<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
OFFICERS AND DIRECTORS
Richard C. Barrett, CHAIRMAN, BOARD OF DIRECTORS
AND VICE PRESIDENT
John G. Ayer, PRESIDENT AND DIRECTOR
Charles E. Woodhouse, VICE PRESIDENT AND DIRECTOR
Debra L. Newman, VICE PRESIDENT AND TREASURER
Craig B. Burger, VICE PRESIDENT
Chad S. Christensen, VICE PRESIDENT STONEBRIDGE
James V. Hyatt, SECRETARY AGGRESSIVE
Selvyn B. Bleifer, DIRECTOR GROWTH FUND, INC.
Charles F. Haas, DIRECTOR
William H. Taylor, DIRECTOR
Marvin Freedman, DIRECTOR
INVESTMENT ADVISER
STONEBRIDGE CAPITAL MANAGEMENT,
INCORPORATED
1801 Century Park East, Suite 1800
Los Angeles, California 90067
ADMINISTRATOR AND DISTRIBUTOR
ALPS MUTUAL FUNDS SERVICES, INC.
370 Seventeenth Street, Suite 3100
Denver, Colorado 80202
TRANSFER AGENT
NATIONAL FINANCIAL DATA SERVICES
330 W. 9th Street, 4th Floor
Kansas City, Missouri 64105
CUSTODIAN
FIFTH THIRD BANK
Fifth Third Center,
Cincinnati, Ohio 45263
LEGAL COUNSEL
PAUL, HASTINGS, JANOFSKY & WALKER
555 S. Flower Street, 23rd Floor
Los Angeles, California 90071
INDEPENDENT AUDITORS
HEIN + ASSOCIATES LLP ANNUAL REPORT
717 Seventeenth Street, Suite 1600 FOR THE YEAR ENDED
Denver, Colorado 80202 OCTOBER 31, 1998
This report and its financial statements are submitted for the general
information of the stockholders of the Fund. The report is not authorized for
distribution to prospective investors in the Fund unless preceded or accompanied
by an effective prospectus.
<PAGE>
LETTER TO SHAREHOLDERS
I REORGANIZATION
Thanks to the support of our shareholders, we were able to accomplish a major
reorganization of the corporate form for each of the two Stonebridge Funds in
1998. Since inception, each fund has operated as a separate corporation. At
the 1998 annual meeting, shareholders voted to combine both funds into two
separate series of a single Trust effective November 1, 1998. The Stonebridge
Funds Trust includes the Stonebridge Aggressive Growth Fund and the Stonebridge
Growth Fund. The efficiencies and reduced costs of the Trust structure should
serve shareholders both currently and well into the future. The information in
this report corresponds to the period up to the Fund's reorganization.
II THE YEAR IN REVIEW
1998 began with a continuation of the upward trend in the U.S. stock market.
However, global turmoil in Asia, Russia, and Brazil, together with a slowing in
U.S. corporate earnings and fears about hedge fund leverage, were sufficient to
trigger a major decline in equity prices over the summer. Investors have taken
recent interest rate cuts by the Federal Reserve and many other central banks as
a signal that economic and financial risks have diminished dramatically and the
U.S. equity markets have recovered to prior highs.
In an environment where there have been wide swings in investor sentiment, once
again the large capitalization stocks have been viewed as "safe havens" and have
significantly outperformed the broader market. Small and mid capitalization
stocks under performed again this year, so far. Given the continuing
uncertainties in the global economy, this trend could persist for several more
quarters.
The domestic economy continues to benefit from low interest rates, nominal
inflation, low unemployment and improved productivity in the corporate sector.
However, extended equity valuations, slowing corporate earnings growth and
political uncertainty weigh as potential negative influences for the coming
year.
III STONEBRIDGE AGGRESSIVE GROWTH FUND
1998 has been a very difficult year to be invested in small capitalization
companies. Fears of a global economic slowdown and its impact on corporate
earnings sent equity markets down sharply.
