<PAGE>
STONEBRIDGE FUNDS
STONEBRIDGE GROWTH FUND, INC.
OFFICERS AND DIRECTORS
Richard C. Barrett, CHAIRMAN, BOARD OF DIRECTORS
AND VICE PRESIDENT
Debra L. Newman, PRESIDENT AND TREASURER
Craig B. Burger, VICE PRESIDENT
Chad S. Christensen, VICE PRESIDENT
James V. Hyatt, SECRETARY
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
HEIN + ASSOCIATES LLP
717 Seventeenth Street, Suite 1600
Denver, Colorado 80202
This report and its financial statements are submitted for the general
information of the shareholders of the Fund. The report is not authorized for
distribution to prospective investors in the Fund unless preceded or accompanied
by a prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STONEBRIDGE FUNDS
STONEBRIDGE GROWTH FUND, INC.
SEMI-ANNUAL REPORT
FOR THE SIX-MONTHS ENDED
MAY 31, 1998
<PAGE>
LETTER TO STOCKHOLDERS
Dear Fellow Stockholders,
During the past six months, the strong bull market that began in earnest over
three years ago continued to set record highs. A narrowing of focus by
investors on a handful of large capitalization companies has driven this
strength. The indices that are heavily influenced by these stocks, the Dow
Jones Industrial Average and the Standard & Poor's 500 stock index for example,
have again outperformed the broader market averages. Many of these companies
are trading at multiples of earnings that are almost unparalleled. The Standard
& Poor's 500 Index is trading at some of its highest multiples of trailing four
quarter earnings in seven decades.
The first six months of the Fund's fiscal year witnessed the collapse of many of
Asia's economies and currencies. Dramatic social, political, and economic
events have shaken financial markets around the world as investors have tried to
assess the effects of the turmoil on financial instruments. In the United
States stock markets, the impact of the Asian crisis was quite widespread due to
the global nature of many companies' businesses. The rapid change in the
economic environment has lead to a sharp increase in the volatility of stocks
with exposure to this area. Certain sectors of the economy, technology
companies in particular, have been more negatively impacted; however, the
effects have generally been quite far-reaching.
However, this increased volatility has provided us with the opportunity to
acquire quality companies at quite reasonable valuations. We increased the
overall exposure of the Fund to common stocks from 87.9% on November 30, 1997 to
94.5% on May 31, 1998. We have maintained approximately 5% in cash equivalents
to take advantage of any future opportunities. We acted decisively to take
profits in stocks that had become expensive and shifted those assets into less
expensive alternatives. For example, profits were taken in such names as
Bristol Myers Squibb (Healthcare), Hewlett Packard Co. (Computer Hardware), and
Gillette Co. (Personal Care). Investments were made in Abbott Labs
(Healthcare), Precision Castparts Corp. (Aerospace), and Central Garden & Pet
Co. (Household Products) to name a few.
Over the first half of the fiscal year, the Fund posted a solid gain of +8.2%,
including reinvestment of the $2.91 per share capital gain/dividend distribution
in December. Over the same period, the Dow Jones Industrial Average returned
+14.7% and the broader ValueLine Index was up 6.6%. On a calendar year basis,
since January 1, 1998, the Fund rose +6.6% versus 13.3% for the Dow Jones
Industrial Average and +5.6% for the ValueLine Index.
Our stock selection process uses proprietary quantitative tests to attempt to
identify companies that are expected to achieve above-average future growth of
sales and earnings and that are selling at attractive valuations. We believe
that adhering to this discipline leads to competitive returns, while reducing
the fluctuation or risk of the portfolio relative to the market. While we
continue to be concerned about the long-term impact of the Asian crisis and the
strong dollar on revenue and earnings growth, we also feel that these
fluctuations may continue to provide opportunities. We will seek out companies
with unique prospects selling at relatively inexpensive valuations.
Thank you for your investment in the Stonebridge Growth Fund. Should you have
questions or concerns, please call a Stockholder Services Representative at
1-800-639-3635.
Sincerely,
/s/ Charles E. Woodhouse /s/ Richard C. Barrett
Charles E. Woodhouse Richard C. Barrett
Director of Research President
Stonebridge Capital Management, Inc. Stonebridge Capital Management, Inc.
