . . . . . . . . . . . . . . . . . . . . . . . 9,189
Audit Fee . . . . . . . . . . . . . . . . . . . . . . . . 11,873
Trustee Fee . . . . . . . . . . . . . . . . . . . . . . . 590
Printing Fee. . . . . . . . . . . . . . . . . . . . . . . 8,244
Other payables. . . . . . . . . . . . . . . . . . . . . . 3,155
----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . $ 57,601
----------
NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . $ 5,428,427
----------
----------
COMPOSITION OF NET ASSETS:
Capital Stock (Par Value $1.00) . . . . . . . . . . . . . $ 409,077
Paid in capital . . . . . . . . . . . . . . . . . . . . . 3,552,168
Over-distributed net investment income. . . . . . . . . . (930,597)
Accumulated net realized gain on investments. . . . . . . 1,227,869
Net unrealized appreciation in value of investments . . . 1,169,910
----------
NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . $ 5,428,427
----------
----------
NET ASSET VALUE PER SHARE:
Net assets. . . . . . . . . . . . . . . . . . . . . . . . $ 5,428,427
----------
Shares of beneficial interest outstanding . . . . . . . . 409,077
Net asset value and redemption price per share. . . . . . $13.27
----------
COST OF INVESTMENTS . . . . . . . . . . . . . . . . . . . $ 4,139,372
----------
----------
* The accompanying notes to financial statements are an integral part of the
financial statements.
** Related Party
8
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . $ 4,220
Interest. . . . . . . . . . . . . . . . . . . . . . . . . 61,858
----------
TOTAL INCOME . . . . . . . . . . . . . . . . . . . $ 66,078
----------
EXPENSES:
Investment Advisory Fee . . . . . . . . . . . . . . . . . $ 33,694
Administrative Fee. . . . . . . . . . . . . . . . . . . . 15,000
Transfer Agency Fee . . . . . . . . . . . . . . . . . . . 22,783
Accounting Fee. . . . . . . . . . . . . . . . . . . . . . 5,850
Legal . . . . . . . . . . . . . . . . . . . . . . . . . 18,630
Printing. . . . . . . . . . . . . . . . . . . . . . . . . 4,442
Registration Fee. . . . . . . . . . . . . . . . . . . . . 426
Audit . . . . . . . . . . . . . . . . . . . . . . . . . 10,593
Custodian . . . . . . . . . . . . . . . . . . . . . . . . 9,000
Corporate Expense . . . . . . . . . . . . . . . . . . . . 13,624
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 1,640
Other . . . . . . . . . . . . . . . . . . . . . . . . . 14,067
----------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . . $ 149,749
----------
----------
NET INVESTMENT INCOME (LOSS) . . . . . . . . . . . . . . . . $ (83,671)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net Realized Gain (Loss)on Investments. . . . . . . . . . $1,006,649
Unrealized Appreciation (Depreciation)
Beginning of Period . . . . . . . . . . . . . . . . . . 1,116,683
End of Period . . . . . . . . . . . . . . . . . . . . . 1,169,910
----------
Change in net unrealized appreciation/depreciation. . . . 53,227
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS. . . . . . 1,059,876
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . $ 976,205
----------
----------
* The accompanying notes to financial statements are an integral part of the
financial statements.
9
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
1997 1996
-------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . $ (83,671) $ (56,177)
Net Realized Gain On Investments. . . . . . . . . . . . . . . . . . 1,006,649 884,070
Net Increase In Unrealized Appreciation/Depreciation. . . . . . . . 53,227 (590,898)
-------------------------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . 976,205 236,995
-------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Realized Gain On Investments. . . . . . . . . . . . . . . . . . (884,196) (449,307)
Change in Net Assets Derived from Investment Activities . . . . . . 92,009 (212,312)
-------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net Increase (Decrease) in Net Assets Derived From
Beneficial Interest Transactions - Note 4 . . . . . . . . . . . . 797,820 599,614
-------------------------------
NET INCREASE (DECREASE) IN NET ASSETS . . . . . . . . . . . 889,829 387,302
-------------------------------
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 4,538,598 4,151,296
-------------------------------
End of period (including overdistributed net investment income
of $930,597 and $846,923, respectively). . . . . . . . . . . . . $5,428,427 $ 4,538,598
-------------------------------
-------------------------------
</TABLE>
* The accompanying notes to financial statements are an integral part of the
financial statements.