While many of the "large capitalization" indices have reestablished new highs,
small and mid capitalization stocks have rallied only modestly. This is readily
evident by comparing the year to date returns of the large cap S&P 500 +14.63%
and Valuline Composite Index -10.12% versus the small-cap Russell 2000 Index
- -12.82%. Our strategy for the Aggressive Growth Fund of increasing sector
diversification and carrying larger than usual cash balances in the second half
of 1998 worked well.
1
<PAGE>
The Fund's performance, which lagged behind the Russell 2000 Index as of the
April 30, 1998 semi-annual report, caught up and surpassed it in the ensuing six
months. For the calendar year as of October 31, 1998, the Aggressive Growth
Fund returned -12.53% versus -12.82% for the Russell 2000 Index. The average
return for the 53 mutual funds in the MORNINGSTAR MUTUAL FUNDS Small-Growth
category was -15.91%.
CHANGE IN VALUE OF A $10,000 INVESTMENT IN STONEBRIDGE AGGRESSIVE
GROWTH FUND, INC.
VS. THE RUSSELL 2000 INDEX WITH INCOME
FROM NOVEMBER 1, 1988 TO OCTOBER 31, 1998
[GRAPH]
Average Annual Total Return
Periods Ended October 31, 1998
<TABLE>
<CAPTION>
1 Year 5 Year 10 Year
- --------------------------------------------------------------------------------
<S> <C> <C>
(20.23)% 8.58% 9.63%
</TABLE>
Average Annual Total Return
Periods Ended September 30, 1998
<TABLE>
<CAPTION>
1 Year 5 Year 10 Year
- --------------------------------------------------------------------------------
<S> <C> <C>
(15.26)% 8.96% 10.31%
</TABLE>
Final Portfolio Values
Period Ended October 31, 1998
<TABLE>
<S> <C>
Stonebridge Aggressive Growth Fund $25,103
Russell 2000 Index $20,301
</TABLE>
DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE RESULTS.
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE AND AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
By spreading our investments in the fund across a larger number of sectors of
the economy and by maintaining a relatively defensive cash position, we have
hoped to smooth out some of the volatility that has occurred in small cap stocks
and take advantage of opportunities as they present themselves.
2
<PAGE>
We took profits in Rational Software (TECHNOLOGY), Popular Inc. (FINANCE), and
Oracle Corp. (TECHNOLOGY) to name a few, while adding new names like General
Nutrition Co. (CONSUMER STAPLES), Sangstat Medical Corp. (HEALTHCARE), and
Caraustar Industries (BASIC MATERIALS). Finally, it is worth noting that we
took advantage of the weak market conditions during 1998 to offset the capital
gains taken during the year. As a result, the fund will not make a dividend or
capital gains distribution for fiscal year 1998. We did this consciously to
minimize the tax burden to our shareholders.
AGGRESSIVE GROWTH FUND SECTOR ALLOCATION
[CHART]
OCTOBER 31, 1997
<TABLE>
<S> <C>
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.25%
Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.29%
Convertible Bonds. . . . . . . . . . . . . . . . . . . . . . . . . 1.92%
U.S. Government Agency Obligations . . . . . . . . . . . . . . . . 8.41%
Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.39%
Basic Materials. . . . . . . . . . . . . . . . . . . . . . . . . . 0.56%
Capital Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . 3.36%
Consumer Cyclicals . . . . . . . . . . . . . . . . . . . . . . . . 3.46%
Consumer Staples . . . . . . . . . . . . . . . . . . . . . . . . . 18.89%
Financial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.47%
</TABLE>
[CHART]
APRIL 30, 1998
<TABLE>
<S> <C>
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.73%
Convertible Bonds. . . . . . . . . . . . . . . . . . . . . . . . . 1.54%
U.S. Government Agency Obligations . . . . . . . . . . . . . . . . 13.61%
Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.64%
Capital Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.63%
Communication Services . . . . . . . . . . . . . . . . . . . . . . 1.53%
Consumer Cyclicals . . . . . . . . . . . . . . . . . . . . . . . . 5.27%
Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.48%
Financial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.39%
Foreign Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . 2.60%
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.58%
</TABLE>
[CHART]
OCTOBER 31, 1998
<TABLE>
<S> <C>
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.13%
Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . 0.75%
Convertible Bonds. . . . . . . . . . . . . . . . . . . . . . . . . 1.85%
U.S. Government Agency Obligations . . . . . . . . . . . . . . . . 12.86%
Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.67%
Basic Materials. . . . . . . . . . . . . . . . . . . . . . . . . . 2.53%
Capital Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . 8.18%
Communication Services . . . . . . . . . . . . . . . . . . . . . . 1.93%
Consumer Cyclicals . . . . . . . . . . . . . . . . . . . . . . . . 7.98%
Consumer Staples . . . . . . . . . . . . . . . . . . . . . . . . . 0.94%
Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.19%
Financial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.96%
Foreign Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . 1.69%
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.32%
</TABLE>
In closing, we reiterate that volatility, while uncomfortable in the short term,
can create opportunity in the intermediate to long-term. We will endeavor to
purchase high quality, growth companies at attractive valuations to the benefit
of our shareholders.