1
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS (UNAUDITED)
MAY 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE*
--------- -----------
<S> <C> <C>
COMMON STOCKS (94.5%)
CAPITAL GOODS (18.0%)
AEROSPACE & DEFENSE (3.4%)
Boeing Co . . . . . . . . . . . . . . 13,000 619,125
Precision Castparts Corp. . . . . . . 15,000 864,375
-----------
1,483,500
-----------
ELECTRICAL EQUIPMENT (4.2%)
Emerson Electric Co . . . . . . . . . 20,000 1,215,000
Vicor Corp* . . . . . . . . . . . . . 40,000 625,000
-----------
1,840,000
-----------
MACHINERY (5.6%)
Caterpillar Inc . . . . . . . . . . . 14,000 769,125
Deere & Co. . . . . . . . . . . . . . 10,000 518,750
Dover Corp. . . . . . . . . . . . . . 30,000 1,125,000
-----------
2,412,875
-----------
MANUFACTURING (4.8%)
Federal Signal Corp . . . . . . . . . 35,000 783,125
Illinois Tool Works Inc . . . . . . . 20,000 1,320,000
-----------
2,103,125
-----------
TOTAL CAPITAL GOODS . . . . . . . . . 7,839,500
-----------
COMMUNICATION SERVICES (1.3%)
TELEPHONE (1.3%)
SBC Communications Inc. . . . . . . . 15,000 583,125
-----------
TOTAL COMMUNICATION SERVICES. . . . . 583,125
-----------
CONSUMER CYCLICALS (14.8%)
AUTOS AND AUTO EQUIPMENT (1.3%)
Littlefuse Inc* . . . . . . . . . . . 25,000 571,875
-----------
BUILDING MATERIALS & HOME BUILDERS (4.9%)
Clayton Homes . . . . . . . . . . . . 50,000 940,625
Valspar Corp. . . . . . . . . . . . . 30,000 1,211,250
-----------
2,151,875
-----------
LEISURE & ENTERTAINMENT (2.2%)
Mattel Inc. . . . . . . . . . . . . . 25,000 946,875
-----------
RETAIL - SPECIALITY (1.8%)
Toys 'R' Us Inc*. . . . . . . . . . . 30,000 795,000
-----------
</TABLE>
2
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE*
--------- -----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER CYCLICALS (CONTINUED)
SERVICES - COMMERCIAL & CONSUMER (3.4%)
Cendant Corp* . . . . . . . . . . . . 25,000 542,188
Hertz Corp Class A. . . . . . . . . . 20,000 917,500
-----------
1,459,688
-----------
TEXTILES & SHOES - (1.2%)
St. John's Knits Inc. . . . . . . . . 14,000 538,125
-----------
TOTAL CONSUMER CYCLICALS. . . . . . . 6,463,438
-----------
CONSUMER STAPLES (10.5%)
BEVERAGES (2.3%)
Pepsico Inc . . . . . . . . . . . . . 25,000 1,020,313
-----------
BROADCAST MEDIA & ENTERTAINMENT (2.7%)
Time Warner Inc . . . . . . . . . . . 15,000 1,167,187
-----------
HOUSEHOLD PRODUCTS & HOUSEWARES (1.4%)
Central Garden & Pet Co*. . . . . . . 20,000 591,250
-----------
PERSONAL CARE (2.0%)
Gillette Co . . . . . . . . . . . . . 7,500 878,438
-----------
RETAIL - FOOD & DRUG (2.1%)
Albertsons Inc. . . . . . . . . . . . 20,000 926,250
-----------
TOTAL CONSUMER STAPLES. . . . . . . . 4,583,438
ENERGY (7.8%)
OIL & GAS - DRILL & EQUIPMENT (2.1%)
Helmerich & Payne Inc . . . . . . . . 36,000 909,000
-----------
OIL - INTERNATIONAL (5.7%)
Baker Hughes Inc. . . . . . . . . . . 25,000 900,000
Chevron Corp. . . . . . . . . . . . . 10,000 798,750
Mobil Corp. . . . . . . . . . . . . . 10,000 780,000
-----------
2,478,750
-----------
TOTAL ENERGY. . . . . . . . . . . . . 3,387,750
-----------
</TABLE>
3
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE*
--------- -----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TECHNOLOGY (CONTINUED)
FINANCIAL (11.3%)
BROKERAGE & DIVERSE FINANCIAL SERVICES (5.1%)
American Express Co . . . . . . . . . 10,000 1,026,250
Fannie Mae. . . . . . . . . . . . . . 20,000 1,197,500
-----------
2,223,750
-----------
INSURANCE - MULTILINE & BROKERAGE (2.1%)
American International Group. . . . . 7,500 928,593
-----------
INSURANCE PROPERTY (4.1%)
General RE Corp . . . . . . . . . . . 4,000 879,500
MGIC Investment Corp. . . . . . . . . 15,000 899,063
-----------
1,778,563
-----------
TOTAL FINANCIAL . . . . . . . . . . . 4,930,906
-----------
FOREIGN STOCKS (10.1%)
ABB AG ADR* . . . . . . . . . . . . . 7,000 1,188,263
Nestle S A Sponsored ADR* . . . . . . 12,000 1,287,545
Roche Holdings Ltd Sponsored ADR. . . 10,000 1,030,346
Royal Dutch Petroleum . . . . . . . . 16,000 897,000
-----------
TOTAL FOREIGN STOCKS 4,403,154
-----------
HEALTHCARE (7.3%)
BIOTECHNOLOGY (1.9%)
Chiron Corp*. . . . . . . . . . . . . 45,000 812,812
-----------
HEALTHCARE - DIVERSE (5.4%)
