[DESCRIPTION] Smith Barney Shearson Aggressive Growth Fund Semiannual
[TEXT]
(COVER ARTWORK: Small box above fund name showing a personal computer, a
touchtone receiver, a DNA module, and a glass container used for measuring
scientific fluids.)
Smith Barney Shearson
Aggressive
Growth
Fund Inc.
......................................
FEBRUARY 28, 1994
SEMI-
ANNUAL
REPORT
SMITH BARNEY SHEARSON
- ---------------------
Aggressive Growth Fund Inc.
Dear Shareholder:
We are pleased to report that 1993 marked the ten-year anniversary of Smith
Barney Shearson Aggressive Growth Fund Inc. While it is important to be aware
of short-term performance, we have always viewed our mission as seeking to
provide long-term capital appreciation by investing in companies possessing
special characteristics that enable them to create innovative products and
become dominant factors within their markets. Since we view ourselves as
long-term investors, witness our below-average turnover, we hope you share
our belief that a successful investment should be measured over years rather
than months.
Having preached the virtues of a long-term track record, we are also happy to
report that the Fund enjoyed strong relative performance in the recently
completed first half of our fiscal year. In the six months ended February 28,
1994, the net asset value of the Class A, Class B and Class D shares of the
Fund advanced 17.6%, 17.2% and 17.2%, respectively. This compared with a gain
of 2.1% for the Standard & Poor's Daily Price Index of 500 Common Stocks (S&P
500). This index is composed of 500 widely-held common stocks listed on the
New York Stock Exchange and American Stock Exchange. It is useful in
depicting the general movement of the stock market, but because it is
unmanaged, the S&P 500 is not subject to the same management and trading
expenses of a mutual fund. The Value Line Index, which represents a better
measure of performance for the kinds of securities held in the Fund, advanced
4.3% in the same six-month period. This index, composed of approximately
1,700 stocks, is a geometric average of the daily price percentage change in
each stock covering both large and small capitalized companies.
Sectors that made important contributions to the Fund's six-month performance
were technology and health care. The standout performer was Lotus Development
Corporation which has seen strong interest in its communications oriented
software called Notes. Quantum Corporation has witnessed such strong demand
for its computer disk drives that they recently took the unusual step of
instituting price increases. Our three holdings in managed health care, U.S.
Healthcare Inc., United Healthcare Corporation, and Value Health, Inc. (in
which we significantly increased our position) all traded at new all-time
highs in spite of the continued pressure on many health care related
securities. Forest Laboratories, Inc., one of our original holdings, reached
a new high following the successful launch of its drug Flumadine used in the
treatment of the flu.
In the most recent six-month period, the Fund took partial profits in Cirrus
Logic, Inc., while selling our entire positions in Service Corporation,
Charming Shoppes, Sequent Computer and Amgen, all for capital gains. We took
losses in Data I/O, and Scios-Nova.
1
For the first time in over four years, the Federal Reserve has switched from
an accommodative monetary policy to one of restraint. From the lows reached
last summer, long-term rates have backed up over 150 basis points, with much
of the increase following the series of tightening moves instituted by the
Federal Reserve. It is our belief that the economy has too much slack at the
current time to lead to a further back-up in long-term interest rates. If one
were to occur, it could conceivably slow the economic expansion currently
underway and actually lead to a decline in interest rates. Just as Smith
Barney Shearson Asset Management felt that interest rates had overshot on the
downside when they breached the 6.00% level last year, we believe that the
recent move up to 7.40% on 30-year Treasury Bonds marked an overreaction on
the upside. Provided long-term rates have little further upside and the
economy is able to generate a healthy rate of growth (yet remain far below
the unusually strong fourth quarter pace), we believe that the equity market
will regain its footing. Investment advisory sentiment, traditionally a good
contrary indicator for forecasting moves in the stock market, has turned
decidedly bearish. Option speculators have also become much more pessimistic,
as evidenced by the amount of put options being bought versus call options.
The combination of these two sentiment indicators gives us comfort in
continuing to feel optimistic towards the stock market.
We would like to welcome all of our new shareholders, including the former
shareholders of Smith Barney Shearson 1990s Fund. We value your trust and
support and will continue to strive to provide you with the highest level of
investment management.
(Signature)
Heath B. McLendon
Chairman of the Board
(Signature)
Richard A. Freeman
Vice President and
Investment Officer
April 4, 1994
2
Smith Barney Shearson
Aggressive Growth Fund Inc.
