<PAGE>
STONEBRIDGE GROWTH FUND, INC.
OFFICERS AND DIRECTORS
Richard C. Barrett, CHAIRMAN, BOARD OF DIRECTORS
AND VICE PRESIDENT
Debra L. Newman, VICE PRESIDENT AND TREASURER
Craig B. Burger, VICE PRESIDENT
Chad S. Christensen, VICE PRESIDENT STONEBRIDGE
James V. Hyatt, SECRETARY GROWTH FUND, INC.
Selvyn B. Bleifer, DIRECTOR
Marvin Freedman, DIRECTOR
Charles F. Haas, DIRECTOR
William H. Taylor, 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
1004 Baltimore, Dwight 4,
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 THIRTY-EIGHTH
HEIN + ASSOCIATES LLP ANNUAL REPORT
717 Seventeenth Street, Suite 1600 FOR THE YEAR ENDED
Denver, Colorado 80202 NOVEMBER 30, 1997
This report and its financial statements are submitted for the
general information of the shareholders of the Fund. The report
is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective
prospectus.
<PAGE>
LETTER TO SHAREHOLDERS
I HIGHLIGHTS OF THE FISCAL YEAR ENDED NOVEMBER 30, 1997
This annual report covers the twelve months ended November 30, 1997.
During this period Stonebridge Growth Fund's total return gained
19.79%, while the Standard & Poor's 500 average (S&P500) gained
+28.6%, and the New York Stock Exchange Composite Index gained +27.9%.
On November 30, 1996 the net asset value of the Fund was $16.56 and on
November 30, 1997 the net asset value was $17.69. During the year the
Fund paid a capital gains dividend of $1.514 per share and a dividend
from investment income of $0.278 per share to shareholders of record
on December 27, 1996.
II THE YEAR IN REVIEW
SUMMARY
1997 was the third year in a row in which your Fund achieved a total
annual return in excess of 19%.
From the perspective of the U.S. economy, it is difficult to imagine
how 1997 could have been a better year: solid overall growth, good
corporate profits, low to negligible inflation, low unemployment, and
declining long-term interest rates. The only negative development came
late in the year with the troubles in the Far East.
After years of seemingly endless dramatic growth which led to serious
overbuilding and excess capacity, the Asian miracle ground to an
abrupt halt with debt liquidation and depreciation of local currencies
late in 1997. These events will undoubtedly have a negative impact on
some of the U.S. multinational companies, however, Asia's troubles
should be offset by strength in Europe and Latin America.
The divergence in the equity markets we talked about in our last
annual report continued in 1997. For the third year in a row, big cap
stocks were the best performers. The top ten stocks in the Dow Jones
Industrial Average accounted for 74.7% of the market's gain, while the
top ten in the S&P500 accounted for 26% of the Index's return.
Compared with the S&P500's 28.6% return, the broader ValueLine Index
was up only 19.4%.
INVESTMENT STYLE
Our investment style places a major emphasis on the stocks of companies
that we believe have superior earnings growth potential relative to the
average company in the S&P500 Index. Generally, these companies are
consistently profitable, have demonstrated stable growth, possess strong
balance sheets, and earn relatively high returns on equity.
1
<PAGE>
Our growth style again contributed positively to performance during
1997 as growth stocks, especially the technology sectors, continued to
outperform the cyclical issues. As this economic cycle matures during
1998 and earnings gains for cyclical companies become relatively more
difficult we believe that this trend will continue.
III PORTFOLIO PROFILE
NOVEMBER 30, 1997 NOVEMBER 30, 1996
[Chart] [Chart]
TOP TEN EQUITIES
Intel 3.7% 4.2%
Hewlett Packard 2.9% 3.0%
WW Grainger 2.7% ---
Bristol Myers 2.7% ---
Emerson Electric 2.6% 2.7%
Illinois Tool Works 2.6% ---
Fannie Mae 2.5% 2.7%
Dover 2.4% ---
ABB AG 2.2% 2.4%
Gillette 2.2% ---
------ -----
TOP TEN EQUITIES 26.5% 30.7%
PORTFOLIO TURNOVER 41.0% 43.0%
BEST PERFORMING EQUITIES* WORST PERFORMING EQUITIES*
Computer Associates +67.1% Seagate (41.8%)
Bristol Myers +64.6% Outback Steakhouse (35.8%)
Microsoft +63.4% Fuisz (28.3%)
WalMart +55.9% Harland, John H. & Co. (26.1%)
Lucent Technologies +50.8% Cabletron Systems, Inc. (23.8%)
*Results from November 30, 1996, or purchase date if more recent, to
November 30, 1997.