Abbott Labs . . . . . . . . . . . . . 17,500 1,298,281
Bristol Myers Squibb Co . . . . . . . 10,000 1,075,000
-----------
2,373,281
-----------
TOTAL HEALTHCARE. . . . . . . . . . . 3,186,093
-----------
TECHNOLOGY (12.5%)
COMMUNICATION EQUIPMENT (1.1%)
Motorola Inc. . . . . . . . . . . . . 9,000 476,438
-----------
COMPUTER HARDWARE & PERIPHERAL (2.5%)
Lexmark International Group Class A*. 20,000 1,110,000
-----------
</TABLE>
4
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE*
--------- -----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE & SERVICES (4.4%)
Computer Associates International Inc 15,000 787,500
Oracle Corp*. . . . . . . . . . . . . 25,000 590,625
Rational Software Corp* . . . . . . . 35,000 533,750
-----------
1,911,875
-----------
ELECTRONICS - INSTRUMENTS & DEVICES (2.9%)
W.W. Grainger Inc . . . . . . . . . . 12,000 1,266,750
-----------
SEMICONDUCTORS (1.6%)
Intel Corp. . . . . . . . . . . . . . 10,000 714,375
-----------
TOTAL TECHNOLOGY. . . . . . . . . . . 5,479,438
-----------
TRANSPORTATION (0.9%)
TRUCKING (0.9%)
U.S. Freightways Corp . . . . . . . . 12,500 393,750
-----------
TOTAL TRANSPORTATION. . . . . . . . . 393,750
-----------
TOTAL COMMON STOCKS(94.5%)
(Cost $28,078,239) . . . . . . . . . 41,250,592
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (4.1%)
Federal Home Loan Bank Discount
Note 5.30%, 7/13/98 . . . . . . . . 800,000 795,128
Freddie Mac Discount Note 5.33%,
7/16/98 . . . . . . . . . . . . . . 1,000,000 993,444
-----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS . . . . . . . . . . . . 1,788,572
-----------
(Cost $1,788,572)
MUTUAL FUND (MONEY MARKET INVESTMENTS) (1.4%)
Fountain Square Money Market. . . . . 621,464
-----------
(Cost $621,464)
TOTAL INVESTMENTS (100.0%)
(Cost $30,488,275) . . . . . . . . . $43,660,628
OTHER ASSETS IN EXCESS OF LIABILITIES (0.0%) 7,275
-----------
NET ASSETS (100%). . . . . . . . . . . . . . $43,667,903
-----------
-----------
</TABLE>
*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.
5
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MAY 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost - see below) . . . . . . . . . $43,660,628
Dividends and interest receivable. . . . . . . . . . . . . 61,286
Receivable for Capital Stock sold. . . . . . . . . . . . . 347
Prepaid Bond Expenses. . . . . . . . . . . . . . . . . . . 4,575
Other Assets . . . . . . . . . . . . . . . . . . . . . . . 4,650
-----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . $43,731,486
-----------
LIABILITIES:
Management Fee** . . . . . . . . . . . . . . . . . . . . . $ 28,663
Administration Fee** . . . . . . . . . . . . . . . . . . . 7,252
Transfer Agent Fee . . . . . . . . . . . . . . . . . . . . 9,308
Custody Fee. . . . . . . . . . . . . . . . . . . . . . . . 349
Accounting Fee . . . . . . . . . . . . . . . . . . . . . . 870
Legal Fee. . . . . . . . . . . . . . . . . . . . . . . . . 4,398
Printing Fee . . . . . . . . . . . . . . . . . . . . . . . 5,748
Audit Fee. . . . . . . . . . . . . . . . . . . . . . . . . 4,817
Other payables . . . . . . . . . . . . . . . . . . . . . . 2,178
-----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . $ 63,583
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $43,667,903
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital Stock ($1.00 par value). . . . . . . . . . . . . . $ 2,732,141
Paid in capital. . . . . . . . . . . . . . . . . . . . . . 24,282,527
Over-distributed net investment income . . . . . . . . . . (879,748)
Accumulated net realized gain on investments . . . . . . . 4,360,630
Net unrealized appreciation in value of investments. . . . 13,172,353
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $43,667,903
-----------
-----------
NET ASSET VALUE PER SHARE:
Net assets . . . . . . . . . . . . . . . . . . . . . . . . $43,667,903
-----------
Shares outstanding . . . . . . . . . . . . . . . . . . . . 2,732,141
Net asset value and redemption price per share . . . . . . $15.98
-----------
COST OF INVESTMENTS. . . . . . . . . . . . . . . . . . . . $30,488,275
-----------
-----------
</TABLE>
**Related Party
The accompanying notes to financial statements are an integral part of the
financial statements.