Portfolio Highlights (unaudited) February 28, 1994
Top Ten Holdings
Industry Breakdown
Pie chart depicting the allocation of the Aggressive Growth Fund's investment
securities held at February 28, 1994 by industry classification. The pie is
broken in pieces representing industries in the following percentages:
Industry Percentage
Cellular Communications 9.4%
Warrant, Commercial Paper and Net
Other Assets and Liabilities 4.4%
Computer Software 8.9%
Computer Hardware 6.3%
Pharmaceuticals 8.3%
Diversified Technology 9.3%
Managed Healthcare Providers 11.1%
Semiconductor 9.5%
Other Common Stocks 5.4%
Broadcasting 11.0%
Biotechnology 16.4%
Percentage
Company of Net Assets
============================================================
Lotus Development Corporation 6.9%
Chiron Corporation 6.5
Intel Corporation 6.4
Genentech Inc. 5.6
Forest Laboratories, Inc., Class A 5.4
Infinity Broadcasting Corporation,
Class A 4.9
United Healthcare Inc. 4.0
Tyco Laboratories Inc. 3.9
Value Health Inc. 3.7
Cellular Communications Inc. 3.4
3
Smith Barney Shearson
Aggressive Growth Fund Inc.
Portfolio of Investments (unaudited) February 28, 1994
<TABLE>
<CAPTION>
Market Value
Shares
(Note 1)
==============================================================================
================================================
<C> <S>
<C>
COMMON STOCKS -- 95.6%
Biotechnology -- 16.4%
115,000 Alkermes, Inc.(+)
$ 848,125
235,000 Chiron Corporation(+)
18,212,500
180,000 Cor Therapeutics, Inc.(+)
2,430,000
320,000 Genentech, Inc.(+)
15,640,000
200,000 Genzyme Corporation(+)
5,700,000
185,500 Glycomed, Inc.(+)
1,252,125
225,000 Univax Biologics, Inc. (+)
1,856,250
- ------------------------------------------------------------------------------
- ------------------------------------------------
45,939,000
- ------------------------------------------------------------------------------
- ------------------------------------------------
Managed Healthcare Providers -- 11.1%
135,000 United Healthcare Corporation
11,154,375
150,000 U.S. Healthcare, Inc.
9,525,000
250,000 Value Health, Inc.(+)
10,437,500
- ------------------------------------------------------------------------------
- ------------------------------------------------
31,116,875
- ------------------------------------------------------------------------------
- ------------------------------------------------
Broadcasting -- 11.0%
70,000 Cablevision Systems Development Corporation, Class A(+)
4,480,000
100,000 Comcast Corporation, Class A
2,037,500
293,750 Comcast Corporation, Class A, Special
5,948,438
430,000 Infinity Broadcasting Corporation, Class A(+)
13,760,000
200,000 Tele-Communications, Inc., Class A(+)
4,725,000
- ------------------------------------------------------------------------------
- ------------------------------------------------
30,950,938
- ------------------------------------------------------------------------------
- ------------------------------------------------
Diversified Technology -- 10.0%
335,000 California Microwave, Inc.(+)
8,207,500
201,000 C-COR Electronics, Inc.(+)
3,718,500
35,000 CMC Industries, Inc.
345,625
151,000 Drexler Technology Corporation(+)
868,250
376,000 Excel Technology, Inc.(+)
2,491,000
See Notes to Financial Statements
4
Smith Barney Shearson
Aggressive Growth Fund Inc.
Portfolio of Investments (unaudited) (cont'd) February 28, 1994
Market Value
Shares
(Note 1)
==============================================================================
================================================
COMMON STOCKS -- (continued)
Diversified Technology -- (continued)
100,000 Tellular Corporation(+)
$ 1,812,500
210,000 Tyco Laboratories, Inc.