2
<PAGE>
IV LOOKING AHEAD
We expect 1998 to be a challenging year for stock selection. We plan
to be very selective focusing on companies that can generate superior
top line growth in a slowing economy.
Longer term we continue to believe that investing in a portfolio of
carefully selected common stocks is one of the more attractive
investment opportunities.
Sincerely,
/s/ Richard C. Barrett
-------------------------------------
Richard C. Barrett, CFA
President of the Adviser
Stonebridge Capital Management, Inc.
Vice President & Director of the Fund
CHANGE IN VALUE OF A $10,000 INVESTMENT IN STONEBRIDGE GROWTH FUND, INC.
VS. S&P 500 WITH INCOME AND THE NYSE COMPOSITE INDEX
FROM DECEMBER 1, 1987 TO NOVEMBER 30, 1997
[CHART]
[plotpoints to be provided by client]
--------------------------------- ----------------------------------------
Final Portfolio Values
Average Annual Total Return ----------------------------------------
Periods Ended November 30, 1997 Stonebridge Growth Fund, Inc. $36,421
--------------------------------- ----------------------------------------
1 Year 5 Year 10 Year NYSE Composite Index $38,787
--------------------------------- ----------------------------------------
19.79% 12.35% 13.80% S&P 500 $55,611
--------------------------------- ----------------------------------------
3
<PAGE>
FACTS ABOUT THE FUND
When you buy shares of most mutual funds, the purchase price
usually includes a sales charge which may be as high as 8.25% of the
purchase price. These are known as "load" funds. Stonebridge Growth
Fund, Inc. differs from these funds because it makes no sales charge
and is commonly referred to as a "no-load" Fund. When you invest in
Stonebridge Growth Fund, Inc., you purchase shares at net asset value,
since no sales charge and no commission is paid to anyone, nothing is
deducted for sales expense from the price you pay for its shares, and
every dollar you invest in the Fund is put to work for you. The
primary objective of the Fund is long-term growth of capital.
The Fund offers a means of participating in the expansion and
profits of the economy through a diversified common stock program, as
well as an opportunity to hedge against the continuing decline in the
purchasing power of money. Shareholders own in a single security a
proportionate interest in a continuously managed portfolio of many
securities representing a cross section of progressive American
companies. After payment of operating expenses, all income and profits
realized from the Fund's investments are distributed to the
shareholders.
Investment advice is provided by the investment counseling firm
of Stonebridge Capital Management, Inc., which also acts as investment
adviser on an annual fee basis to substantial individual and
institutional accounts as well as Stonebridge Aggressive Growth Fund,
Inc. Thus, through the medium of the Fund, investors of more limited
means are offered the benefits and advantages of competent, qualified
investment management on an economical basis.
Shares of the Fund are priced daily and fluctuate in accordance
with changes in the market value of the securities owned by the Fund.
The Fund will, at any time, repurchase its shares at the applicable
net asset value per share.
HISTORICAL RECORD
PER SHARE
-----------------------------------
DIVIDENDS DISTRIBUTIONS
NET FROM NET FROM
ASSET INVESTMENT CAPITAL
YEAR ENDED NOVEMBER 30, VALUE INCOME GAINS
- ---------------------------------------------------------------------
1988.......................... $11.70 $.10 $1.15
1989.......................... $14.18 $.13 $ .50
1990.......................... $12.55 $.21 $1.48
1991.......................... $14.85 $.22 $ .33
1992.......................... $14.78 $.21 $1.10
1993.......................... $12.62 $.15 $1.88
1994.......................... $12.61 $.07 $ .30
1995.......................... $14.36 $.07 $ .69
1996.......................... $16.56 $.17 $ .56
1997.......................... $17.69 $.28 $1.51
4
<PAGE>
INDEPENDENT AUDITOR'S REPORT
BOARD OF DIRECTORS AND SHAREHOLDERS
STONEBRIDGE GROWTH FUND, INC.