6
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . $ 221,307
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 162,369
-----------
TOTAL INCOME . . . . . . . . . . . . . . . . . . . . . $ 383,676
-----------
EXPENSES:
Management Fee . . . . . . . . . . . . . . . . . . . . . . $ 162,771
Administrative Fee . . . . . . . . . . . . . . . . . . . . 31,213
Transfer Agency Fee. . . . . . . . . . . . . . . . . . . . 69,808
Accounting Fee . . . . . . . . . . . . . . . . . . . . . . 14,309
Legal Fee. . . . . . . . . . . . . . . . . . . . . . . . . 28,795
Printing Fee . . . . . . . . . . . . . . . . . . . . . . . 10,077
Audit Fee. . . . . . . . . . . . . . . . . . . . . . . . . 6,098
Registration Fee . . . . . . . . . . . . . . . . . . . . . 3,956
Custodian Fee. . . . . . . . . . . . . . . . . . . . . . . 1,052
Trustee Fee. . . . . . . . . . . . . . . . . . . . . . . . 12,086
Other Fees . . . . . . . . . . . . . . . . . . . . . . . . 13,143
-----------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . . . . $ 353,308
-----------
-----------
NET INVESTMENT INCOME (LOSS) . . . . . . . . . . . . . . . . $ 30,368
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net Realized Gain (Loss) on Investments. . . . . . . . . . $ 3,503,634
Unrealized Appreciation (Depreciation)
Beginning of Period. . . . . . . . . . . . . . . . . . . 13,295,084
End of Period. . . . . . . . . . . . . . . . . . . . . . 13,172,353
-----------
Change in net unrealized appreciation/depreciation . . . . (122,731)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS. . . . . . 3,380,903
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . $ 3,411,271
-----------
-----------
</TABLE>
The accompanying notes to financial statements are an integral part of the
financial statements.
7
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, NOVEMBER 30,
1998 (UNAUDITED) 1997
--------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . . $ 30,368 $ 45,114
Net Realized Gain On Investments . . . . . . . . . . . . . . . . . . 3,503,634 6,904,912
Net Change In Unrealized Appreciation/Depreciation . . . . . . . . . (122,731) 722,858
--------------------------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 3,411,271 7,672,884
--------------------------------
DISTRIBUTIONS TO STOCKHOLDERS:
Dividends from Net Investment Income . . . . . . . . . . . . . . . . (517,546) (662,905)
Distributions from Net Realized Gain on Investments. . . . . . . . . (6,432,467) (3,610,209)
--------------------------------
DECREASE IN NET ASSETS RESULTING FROM
Distributions to stockholders. . . . . . . . . . . . . . . . . (6,950,013) (4,273,114)
--------------------------------
CHANGE IN NET ASSETS DERIVED FROM INVESTMENT ACTIVITIES. . . . . . . (3,538,742) 3,399,770
--------------------------------
FROM CAPITAL STOCK TRANSACTIONS:
Net Increase (Decrease) in Net Assets Derived From
Capital Stock Transactions - Note 4 . . . . . . . . . . . . . . . . 4,826,797 (621,631)
--------------------------------
NET INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . 1,288,055 2,778,139
--------------------------------
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 42,379,848 39,601,709
--------------------------------
End of period (including overdistributed net investment
income of ($879,748)and ($392,570), respectively) . . . . . . . . . $43,667,903 $42,379,848
--------------------------------
--------------------------------
</TABLE>
The accompanying notes to financial statements are an integral part of the
financial statements.