Thank you for your investment in the Stonebridge Aggressive Growth Fund. Should
you have questions or concerns, please call a Shareholder Services
Representative at 1-800-639-3935.
Sincerely,
/s/ Charles E. Woodhouse
Charles E. Woodhouse
Managing Director and Director of Research
Stonebridge Capital Management, Inc.
3
<PAGE>
DEFINITION OF INDICES
The STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged index containing
common stocks of 500 industrial, transportation, utility and financial
companies, regarded as generally representative of the U.S. stock market. The
index return reflects the reinvestment of income dividends and capital gain
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
The RUSSELL 2000 INDEX (Russell 2000), an unmanaged index, measures performance
of the 2,000 smallest companies in the Russell 3000 Index which represents
approximately 7% of the US. equity market capitalization.
MORNINGSTAR, INC. (Morningstar) provides data, analysis, and editorial
commentary on more than 8,500 mutual funds. The performance of the 40 funds in
the Small Growth category is measured net of fees and includes funds with the
prospectus objective of aggressive growth and with one year of performance
history.
The VALUELINE COMPOSITE INDEX is an unmanaged equally weighted geometric average
composed of approximately 1700 stocks traded on the New York Stock Exchange,
American Stock Exchange, and over-the-counter that are tracked by the Value
Line Investment Survey. The index return reflects the reinvestment of income
dividends and capital gain distributions, if any, but does not reflect fees,
brokerage commissions, or other expenses of investing.
4
<PAGE>
INDEPENDENT AUDITOR'S REPORT
BOARD OF DIRECTORS AND SHAREHOLDERS
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
LOS ANGELES, CALIFORNIA
We have audited the accompanying statement of assets and liabilities of
Stonebridge Aggressive Growth Fund, Inc., (the "Fund") including the statement
of investments, as of October 31, 1998, the related statement of operations for
the year then ended, the statements of changes in net assets for the years ended
October 31, 1998 and 1997, 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, 1998. These financial statements and per share data
and ratios are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and per share data and
ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to in the first sentence above present fairly, in all material
respects, the financial position of Stonebridge Aggressive Growth Fund, Inc. at
October 31, 1998, the results of its operations for the year then ended, the
changes in its net assets for the years 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.
