<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 1997
REGISTRATION NO. 2-12893
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
POST-EFFECTIVE AMENDMENT NO. 58
AND
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 58
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
1801 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (310) 277-1450
JOHN G. AYER, PRESIDENT
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
1801 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
MICHAEL GLAZER, ESQ.
PAUL, HASTING, JANOFSKY & WALKER
555 SOUTH FLOWER STREET
23RD FLOOR
LOS ANGELES, CALIFORNIA 90071
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
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)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
Registrant has registered an indefinite number of shares by this Registrant
Statement. Registrant filed a Notice under such Rule for its fiscal year
ended October 31, 1996 on February 28, 1997.
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
Cross Reference Sheet Showing Location in Prospectus and in Statement of
Additional Information of Information Required by Items of Form N-1A
FORM N-1A
ITEM AND HEADING PROSPECTUS CAPTION
---------------- ------------------
Part A--
Item:
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Per Share Data and Ratios
4. General Description of Registrant What is the Fund; Objectives
and Investment Policy
5. Management of the Fund Board of Directors; Investment
Adviser; Custodian, Transfer
Agent and Dividend Disbursing
Agent
6. Capital Stock and Other Securities Capital Stock; Dividends and
Tax Status; Systematic Cash
Withdrawal Plan
7. Purchase of Securities Being Offered Cover Page; How Net Asset
Value is Determined; How to
Buy and Redeem Fund Shares
8. Redemption or Repurchase How to Buy and Redeem Fund
9. Pending Legal Proceedings Shares Inapplicable
STATEMENT OF ADDITIONAL INFORMATION CAPTION
-------------------------------------------
Part B--
Item:
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Inapplicable
13. Investment Objectives and Policies Investment Objectives and
Policies; Investment
Restrictions, Brokerage
Transactions
14. Management of the Fund Officers and Directors
15. Control Persons and Principal Holders
of Securities Officers and Directors
16. Investment Advisory and Other Services Investment Advisory and Other
Services
17. Brokerage Allocation and Other
Practices Brokerage Transactions
18. Capital Stock and Other Securities Inapplicable
19. Purchase, Redemption and Pricing of
Securities Being Offered Purchase Redemption and
Pricing of Securities Being
Offered
20. Tax Status Inapplicable
21. Underwriters Inapplicable
22. Calculation of Performance Data Inapplicable
23. Financial Statements Financial Statements
Part C--
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
1801 CENTURY PARK EAST, LOS ANGELES, CALIFORNIA 90067
(310) 277-1450
Stonebridge Aggressive Growth Fund, Inc. (the "Fund") is a no-load,
diversified, open-end investment company. Its principal objective is
long-term growth of capital. A secondary consideration is the production of
short-term income. In order to achieve its investment objectives, the Fund
invests in securities of companies which appear to have good prospects for
increased earnings and dividends and uses certain other investment techniques
in an effort to enhance income and reduce market risks.
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.
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT INVESTORS SHOULD KNOW
ABOUT THE FUND PRIOR TO INVESTING AND SHOULD BE RETAINED FOR FUTURE
REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY 28, 1997, HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS HEREBY
INCORPORATED BY REFERENCE. A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION
IS AVAILABLE UPON REQUEST AND WITHOUT CHARGE BY WRITING OR CALLING THE FUND.
THIS PROSPECTUS IS DATED FEBRUARY 28, 1997
<PAGE>
SUMMARY OF EXPENSES
This table is designed to assist shareholders in understanding the
various fees and expenses associated with investing in the Fund. The Example
shown below should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
<TABLE>
<S> <C>
Shareholder Transaction Expenses:
Maximum sales load imposed on purchases (as a percentage of offering price) none
Maximum sales load imposed on reinvested dividends (as a percentage of offering price) none
Deferred sales load (as a percentage of original purchase price or redemption proceeds,
as applicable) none
Redemption fees (as a percentage of amount redeemed, if applicable) none
Exchange fee none
Annual Fund Operating Expenses for the year ended October 31, 1996
(as a percentage of average net assets):
Management fees .91%
----
12b-1 fees none
Other expenses (Audit, legal, shareholder services, transfer agent, custodian,
and miscellaneous) 1.38%
-----
Total Fund Operating Expenses 2.29%
----
----
</TABLE>
<TABLE>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following total fees and expenses
on a $1,000 investment, assuming (1) 5% annual
return (a) and (2) redemption at the end of each time period: $24 $27 $29 $303(b)
--- --- --- ----
</TABLE>
(a) Use of this assumed annual return is mandated by the Securities and
Exchange Commission and is not intended to be an illustration of past or
future investment results.
(b) These are cumulative totals. The average fees and expenses paid over a
10-year period would be approximately $30.30 per year.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The per share data and ratios in the following table for the years ended
October 31, 1996, 1995 and 1994, have been audited by Hein + Associates LLP,
independent auditors, whose report thereon and on the financial statements
and the related notes, appears in the Statement of Additional Information.
The per share data and ratios for each of the five years in the period ended
October 31, 1991, were audited by other auditors, whose report dated November
21, 1991 expressed an unqualified opinion on such selected per share data and
ratios.
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
FOR THE YEARS ENDED OCTOBER 31,
- -------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.97 $10.24 $12.07 $11.58 $13.22 $8.37 $12.27 $11.41 $10.73 $11.58
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.17) (.26) (.29) (.21) (.27) (.23) (.22) (.17) (.30) (.43)
Net gains or losses on securities
(both realized and unrealized) .90 4.51 .55 1.56 (.20) 5.30 (1.22) 1.66 .98 .10
------ ------ ------ ------ ------ ----- ------ ------ ------ ------
Total from investment operations .73 4.25 .26 1.35 (.47) 5.07 (1.44) 1.49 .68 (.33)
LESS DISTRIBUTIONS:
Dividends (from net investment
income -- -- -- -- -- -- -- -- -- --
Dividends (from capital gains) (1.51) (.52) (2.09) (.86) (1.17) (.22) (2.46) (.63) -- (.52)
Net asset value, end of year $13.19 $13.97 $10.24 $12.07 $11.58 $13.22 $8.37 $12.27 $11.41 $10.73
------ ------ ------ ------ ------ ----- ------ ------ ------ ------
------ ------ ------ ------ ------ ----- ------ ------ ------ ------
Total Return 5.70% 43.71% 1.86% 11.80% (4.67)% 61.63% (15.30%) 13.54% 6.34% (3.16)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's): $4,539 $4,151 $2,992 $3,024 $3,032 $3,459 $2,247 $2,672 $2,686 $2,862
Ratio of operating expenses* 2.29% 3.10% 3.51% 2.81% 3.03% 3.49% 3.99% 3.28% 3.31% 3.87%
Ratio of net investment income
(loss to average net assets) (1.26)% (2.10)% (2.86)% (1.82)% (2.24)% (2.08)% (2.29)% (1.32)% (2.50)% (3.16)%
Portfolio turnover rate ** 108% 60% 43% 50% 67% 49% 69% 49% 11% 33%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes state taxes.
** 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.
3
<PAGE>
WHAT IS THE FUND
Stonebridge Aggressive Growth Fund, Inc. (the "Fund") is an investment
company which was organized in the State of Delaware. Purchasers of the
Fund's shares invest in a company that itself invests in securities. The
Fund is an open-end investment company because, upon demand of an investor,
the Fund has a legal duty to redeem its shares held by the investor and pay
the investor the net asset value of the shares. See "How Net Asset Value is
Determined" and "How to Buy and Redeem Fund Shares" on page 10. The Fund
makes investments in various securities and is a type of management company
commonly known as a mutual fund.
The Fund was organized as a corporation under the name Teachers Mutual
Fund of California, Inc. in the State of Delaware on October 1, 1956 and
commenced operations in 1957. The Fund's name was changed to Teachers
Association Mutual Fund of California, Inc. in 1957, to Inverness Growth
Fund, Inc. in 1973, to Sierra Growth Fund, Inc. in 1976 and to Stonebridge
Aggressive Growth Fund in 1996. The purpose of the Fund is to provide
investors with an opportunity to acquire an interest in a comprehensive
common stock program under the continuous supervision of impartial and
experienced professional investment management. Investment companies operate
in accordance with their objectives and policies. The Fund's investment
objectives and policies are set forth below under "Objectives and Investment
Policy."
With respect to the purchase and sale of investments, the Fund receives
investment advice and other services from Stonebridge Capital Management,
Incorporated (the "Adviser"), which is paid a fee pursuant to a contract.
See "Investment Adviser" on page 10 for a discussion of the Adviser and its
contract with the Fund. In addition to the advisory fee, the Fund pays other
costs including custodian and transfer agency fees, audit and legal fees,
brokerage fees and fees for certain administrative services.
The value of the Fund's shares, which are priced daily, fluctuates with
the value of the securities in which the Fund invests. When the Fund sells
portfolio securities it may realize a gain or a loss, depending on whether it
sells them for more or less than their cost. The Fund will earn dividend or
interest income to the extent that it receives dividends and interest from
its investments.
The Fund offers its shares to the public at net asset value on a
continuous basis. Such shares have been qualified for sale in California and
New York and may also be purchased in states where qualification is not
required.
OBJECTIVES AND INVESTMENT POLICY
The principal objective of the Fund is long-term growth of capital. The
production of short-term income is a secondary consideration. In order to
achieve these objectives, management obtains careful and intensive studies of
trends of various industries and companies, including their earnings, as well
as the appreciation possibilities and relative investment values of their
securities.
Management seeks to attain the objectives of the Fund primarily through
the ownership of securities of companies which appear to have good prospects
for superior earnings growth. In order to achieve it's growth objective,
the Fund will often invest in small capitalization companies which have
higher growth rates. Proper diversification will even out the higher
volatility. There can be no assurance that these objectives will be achieved
since all investments are subject to risk in varying degrees. Such
objectives can be changed by the Board of Directors of the Fund.
It is a policy of the Fund, which may not be changed without approval of a
majority of the outstanding voting securities of the Fund, to diversify its
investments and not to concentrate its assets in any one industry.
Diversification and non-concentration tend to reduce, though they do not
eliminate, the market risk inherent in all securities. At the same time they
broaden investment opportunities.
The Fund is not restricted to investment in companies of any particular
size, and it may invest in smaller growth companies as well as established
companies. The securities of smaller companies may be subject to more
volatile market movements and greater risk than the securities of more
well-established companies. The Fund does not usually invest in stocks which
are not listed on an exchange or on the NASDAQ National Market System.