LOS ANGELES, CALIFORNIA
We have audited the accompanying statement of assets and
liabilities of Stonebridge Growth Fund, Inc., (the "Fund") including
the statement of investments, as of November 30, 1997, the related
statement of operations for the year then ended, the statements of
changes in net assets for the years ended November 30, 1997 and 1996,
and the selected per share data and ratios set forth under the caption
"Financial Highlights" for each of the five years in the period ended
November 30, 1997. These financial statements and per share data and
ratios are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements
and per share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and per share data and ratios are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of
November 30, 1997, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and selected per share
data and ratios referred to in the first sentence above present
fairly, in all material respects, the financial position of
Stonebridge Growth Fund, Inc. at November 30, 1997, the results of its
operations for the year then ended, the changes in its net assets for
the years ended November 30, 1997 and 1996, and the selected per share
data and ratios for each of the five years in the period ended
November 30, 1997, in conformity with generally accepted accounting
principles.
HEIN + ASSOCIATES LLP
Denver, Colorado
January 16, 1997
5
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1997
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
COMMON STOCKS (88.04%)
BASIC MATERIALS (2.15%) OF
Valspar Corp. . . . . . . . . . . . . . . . . 30,000 $ 911,250
-----------
TOTAL BASIC MATERIALS . . . . . . . . . . . . 911,250
-----------
CAPITAL GOODS (15.37%) OF
Boeing Co.. . . . . . . . . . . . . . . . . . 13,000 690,625
Caterpillar, Inc. . . . . . . . . . . . . . . 14,000 671,125
Deere & Co. . . . . . . . . . . . . . . . . . 10,000 548,125
Emerson Electric Co.. . . . . . . . . . . . . 20,000 1,100,000
W.W. Grainger Inc.. . . . . . . . . . . . . . 12,000 1,123,500
Illinois Tool Works . . . . . . . . . . . . . 20,000 1,096,250
Little Fuse** . . . . . . . . . . . . . . . . 25,000 690,625
Precision Castparts Corp. . . . . . . . . . . 10,000 593,750
-----------
TOTAL CAPITAL GOODS . . . . . . . . . . . . . 6,514,000
-----------
CONSUMER CYCLICALS (8.18%) OF
Albertson's Inc.. . . . . . . . . . . . . . . 20,000 887,500
Harland, John H. & Co.. . . . . . . . . . . . 10,000 206,875
Mattel Inc. . . . . . . . . . . . . . . . . . 20,000 801,250
Time Warner Inc.. . . . . . . . . . . . . . . 15,000 873,750
Wal-Mart Stores, Inc. . . . . . . . . . . . . 17,500 698,906
-----------
TOTAL CONSUMER CYCLICALS. . . . . . . . . . . 3,468,281
-----------
CONSUMER STAPLES (10.57%) OF
Abbott Labs . . . . . . . . . . . . . . . . . 12,500 812,500
American Home Products. . . . . . . . . . . . 10,000 698,750
Bristol-Meyers Squibb Co. . . . . . . . . . . 12,000 1,123,500
Gillette Corporation. . . . . . . . . . . . . 10,000 923,125
PepsiCo Inc.. . . . . . . . . . . . . . . . . 25,000 921,875
-----------
TOTAL CONSUMER STAPLES. . . . . . . . . . . . 4,479,750
-----------
ENERGY (5.60%) OF
Chevron Corp. . . . . . . . . . . . . . . . . 10,000 801,875
Exxon Corp. . . . . . . . . . . . . . . . . . 14,000 854,000
Mobil Corp. . . . . . . . . . . . . . . . . . 10,000 719,375