HEIN + ASSOCIATES LLP
Denver, Colorado
December 14, 1998
5
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC
STATEMENT OF INVESTMENTS
OCTOBER 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (80.4%)
BASIC MATERIALS (2.5%)
CHEMICALS - SPECIALTY (1.0%)
Sigma Aldrich Corp . . . . . . . . . . . . . . . . . . . 1,500 $ 46,359
-----------
PAPER AND FOREST PRODUCTS (1.5%)
Caraustar Industries Inc . . . . . . . . . . . . . . . . 3,000 71,250
-----------
TOTAL BASIC MATERIALS. . . . . . . . . . . . . . . . . . 117,609
-----------
CAPITAL GOODS (8.1%)
AEROSPACE & DEFENSE (2.8%)
Precision Castparts Corp . . . . . . . . . . . . . . . . 3,000 132,000
-----------
ELECTRICAL EQUIPMENT (1.2%)
Vicor Corp** . . . . . . . . . . . . . . . . . . . . . . 6,000 56,250
-----------
MANUFACTURING (1.8%)
Halter Marine Group Inc**. . . . . . . . . . . . . . . . 10,000 86,250
-----------
WASTE MANAGEMENT (2.3%)
United States Filter Corp**. . . . . . . . . . . . . . . 5,000 105,938
-----------
TOTAL CAPITAL GOODS. . . . . . . . . . . . . . . . . . . 380,438
-----------
COMMUNICATION SERVICES (1.9%)
TELECOM - CELLULAR (1.9%)
Metro One Telecommunications** . . . . . . . . . . . . . 10,000 90,000
-----------
TOTAL COMMUNICATION SERVICES . . . . . . . . . . . . . . 90,000
-----------
CONSUMER CYCLICALS (8.0%)
RETAIL - SPECIALITY (4.3%)
Casey's General Stores Inc.. . . . . . . . . . . . . . . 7,000 98,000
General Nutrition Companies Inc**. . . . . . . . . . . . 7,000 101,938
-----------
199,938
-----------
TEXTILES AND SHOES - (3.7%)
Timberland Co Class A**. . . . . . . . . . . . . . . . . 3,000 120,000
Warnaco Group Inc Class A. . . . . . . . . . . . . . . . 2,000 51,125
-----------
171,125
-----------
TOTAL CONSUMER CYCLICALS . . . . . . . . . . . . . . . . 371,063
-----------
CONSUMER STAPLES (0.9%)
FOODS (0.9%)
Northland Cranberries Inc Class A. . . . . . . . . . . . 4,000 43,500
-----------
TOTAL CONSUMER STAPLES . . . . . . . . . . . . . . . . . 43,500
-----------
</TABLE>
6
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC
STATEMENT OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY (2.2%)
OIL & GAS - DRILL & EQUIPMENT (2.2%)
Rowan Companies Inc**. . . . . . . . . . . . . . . . . . 7,000 $ 101,937
-----------
TOTAL ENERGY . . . . . . . . . . . . . . . . . . . . . . 101,937
-----------
FINANCIAL (9.9%)
BANKS - MAJOR REGIONAL (6.0%)
First Hawaiian Inc . . . . . . . . . . . . . . . . . . . 4,000 159,500
Popular, Inc.. . . . . . . . . . . . . . . . . . . . . . 4,000 121,500
-----------
281,000
-----------
BROKERAGE AND DIVERSE FINANCIAL SERVICES (1.9%)
Ocwen Financial Corp . . . . . . . . . . . . . . . . . . 7,500 90,000
-----------
INSURANCE - PROPERTY (2.0%)
Fidelity National Financial Corp . . . . . . . . . . . . 3,000 92,250
-----------
TOTAL FINANCIAL. . . . . . . . . . . . . . . . . . . . . 463,250
-----------
FOREIGN STOCKS (1.7%)
Hummingbird Communications Ltd** . . . . . . . . . . . . 5,000 78,750
-----------
TOTAL FOREIGN STOCKS . . . . . . . . . . . . . . . . . . 78,750
-----------
HEALTHCARE (20.3%)
BIOTECHNOLOGY (10.3%)
Chiron Corp**. . . . . . . . . . . . . . . . . . . . . . 10,000 225,000
Gilead Sciences Inc**. . . . . . . . . . . . . . . . . . 4,000 113,500
Onyx Pharmaceuticals Inc** . . . . . . . . . . . . . . . 10,000 77,500
Sangstat Medical Group** . . . . . . . . . . . . . . . . 3,000 62,250
-----------
478,250