4
<PAGE>
It is also the general policy of the Fund to remain fully invested in
common stocks. However, under certain circumstances, investments may be made
in other types of securities such as convertible bonds, preferred stocks,
American Depository Receipts, futures and options. There may also be times
when, in order to protect and preserve the assets of the Fund, management may
hold significant portions of the Fund's assets in cash, money market funds or
short-term US Treasury Securities, or make investments in those industries
which will best afford such protection, but in no event will more than 25% of
the Fund's assets be invested in any one industry.
The Fund may not invest an amount which exceeds 5% of the value of the
Fund's total assets in the securities of any one issuer. This restriction
does not apply to holdings of government securities.
The Fund does not trade actively for quick profits; however, changes are
made in the portfolio whenever such action appears advisable. During periods
of broad economic growth, emphasis is placed on seeking investments in
leading companies in those industries that are expected to lead the
expansion. During periods when the economy is sluggish, emphasis is placed
on seeking to invest in companies selected because of their individual
prospects for improved earnings. In recent years, companies that have
provided unusual investment opportunities notwithstanding a sluggish economy
have often been found to be among the leaders in the development of new
technology in their respective industries. Management HAS approached these
decisions with essentially the point of view of long-term investing but
securities may occasionally be sold for investment reasons even though they
have been held for short periods. Therefore, there may be a limited number
of short term transactions. This flexibility gives management freedom to
adjust the portfolio to changing business conditions. Because of this
policy, it is anticipated that the annual portfolio turnover will normally be
in the range of 25-100%. A 50% turnover rate would occur, for example, if
one-half of the value of the shares of the Fund's portfolio were replaced in
a period of one year. The rate of portfolio turnover in the Fund for the
fiscal years ended October 31, 1996, 1995 and 1994 was 108%, 60%, and 43%,
respectively. Brokerage cost to the Fund is normally commensurate with the
rate of portfolio activity.The investor should consider the tax consequences
of these policies as discussed on page 9.
Maintaining the purchasing power of the capital of the Fund is an
important consideration of management in the determination of investment
policy, but there can be no assurance that investors in the Fund will be
protected from the effects of inflation.The principal risk factor generally
attendant to investment in an investment company with investment policies and
objectives similar to the Fund's is the market risk inherent in investment in
the underlying securities in which the Fund invests. An additional risk
factor peculiar to investment in the Fund arises from the fact that long-term
growth is sought by the Fund at the possible expense of short-term profits.
FOREIGN INVESTMENTS. The Fund may invest up to 20% of its assets, either
directly or indirectly through investments in American Depository Receipts
("ADRs"), closed-end investment companies and in securities issued by foreign
companies wherever organized. ADRs are receipts issued by an American bank
or trust company evidencing ownership of underlying securities issued by a
foreign issuer. ADRs may be listed on a national securities exchange or may
trade in the over-the-counter market. ADR prices are denominated in United
States dollars; the underlying security may be subject to foreign government
taxes which would reduce the yield on such securities.ADRs may be sponsored
by the foreign issuer or may be unsponsored (organized independently from the
foreign issuer). Available information regarding the foreign securities
underlying unsponsored ADRs may not be as current as for sponsored ADRs, and
the prices of unsponsored ADRs may be more volatile.
Securities of closed-end investment companies INVESTING IN FOREIGN
SECURITIES MAY be acquired by the Fund within the limits prescribed by the
Investment Company Act of 1940. The Fund will invest in closed-end
investment companies only in furtherance of its investment objective. Such
companies, themselves, however, may have policies that are different from
those of the Fund and will bear management and other expenses of the same
type as those paid by the Fund and which may be greater or lesser in amount
than those paid by the Fund.
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those
not subject to the disclosure and reporting requirements of the United States
securities laws. Foreign issuers are generally not bound by uniform
accounting, auditing and financial reporting requirements comparable to those
applicable to domestic issuers. Investments in foreign securities also
involve the risk of possible adverse changes in investment or exchange
control regulations, expropriation or confiscatory taxation, political or
financial instability or diplomatic and other developments which could affect
such investments. Further, economies of particular countries or areas of the
world may differ favorably or unfavorably from the economy of the United
States.
5
<PAGE>
The Fund may enter into currency exchange contracts (agreements to
exchange dollars for foreign currencies at a future date) to manage exchange
rate risk. Currency exchange contracts allow the Fund to hedge the Fund's
foreign investments against adverse exchange rate changes. Successful
currency hedging depends upon the Adviser's ability to predict foreign
currency values. A currency exchange contract will tend to offset both
positive and negative currency fluctuations but will not offset other changes
in the value of the Fund's foreign investments. The Fund does not and will
not use currency exchange contracts for speculative purposes.
OPTIONS AND STOCK INDEX FUTURES. In addition to its investments in
securities, the Fund may buy and sell options on stocks and stock indices,
stock index futures contracts, and options on futures with respect to a
portion of its assets. The Fund may purchase and sell options on stocks and
stock indices, stock index futures contracts and futures options to manage
cash flow and to attempt to remain fully invested in the stock market. Since
stock index options and futures contracts and options are based on broad
stock market indices, their performance tends to track the performance of
common stocks generally--which may or may not correspond to the types of
securities in which the Fund invests. Some options and futures strategies
expose the Fund to stock market changes when it is not fully invested in
stocks, and some strategies hedge against stock price fluctuations. When the
Fund has cash from new investments in the Fund or holds a portion of its
assets in money market instruments, it may enter into futures contracts or
options to attempt to increase its exposure to the stock market. Strategies
the Fund could use to accomplish this include purchasing futures contracts,
writing put options, and purchasing call options. When the Fund wishes to
sell securities, because of shareholder redemption or otherwise, it may use
futures or options to hedge against market risk until the sale can be
completed. These strategies could include selling futures contracts, writing
call options, and purchasing put options. The Fund will not use leverage in
futures and options transactions, and will segregate liquid assets to cover
its potential obligations when required to do so by guidelines issued by the
Securities and Exchange Commission.
In selecting futures contracts and options for the Fund, the Adviser will
assess such factors as current and anticipated stock prices, relative
liquidity and price levels in the options and futures markets compared to the
securities markets, and the Fund's cash flow and cash management needs. If
the Adviser judges these factors incorrectly, or if price changes in the
Fund's futures or options positions are not correlated with its other
investments, use of futures contracts and options may lower the Fund's
return. The Fund could also be exposed to risks if it could not close out
its futures or options positions because of an illiquid secondary market.
The Fund's policies regarding options and futures contracts are not
fundamental policies and may be changed at any time without shareholder
approval.
SHORT SALES. The Fund may from time to time make short sales "against
the box" when it believes that a decline may occur in the price of a security
held by the Fund (or in the price of a security convertible into or
exchangeable for such security), or when the Fund wants to sell the security
at a current attractive price but also wished to defer recognition of gain
or loss for tax purposes.
BOARD OF DIRECTORS
The overall management of the business and affairs of the Fund is vested
with the Board of Directors. The Board of Directors approves all significant
agreements between the Fund and persons or companies furnishing services to
the Fund, including the Fund's agreements with its investment adviser,
custodian, transfer agent, and dividend disbursing agent.
The day-to-day operations of the Fund are delegated to the Fund's
officers, subject always to the objectives and policies of the Fund and to
the general supervision of the Fund's Board of Directors.
INVESTMENT ADVISER
The Adviser, Stonebridge Capital Management, Incorporated, 1801 Century
Park East, Los Angeles, California 90067, is retained as investment adviser
pursuant to a written Investment Advisory Agreement (the "Agreement") last
approved by the shareholders of the Fund on May 11, 1987. Stonebridge
Capital Management, Incorporated is the successor to Cole, Ayer, McCully &
Light, Inc. which served as adviser to the Fund from June 29, 1976 to August
10, 1979 when it merged with Barrett & Denney, Incorporated, an investment
advisory firm the shareholders of which were Messrs. V. Barrett Denney and
Richard C. Barrett. Subsequently, the name Cole, Ayer, McCully & Light,
Inc., was changed to Stonebridge Capital Management, Incorporated.
6
<PAGE>
The Agreement provides that it shall remain in force and effect from year
to year so long as such continuance is approved at least annually by the
Board of Directors of the Fund or by a majority of the outstanding voting
securities of the Fund, but in either event it must be approved by a majority
of the directors who are not parties to the agreement or "interested persons"
of any such party (as defined in the Investment Company Act of 1940). The
Agreement also provides that it may be terminated without penalty at any time
by the Board of Directors of the Fund or by vote of a majority of the Fund's
outstanding voting securities or by the Adviser upon sixty days' written
notice and that it shall terminate automatically in the event of its
assignment (as defined in the Investment Company Act of 1940).
The Agreement provides that the Adviser shall act as investment adviser
for the Fund and make recommendations with respect to the investment and
reinvestment of the portfolio of the Fund. In carrying out its function as
investment adviser, the Adviser obtains and evaluates such economic,
statistical and financial information as may be pertinent to the formulation
and implementation of programs for investment and reinvestment. In this
connection, the Adviser determines what industries and companies shall be
represented in the Fund's portfolio and regularly reports thereon to the
Board of Directors of the Fund. Any investment program undertaken by the
Adviser, as well as any other activities undertaken by the Adviser on behalf
of the Fund, are at all times subject to any directives of the Fund's Board
of Directors.
In addition, the Agreement provides that, subject to the authority of the
Board of Directors of the Fund, the Adviser shall supervise and manage the
business of the Fund. The Adviser 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
cost of services of its principal financial officer and of personnel
operating under the direction of the principal financial officer.
The Adviser is normally paid an annual fee which is a percentage of the
average weekly net asset value of the Fund equal to 1/2% of the first $10
million, 1/4% of the next $15 million, and 1/8% of the excess over $25
million. Under the Agreement, the Adviser may be obligated to refund all or a
portion of its fee to the Fund if certain expenses of the Fund exceed an
expense limitation established by the California Department of Corporations.
For the Fund's fiscal year ended October 31, 1996, the Adviser received a fee
for investment advisory services which represented .91% of the Fund's average
net assets.
The Adviser is owned by six of its employees. John G. Ayer, President of
the Fund and Vice President of the Adviser, has been primarily responsible
for the day-to-day management of the Fund's portfolio since 1985. Although
the organizational arrangements of the Adviser do not require that all
investment decisions be made by committee, it is the practice of the Adviser
to make such decisions by committee.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The Fund's transfer agent and dividend disbursing agent is NIF Management
Co., Inc., 5990 Greenwood Plaza Boulevard, Englewood, Colorado 80111 (the
"Transfer Agent"), and the Fund's custodian is Colorado National Bank of
Denver, 17th and Champa Street, Denver, Colorado 80202 (the "Bank").