-----------
TOTAL ENERGY. . . . . . . . . . . . . . . . . 2,375,250
-----------
FINANCIAL (8.01%) OF
American Express Corp.. . . . . . . . . . . . 10,000 788,750
American Int'l Group. . . . . . . . . . . . . 7,500 756,094
Fannie Mae. . . . . . . . . . . . . . . . . . 20,000 1,056,250
6
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, CON'T
NOVEMBER 30, 1997
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
COMMON STOCKS (CON'T)
FINANCIAL (CON'T)
General Re Corp.. . . . . . . . . . . . . . . 4,000 $ 794,000
-----------
TOTAL FINANCIAL . . . . . . . . . . . . . . . 3,395,094
-----------
MISCELLANEOUS (13.05%) OF
Cabletron Systems, Inc**. . . . . . . . . . . 15,000 345,000
Clayton Homes, Inc. . . . . . . . . . . . . . 40,000 657,500
Dover Corporation . . . . . . . . . . . . . . 15,000 1,005,937
Electronic Data Systems . . . . . . . . . . . 20,000 760,000
Federal Signal Corp.. . . . . . . . . . . . . 35,000 761,250
Lexmark Int'l Group, Class A**. . . . . . . . 20,000 637,500
MGIC Investment Corp. . . . . . . . . . . . . 15,000 876,563
Tricon Global Restaurant**. . . . . . . . . . 3,000 101,438
U.S. Freightways Corp.. . . . . . . . . . . . 12,500 384,375
-----------
TOTAL MISCELLANEOUS . . . . . . . . . . . . . 5,529,563
-----------
TECHNOLOGY (16.73%) OF
Chiron Corp**.. . . . . . . . . . . . . . . . 45,000 818,437
Computer Associates Int'l Inc.. . . . . . . . 15,000 780,937
Hewlett Packard . . . . . . . . . . . . . . . 20,000 1,221,250
Intel Corp. . . . . . . . . . . . . . . . . . 20,000 1,552,500
Microsoft Corp**. . . . . . . . . . . . . . . 4,000 566,000
Motorola Inc. . . . . . . . . . . . . . . . . 9,000 565,875
Oracle Corp**.. . . . . . . . . . . . . . . . 20,000 666,250
Rational Software Corp**. . . . . . . . . . . 35,000 354,375
Vicor Corp**. . . . . . . . . . . . . . . . . 20,000 565,000
-----------
TOTAL TECHNOLOGY. . . . . . . . . . . . . . . 7,090,624
-----------
FOREIGN STOCKS (8.38%) OF
ABB AG ADR. . . . . . . . . . . . . . . . . . 7,000 931,410
Nestle SA, ADR. . . . . . . . . . . . . . . . 12,000 885,000
Roche Holdings Ltd, ADR . . . . . . . . . . . 10,000 892,500
Royal Dutch Petroleum . . . . . . . . . . . . 16,000 843,000
-----------
TOTAL FOREIGN STOCKS. . . . . . . . . . . . . 3,551,910
-----------
TOTAL COMMON STOCKS (88.04%)
(Cost $24,020,638) . . . . . . . . . . . . . 790,000 37,315,722
-----------
U.S GOVERNMENT AND AGENCY OBLIGATIONS (10.20%)
FC Discount Note 2/12/98. . . . . . . . . . . 700,000 692,561
FHLB Discount Note 1/07/98. . . . . . . . . . 800,000 795,862
7
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, CON'T
NOVEMBER 30, 1997
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (CON'T)
FHLB Discount Note 5.629%. . . . . . . . . . . . 1,000,000 $ 990,574
FMC Discount Note 12/12/97 . . . . . . . . . . . 250,000 249,566
FMC Discount Note 1/15/98. . . . . . . . . . . . 800,000 794,768
Fannie Mae Discount Note 10/17/97. . . . . . . . 800,000 797,548
-----------
TOTAL GOVERNMENT AND AGENCY OBLIGATIONS. . . . . 4,320,879
-----------
(Cost $4,320,879)
MUTUAL FUND (MONEY MARKET INVESTMENTS) (1.91%)
Fountain Square Money Market . . . . . . . . . . 808,514 808,514
-----------
(Cost $808,514)
TOTAL INVESTMENTS (100.15%)
(Cost $29,150,031) . . . . . . . . . . . . . . . $42,445,115
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.15%). . . (65,267)