-----------
MAJOR DRUGS (2.6%)
Fuisz Technologies Inc Ltd** . . . . . . . . . . . . . . 5,000 45,625
La Jolla Pharmaceutical Co** . . . . . . . . . . . . . . 30,000 75,000
-----------
120,625
-----------
MEDICAL PRODUCTS & SUPPLIES (7.4%)
Alkermes Inc** . . . . . . . . . . . . . . . . . . . . . 6,000 117,000
Bio Rad Labs Class "A"** . . . . . . . . . . . . . . . . 5,000 110,313
Mentor Corporation . . . . . . . . . . . . . . . . . . . 7,000 119,000
-----------
346,313
-----------
TOTAL HEALTHCARE . . . . . . . . . . . . . . . . . . . . 945,188
-----------
TECHNOLOGY (24.1%)
COMMUNICATION EQUIPMENT (3.6%)
Qualcomm Inc** . . . . . . . . . . . . . . . . . . . . . 3,000 166,875
-----------
COMPUTER SOFTWARE & SERVICES (9.0%)
Analogy Inc**. . . . . . . . . . . . . . . . . . . . . . 10,000 35,000
Cambridge Technical Partners Inc** . . . . . . . . . . . 3,000 66,375
Networks Associates Inc**. . . . . . . . . . . . . . . . 3,000 127,500
</TABLE>
7
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC
STATEMENT OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TECHNOLOGY (CONTINUED)
COMPUTER SOFTWARE & SERVICES (CONTINUED)
Orcad Inc**. . . . . . . . . . . . . . . . . . . . . . . 10,000 $ 80,625
Rational Software Corp** . . . . . . . . . . . . . . . . 5,000 111,875
-----------
421,375
-----------
ELECTRONICS - INSTRUMENT & DISTRIBUTION (3.7%)
Planar Systems Inc** . . . . . . . . . . . . . . . . . . 6,000 54,000
Veeco Instruments Inc**. . . . . . . . . . . . . . . . . 4,000 118,750
-----------
172,750
-----------
SEMICONDUCTORS (5.9%)
Intel Corp . . . . . . . . . . . . . . . . . . . . . . . 2,000 178,375
Triquint Semiconductor Inc** . . . . . . . . . . . . . . 5,000 96,250
-----------
274,625
-----------
SEMICONDUCTOR EQUIPMENT (1.9%)
Photronics Inc . . . . . . . . . . . . . . . . . . . . . 4,000 87,250
-----------
TOTAL TECHNOLOGY . . . . . . . . . . . . . . . . . . . . 1,122,875
-----------
TRANSPORTATION (0.8%)
AIR FREIGHT (0.8%)
Teekay Shipping Corp . . . . . . . . . . . . . . . . . . 2,000 35,000
-----------
TOTAL TRANSPORTATION . . . . . . . . . . . . . . . . . . 35,000
-----------
TOTAL COMMON STOCKS (80.4%)
(Cost $3,613,535). . . . . . . . . . . . . . . . . . . . 229,000 3,749,610
-----------
CONVERTIBLE BONDS (1.8%)
VLSI Technology, 8.25%, 10/01/05 . . . . . . . . . . . . 100,000 86,125
(Cost $92,691) -----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (12.8%)
Federal Home Loan Bank Discount Note 4.49%, 11/27/98 . . 200,000 199,329
Federal Home Loan Bank Discount Note 4.58%, 12/04/98 . . 100,000 99,569
Federal Mortgage Corporation Discount Note 4.53%,
11/16/98 . . . . . . . . . . . . . . . . . . . . . . . 300,000 299,397
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS . . . . . . . . 598,295
(Cost $598,295) -----------
MUTUAL FUND (MONEY MARKET INVESTMENTS) (4.7%)
Fountain Square Money Market . . . . . . . . . . . . . . 217,412
(Cost $217,412) -----------
TOTAL INVESTMENTS (99.7%)
(Cost $4,521,933). . . . . . . . . . . . . . . . . . . . $ 4,651,442
OTHER ASSETS IN EXCESS OF LIABILITIES (0.3%) . . . . . . . . . 12,108
-----------
NET ASSETS (100%). . . . . . . . . . . . . . . . . . . . . . . $ 4,663,550
-----------
-----------
**Securities on which no cash dividends were paid during the preceding
twelve (12) months.
The accompanying notes to financial statements are an integral part of the
financial statements.