10
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . $13.19 $13.97 $10.24 $12.07 $11.58
------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income . . . . . . . . . . . . . . . (0.20) (0.17) (0.26) (0.29) (0.21)
Net Realized and Unrealized Gain (Loss)
on Investments. . . . . . . . . . . . . . . . . . 2.83 0.90 4.51 0.55 1.56
------------------------------------------------------------------
Total Income from Investment Operations . . . . . 2.63 0.73 4.25 0.26 1.35
------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net realized gain on
investments . . . . . . . . . . . . . . . . . . . (2.55) (1.51) (0.52) (2.09) (0.86)
Total Distributions to shareholders . . . . . . . . (2.55) (1.51) (0.52) (2.09) (0.86)
------------------------------------------------------------------
Net Asset Value, End of Period . . . . . . . . . . . . $13.27 $13.19 $13.97 $10.24 $12.07
------------------------------------------------------------------
------------------------------------------------------------------
Total Return . . . . . . . . . . . . . . . . . . . . . 22.89% 5.70% 43.71% 1.86% 11.80%
------------------------------------------------------------------
------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s) . . . . . . . . $5,428 $4,539 $4,151 $2,992 $3,024
------------------------------------------------------------------
------------------------------------------------------------------
Ratio of Operating Expenses to
Average Net Assets. . . . . . . . . . . . . . . . 2.90% 2.29% 3.10% 3.51% 2.81%
------------------------------------------------------------------
------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to
Average Net Assets. . . . . . . . . . . . . . . . (1.62)% (1.26)% (2.10)% (2.86)% (1.82)%
------------------------------------------------------------------
------------------------------------------------------------------
Portfolio Turnover Rate** . . . . . . . . . . . . . 88% 108% 60% 43% 50%
------------------------------------------------------------------
------------------------------------------------------------------
Average Commission Rate***. . . . . . . . . . . . . $.1044 $.1248 - - -
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</TABLE>
* The accompanying notes to financial statements are an integral part of the
financial statements.
** A portfolio turnover rate is the percentage computed by taking the lesser
of purchases or sales of portfolio securities (excluding short-term
investments) for a year and dividing it by the monthly average of the
market value of the portfolio securities during the year.
*** For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged.
11
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND NATURE OF OPERATIONS -- Stonebridge Aggressive Growth
Fund, Inc. (the Fund) is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment company.
SECURITY VALUATION -- Investment securities listed or traded on a
registered securities exchange or quoted on NASDAQ are valued at the last
sales price on the date of valuation. Securities traded on the
over-the-counter market for which no sales are reported are valued at the
mean between the bid and asked price.
Short-term debt securities consist of U.S. Treasury and Agency Obligations
and are stated at amortized cost which is approximately equivalent to
value. Amortization of premiums and accretion of discounts is accrued
and recorded daily.
FEDERAL INCOME TAXES -- No provision for Federal income taxes is necessary
since the Fund is qualified as a "regulated investment company" under the
Internal Revenue Code and intends to maintain this qualification and
distribute substantially all of its net investment income and realized
gains from investment transactions to its shareholders each year.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate charaterization
for federal income tax purposes due to GAAP/tax differences in the
character of income and expense recognition.
DISTRIBUTIONS --Distributions of net investment income, if any, are
distributed annually. Distributions of net realized gains, if any, are
declared at least once each year. Distributions to shareholders are
recorded on the ex-dividend date.
OTHER -- Securities transactions are accounted for on the date the
securities are purchased or sold (trade date). Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income is recognized on the accrual basis. Realized gains and
losses from investment transactions and unrealized appreciation and
depreciation of investments are reported on an identified cost basis, which
is the same basis the Fund uses for Federal income tax purposes.
USE OF ESTIMATES -- The preparation of the Fund's financial statements in
conformity with generally accepted accounting principles requires the
Fund's management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those statements.
12
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
2. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities (excluding short-term
securities), for the year ended October 31, 1997 were as follows:
Purchases Sales
Common Stocks $3,950,257 $3,994,196
As of October 31, 1997
Gross appreciation (excess of value over cost) $1,387,914
Gross depreciation (excess of cost over value) (218,004)
----------
Net unrealized appreciation $1,169,910
This amount represents the net increase in the value of investments
(all of which are represented by long transactions) held during the
year.