-----------
NET ASSETS: (100%) . . . . . . . . . . . . . . . . $42,379,848
-----------
-----------
**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.
8
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
ASSETS:
Investments, at value (Cost - see below) . . . . . $42,445,115
Dividends and interest receivable. . . . . . . . . 48,464
Receivable for shares sold . . . . . . . . . . . . 485
Other Assets . . . . . . . . . . . . . . . . . . . 4,538
-----------
TOTAL ASSETS . . . . . . . . . . . . . . . . $42,498,602
-----------
LIABILITIES:
Transfer Agent Fee . . . . . . . . . . . . . . . . $ 71,760
Management Fee** . . . . . . . . . . . . . . . . . 16,628
Audit Fee. . . . . . . . . . . . . . . . . . . . . 12,154
Printing Fee . . . . . . . . . . . . . . . . . . . 8,232
Legal Fee. . . . . . . . . . . . . . . . . . . . . 3,385
Trustee Fee. . . . . . . . . . . . . . . . . . . . 2,774
Accounting Fee . . . . . . . . . . . . . . . . . . 2,500
Custody Fee. . . . . . . . . . . . . . . . . . . . 562
Other payables . . . . . . . . . . . . . . . . . . 759
-----------
TOTAL LIABILITIES . . . . . . . . . . . . . . $ 118,754
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . $42,379,848
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital stock ($1.00 par value). . . . . . . . . . $ 2,395,798
Paid in capital. . . . . . . . . . . . . . . . . . 19,792,073
Over-distributed net investment income . . . . . . (392,570)
Accumulated net realized gain on investments . . . 7,289,463
Net unrealized appreciation in value of
investments . . . . . . . . . . . . . . . . . . . 13,295,084
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . $42,379,848
-----------
-----------
NET ASSET VALUE PER SHARE:
Net assets . . . . . . . . . . . . . . . . . . . . $42,379,848
-----------
Shares outstanding . . . . . . . . . . . . . . . . 2,395,798
Net asset value and redemption price per share . . $ 17.69
-----------
-----------
COST OF INVESTMENTS. . . . . . . . . . . . . . . . $29,150,031
-----------
-----------
**Related Party
The accompanying notes to financial statements are an
integral part of the financial statements.
9
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1997
INVESTMENT INCOME:
INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . $ 480,740
Interest . . . . . . . . . . . . . . . . . . . . . . 196,467
-----------
TOTAL INCOME . . . . . . . . . . . . . . . . . . . . $ 677,207
-----------
EXPENSES:
Investment Advisory Fees . . . . . . . . . . . . . . $ 285,980
Transfer Agency Fees . . . . . . . . . . . . . . . . 171,760
Administrative Fees. . . . . . . . . . . . . . . . . 57,775
Printing . . . . . . . . . . . . . . . . . . . . . . 30,484
Legal. . . . . . . . . . . . . . . . . . . . . . . . 14,086
Custodian Fees . . . . . . . . . . . . . . . . . . . 10,630
Accounting Fees. . . . . . . . . . . . . . . . . . . 10,000
Trustee Fees . . . . . . . . . . . . . . . . . . . . 9,574
Audit Fees . . . . . . . . . . . . . . . . . . . . . 8,810
Registration Fees. . . . . . . . . . . . . . . . . . 2,956
Other. . . . . . . . . . . . . . . . . . . . . . . . 30,038
-----------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . $ 632,093
-----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . $ 45,114
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net Realized Gain on Investments . . . . . . . . . . $ 6,904,912
Unrealized Appreciation
Beginning of Period. . . . . . . . . . . . . . . . 12,572,226
End of Period. . . . . . . . . . . . . . . . . . . 13,295,084
-----------
Change in net unrealized appreciation. . . . . . . . 722,858
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS. . . 7,627,770
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . $ 7,672,884
-----------
-----------
The accompanying notes to financial statements are an
integral part of the financial statements.