</TABLE>
8
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost - see below) . . . . . . . . . . . $ 4,651,442
Dividends and interest receivable. . . . . . . . . . . . . . . 1,399
Receivable for investments sold. . . . . . . . . . . . . . . . 91,434
Deferred Expense Subsidy** (Note 3). . . . . . . . . . . . . . 6,324
Prepaid Bond Expenses. . . . . . . . . . . . . . . . . . . . . 5,209
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . 436
-----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . $ 4,756,244
-----------
LIABILITIES:
Payable for investments purchased. . . . . . . . . . . . . . . $ 64,125
Administration Fee** . . . . . . . . . . . . . . . . . . . . . 5,774
Transfer Agent Fee . . . . . . . . . . . . . . . . . . . . . . 3,434
Accounting Fee . . . . . . . . . . . . . . . . . . . . . . . . 4,878
Legal Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,514
Printing Fee . . . . . . . . . . . . . . . . . . . . . . . . . 368
Audit Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 9,368
Trustee Fee. . . . . . . . . . . . . . . . . . . . . . . . . . 375
Other payables . . . . . . . . . . . . . . . . . . . . . . . . 858
-----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . $ 92,694
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,663,550
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital Stock ($1.00 par value). . . . . . . . . . . . . . . . $ 543,057
Paid in capital. . . . . . . . . . . . . . . . . . . . . . . . 3,990,984
Net unrealized appreciation in value of investments. . . . . . 129,509
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,663,550
-----------
-----------
NET ASSET VALUE PER SHARE:
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,663,550
Shares outstanding . . . . . . . . . . . . . . . . . . . . . . 543,057
Net asset value and redemption price per share . . . . . . . . $8.59
COST OF INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . $ 4,521,933
-----------
-----------
</TABLE>
**Related Party
The accompanying notes to financial statements are an integral part of the
financial statements.
9
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,238
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,694
-----------
TOTAL INCOME. . . . . . . . . . . . . . . . . . . . . . . $ 45,932
-----------
EXPENSES:
Investment Advisory Fee. . . . . . . . . . . . . . . . . . . . $ 52,011
Administrative Fee . . . . . . . . . . . . . . . . . . . . . . 63,290
Transfer Agency Fee. . . . . . . . . . . . . . . . . . . . . . 16,950
Fund Accounting Fee. . . . . . . . . . . . . . . . . . . . . . 21,235
Legal Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,759
Printing Fee . . . . . . . . . . . . . . . . . . . . . . . . . 5,846
Audit Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,475
Trustee Fee. . . . . . . . . . . . . . . . . . . . . . . . . . 2,172
Insurance Fee. . . . . . . . . . . . . . . . . . . . . . . . . 10,749
Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,162
Expense Subsidy (Note 3) . . . . . . . . . . . . . . . . . . . (41,246)
-----------
TOTAL EXPENSES. . . . . . . . . . . . . . . . . . . . . . $ 150,403
-----------
NET INVESTMENT LOSS. . . . . . . . . . . . . . . . . . . . . . . $ (104,471)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net Realized Loss on Investments . . . . . . . . . . . . . . . $ (77,914)
Unrealized Appreciation
Beginning of Period. . . . . . . . . . . . . . . . . . . . . 1,169,910
End of Period. . . . . . . . . . . . . . . . . . . . . . . . 129,509
-----------
Change in net unrealized appreciation/depreciation . . . . . . (1,040,401)
-----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS. . . . . . . . (1,118,315)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . $(1,222,786)
-----------
-----------
</TABLE>
The accompanying notes to financial statements are an integral part of the
financial statements.
10
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net Investment Loss. . . . . . . . . . . . . . . . . . . . . . . $ (104,471) $ (83,671)
Net Realized Gain (Loss) On Investments. . . . . . . . . . . . . (77,914) 1,006,649
Net Change In Unrealized Appreciation/Depreciation . . . . . . . (1,040,401) 53,227
--------------------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . (1,222,786) 976,205
--------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from Net Realized Gain on Investments. . . . . . . (924,200) (884,196)
--------------------------
CHANGE IN NET ASSETS DERIVED FROM INVESTMENT ACTIVITIES. . . . . (2,146,986) 92,009
--------------------------
FROM CAPITAL STOCK TRANSACTIONS:
Net Increase in Net Assets Derived From
Capital Stock Transactions - Note 4 . . . . . . . . . . . . . 1,382,109 797,820
--------------------------
NET INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . (764,877) 889,829
--------------------------
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . 5,428,427 4,538,598
--------------------------
End of period (including overdistributed net investment income
of $0and ($930,597), respectively). . . . . . . . . . . . . . $ 4,663,550 $5,428,427
--------------------------
--------------------------
</TABLE>
The accompanying notes to financial statements are an integral part of the
financial statements.