CAPITAL STOCK
The authorized capitalization of the Fund consists of 3,000,000 shares of
capital stock having a par value of $1.00 per share. All full shares have
equal rights with respect to voting, repurchase, dividends, and liquidation.
Each share is transferable and redeemable on written demand of the holder.
All shares are fully paid and are not subject to assessment. Shares have no
preemptive or conversion rights. In the election of directors, shareholders
have the right to cumulate their votes. Under the cumulative voting method, a
shareholder is entitled to cast a total number of votes equal to the number
of directors to be elected, multiplied by the total number of votes to which
his or her shares are entitled. These votes may be cast for one candidate or
distributed among any number of candidates.
At the Fund's annual shareholder meeting held on March 28, 1996, its
shareholders approved an amendment to the Fund's Certificate of Incorporation
changing its name to "Stonebridge Aggressive Growth Fund." The Adviser has
entered into a license agreement with the Fund permitting the fund to use the
phrase "Stonebridge" in its name for so long as the Adviser continues to act
as the Fund's investment adviser.
Shareholder inquiries concerning the Fund should be directed to a Fund
representative by calling (310) 277-1450.
7
<PAGE>
REPORTS TO SHAREHOLDERS
The Fund issues semi-annual and annual reports to its shareholders listing
securities held in its portfolio and containing financial statements and
other information. The accounts of the Fund are audited annually by
independent auditors.
DIVIDENDS AND TAX STATUS
Annual dividends, if any, are paid to shareholders from the Fund's
investment income after deducting expenses. Dividends from net investment
income are normally paid in December. Capital gains realized on investment
holdings, if any, will be distributed to shareholders once a year, usually in
December. With respect to dividends, shareholders holding certificates and
shareholders whose written request for a cash payment is received by the
Transfer Agent before the payable date are paid the cash value of such
dividends. All other shareholders are paid their dividends in shares of the
Fund at net asset value. With respect to capital gains distributions, all
shareholders are paid in shares of the Fund at net asset value, except for
shareholders holding certificates and shareholders whose written request for
a cash payment is received by the Transfer Agent before the payable date of
such distribution. A dividend or capital gains distribution payment will
have the effect of reducing the net asset value of a share by the amount of
such payment. Furthermore, such dividends or distributions are subject to
income taxes.
The Fund has complied and intends to comply with the provisions of
Subchapter M of the Internal Revenue Code relating to "regulated investment
companies."
It is the policy of the Fund to distribute to shareholders each year
substantially all of its net taxable income and realized capital gains. By
following this policy, and meeting certain other requirements, the Fund is
relieved of the payment of federal income taxes. Net gains on sales of
securities when realized and distributed (actually or constructively) are
taxable to shareholders as capital gains.
Dividends from net investment income are taxable to shareholders as
ordinary income and are generally eligible, in the case of corporations, for
the 70% deduction for corporate shareholders provided by the Internal Revenue
Code. Capital gains distributions do not qualify for such exclusion. For the
fiscal year ended October 31, 1996, there were no dividends paid from
investment income of the Fund so none were eligible for such exclusion.
Shareholders who are citizens or residents of the United States pay federal
taxes at capital gains rates on long-term capital gains which are distributed
to them, whether or not reinvested in the Fund, and regardless of the period
of time that such shares have been owned by the shareholders. Advice as to
the tax status and amount of each year's dividends and distributions will be
mailed annually.
Pursuant to federal regulations, the Fund may be required to withhold for
federal income taxes 31% of distributions payable to shareholders who fail to
provide the Fund with their correct taxpayer identification numbers or to
make required representations, or who have been notified by the Internal
Revenue Service they are subject to back-up withholding. Corporate
shareholders, and other shareholders specified by the Internal Revenue Code,
are exempt from back-up withholding.
The foregoing is only a brief description of some of the federal income
tax consequences of holding Fund shares. Distributions also may be subject
to additional state, local, and foreign taxes, depending on each
shareholder's particular situation. Shareholders should consult their own
tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.
SYSTEMATIC CASH WITHDRAWAL PLAN
The Systematic Cash Withdrawal Plan (the "Plan") makes it possible to
receive a fixed amount of money at regular intervals--monthly or
quarterly--without disturbing investment diversification.
Any shareholder who owns $10,000 or more in shares of the Fund, based on
net asset value, may establish a Plan with the Transfer Agent to provide for
periodic monthly or quarterly payments of a fixed sum of $50 or more in
multiples of $10. The Fund makes no recommendation as to an appropriate
amount for withdrawal payments. Under this Plan, income dividends and
capital gains distributions are automatically reinvested in additional shares
at net asset value.
8
<PAGE>
Withdrawal payments represent proceeds from the redemption of shares. There
will be a reduction of the shareholder's equity in the Fund if the amount of
the withdrawal payments exceeds the dividends and distributions reinvested.
There is no limit as to the amount which may be withdrawn under the Plan. An
investor under the Plan ordinarily will not be permitted to make periodic
purchases at the same time as withdrawals.
Payments under the Plan may represent a return of capital as well as
income, and may deplete all or part of the initial investment under the Plan,
particularly if there is a market decline. Also, the number of payments
which a shareholder will receive will be affected by fluctuations in the
market.
A Plan authorization form may be obtained from the Fund upon request.
HOW NET ASSET VALUE IS DETERMINED
The net asset value per share is computed daily at the close of the New
York Stock Exchange (the "Exchange") on those days on which the Exchange is
open. The net asset value per share is determined by dividing the total
market value of all the Fund's securities and other assets including cash,
less all liabilities including accrued expenses, but excluding capital and
surplus, by the total number of Fund shares outstanding. Securities listed
or traded on a registered securities exchange or quoted on the NASDAQ
National Market ("NASDAQ") are valued at the last sales price on the day of
computation. 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.
The value of any other securities and assets will be determined at fair value
in good faith by or under the direction of the Board of Directors.
Dividends receivable are treated as assets from the date on which stocks go
ex-dividend, interest on bonds is accrued daily, and insofar as is
practicable, liabilities are accrued daily.
HOW TO BUY AND REDEEM FUND SHARES
TO BUY SHARES: Complete a Share Purchase Application and send it to the
Stonebridge Aggressive Growth Fund, Inc., 1801 Century Park East, Suite 1800,
Los Angeles, California 90067, along with your check or money order payable
to the Fund for $100 or more.
Upon acceptance, your Application will be forwarded to the Transfer Agent
which will establish an account in your name on the books of the Fund.
Additional purchases may be made without a new application at any time in
amounts of $25 or more by sending payments directly to NIF Management Co.,
Inc., P.O. Box 17017, Denver, Colorado 80217, in return envelopes supplied
by it. After each purchase, you will receive a confirmation showing the
number of full and fractional shares purchased and total shares owned. The
Fund reserves the right to reject any application or purchase order which it
judges to be disadvantageous to the Fund. If the initial application to
purchase shares and check or money order are received by the Fund prior to
the close of the Exchange on a given day, then the purchase price for the
shares will be the net asset value per share on such day. If the initial
application and check or money order are received by the Fund after the close
of the Exchange on a given day or on any day when the Exchange is not open,
the purchase price will be the net asset value per share as of the close of
the Exchange on the next day the Exchange is open. In the case of purchases
by existing shareholders, net asset value is determined based upon the time
the Transfer Agent receives the order and funds to purchase the shares.
Certificates representing the shares purchased are not issued unless
specifically requested. The Transfer Agent credits the shareholder's account
with the number of shares purchased. Each shareholder receives account
statements after every transaction, as well as annually, to provide him with
a record of the total number of shares in his account. This relieves the
shareholder of responsibility for safekeeping of certificates and, should he
redeem his shares, eliminates the need to deliver certificates. However, a
shareholder may at any time request the Transfer Agent to issue certificates
for full shares for all or a part of his holdings and such certificates will
bear the date on which the Transfer Agent receives the request to issue such
certificates.
TO REDEEM SHARES: If you wish to redeem shares for which you do not hold
share certificates, simply send your written redemption request, signed by
all registered owners, to the Transfer Agent. If you hold certificates for
your shares, endorse them for transfer and send them and a written redemption
request to the Transfer Agent.
9
<PAGE>
A signature guarantee by a guarantor institution which participates in The
Securities Transfer Agents Medallion Program (STAMP), The Stock Exchange
Medallion Program (SEMP) or The New York Stock Exchange, Inc. Medallion
Signature Program (MSP), is required if payment is to be made to someone
other than the registered stockholder at his address as listed on the Fund's
stock records.
In case of a redemption, the redemption price will be paid as soon as
possible but not later than the seventh day following the day of surrender of
shares in proper form as described above, except as further postponement may
be permissible under the Investment Company Act of 1940 for any period when
(a) the Exchange is closed for other than weekends or holidays or trading
thereon is restricted under conditions set forth by the Securities and
Exchange Commission (the "Commission"), (b) the Commission has by order
permitted such suspension, or (c) there is an emergency as defined by the
rules of the Commission, which makes disposal of portfolio securities or
valuation of the net assets of the Fund not reasonably practicable. Payment
for redemption of recently purchased shares will be delayed until the
Transfer Agent has been advised that the purchase check has been honored,
which may take up to 15 days.
The redemption price may be more or less than the cost of the shares
redeemed, depending upon the market value of the securities owned by the Fund
at the time of redemption.
THROUGH BROKERS: The Fund's shares may be purchased and redeemed through
certain registered securities broker-dealers. A broker-dealer who agrees to
process an order to purchase or redeem shares on your behalf may charge you a
fee for this service.
10
<PAGE>
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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
COLLEEN M. SCHOMER, Secretary
SELVYN B. BLEIFER, Director
MARVIN FREEDMAN, Director
CHARLES F. HAAS, Director
WILLIAM H. TAYLOR II, Director
EXECUTIVE OFFICES
1801 Century Park East, Suite 1800
Los Angeles, California 90067
Telephone--(310) 277-1450
INVESTMENT ADVISER
STONEBRIDGE CAPITAL MANAGEMENT, INC.
1801 Century Park East, Suite 1800
Los Angeles, California 90067
TRANSFER AGENT
NIF MANAGEMENT CO., INC.
5990 Greenwood Plaza Boulevard
Suite 325
Englewood, Colorado 80111
Telephone--(303) 220-8500
CUSTODIAN
COLORADO NATIONAL BANK OF DENVER
17th and Champa Street
Denver, Colorado 80202
LEGAL COUNSEL
PAUL HASTINGS, JANOFSKY & WALKER
555 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
INDEPENDENT AUDITORS
HEIN + ASSOCIATES LLP
717 17th Street
Suite 1600
Denver, Colorado 80202
- ---------------------------------------
<PAGE>
STONEBRIDGE AGGRESSIVE
GROWTH FUND, INC.