10,972,500
- ------------------------------------------------------------------------------
- ------------------------------------------------
28,415,875
- ------------------------------------------------------------------------------
- ------------------------------------------------
Semiconductor -- 9.5%
170,000 Cirrus Logic, Inc.(+)
6,885,000
315,000 GenRad, Inc.(+)
1,850,625
260,000 Intel Corporation
17,875,000
- ------------------------------------------------------------------------------
- ------------------------------------------------
26,610,625
- ------------------------------------------------------------------------------
- ------------------------------------------------
Cellular Communications -- 9.4%
261,000 Arch Communications Group, Inc.(+)
3,849,750
200,000 Cellular Communications, Inc.(+)
9,650,000
41,666 Cellular Communications of Puerto Rico(+)
989,568
50,000 LIN Broadcasting Corporation(+)
5,587,500
125,000 McCaw Cellular Communications, Inc., Class A(+)
6,281,250
- ------------------------------------------------------------------------------
- ------------------------------------------------
26,358,068
- ------------------------------------------------------------------------------
- ------------------------------------------------
Computer Software -- 8.9%
280,000 Lotus Development Corporation(+)
19,460,000
170,000 Oracle Systems Corporation(+)
5,610,000
- ------------------------------------------------------------------------------
- ------------------------------------------------
25,070,000
- ------------------------------------------------------------------------------
- ------------------------------------------------
Pharmaceuticals -- 8.3%
300,000 Forest Laboratories, Inc., Class A(+)
15,037,500
250,000 Gensia Pharmaceuticals, Inc.(+)
5,250,000
240,000 IDEC Pharmaceuticals Corporation(+)
1,260,000
100,000 Vertex Pharmaceuticals, Inc.(+)
1,700,000
- ------------------------------------------------------------------------------
- ------------------------------------------------
23,247,500
- ------------------------------------------------------------------------------
- ------------------------------------------------
See Notes to Financial Statements
5
Smith Barney Shearson
Aggressive Growth Fund Inc.
Portfolio of Investments (unaudited) (cont'd) February 28, 1994
Market Value
Shares
(Note 1)
==============================================================================
================================================
COMMON STOCKS -- (continued)
Computer Hardware -- 6.3%
145,000 General Automation, Inc.(+)
$ 117,812
246,000 NetFRAME Systems, Inc.(+)
3,997,500
340,000 Network Systems Corporation(+)
2,975,000
556,143 Quantum Corporation(+)
9,384,912
125,000 SyQuest Technology, Inc.(+)
1,203,125
- ------------------------------------------------------------------------------
- ------------------------------------------------
17,678,349
- ------------------------------------------------------------------------------
- ------------------------------------------------
Environmental -- 2.4%
320,000 Wellman, Inc.
6,720,000
- ------------------------------------------------------------------------------
- ------------------------------------------------
Drug Delivery/Testing -- 2.3%
499,500 Advanced Polymer Systems, Inc.(+)
3,371,625
170,000 Cygnus Therapeutic Systems(+)
1,976,250
70,000 Cytotherapeutics, Inc.
691,250
400,000 TSI Corporation (+)
450,000
- ------------------------------------------------------------------------------
- ------------------------------------------------
6,489,125
- ------------------------------------------------------------------------------
- ------------------------------------------------
TOTAL COMMON STOCKS
(Cost $139,511,164)
268,596,355
- ------------------------------------------------------------------------------
- ------------------------------------------------
WARRANT -- 0.0% (Cost $413,678)
56,250 Excel Technology, Inc., expires 9/30/97(+)
112,500
- ------------------------------------------------------------------------------
- ------------------------------------------------
Face Value
==============================================================================
================================================
COMMERCIAL PAPER -- 3.0% (Cost $8,255,000)
$8,255,000 Ford Motor Credit Corporation, 3.400% due 3/1/94
8,255,000
- ------------------------------------------------------------------------------
- ------------------------------------------------
TOTAL INVESTMENTS (Cost $148,179,842*) 98.6%
$276,963,855
OTHER ASSETS AND LIABILITIES (Net) 1.4
4,005,180
- ------------------------------------------------------------------------------
- ------------------------------------------------
NET ASSETS 100.0%
$280,969,035
==============================================================================
================================================
</TABLE>
*Aggregate cost for Federal tax purposes.
(+)Non-income producing security.
See Notes to Financial Statements
6
Smith Barney Shearson
Aggressive Growth Fund Inc.