11
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEARS ENDED
OCTOBER 31,
1998 1997 1996 1995 1994
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period . . . . . . . $13.27 $13.19 $13.97 $10.24 $12.07
-----------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income. . . . . . . . . . . . . . (0.37) (0.20) (0.17) (0.26) (0.29)
Net Realized and Unrealized Gain (Loss). . . . .
on Investments. . . . . . . . . . . . . . . . (2.07) 2.83 0.90 4.51 0.55
-----------------------------------------------
Total income from investment operations. . . . . (2.44) 2.63 0.73 4.25 0.26
-----------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from Net Realized Gain
on Investments. . . . . . . . . . . . . . . . (2.24) (2.55) (1.51) (0.52) (2.09)
-----------------------------------------------
Total distributions to shareholders. . . . . . . (2.24) (2.55) (1.51) (0.52) (2.09)
-----------------------------------------------
Net Asset Value, End of Period . . . . . . . . . . $8.59 $13.27 $13.19 $13.97 $10.24
-----------------------------------------------
-----------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . (20.23)% 22.89% 5.70% 43.71% 1.86%
-----------------------------------------------
-----------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in 000S). . . . . . . $4,664 $5,428 $4,539 $4,151 $2,992
-----------------------------------------------
-----------------------------------------------
Ratio of Operating Expenses to
Average Net Assets . . . . . . . . . . . . . . 2.90% 2.90% 2.29% 3.10% 3.51%
-----------------------------------------------
-----------------------------------------------
Ratio of Net Investment Income (Loss) to
Average Net Assets . . . . . . . . . . . . . . (2.01)% (1.62)% (1.26)% (2.10)% (2.86)%
-----------------------------------------------
-----------------------------------------------
Portfolio Turnover Rate* . . . . . . . . . . . . 92% 88% 108% 60% 43%
-----------------------------------------------
-----------------------------------------------
Average Commission Rate**. . . . . . . . . . . . $.1055 $.1044 $.1248 - -
-----------------------------------------------
-----------------------------------------------
</TABLE>
* 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 period.
** For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
The accompanying notes to financial statements are an integral part of the
financial statements.
12
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OFSIGNIFICANT 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 having a
remaining maturity of 60 days or less consist exclusively of U.S. Treasury
and Agency Obligations and are stated at amortized cost which is
approximately equivalent to value.
FEDERAL INCOME TAXES -- No provision for Federal income taxes is necessary
since the Fund is qualified as a "regulated investment company" under the
Internal Revenue Code and intends to maintain this qualification and
distribute substantially all of its net investment income and realized
gains from investment transactions to its stockholders each year.
DISTRIBUTIONS - Distributions of net investment income, if any, are
distributed annually. Distributions of net realized gains, if any, are
declared at least once each year. Distributions to stockholders are
recorded on the ex-dividend date.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulation.
Accordingly, during the year ended October 31, 1998, amounts have been
reclassified to paid in capital to reflect an accumulated net investment
loss which may not be offset against capital gains or carried forward for
tax purposes. The calculation of net investment income in the Financial
Highlights excludes these adjustments.
OTHER -- Securities transactions are accounted for on the date the
securities are purchased or sold (trade date). Dividend income is recorded
on the ex-dividend date. Interest income, which includes amortization of
premiums and accretion of discounts, is accrued and recorded daily.
Realized gains and losses from investment transactions and unrealized
appreciation and depreciation of investments are reported on an identified
cost basis, which is the same basis the Fund uses for Federal income tax
purposes.