PROSPECTUS
FEBRUARY 28, 1997
1801 Century Park East
Los Angeles, CA 90067
- ---------------------------------------
<PAGE>
STATEMENT OF ADDITIONAL
INFORMATION
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
1801 Century Park East, Los Angeles, California 90067
(310) 277-1450
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE
READ IN CONJUNCTION WITH A PROSPECTUS, WHICH MAY BE OBTAINED BY WRITING
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC., 1801 CENTURY PARK EAST, LOS
ANGELES, CALIFORNIA 90067 (310) 277-1450
STATEMENT OF ADDITIONAL INFORMATION DATED: FEBRUARY 28, 1997
RELATING TO THE PROSPECTUS DATED: FEBRUARY 28, 1997
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
----
Introduction 3
Investment Objectives and Policies 3
Investment Restrictions 8
Officers and Directors 8
Investment Advisory and Other Services 10
Brokerage Transactions 10
Purchase, Redemption and Pricing of Securities Being Offered 11
Index to Financial Statements F-1
Report of Independent Auditors F-2
Statement of Assets and Liabilities F-3
Portfolio of Investments F-4
Statement of Operations F-6
Statements of Changes in Net Assets F-7
Notes to Financial Statements F-8
-2-
<PAGE>
INTRODUCTION
Stonebridge Aggressive Growth Fund, Inc. (the "Fund") is a no-load,
diversified, open-end investment company, commonly known as a mutual fund.
The rules and regulations of the United States Securities and Exchange
Commission (the "SEC") require all mutual funds to furnish prospective
investors certain information concerning the activities of the company being
considered for investment. This information is included in a Prospectus
dated February 28, 1997 (the "Prospectus"), which may be obtained without
charge by writing or calling the Fund. This Statement of Additional
Information is intended to furnish investors with additional information
concerning the Fund. Some of the information required to be in this
Statement of Additional Information is included in the Fund's current
Prospectus; and, in order to avoid repetition, reference will be made to
sections of the Prospectus. Additionally, the Prospectus and this Statement
of Additional Information omit certain information contained in the Fund's
registration statement filed with the SEC. Copies of the registration
statement, including items omitted from the prospectus and this Statement of
Additional Information, may be obtained from the SEC by paying the charges
prescribed under its rules and regulations.
INVESTMENT OBJECTIVES AND POLICIES
Information concerning the Fund's fundamental investment objective is set
forth in the Prospectus under the heading "Objectives and Investment Policy."
The Fund's principal objective is long-term growth of capital. Production of
short-term income is a secondary consideration. In order to achieve its
investment objectives, the Fund invests in securities of companies which
appear to have good prospects for increased earnings and dividends and uses
certain other investment techniques in an effort to enhance income and reduce
market risks.
SHORT-TERM TREASURY SECURITIES. The Fund may invest in US Treasury
bills, which mature in one year or less, have fixed interest rates, and are
guaranteed by the full faith and credit of the US Government.
REGISTERED INVESTMENT COMPANIES. The Fund may invest in money market
mutual funds, and in closed-end investment companies with foreign security
portfolios. The Investment Company Act of 1940 prohibits the Fund from
investing in any such investment company if, as a result of the purchase, the
Fund and any "affiliated persons" of the Fund (as defined in the Act) would
own more than 3% of the total outstanding stock of the investment company.
CONVERTIBLE BONDS. The Fund may invest in convertible bonds, which are
fixed income securities that may be converted at a stated price within a
specified period of time into a certain quantity of the common stock of the
same or a different issuer. Convertible bonds are senior to common stocks in
an issuer's capital structure, but are usually subordinated to similar
non-convertible securities. While providing a fixed income stream (generally
higher in yield than the income derivable from common stock but lower than
that afforded by a similar nonconvertible security), a convertible security
also provides the investor the opportunity, through its conversion feature,
to participate in the capital appreciation of the underlying common stock.
Like other debt securities, the value of a convertible bond tends to vary
inversely with the level of interest rates. However, to the extent that the
market price of the underlying common stock approaches or exceeds the
conversion price, the price of the convertible bond will be increasingly
influenced by its conversion value (the security's worth, at market value, if
converted into the underlying common stock).
PREFERRED STOCKS. The Fund may invest in preferred stocks, though this
being an aggressive growth fund it would mostly consider convertible
preferred stocks for which the same criterion apply as the ones outlined
above for the convertible bonds.
SHORT SALES AGAINST THE BOX. The Fund may from time to time make short
sales of securities if at the time of the short sale it owns or has the right
to acquire, at no additional cost, an equal amount of the securities sold
short. This investment technique is known as a "short sale against the box."
In a short sale, the Fund does not immediately deliver the securities sold
and is said to have a short position in those securities until delivery
occurs. To make delivery to the purchaser, the executing broker borrows the
securities being sold short on behalf of the Fund. While the short position
is maintained, the Fund will collateralize its obligation to deliver the
securities sold short in an amount equal to the proceeds of the short sale
plus an additional margin amount established by the Board of Governors of the
Federal Reserve (presently 10% of the market value of the securities sold
short). If the Fund engages in a short sale, the collateral account will be
maintained by the Fund's custodian or a duly qualified sub-custodian. While
the short sale is open the Fund will maintain in a segregated custodial
account an amount of securities equal in kind and amount to the securities
sold short or securities convertible into or exchangeable for such equivalent
securities at no additional cost. These securities would constitute the
Fund's long position.
-3-
<PAGE>
The Fund may make a short sale against the box when it believes that the
price of a security may decline, causing a decline in the value of a
security owned by the Fund (or a security convertible into or exchangeable
for such security), or when the Fund wants to sell the security it wants at a
current attractive price, but also wishes to defer recognition of gain or
loss for federal income tax purposes and for purposes of satisfying certain
tests applicable to regulated investment companies under the Internal Revenue
Code. In such a case, any future losses in the Fund's long position should
be reduced by a gain in the short position. The extent to which such gains
or losses are reduced would depend upon the amount of the security sold short
relative to the amount the Fund owns. There will be certain additional
transaction costs associated with short sales against the box, but the Fund
will endeavor to offset these costs with income from the investment of the
cash proceeds of short sales.
The Fund will not make short sales of securities if doing so could create
liabilities or require collateral deposits and segregation of assets
aggregating more than 25% of the market value of the Fund's total assets.
The Fund's ability to enter into short sales transactions is limited by the
requirements of the Internal Revenue Code for qualification as a regulated
investment company.
OPTIONS AND FUTURES TRANSACTIONS. The Fund intends to limit its
transactions in options to writing covered call options on stocks and stock
indexes, purchasing put options on stocks and on stock indexes, and closing
out such options in closing transactions. The Fund intends to limit its
transactions in futures contracts (contracts to purchase or sell an
underlying instrument at a future date), to purchasing and selling stock
index and foreign currency futures contracts, and to the purchase of related
options. Transactions in such options and futures contracts may afford the
Fund the opportunity to hedge against a decline in the value of securities it
owns, may provide a means for the Fund to generate additional income on its
investments, or may provide opportunities for capital appreciation.
In purchasing futures contracts and related options the Fund will comply
with rules and interpretations of the Commodity Futures Trading Commission
("CFTC"), under which the Fund is excluded from regulation as a "commodity
pool operator." CFTC regulations require, among other things, (1) that
futures be used solely for "bona fide hedging" purposes, as defined in CFTC
regulations, and (2) other positions for the establishment of which the
aggregate initial margin and option premiums (less the amount by which such
options are "in the money") do not exceed 5% of the Fund's net assets (after
taking into account unrealized gains and unrealized losses on any contract it
has entered into). The extent to which the Fund may engage in futures
transactions may also be limited by the Internal Revenue Code's requirements
for qualification as a regulated investment company.
The above limitations on the Fund's investments in futures contracts and
options, and the Fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit. The
Fund will not modify the above limitations to increase the permissible
futures and options activities without supplying additional information in a
current Prospectus or Statement of Additional Information that has been
distributed or made available to the Fund's shareholders.
OPTIONS ON SECURITIES. A call option is a short-term contract (generally
having a duration of nine months or less) under which the purchaser of the
call option, in return for payment of the option premium (the option's
current market price), obtains the right to buy the option's underlying
security at a specified exercise price at any time during the term of the
option. The writer of a call option, who receives the premium, assumes the
obligation to deliver the underlying security against payment of the exercise
price at any time the option is exercised. A put option is a similar
contract that gives the purchaser of the option, in return for the premium
paid, the right to sell the underlying security at a specified exercise price
at any time during the term of the option. The writer of the put option
receives the premium and assumes the obligation to buy the underlying
security at the exercise price whenever the option is exercised.
A call option is "covered" if the Fund owns the call option's underlying
security or has an absolute and immediate right to acquire that security
without the payment of additional consideration (or upon payment of
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities it owns. A call option is
also covered if the Fund owns, on a share-for-share basis, a call option on
the same security whose exercise price is equal to or less than the call
written, or greater than the exercise price of the call written if the
difference is maintained by the Fund in cash, Treasury bills and other
high-grade liquid debt securities in a segregated account with its custodian.
A put option is "covered" if the Fund maintains cash, Treasury bills and
other high-grade liquid debt securities with a value equal to the put
option's exercise price in a segregated account with its custodian, or else
owns, on a share-for-share basis, a put option on the same security whose
exercise price is equal to or greater than the put written. Securities held
to cover an option may not be sold (and may not be lent to another party) so
long as the Fund remains obligated under the option, unless they are replaced
by other appropriate securities. The premium paid for purchasing an option
reflects, among other things, the relationship of the exercise price to the
market price and volatility of the underlying security, the remaining term of
the option, supply and demand and interest rates.
-4-
<PAGE>
When the Fund has written an option it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by
purchasing, at the current market price, an option identical as to underlying
instrument, exercise price and expiration date to the option written by the
Fund. The Fund may not effect a closing purchase transaction, however, after
it has been notified that the option has been exercised. When the Fund has
purchased an option it may liquidate its position by exercising the option,
or by entering into a closing sale transaction by selling an option identical
to the option it has purchased. There is no guarantee that a closing
transaction can be effected.
The Fund will realize a profit from a closing transaction if the price at
which the option is closed out is less than the premium received for writing
the option or more than the premium paid for purchasing the option.