10
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30,
1997 1996
--------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net Investment Income. . . . . . . . . . . . . . . $ 45,114 $ 242,665
Net Realized Gain On Investments . . . . . . . . . 6,904,912 4,029,329
Net Change in Unrealized Appreciation. . . . . . . 722,858 2,883,204
--------------------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . 7,672,884 7,155,198
--------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from Net Investment Income . . . . . . . (662,905) (420,834)
Distributions from Net Realized Gain On
Investments . . . . . . . . . . . . . . . . . . . (3,610,209) (1,342,329)
--------------------------
DECREASE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS . . . . . . . . . (4,273,114) (1,763,163)
--------------------------
CHANGE IN NET ASSETS DERIVED FROM INVESTMENT
ACTIVITIES. . . . . . . . . . . . . . . . . . . . 3,399,770 (5,392,035)
--------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net Decrease in Net Assets Derived From
Capital Stock Transactions - Note 4. . . . . . . . (621,631) (565,107)
--------------------------
NET INCREASE IN NET ASSETS. . . . . . . . . . 2,778,139 4,826,928
--------------------------
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . 39,601,709 34,774,781
--------------------------
End of period (including (over)/underdistributed
net investment income of $(392,570) and $216,775,
respectively) . . . . . . . . . . . . . . . . . . $42,379,848 $39,601,709
--------------------------
--------------------------
The accompanying notes to financial statements are an
integral part of the financial statements.
11
<PAGE>
STONEBRIDGE GROWTHFUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED PER-SHARE DATA FOR EACH SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period . . . . . . . $ 16.56 $ 14.36 $ 12.61 $ 12.62 $14.78
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income. . . . . . . . . . . . . . 0.02 0.10 0.17 0.07 0.06
Net Realized and Unrealized Gain (Loss)
on Investments. . . . . . . . . . . . . . . . . 2.90 2.83 2.34 0.29 (0.19)
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from Net Investment Income . . . . . . (0.28) (0.17) (0.07) (0.07) (0.15)
Distributions from Net Realized Gain on
Investments . . . . . . . . . . . . . . . . . . (1.51) (0.56) (0.69) (0.30) (1.88)
--------------------------------------------------
Net Asset Value, End of Period . . . . . . . . . . $ 17.69 $ 16.56 $ 14.36 $ 12.61 $12.62
--------------------------------------------------
--------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . 19.79% 21.46% 23.50% 2.81% (1.22)%
--------------------------------------------------
--------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in 000s). . . . . . . $42,380 $39,602 $34,775 $30,775 $32,448
--------------------------------------------------
--------------------------------------------------
Ratio of Operating Expenses to
Average Net Assets . . . . . . . . . . . . . . 1.50% 1.47% 1.49% 1.64% 1.60%
--------------------------------------------------
--------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . 0.11% 0.67% 1.27% 0.53% 0.50%
--------------------------------------------------
--------------------------------------------------
Portfolio Turnover Rate* . . . . . . . . . . . . 41% 45% 38% 36% 56%
--------------------------------------------------
--------------------------------------------------
Average Commission Rate**. . . . . . . . . . . . $ .1221 $ .1359 - - -
</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
year.
**For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commission are charged.
The accompanying notes to financial statements are an
integral part of the financial statements.
12
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND NATURE OF OPERATIONS -- Stonebridge Growth Fund,
Inc. (the Fund) is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment
company.
SECURITY VALUATION -- Investment securities listed or traded
on a registered securities exchange or quoted on NASDAQ are
valued at the last sales price on the date of valuation. Securities
traded on the over-the-counter market for which no sales are reported
are valued at the mean between the bid and asked price. Short-term debt
securities consist 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
shareholders 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
shareholders are recorded on the ex-dividend date.
OTHER -- Securities transactions are accounted for on the date
the securities are purchased or sold (trade date). Dividend income 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 these financial statements and
accompanying notes. Actual results could differ from those statements.
2. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities (excluding short-term
securities), for the year ended November 30, 1997 were as follows:
Purchases Sales
--------- -----
Common Stocks $15,665,080 $22,420,322
As of November 30, 1997
Gross appreciation (excess of value over cost) $13,759,514
Gross depreciation (excess of cost over value) (464,430)
------------
Net unrealized appreciation $13,295,084
This amount represents the net increase in the value of investments (all
of which are represented by long transactions) held at November 30, 1997.