USE OF ESTIMATES -- The preparation of the Fund's financial statements in
conformity with generally accepted accounting principles requires the
Fund's management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.
13
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities (excluding short-term
securities), for the year ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------- -----
<S> <C> <C>
Common Stocks $4,349,381 $4,095,555
</TABLE>
<TABLE>
<S> <C>
As of October 31, 1998
Gross appreciation (excess of value over cost) $552,664
Gross depreciation (excess of cost over value) (432,155)
--------
Net unrealized appreciation $129,509
--------
--------
</TABLE>
This amount represents the net increase in the value of investments (all of
which are represented by long transactions) held at October 31, 1998.
3. TRANSACTIONS WITH AFFILIATES:
The Fund has entered into an investment advisory agreement with Stonebridge
Capital Management, Inc. (the Adviser). The advisory agreement has been
approved by the Fund's Board of Directors and stockholders. Under the
agreement, the Adviser is entitled to a fee, computed daily and paid
monthly (in arrears), at the annual rate of 1.00% of the average daily net
assets of the Fund. For the year ended October 31, 1998 Advisory fees paid
to the Adviser totaled approximately $26,689.
The Adviser has agreed that it will limit the overall annual expenses of
the Fund to 2.90% of average annual net assets, by either reducing its fees
or reimbursing the Fund for operating expenses in excess of this
limitation. The Fund will remain liable to the Adviser for all such
expenses subsidized in any fiscal year, for a period of up to three years
from the date the expenses were incurred, so long as reimbursement will not
cause the annual expense ratio to exceed the expense limit in effect for
that year. The amount of the deferred expense subsidy, as defined in the
statement of assets and liabilities, represents the difference between
total expenses subsidized and management fees waived by the Adviser (less
payments received from the Adviser) totaling $36,635 at October 31, 1998
and the accrued management fee due the Adviser at October 31, 1998 of
$30,311; this amount will be recognized as expense previously deferred in
the statement of operations in future periods, if limits permit in those
periods. As of October 31, 1998, the Fund had a cumulative carryover of
$57,516 in waived expenses.
On July 23, 1997, the Fund entered into an administration agreement with
ALPS Mutual Funds Services ("ALPS"). The administrative agreement provides
that ALPS will receive a monthly management fee equal to the annual rate of
.10% of the average daily net assets in the Fund up to $250,000,000 and
.075% of the average daily net assets of the Fund in excess of
$250,000,000. At all times ALPS' fee will be no less than $5,000 per
month in the first year and $6,250 per month in years two and three. For
the year ended October 31, 1998, ALPS received $57,516 for administration
services.
Certain officers and directors of the Fund are also officers and/or
directors of the Adviser and/or ALPS.
14
<PAGE>
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL STOCK:
At October 31, 1998, there were indefinite shares of $1.00 par value
capital stock authorized shares. Transactions in shares of capital stock
for the year ended October 31, 1998 and the year ended October 31, 1997,
were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares Sold 101,506 $1,102,475 28,323 $ 378,125
Shares Issued to Shareholders
in Reinvestment of Dividends 89,906 863,993 71,471 844,073
----------------------------------------------------
Total 191,412 1,966,468 99,794 1,222,198
Less Shares Redeemed (57,432) (584,359) (34,794) (424,378)
----------------------------------------------------
Net Increase 133,980 $1,382,109 65,000 $ 797,820
----------------------------------------------------
----------------------------------------------------
</TABLE>
5. STONEBRIDGE REORGANIZATION:
On August 25, 1998, shareholders of the former Stonebridge Aggressive
Growth Fund, Inc. voted to approve its reorganization into the Aggressive
Growth Fund Portfolio of the Stonebridge Funds Trust, a newly created
Delaware business trust, effective November 1, 1998.
6. DISTRIBUTION TO SHAREHOLDERS:
On December 10, 1997, a dividend of $2.24 per share, aggregating $924,200
was declared from net realized gains from investment transactions
(including $0.58 applicable to short-term capital gains that are taxable to
shareholders as ordinary income dividends). These dividends were paid on
December 31, 1997 to shareholders of record December 29, 1997.
15