Similarly, the Fund will realize a loss from a closing transaction if the
price at which the option is closed out is more than the premium received or
less than the premium paid. If a put option written by the Fund were
exercised, the Fund would incur a loss if and to the extent that the exercise
price it had to pay exceeded the sum of the value of the securities received
and the premium received for writing the option. Transaction costs for
opening and closing positions must be taken into account in these
calculations.
The Fund may write covered call options on securities it owns to attempt
to realize, through the receipt of premium income, a greater return than
would be realized on the securities alone. In return for the premium, the
Fund forfeits the right to any appreciation in the value of the underlying
security above the option's exercise price for the life of the option (or
until a closing transaction can be effected). The Fund also gives up some
control over when it may sell the underlying securities, and must be prepared
to deliver the underlying securities against payment of the option's exercise
price at any time during the life of the option. The Fund retains the full
risk of a decline in the price of the underlying security held to cover the
call for as long as its obligation as a writer continues, except to the
extent that the effect of such a decline may be offset in part by the premium
received.
The principal purpose of writing a covered put option would be to realize
income in the form of the option premium, in return for which the Fund would
assume the risk of a decline in the price of the underlying security below
the option's exercise price less the premium received. The Fund's potential
profit from writing a put option would be limited to the premium received.
The Fund may purchase put options on securities it owns to attempt to
protect those securities against a decline in market value during the term of
the option. To the extent that the value of the securities declines, the
Fund may be able to realize a gain by closing out the put option (or, if the
value of the securities falls below the put option's exercise price, may
exercise the option and sell the securities at the exercise price), and
thereby may partially or completely offset the depreciation of the
securities. If the price of the securities does not fall during the life of
the option, the Fund may lose all or a portion of the premium it paid for the
put option, and would lose the entire premium if an option were allowed to
expire unexercised. Such a loss could, however, be offset entirely or in
part if the value of the securities owned should rise.
STOCK INDEX AND FOREIGN CURRENCY FUTURES AND RELATED OPTIONS. The Fund
may purchase and sell stock index and foreign currency futures contracts (as
well as purchase related options) as a hedge against changes resulting from
market conditions and exchange rates in the values of the domestic and
foreign securities held in the Fund or which it intends to purchase and where
the transactions are economically appropriate for the reduction of risks
inherent in the ongoing management of the Fund.
A stock index assigns relative value to the common stocks included in the
index (for example, the Standard & Poor's 500 or the New York Stock Exchange
Composite Index), and the stock index fluctuates with changes in the market
value of such stocks. A stock index futures contract is a bilateral
agreement pursuant to which two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference
between the stock index value at the close of the last trading day of the
contract and the price at which the futures contract is originally struck.
No physical delivery of the underlying stocks in the index is made. A
foreign currency futures contract creates an obligation on one party to
deliver, and corresponding obligation on another party to accept delivery of,
a stated quantity of a foreign currency, for an amount fixed in United States
dollars.
The Fund will sell stock index futures contracts in order to offset a
decrease in market value of its portfolio securities that might otherwise
result from a market decline. The Fund may do so either to hedge the value
of its portfolio as a whole, or to protect against declines, occurring prior
to sales of securities, in the value of the securities to be sold.
Conversely, the Fund will purchase stock index futures contracts in
anticipation of purchases of securities. In a substantial majority of these
transactions, the Fund will purchase such securities upon termination of the
long futures positions, but a long futures position may be terminated without
a corresponding purchase of securities.
In addition, the Fund may utilize stock index futures contracts in
anticipation of changes in the composition of its portfolio holdings. For
example, in the event that the Fund expects to narrow the range of industry
groups represented in its holdings it may, prior to making purchases of the
actual securities, establish a long futures position based on a more
restricted index, such as an index comprised of securities of a particular
industry group. The Fund may also sell futures contracts in connection with
this strategy, in order to protect against the possibility that the value of
the securities to be sold as part of the restructuring of the portfolio will
decline prior to the time of sale.
-5-
<PAGE>
Foreign currency futures may be used to hedge against a decline of the US
dollar and to hedge against the currency risk of some foreign securities. We
do not expect this to happen often.
No price is paid or received by the Fund upon the purchase or sale of a
futures contract. Initially, the Fund will be required to deposit with the
broker or in a segregated account with the Fund's custodian an amount of cash
or cash equivalents, the value of which may vary but is generally equal to
10% or less of the value of the contract. This amount is known as initial
margin. The nature of initial margin in futures transactions is different
from that of margin in securities transactions in that futures contract
margin does not involve the borrowing of funds by the customer to finance the
transactions. Rather, the initial margin is in the nature of a performance
bond or good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract assuming all contractual obligations have
been satisfied. Subsequent payments, called variation margin, to and from the
broker, will be made on a daily basis as the price of the underlying
instruments fluctuates making the long and short positions in the futures
contract more or less valuable, a process known as marking-to-market. For
example, when the Fund has purchased a futures contract and the price of the
contract has risen in response to a rise in the underlying instruments, that
position will have increased in value and the Fund will be entitled to
receive from the broker a variation margin payment equal to that increase in
value. Conversely, where the Fund has purchased a futures contract and the
price of the futures contract has declined in response to a decrease in the
underlying instruments, the position would be less valuable and the Fund
would be required to make a variation margin payment to the broker. At any
time prior to expiration of the futures contract, the Adviser may elect to
close the position by taking an opposite position, subject to the
availability of a secondary market, which will operate to terminate the
Fund's position in the futures contract. A final determination of variation
margin is then made, additional cash is required to be paid by or released to
the Fund, and the Fund realizes a loss or gain.
Futures options possess many of the same characteristics as options on
securities. A futures option gives the holder the right, in return for the
premium paid, to assume a long positions (call) or short position (put) in a
futures contract at a specified exercise price at any time during the period
of the option. Upon exercise of a call option, the holder acquires a long
position in the futures contract and the writer is assigned the opposite
short position. In the case of a put option, the opposite is true.
Futures positions may be closed out only on an exchange or board of trade
which provides a market for such futures. Although the Fund intends to
purchase futures which appear to have an active market, there is no assurance
that a liquid market will exist for any particular contract or at any
particular time. Thus, it may not be possible to close a futures position in
anticipation of adverse price movements.
OPTIONS ON STOCK INDICES. The Fund may write covered call options on
stock indexes to attempt to increase the return on its investments through
the receipt of premium income. The Fund will cover index calls by owning
securities whose price changes, in the opinion of the Fund's Adviser, are
expected to be similar to those of the index. If the value of an index on
which the Fund has written a call option falls or remains the same, the Fund
would realize a profit in the form of the premium received (less transaction
costs) that could offset all or a portion of any decline in the value of the
securities it owns. If the value of the index rises, however, the Fund would
realize a loss in its call option position, which would reduce the benefit of
any unrealized appreciation of the Fund's stock investments.
The principal reason for writing a covered put option on a stock index
would be to realize income in return for assuming the risk of a decline in
the index. To the extent that the price changes of securities owned by the
Fund correlate with changes in the value of the index, writing covered put
options on indexes would increase the Fund's losses in the event of a market
decline, although such losses would be offset in part by the premium received
for writing the option. The Fund would cover put options on indexes by
segregating assets equal to the option's exercise price, in the same manner
as put options on securities.
The Fund may purchase put options on stock indexes to hedge its
investments against a decline in value. By purchasing a put option on a
stock index, the Fund will seek to offset a decline in the value of
securities it owns through appreciation of the put option. If the value of
the Fund's investments did not decline as anticipated, or if the value of the
option did not increase, the Fund's loss would be limited to the premium paid
for the option. The success of this strategy will largely depend on the
accuracy of the correlation between the changes in value of the index and the
changes in value of the Fund's security holdings.
RISKS ASSOCIATED WITH OPTIONS ON SECURITIES AND INDICES. Several risks
are associated with transactions in options on securities and indices. For
example, significant differences between the securities and options markets
could result in an imperfect correlation between those markets, causing a
given transaction not to achieve its objectives. A decision as to whether,
when and how to use options involves the exercise of skill and judgment, and
even a well-conceived transaction may be unsuccessful to some degree because
of market behavior or unexpected events.
-6-
<PAGE>
There can be no assurance that a liquid market will exist when the Fund
seeks to close out an option position. 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 Options
Clearing Corporation to handle current trading volume; or (vi) a decision by
an exchange to discontinue the trading of options or a particular class or
series of options (in which event the secondary market on that exchange or in
that class or series of options could cease to exist, although outstanding
options on that exchange that had been issued by the Options Clearing
Corporation as a result of trades on that exchange would generally continue
to be exercisable in accordance with their terms).
If the Fund were unable to close out an option that it had purchased on a
security, it would have to exercise the option in order to realize any
profit. If the Fund were unable to close out a covered call option that it
had written on a security, it would not be able to sell the underlying
security unless the option expired without exercise. As the writer of a
covered call option, the Fund forgoes, during the option's life, the
opportunity to profit from increases in the market value of the security
covering the call option above the sum of the premium and the exercise price
of the call.
If trading were suspended in an option purchased by the Fund, the Fund
would not be able to close out the option. If restrictions on exercise were
imposed, the Fund might be unable to exercise an option it has purchased.
Except to the extent that a call option on an index written by the Fund is
covered by an option on the same index purchased by the Fund, movements in
the index may result in a loss to the Fund; however, such losses may be
mitigated by changes in the value of the Fund's securities during the period
the option was outstanding.
RISKS OF TRANSACTIONS IN STOCK INDEX FUTURES AND RELATED OPTIONS. Because
of the imperfect correlation between movements in the price of the future and
movements in the price of the securities which are the subject of the hedge,
the price of the future may move more than or less than the price of the
securities being hedged. If the price of the future moves less than the
price of the securities which are the subject of the hedge, the hedge will
not be fully effective but, if the price of the securities being hedged has
moved in an unfavorable direction, the Fund would be in a better position
than if it had not hedged at all. If the price of the securities being
hedged has moved in a favorable direction, this advantage will be partially
offset by the loss on the future. If the price of the future moves more than
the price of the hedged securities, the Fund will experience either a loss or
gain on the future which will not be completely offset by movements in the
price of the securities which are the subject of the hedge. It is also
possible that, where the Fund has sold futures to hedge its portfolio against
a decline in the market, the market may advance while the value of securities
held in the Fund may decline. If this occurred, the Fund would lose money on
the future and also experience a decline in value in its portfolio securities.