8
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED
MAY 31, NOVEMBER 30,
1998 (UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period . . . . $17.69 $16.56 $14.36 $12.61 $12.62 $14.78
----------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income . . . . . . . . . . 0.05 0.02 0.10 0.17 0.07 0.06
Net Realized and Unrealized Gain (Loss)
on Investments. . . . . . . . . . . . . 1.15 2.90 2.83 2.34 0.29 (0.19)
----------------------------------------------------------------
Total Income from Investment Operations . 1.20 2.92 2.93 2.51 0.36 (0.13)
----------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
STOCKHOLDERS:
Distributions from Net Investment
Income. . . . . . . . . . . . . . . . . (0.22) (1.51) (0.17) (0.07) (0.07) (0.15)
Distributions from Net Realized Gain
on Investments. . . . . . . . . . . . . (2.69) (0.28) (0.56) (0.69) (0.30) (1.88)
----------------------------------------------------------------
Total Distributions to shareholders . . . (2.91) (1.79) (0.73) (0.76) (0.37) (2.03)
----------------------------------------------------------------
Net Asset Value, End of Period . . . . . . . $15.98 $17.69 $16.56 $14.36 $12.61 $12.62
----------------------------------------------------------------
----------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . 16.78% 19.79% 21.46% 23.50% 2.81% (1.22)%
----------------------------------------------------------------
----------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in 000s) . . . $43,668 $42,380 $39,602 $34,775 $30,775 $32,448
----------------------------------------------------------------
----------------------------------------------------------------
Ratio of Operating Expenses to
Average Net Assets* . . . . . . . . . . 1.61% 1.50% 1.47% 1.49% 1.64% 1.60%
----------------------------------------------------------------
----------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets. . . . . . . . . . . 0.14% 0.11% 0.67% 1.27% 0.53% 0.50%
----------------------------------------------------------------
----------------------------------------------------------------
Portfolio Turnover Rate** . . . . . . . . 11% 41% 45% 38% 36% 56%
----------------------------------------------------------------
----------------------------------------------------------------
Average Commission Rate***. . . . . . . . $.1089 $.1221 $.1351 - - -
----------------------------------------------------------------
----------------------------------------------------------------
</TABLE>
* Subsequent to May 31, 1998, the investment adviser began waiving fees to
ensure the Fund's operating expenses do not exceed 1.50% for the year ended
November 30, 1998.
** A portfolio turnover rate is the percentage computed by taking the lesser of
purchases or sales of portfolio securities (excluding securities with a
maturity date of one year or less at the time of acquisition) for a period
and dividing it by the monthly average of the market value of such
securities during the period. Purchases and sales of investment securities
(excluding short-term securities) for the year ended May 31, 1998 were
$8,588,422 and $8,033,980, respectively.
*** 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.
9
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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
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.
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 six months ended May 31, 1998 were as follows:
Purchases Sales
--------- -----
Common Stocks $8,588,422 $8,033,980
As of May 31, 1998
Gross appreciation (excess of value over cost) $14,000,145
Gross depreciation (excess of cost over value) (827,792)
----------
Net unrealized appreciation $13,172,353
This amount represents the net increase in the value of investments (all
of which are represented by long transactions) held at May 31, 1998.
10
<PAGE>
STONEBRIDGE GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS ((UNAUDITED) CONTINUED)
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
0.75% of the average daily net assets of the Fund. For the six months
ended May 31, 1998 Advisory fees payable to the Adviser totaled
approximately $156,078.
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 July 23, 1997, the Fund entered into an administration agreement with
ALPS Mutual Funds Services, Inc. ("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 six months ended April 30, 1998, fees payable to ALPS was
$30,000 for administration services.
Certain officers and directors of the Fund are also officers and/or
directors of the Adviser and/or ALPS.
4. CAPITAL STOCK:
At May 31, 1998, there were indefinite shares of $1.00 par value capital
stock authorized shares. Transactions in shares of capital stock for the
six months ended May 31, 1998 and the year ended November 30, 1997, were
as follows:
SHARES AMOUNT
1998 1997 1998 1997
---- ---- ---- ----
Shares Sold. . . . . . . . . . . 39,564 26,597 $ 643,387 $ 401,883
Shares Issued to Stockholders
in Reinvestment of Dividends . 463,912 288,177 6,861,258 4,233,322
---------------------------------------------
Total. . . . . . . . . . . . . . 503,476 314,774 7,504,645 4,635,205
Less Shares Redeemed . . . . . . (167,133) (310,844) (2,677,848) (5,256,836)
---------------------------------------------
Net Increase (Decrease). . . . . 336,343 3,930 $ 4,826,797 $ (621,631)
---------------------------------------------
---------------------------------------------
5. DISTRIBUTION TO STOCKHOLDERS:
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 stockholders of record December 29, 1997.*
*1997 dividend information has not been audited.
11