3. TRANSACTIONS WITH AFFILIATES:
From November 1, 1996 to July 22, 1997, the following Investment Adviser
Agreement was in place with Stonebridge Capital Management, Incorporated
(Stonebridge). Certain officers and directors of the Fund are affiliated
with Stonebridge. Under the Agreement, the Fund pays a monthly advisory fee
to Stonebridge for a continuous investment program approximately
equivalent, on an annual basis, to the sum of: (a) 1/2 of 1% of the average
weekly net assets on the first $10,000,000 of assets; (b) 1/4 of 1% on the
next $15,000,000; and 1/8 of 1% of the excess over $25,000,000. For these
fees, Stonebridge provides to the Fund, in addition to investment advice
and management, the services of the Fund's officers and other personnel,
except that by contract the Fund is obligated to pay the costs of services
of its principal financial officer and of personnel operating under the
direction of the principal financial officer. Officers salaries paid by
the Fund during the year ended October 31, 1997 amounted to $13,525.
The Agreement provides that the advisory fee will be reduced by the amount
which will reduce the total expenses of the Fund, including the advisory
fee, but excluding taxes and interest to the amount of the aggregate annual
expenses (2 1/2% of the first $30,000,000 of the Fund's average weekly net
assets, 2% of the next $70,000,000 of the average weekly net assets, and
1 1/2% of the average weekly net assets in excess of $100,000,000
calculated on a monthly basis) which, if exceeded, would result in the
denial of the California Department of Corporations of a permit allowing
the shares of the Fund to be sold in California. Subsequent to October 31,
1986, the Fund applied for a variance from the limitation on aggregate
expenses. The variance was granted on February 13, 1987, permitting
custodial fees and expenses, transfer agent fees and expenses, and
accounting fees to be excluded from aggregate annual expenses for purposes
of computing the expense limitation. The variance applies to the fiscal
year ended
13
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
October 31, 1986 and future years, or until such time as the variance is
revoked by the California Department of Corporations. For the fiscal year
ended October 31, 1997, applicable operating expenses did not exceed the
statutory limitations.
On July 23, 1997, the Fund entered into a new investment advisory agreement
with Stonebridge. For the services provided and the expenses assumed
pursuant to this agreement, the Fund will pay the Investment Adviser and
the Investment Adviser will accept as full compensation a fee, computed
daily and paid monthly (in arrears), at the annual rate of 1% of the
average daily net assets of the Fund.
The Investment Adviser may from time to time voluntarily agree to reduce
its fees or absorb other operating expenses to ensure that the expenses of
the Fund do not exceed certain limitations. In such event, any such
reductions and other expenses paid by the Investment Adviser will be repaid
to the Investment Adviser by the Fund, without interest, at such later time
or times as they may be repaid without causing the aggregate operating
expenses of the Fund to exceed such voluntary expense limitations. In the
event this Agreement is terminated for any reason, any such repayment
obligation will also be terminated without further liability to the Fund.
4. CAPITAL STOCK:
At October 31, 1997, there were indefinite shares of $1.00 par value
capital stock authorized shares. Transactions in shares of capital stock
for the years ended October 31, 1997 and 1996, were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares Sold . . . . . . . . . . . . . . . . . 28,323 19,796 $ 378,125 $ 268,106
Shares Issued to Shareholders
in Reinvestment of Dividends. . . . . . . . 71,471 33,801 844,073 425,557
Less Shares Redeemed. . . . . . . . . . . . . (34,794) (6,761) (424,378) (94,049)
---------------------------------------------------
Net Increase. . . . . . . . . . . . . . . . . 65,000 46,836 797,820 599,614
</TABLE>
5. DISTRIBUTION TO SHAREHOLDERS:
On December 26, 1996, a distribution of $2.55 per share, aggregating
$884,196 was declared from net realized gains from investment transactions.
14
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
PORTFOLIO MANAGERS: Dr. John Ayer
Charles Woodhouse
CUSIP: 822998010
E-MAIL ADDRESS: [email protected]
SHAREHOLDER SERVICES
PHONE NUMBER: 1-800-639-3935
15