Where futures are purchased to hedge against a possible increase in the
price of securities before the Fund is able to invest its cash or cash
equivalents in securities or options in an orderly fashion, it is possible
that the market may decline instead; if the Fund then concludes not to invest
in securities or options at that time because of concern as to possible
further market decline or for other reasons, the Fund will realize a loss on
the futures contract that is not offset by a reduction in the price of
securities purchased.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the securities
being hedged, the price of futures may not correlate perfectly with movement
in the cash market due to certain market distortions. FIRST, rather than
meeting additional margin deposit requirements, investors may close futures
contracts through off-setting transactions which could distort the normal
relationship between the cash and futures markets. Second, with respect to
financial futures contracts, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take delivery,
liquidity in the futures market could be reduced thus producing distortions.
Third, from the point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the securities
market. Therefore, increased participation by speculators in the futures
market may also cause temporary price distortions. Due to the possibility of
price distortion in the futures market, and because of the imperfect
correlation between the movements in the cash market and movements in the
price of futures, a correct forecast of general market trends or currency
movements by the Adviser may still not result in a successful hedging
transaction over a short time frame. In addition, the Fund's purchase and
sale of options on indexes is subject to the risks described above with
respect to options on securities.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a
price beyond that limit. the daily limit governs only price movements during
a particular trading day and therefore does not limit potential losses,
because the limit may work to prevent the liquidation of unfavorable
positions. For example, futures prices have occasionally moved to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of positions and subjecting some holders of
futures contracts to substantial losses.
-7-
<PAGE>
In the event of the bankruptcy of a broker though which a Fund engages in
transactions in futures contracts or options, the Fund could experience
delays and losses in liquidating open positions purchased or sold though the
broker, and incur a loss of all or part of its margin deposits with the
broker.
INVESTMENT RESTRICTIONS
The following is a more detailed description of certain policies and
practices of the Fund which augments the summary of the Fund's investment
program which appears above and in the Prospectus under the heading
"Objectives and Investment Policy."
Certain investment limitations and restrictions cannot be changed
without the approval of the lesser of (i) 67% or more of the voting
securities of the Fund represented at a meeting if the holders of more than
50% of the outstanding voting securities of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding voting
securities of the Fund. These restrictions are as follows:
(1) The Fund may not invest an amount which exceeds 5% of the value
of the Fund's total assets in the securities of any one issuer. This
restriction does not apply to holdings of government securities.
(2) The Fund may not issue any senior securities.
(3) The Fund may not purchase the securities of any issuer for the
purpose of exercising control of management and it may not acquire or
own more than 10% of any class of the securities of any company.
(4) The Fund may not make short sales of securities or maintain a
short position unless at the time of the short sale the Fund owns or
has the right to acquire at no additional cost an equal amount of the
securities sold short.
(5) The Fund may borrow money only for temporary emergency purposes
and then not in excess of 5% of its total assets.
(6) The Fund may not underwrite securities, buy or sell real estate
or commodities or commodity contracts, or make loans to individuals,
except that the Fund may invest in futures contracts and options as
described in "Futures, Stock Index and Options Transactions."
(7) The Fund will not invest in the securities of other investment
companies if immediately after such investment the Fund will own (a)
securities issued by an investment company having an aggregate value
in excess of 5% of the value of the total assets of the Fund, or (b)
securities issued by all investment companies having an aggregate
value in excess of 10% of the value of the total assets of the Fund,
except to the extent permitted by the Investment Company Act of 1940
and any applicable rules or exemptive orders issued thereunder.
(8) The Fund may not invest in any security if information is not
available with respect to the history, management, assets, owners
and income of the issuer of such security, and may not make any
investment which would subject the Fund to unlimited liability.
(9) The Fund may not purchase any securities on margin except for
short-term credits as are necessary for the clearance of transactions;
provided, however, the Fund may make initial and variation margin
payments in connection with purchases or sales of options or futures
contracts.
Although the Fund's Certificate of Incorporation does not prohibit
purchases of restricted securities, the Fund has never held such securities
in its portfolio and does not presently intend to purchase restricted
securities.
OFFICERS AND DIRECTORS
Overall operations of the Fund are conducted by its officers under the
control of the Board of Directors. Information regarding the current
officers and directors, including their positions with the Fund, and their
principal occupations over the past five years is as follows:
*John G. Ayer (age 74)--President and Director, 1801 Century Park East, Los
Angeles, California 90067. Executive Vice President and Director of the
Adviser; formerly Vice President and Director of its predecessors, Cole,
Ayer, McCully & Light, Inc. and Inverness Counsel, Inc. (California).
-8-
<PAGE>
*Richard C. Barrett (age 55)--Vice President and Chairman of the Board of
Directors, 1801 Century Park East, Los Angeles, California 90067. Vice
President and Director of Stonebridge Growth Fund, Inc. President and
Director of the Adviser; formerly Chairman of the Board, Director and Chief
Financial Officer of Barrett & Denney, Incorporated and Vice President of
Lionel D. Edie & Co., Inc. prior thereto.
Marvin Freedman (age 71)--Director. Partner - Freedman, Broder & Angen,
Certified Public Accountants, 2501 Colorado Avenue, Suite 350, Santa Monica,
California 90404. Director of Stonebridge Growth Fund, Inc.
Charles F. Haas (age 83)--Director, 12626 Hortense Street, Studio City,
California 91604. Private investor, retired motion picture and television
director. Director of Stonebridge Growth Fund, Inc.
William H. Taylor II, Ph.D. (age 58)--Director, 2452 Francisco Street, San
Francisco, California 94123. General Partner of Taylor & Company.
(formerly Taylor & Turner Associates Ltd.) a venture capital organization;
formerly Executive Vice President of B.E.I. Electronics, Inc., and Vice
President of Crocker Capital Corporation.
Selvyn B. Bleifer (age 67)--Director, 414 North Camden Drive, Beverly Hills,
California 90210. Director of Stonebridge Growth Fund, Inc. Physician,
Cardiovascular Medical Group.
*Charles E. Woodhouse (age 33)--Vice President and Director, 1801 Century
Park East, Los Angeles, California 90067. Director of Research, Executive
Vice President and Managing Director of the Adviser. Teaching and research
assistant, University of Southern California.
*Debra L. Newman (age 41)--Vice President and Treasurer, 1801 Century Park
East, Los Angeles, California 90067. President of Stonebridge Growth Fund,
Inc. Executive Vice President, Chief Financial Officer, Corporate Secretary
and Managing Director of the Adviser.
*Colleen M. Schomer (age 30)--Secretary, 1801 Century Park East, Los Angeles,
California 90067. Portfolio Administrator of the Adviser. Story editor,
Triad Artists, Inc.
*"Interested person" of the Fund as defined by the Investment Company Act of
1940.
The following table sets forth the aggregate compensation paid, for the
fiscal year ended October 31, 1996, to the directors who are not affiliated
with the Adviser, for service on the Board of Directors of the Fund and
Stonebridge Growth Fund:
COMPENSATION TABLE
TOTAL COMPENSATION
AGGREGATE FROM FUND AND FUND
COMPENSATION PENSION OR COMPLEX*
DIRECTOR FROM FUND RETIREMENT BENEFITS PAID TO DIRECTORS
-------- --------- ------------------- -----------------
John G. Ayer $0 $0 $0
Richard C. Barrett $0 $0 $0
Marvin Freedman $50 $300
Charles F. Haas $50 $0 $300
William H. Taylor, II $0 $0 $0
Selvyn B. Bleifer, MD $50 $0 $300
Charles E. Woodhouse $0 $0 $0
- ---------------------
* Stonebridge Growth Fund, Inc. and the Fund comprise a "Fund Complex" as
such term is defined in Item 22(a)(1)(v) of Rule 14a-101 of the Securities
Exchange Act of 1934, because they have the same investment advisor.
As of February 3, 1997, the officers and directors, as a group, owned less
than 1% of the outstanding shares of the Fund. As of February 3, 1997,
Lorraine F. Petitfils, 581 Evergreen, Pasadena, California 91105, owned of
record and beneficially 37,683 shares of the Fund constituting 9% of the
outstanding shares of the Fund.
-9-
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
Information concerning the Fund's investment adviser, Stonebridge
Capital Management, Incorporated, 1801 Century Park East, Los Angeles,
California 90067 (the "Adviser"), is set forth in the Prospectus under the
heading "Investment Adviser." The following information augments the
discussion in the Prospectus.
Richard C. Barrett owns 39.2%, John G. Ayer owns 9.8%, Debra L. Newman
owns 15.6%, and Karen H. Parris, Timothy G. Walt and Charles E. Woodhouse
each own 11.8% of the outstanding stock of the Adviser. Each such person is
employed by the Adviser. There are no other shareholders of the Adviser.
The Adviser is paid an annual fee which is a percentage of the average
weekly net asset value of the Fund equal to 1/2 of 1% of the first
$10,000,000, 1/4 of 1% of the next $15,000,000 and 1/8 of 1% of the excess
over $25,000,000. Such fee, determined by taking the average of the net asset
values of the Fund on the last day of each week, is paid monthly. The
Agreement provides for a reduction in the Adviser's fee to the extent that
the Fund's total annual expenses, excluding taxes and interest and including
the advisory fee, exceed the maximum amount of expenses allowed by the
California Department of Corporations, which amount is presently equal to
2.5% 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% of any average
net assets in excess of $100,000,000 calculated on a monthly basis (the
"Expense Limitation Rule"). On February 13, 1987, the Fund was granted a
variance from the Expense Limitation Rule by the California Department of
Corporations allowing the Fund to exclude its transfer agent and custodial
fees and expenses, and its accounting fees from the calculation of its total
expenses for purposes of the Expense Limitation Rule. The variance applies
until such time as the variance is revoked by the California Department of
Corporations.
For the fiscal year ended October 31, 1996, the Adviser received $22,253
in fees for investment advisory services. For fiscal year ended October 31,
1995, the Adviser received $17,491 in fees for investment advisory services.
For the fiscal year ended October 31, 1994, the Adviser received $14,484 in
fees for investment advisory services.
Subject to the authority of the Board of Directors of the Fund, the
Adviser supervises and manages the overall business of the Fund, provides
certain services and facilities including, but not limited to, a chief
executive officer for the Fund, office space, furniture and supplies, and
places orders for the purchase and sale of portfolio securities on behalf of
the Fund. The salary of the Fund's chief financial officer is paid by the
Adviser, which is reimbursed by the Fund for the portion of such salary
attributed to services rendered on behalf of the Fund. All legal and
auditing and ordinary business expenses of the Fund are borne by the Fund.