13
<PAGE>
STONEBRIDGE GROWTHFUND, INC.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
3. TRANSACTIONS WITH AFFILIATES:
Through July 31, 1997 NIF Management Co., Inc. (NIF) was the Fund's
investment adviser and fund manager and was by agreement entitled to
a monthly fee equal to 3/4 of 1% of the first $10,000,000 of average
net assets of the Fund, 5/8 of 1% of the next $15,000,000 and 9/16 of
1% of the excess over $25,000,000 NIF agreed to reimburse the Fund for
all operating expenses (including management fees, but excluding
taxes and interest) of the Fund which annually exceed 2% of the
average weekly net assets. NIF received approximately $173,000 in
fees and reimbursed approximately $34,000 for administrative services
provided to the fund for the year ended November 30, 1997.
NIF also served as the transfer agent for the fund through November
7, 1997. Transfer agent fees were paid based upon the costs of the
transfer agent to the extent that these fees plus all other expenses
of the Fund, excluding taxes and interest, do not exceed 2% of the
average weekly net asset value of the Fund on the first $10,000,000
of net assets and 1 1/2% on the next $20,000,000 and 1% of the excess
over $30,000,000 on an annual basis. For the year ended November 30,
1997 the fund recorded transfer agent expenses to NIF for $168,000 of
which $63,000 was included in transfer agent fees payable relative to
the transfer agent agreement.
On August 1, 1997 the Fund entered into an investment advisory
agreement with Stonebridge Capital Management, Inc. (the Adviser).
Under the agreement, the Adviser is entitled to a fee, computed daily
and paid monthly (in arrears), at the annual rate of .75% of the
average daily net assets of the Fund. For the year ended November 30,
1997 Advisory fees payable to the Adviser totaled approximately
$111,000.
The Adviser may from time to time voluntarily agree to reduce its
fees or absorb other operating expenses to ensure that the expenses
of the Fund do not exceed certain limitations. In such event, any
such reductions and other expenses paid by the Adviser will be
repaid to the Adviser by the Fund, without interest, at such later
time or times as they may be repaid without causing the aggregate
operating expenses of the Fund to exceed such voluntary expense
limitation. In the event this agreement is terminated for any
reason, any such repayment obligation will also be terminated without
further liability to the Fund.
On August 1, 1997, the Fund entered into an administration agreement
with 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 November 30, 1997, ALPS received $20,000 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 GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
4. CAPITAL STOCK:
At November 30, 1997, there were indefinite shares of $1.00 par value
capital stock authorized shares. Transactions in shares of capital
stock for the years ended November 30, 1997 and 1996, were as follows:
<TABLE>
SHARES AMOUNT
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares Sold 26,597 33,382 $ 401,883 $ 492,540
Shares Issued to Shareholders
in Reinvestment of Dividends 288,177 127,160 4,233,322 1,742,087
Less Shares Redeemed (310,844) (190,592) (5,256,836) (2,799,734)
----------------------------------------------------
Net Increase (Decrease) 3,930 (30,050) $ (621,631) $ (565,107)
</TABLE>
5. DISTRIBUTION TO SHAREHOLDERS:
On December 17, 1996, a dividend of $0.28 per share, aggregating
$662,905 was declared from net investment income. Additionally, a
dividend of $1.51 per share, aggregating $3,610,209 was declared from
net realized gains from investment transactions. These dividends were
paid on December 27, 1996 to shareholders of record December 26, 1996.
On December 10, 1997, a dividend of $0.22 per share, aggregating
$517,558 was declared from net investment income. Additionally, a
dividend of $2.69 per share, aggregating $6,432,469 was declared from
net realized gains from investment transactions. These dividends were
paid on December 31, 1997 to shareholders of record December 29,
1997.*
6. YEAR 2000
The Fund is aware of the issues associated with the programming code
in existing computer systems as the millennium (Year 2000)
approaches. The "Year 2000" problem is pervasive and complex as
virtually every computer operation will be affected in some way by
the rollover of the two digit year value to 00. The issue is whether
computer systems will properly recognize date sensitive information
when the year changes to 2000. Systems that do not properly recognize
such information could generate erroneous data or cause a system to
fail.
The Fund is utilizing the necessary resources to identify and seek
corrections with each of the Fund's vendors. To date, confirmations
have been received from the Fund's primary processing vendors that
systems are Year 2000 compliant or plans are being developed to
address processing of transactions in the year 2000. Management has
not yet assessed the year 2000 compliance expense and related
potential effect on the Fund's performance.
*1997 dividend information has not been audited.
15