The Fund's transfer agent and dividend disbursing agent is NIF
Management Co., Inc., 5990 Greenwood Plaza Boulevard, Englewood, Colorado,
80111 (the "Transfer Agent"), and the Fund's custodian is Colorado National
Bank of Denver, 17th and Champa Street, Denver, Colorado 80202 (the "Bank").
As custodian, the Bank receives and deposits cash, holds all securities of
the Fund, receives and delivers securities bought or sold by the Fund, and
receives and collects income from the Fund's investments. The Bank has no
part in the management or investment business of the Fund. The Transfer
Agent maintains all shareholder records for the Fund, issues stock
certificates, accepts, confirms and processes payments for the purchase of
Fund shares and disburses payments made by the Fund to its shareholders. In
exercising transactions, the Transfer Agent acts as agent for the Fund.
While the Transfer Agent also provides other services as directed by officers
of the Fund, it has no part in the management or investment decisions of the
Fund.
The Fund's independent auditors are Hein + Associates LLP, 717 17th
Street, Suite 1600, Denver, Colorado 80202 (the "Auditors"). The Auditors
audit the Fund's annual financial statements and review the Fund's tax
returns. The Auditors have no part in the management or investment decisions
of the Fund.
BROKERAGE TRANSACTIONS
Decisions to buy and sell securities for the Fund, assignment of its
portfolio business and negotiation of its commission rates are made by the
Adviser. It is the Fund's policy to obtain the best security price and
execution available, and in doing so it will assign portfolio executions and
negotiate commission rates in accordance with the reliability and quality of
a broker-dealer's services. In determining the quality of brokerage
services, consideration is given to statistical and research services
provided to the Adviser as well as brokerage services, which may result in
payment of higher commissions than those charged by other brokers.
Allocation of business among broker-dealers is not based on any definitive
formula and a specific dollar value cannot be placed on the statistical and
research material furnished the Adviser by broker-dealers.
Statistical and research material furnished to the Adviser may be useful
to the Adviser in providing services to clients other than the Fund.
Similarly, such material furnished to the Adviser by brokers through which
other clients of the Adviser in providing services to the Fund. The Board of
Directors of the Fund reviews from time to time the extent and continuation
of this practice.
-10-
<PAGE>
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the Adviser, investments of the kind
made by the Fund may also be made by such other accounts. When a purchase or
sale of the same security is made at substantially the same time on behalf of
the Fund and one or more other accounts managed by the Adviser, available
investments are allocated in the discretion of the Adviser by such means as,
in its judgment, result in fair treatment. The Adviser aggregates orders for
purchases and sales of securities of the same issuer on the same day among
the Fund and its other managed accounts, and the price paid to or received by
the Fund and those accounts is the average obtained in those orders. In some
cases, such aggregation and allocation procedures may affect adversely the
price paid or received by the Fund or the size of the position purchased or
sold by the Fund.
When the Fund purchases or sells a security which is not listed on a
national securities exchange but which is traded in the over-the-counter
market, the transaction generally takes place directly with a principal
market maker, except in those circumstances where, in the opinion of the
Fund, better prices and executions will be achieved through the use of other
broker-dealers. The Adviser does not receive any benefit directly or
indirectly arising from these transactions.
The following provides information regarding the Fund's brokerage
transactions during the fiscal years ended October 31, 1996, 1995 and 1994:
ANNUAL TOTAL BROKERAGE
PORTFOLIO TURNOVER COMMISSIONS
RATE PAID*
---- -----
1996 108% $ 12,402
1995 60% $ 8,995
1994 43% $ 5,785
* All of the broker-dealer firms with which the Fund placed orders for the
purchase and sale of portfolio securities furnished the Adviser with
statistical and research material and other services in varying degrees.
None of these firms was affiliated with the Fund or the Adviser during such
periods.
The annual portfolio turnover rate has varied and will continue to vary
from year to year. Portfolio turnover is a function of market shifts and
relative valuation of individual securities and market sectors. The Fund's
Adviser attempts to keep the Fund invested in those securities that have the
potential to meet the Fund's growth objective and that represent the best
relative values.
The Fund has not acquired securities of any brokers or dealers, or the
parents thereof, during the fiscal year ended October 31, 1996.
-11-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditor's Report F-2
Statement of Assets and Liabilities--October 31, 1996 F-3
Portfolio of Investments--October 31, 1996 F-4
Statement of Operations--For the Year Ended October 31, 1996 F-6
Statements of Changes in Net Assets--For the Years Ended
October 31, 1996 and 1995 F-7
Notes to Financial Statements F-8
F-1
<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., including the portfolio of
investments, as of October 31, 1996, the related statement of operations for
the year then ended, the statements of changes in net assets for the years
ended October 31, 1996 and 1995, 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, 1996. 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. The per share data and ratios set
forth under the caption "Financial Highlights" for the five years ended
October 31, 1991, were audited by other auditors whose report, dated November
22, 1991, expressed an unqualified opinion on those selected per share data
and ratios.
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, 1996, 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. on October 31, 1996, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the selected per share data and ratios for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles. In addition, we have audited the calculation of the
Fund's total return for each of the five years in the period ended October
31, 1991, as set forth under the caption "Financial Highlights" and, in our
opinion, the amounts have been calculated correctly.
HEIN + ASSOCIATES LLP
Denver, Colorado
November 21, 1996
F-2
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
ASSETS:
Investments in securities at value - identified cost $3,357,573 $4,474,255
Cash 62,489
Other 24,764
----------
TOTAL ASSETS 4,561,508
LIABILITIES
Accounts payable and accrued expenses, including amounts payable
to related parties of $4,709 22,910
----------
NET ASSETS (equivalent to $13.19 per share based on 344,077
shares of capital stock outstanding) $4,538,598
----------
----------
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-3
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----
COMMON STOCKS (80%):
Apparel & Textiles (1%) -
Warnaco Group "A" 2,000 49,750
Banks (2%) -
BanPonce Corp. 4,000 105,000
Chemicals (2%) -
Spartech Corp. 10,000 105,000
Computer Hardware (7%) -
Hutchinson Technology* 2,000 89,500
Premis Corp.* 5,000 31,875
Sequent Computer Systems* 10,000 148,120
Sun Microsystems* 1,000 61,000
Computer Software (16%) -
Adobe Systems, Inc. 3,000 103,875
Ascend Communications* 1,500 98,063
Informix Corp.* 5,000 110,935
Microsoft Corp.* 2,000 274,500
Oracle Systems Corp.* 3,000 126,936
Data-Communication and Networking (3%) -
Digi International* 3,000 44,250
MAI Systems* 5,000 37,500
VeriFone Inc.* 1,500 50,438
Design and Manufacturing Automation (4%) -
Cognex Corp.* 6,000 77,250
IKOS Systems Inc.* 5,000 89,375
Nicollet Process Engineering* 5,000 11,170
Electrical/Electronics (3%) -
Marshall Industries* 3,000 89,625
Woodhead Industries* 4,000 55,000
Electronics (4%) -
Vicor Corp.* 9,000 164,250
Hospital Supply & Service (4%) -
Fresenius USA* 2,780 82,705
Genesis Health Ventures* 2,000 45,750
Medi-Ject Corp.* 8,000 38,000
Machinery (1%):
Asahi/America Inc.* 5,000 39,375
F-4
<PAGE>
Medical/Biotechnology (12%):
Amgen Inc.* 2,000 122,624
Chiron Corp.* 5,000 114,375
Genzyme Corp. - Geni Divn.* 4,000 92,000
Gilead Sciences* 3,000 70,125
ICOS Corp.* 5,000 37,500
La Jolla Pharmaceutical Co. 10,000 40,000
Martek Biosciences Corp. 2,000 43,000
Pharmaceuticals (2%) -
Bio Rad Labs Cl. A* 3,000 72,750
Photo and Optical (2%) -
Opal Inc.* 7,000 60,375
Zomax Optical Media, Inc.* 5,000 36,250
Retail/Food (1%)
Coffee People Inc.* 5,000 41,250
Semiconductors (11%) -
Applied Materials* 2,500 66,092
Credence Systems* 5,000 68,125
Daw Technologies* 15,000 48,750
Intel Corp. 1,000 109,875
Micrion Corp.* 4,000 55,000
Vitesse Semiconductor Corp.* 4,000 127,500
Shipping and Freight (1%) -
U-Ship Inc.* 10,000 31,250
Specialty Chemicals (2%)
Cyanotech Corp.* 7,000 45,500
Consep Inc.* 15,000 52,500
Textiles and Shoes (1%) -
Wellman Inc. 2,500 44,375
Utility/Telephone (1%)
Metro One Telecommunications* 3,000 30,000
Telident Inc.* 10,000 24,370
----------
TOTAL COMMON STOCKS, at cost $2,450,521 3,562,828
CONVERTIBLE BONDS (2%)
VLSI Technology, 8.25%, due
October 1, 2005 (cost $90,875) 100,000 95,250
MONEY MARKET INVESTMENTS (18%)
First American Treasury Obligation
Class C (cost $816,177) 816,177 816,177
----------
TOTAL INVESTMENTS (100%), at cost $3,357,573 $4,474,255
----------
----------
- -------------------------
* Securities on which no cash dividends were paid during the preceding twelve
(12) months.
On October 31, 1996, the Fund held no investments in any securities of
any company which totaled 5% or more of the outstanding voting securities of
such company (such companies would be deemed to be "Affiliated Companies" as
defined in Section 2 (a) (3) of the Investment Company Act of 1940).
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-5
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME (LOSS):
Income:
Interest $ 39,747
Dividends 6,090
--------
Total income 45,837
--------
EXPENSES:
Officers' salaries and directors' fees 18,185
Legal 6,401
Advisory fees, related party 22,253
Transfer agent fees, related party 15,638
Printing 6,013
Audit 10,500
Custodial fees 9,297
Other 12,096
Taxes, other than income taxes 1,631
--------
Total expenses 102,014
--------
NET INVESTMENT LOSS (56,177)
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 884,070
Net increase in unrealized appreciation 590,898
--------
NET GAIN ON INVESTMENTS 293,172
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $236,995
--------
--------
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-6
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED
OCTOBER 31,
------------------------
1996 1995
------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss $(56,177) $ (73,239)
Net realized gain on investments 884,070 522,215
Net change in unrealized appreciation (590,898) 831,216
----------- ----------
Net increase in net assets resulting
form operations 236,995 1,280,192
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS -
Net realized gain on investments (449,307) (150,944)
----------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 268,106 3,877
Shares issued to shareholders in reinvestment of
dividends 425,557 142,262
----------- ----------
693,663 146,139
Cost of shares redeemed (94,049) (116,451)
----------- ----------
Increase (decrease) in net assets from capital stock
transactions 599,614 29,688
----------- ----------
INCREASE IN NET ASSETS 387,302 1,158,936
NET ASSETS, beginning of year 4,151,296 2,992,360
----------- ----------
NET ASSETS, at end of year $4,538,598 $4,151,296
----------- ----------
----------- ----------
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-7
<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 with remaining maturities at the purchase
date of 60 days or less, consist exclusively of US Treasury Obligations and
are stated at amortized cost which is approximately equivalent to value.
FEDERAL INCOME TAXES - No provision for Federal income taxes is
necessary because the Fund has 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.
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.
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 estimates.
2. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities (excluding short-term
securities) for the year ended October 31, 1996, were as follows:
PURCHASES SALES
------------------------
Common stocks $3,971,453 $4,074,229
Convertible bonds 90,875
---------- ----------
Total $4,062,328 $4,074,229
------------------------
------------------------
The net gain on investments for the year ended October 31, 1996,
amounted to $293,172. This amount represents the net increase in the
value of investments (all of which are represented by long
transactions) held during the year. As of October 31, 1996, gross
unrealized appreciation of investments totaled $1,235,269, and gross
unrealized depreciation of investments totaled $118,587, resulting in
net unrealized appreciation of $1,116,682. The accumulated investment
loss and accumulated undistributed net realized gain from investment
transactions as of October 31, 1996 were $846,923 and $1,105,461,
respectively.
F-8
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES:
On December 19, 1995, the Fund renewed its investment advisory agreement
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
asset value on the first $10,000,000 of assets; (b) 1/4 of 1% of the
next $15,000,000; and (c) 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 cost
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,
1996 amounted to $18,035.
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 (currently 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 any average net assets in excess
of $100,000,000 calculated on a monthly basis) which, if exceeded would
result in the denial by 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 annual 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 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, 1996, applicable operating expenses did not exceed the
statutory limitations.
F-9
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL STOCK:
At October 31, 1996, there were 3,000,000 shares of $1.00 par value
capital stock authorized, and capital paid in aggregated $2,819,303.
Transactions in shares of capital stock for the years ended October 31,
1996 and 1995 were as follows:
SHARES AMOUNT
------ ------
1996 1995 1996 1995
------------------ ---------------------
Shares sold 19,796 347 $ 268,106 $ 3,877
Shares issued to shareholders in
reinvestment of dividends 33,801 14,591 425,557 142,262
------- ------- --------- ---------
53,597 14,938 693,663 146,139
Less shares redeemed (6,761) (10,048) (94,049) (116,451)
------- ------- --------- ---------
Net increase 46,836 4,890 $ 599,614 $ 29,688
------- ------- --------- ---------
------- ------- --------- ---------
5. DISTRIBUTIONS TO SHAREHOLDERS:
On December 19, 1995, a distribution of $1.404 per share, aggregating
$416,936, was declared from net realized gains from investment
transactions. Additionally, a dividend of $.109 per share, aggregating
$32,369, was declared from net investment income. These dividends
were paid on December 27, 1996, to shareholders of record on December
26, 1996.
F-10
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
FOR THE YEARS ENDED OCTOBER 31,
-----------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.97 $10.24 $12.07 $11.58 $13.22 $8.37 $12.27 $11.41 $10.73 $11.58
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.17) (.26) (.29) (.21) (.27) (.23) (.22) (.17) (.30) (.43)
Net gains or losses on securities
(both realized and unrealized) .90 4.51 .55 1.56 (.20) 5.30 (1.22) 1.66 .98 .10
------ ------ ------ ------ ------ ----- ------ ------ ------ ------
Total from investment operations .73 4.25 .26 1.35 (.47) 5.07 (1.44) 1.49 .68 (.33)
LESS DISTRIBUTIONS:
Dividends (from net investment
income) -- -- -- -- -- -- -- -- -- --
Dividends (from capital gains) (1.51) (.52) (2.09) (.86) (1.17) (.22) (2.46) (.63) -- (.52)
Net asset value, end of year $13.19 $13.97 $10.24 $12.07 $11.58 $13.22 $8.37 $12.27 $11.41 $10.73
------ ------ ------ ------ ------ ----- ------ ------ ------ ------
------ ------ ------ ------ ------ ----- ------ ------ ------ ------
Total Return 5.70% 43.71% 1.86% 11.80% (4.67)% 61.63% (15.30%) 13.54% 6.34% (3.16)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's): $4,539 $4,151 $2,992 $3,024 $3,032 $3,459 $2,247 $2,672 $2,686 $2,862
Ratio of operating expenses* 2.29% 3.10% 3.51% 2.81% 3.03% 3.49% 3.99% 3.28% 3.31% 3.87%
Ratio of net investment income
(loss to average net assets) (1.26)% (2.10)% (2.86)% (1.82)% (2.24)% (2.08)% (2.29)% (1.32)% (2.50)% (3.16)%
Portfolio turnover rate ** 108% 60% 43% 50% 67% 49% 69% 49% 11% 33%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes state taxes.
** 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.
F-11
<PAGE>
PART C
OTHER INFORMATION
ITEM
- ----
24. (a) FINANCIAL STATEMENTS
In Part A:
Financial Highlights
In Part B:
Report of Independent Auditors
Statement of Assets and Liabilities
Portfolio of Investments
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
(b) EXHIBITS
EXHIBITS (1) THROUGH (10) AND (12) THROUGH (15)
Reference is made to the Exhibits to the Fund's Form N-1 and
Form N-1A, and post-effective amendments thereto previously filed
with the Securities and Exchange Commission which are hereby
incorporated herein.
EXHIBIT (11): "CONSENT OF INDEPENDENT AUDITOR."
25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Selvyn B. Bleifer, Marvin Freedman, Charles F. Haas and Richard C.
Barrett, comprising a majority of the members of the Board of Directors of
the Fund, also comprise all of the directors of Stonebridge Growth Fund,
Inc., a registered investment company. In addition, Mr. Barrett, Debra L.
Newman and Colleen Schomer, officers of the Fund, are officers of the
Stonebridge Growth Fund. Accordingly, the Fund and Stonebridge Growth Fund
may be deemed to be under common control.
26. NUMBER OF HOLDERS OF SECURITIES
NUMBER OF
RECORDHOLDERS
AS OF
JANUARY 31,
TITLE OF CLASS 1997
-------------
Capital Stock of the Fund 368
---
27. INDEMNIFICATION
In accordance with Section 145 of the General Corporation Law of
the State of Delaware, Article VI, Section 7 of the Fund's By-Laws, filed
as Exhibit 2 to this Registration Statement, provides for indemnification
of the Fund's directors and officers under certain circumstances.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors and officers of the
Fund pursuant to the foregoing provisions or otherwise, the Fund has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Fund of expenses
incurred or paid by a director or officer of the Fund in the successful
defense of any action, suit or proceeding) is asserted by such director or
officer in connection with the securities being
S-1
<PAGE>
registered hereby, the Fund 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 such Act and will be governed by
the final adjudication of such issue.
28. BUSINESS AND OTHER CONNECTION OF INVESTMENT ADVISER
During the two fiscal years ended October 31, 1996, Stonebridge
Capital Management, Incorporated, the Investment Adviser to the Fund, has
engaged principally in the business of providing investment management
services to institutional and individual clients. All of the additional
information required by this Item 28 with respect to the Investment
Adviser is set forth in the Form ADV, as amended, of the Investment
Adviser (File No. 801-5363), which is incorporated herein by reference.
29. PRINCIPAL UNDERWRITERS
Inapplicable.
30. LOCATION OF ACCOUNTS AND RECORDS
1801 Century Park East,
Suite 1800
Los Angeles, California 90067
NTF Management Co., Inc.
5990 Greenwood Plaza Boulevard
Englewood, Colorado 80111
Colorado National Bank of Denver
17th and Champa Street
Denver, Colorado 80202
31. MANAGEMENT SERVICES
Inapplicable.
32. UNDERTAKINGS
The Fund hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Fund's latest annual report to its shareholders
upon the request of such person and without charge.
S-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Los
Angeles, and State of California on the 28th day of February, 1997.
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
a Delaware Corporation
By /s/ DEBRA L. NEWMAN
-----------------------------------
Debra L. Newman
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
(1) Principal Executive Officer:
/s/ JOHN G. AYER
- -------------------------------- President February 28, 1997
John G. Ayer
(2) Principal Financial and Accounting Officer
/s/ DEBRA L. NEWMAN
- -------------------------------- Treasurer February 28, 1997
Debra Newman
(3) Directors
* MARVIN FREEDMAN Director February 28, 1997
* RICHARD C. BARRETT Director February 28, 1997
* WILLIAM H. TAYLOR II Director February 28, 1997
* CHARLES F. HAAS Director February 28, 1997
* CHARLES E. WOODHOUSE Director February 28, 1997
* JOHN G. AYER Director February 28, 1997
* SELVYN B. BLEIFER Director February 28, 1997
*By /s/ DEBRA L. NEWMAN
-----------------------------
Debra L. Newman
Attorney-in-Fact
S-3
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITOR
We consent to the use in this Post-Effective Amendment No. 58 to the
Registration Statement (Form N-1A No. 2-12893) of our report dated November
21, 1996 on the financial statements and the per share data and ratios of
Stonebridge Aggressive Growth Fund, Inc., included herein and to the reference
made to us under the caption "Financial Highlights" in the Prospectus and
under the caption "Investment Advisory and Other Services" in the Statement of
Additional Information.
HEIN + ASSOCIATES LLP
Denver, Colorado
February 26, 1997
S-4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT TO SHAREHOLDERS DATED OCTOBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 3,358
<INVESTMENTS-AT-VALUE> 4,474
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,562
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23
<TOTAL-LIABILITIES> 23
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
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<NET-ASSETS> 4,539
<DIVIDEND-INCOME> 6
<INTEREST-INCOME> 40
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<EXPENSES-NET> 102
<NET-INVESTMENT-INCOME> (56)
<REALIZED-GAINS-CURRENT> 884
<APPREC-INCREASE-CURRENT> (591)
<NET-CHANGE-FROM-OPS> 237
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 449
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 268
<NUMBER-OF-SHARES-REDEEMED> 94
<SHARES-REINVESTED> 426
<NET-CHANGE-IN-ASSETS> 388
<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 13.97
<PER-SHARE-NII> 0
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<PER-SHARE-DISTRIBUTIONS> 1.513
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<PER-SHARE-NAV-END> 13.19
<EXPENSE-RATIO> 2.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