Statement of Assets and Liabilities (unaudited) February 28, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $148,179,842) (Note 1)
See accompanying schedule
$276,963,855
Receivable for Fund shares sold
5,865,705
Receivable for investment securities sold
1,071,375
Receivable from investment adviser
62,153
Dividends and interest receivable
29,778
- ------------------------------------------------------------------------------
Total Assets
283,992,866
- ------------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities purchased $2,355,125
Payable for Fund shares redeemed 406,389
Investment advisory fee payable (Note 2) 125,962
Service fee payable (Note 3) 42,703
Administration fee payable (Note 2) 41,987
Distribution fee payable (Note 3) 19,133
Transfer agent fees payable (Note 2) 11,000
Custodian fees payable (Note 2) 6,250
Due to custodian 4,282
Accrued expenses and other payables 11,000
- ------------------------------------------------------------------------------
Total Liabilities
3,023,831
- ------------------------------------------------------------------------------
NET ASSETS
$280,969,035
==============================================================================
NET ASSETS consist of:
Accumulated net investment loss $
(1,514,940)
Accumulated net realized gain on investments sold
7,607,079
Unrealized appreciation of investments
128,784,013
Par value
101,300
Paid-in capital in excess of par value
145,991,583
- ------------------------------------------------------------------------------
TOTAL NET ASSETS
$280,969,035
==============================================================================
</TABLE>
See Notes to Financial Statements
7
Smith Barney Shearson
Aggressive Growth Fund Inc.
Statement of Assets and Liabilities (unaudited) (continued)
February 28,
1994
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE:
CLASS A SHARES:
Net Asset Value and redemption price per share
($191,940,191 / 6,917,951 shares of common stock
outstanding) $27.75
- -----------------------------------------------------------------------------
Maximum offering price per share ($27.75 / .95) (based on
sales charge of 5% of offering price on February 28,
1994) $29.21
- -----------------------------------------------------------------------------
CLASS B SHARES:
Net Asset Value and offering price per share(+)
($35,257,423 / 1,282,310 shares of common stock
outstanding) $27.50
- -----------------------------------------------------------------------------
CLASS C SHARES:
Net Asset Value, offering and redemption price per share
($53,616,211 / 1,924,141 shares of common stock
outstanding) $27.87
- -----------------------------------------------------------------------------
CLASS D SHARES:
Net Asset Value, offering and redemption price per share
($155,210 / 5,644 shares of common stock outstanding) $27.50
- -----------------------------------------------------------------------------
<FN>
(+)Redemption price per share for Class B shares is equal to Net Asset Value
less any applicable contingent deferred sales charge.
</TABLE>
See Notes to Financial Statements
8
Smith Barney Shearson
Aggressive Growth Fund Inc.
Statement of Operations (unaudited)
For the Six Months Ended February 28, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 168,000
Interest 47,517
- -----------------------------------------------------------------------
Total Investment Income 215,517
- -----------------------------------------------------------------------
EXPENSES:
Investment advisory fee (Note 2) $770,412
Administration fee (Note 2) 256,803
Service fee (Note 3) 249,200
Transfer agent fees (Notes 2 and 4) 155,530
Distribution fee (Note 3) 92,070
Legal and audit fees 39,271
Directors' fees and expenses (Note 2) 25,296
Custodian fees (Note 2) 19,978
Other 121,897
- -----------------------------------------------------------------------
Total Expenses 1,730,457
- -----------------------------------------------------------------------
NET INVESTMENT LOSS (1,514,940)
- -----------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Notes 1 and
4):
Net realized gain on investments sold during the period 8,575,404
Net unrealized appreciation of investments during the
period 41,101,681
- -----------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 49,677,085
- -----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $48,162,145
=======================================================================
</TABLE>
See Notes to Financial Statements
9
Smith Barney Shearson
Aggressive Growth Fund Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Year
Ended
Ended
2/28/94
8/31/93
(unaudited)
<S> <C>
<C>
Net investment loss $ (1,514,940) $
(2,038,685)
Net realized gain on investments sold during the period 8,575,404
1,895,930
Net unrealized appreciation on investments during the
period 41,101,681
44,190,147
- ------------------------------------------------------------------------------
- ----------
Net increase in net assets resulting from operations 48,162,145
44,047,392
Net increase/(decrease) in net assets from capital share
transactions (Note 6):
Class A 5,879,568
(68,499,166)
Class B 13,577,576
16,824,989
Class C (9,005,008)
48,377,699
Class D 121,784
22,852
- ------------------------------------------------------------------------------
- ----------
Net increase in net assets 58,736,065
40,773,766
NET ASSETS:
Beginning of period 222,232,970
181,459,204
- ------------------------------------------------------------------------------
- ----------
End of period (including accumulated net investment loss
of $1,514,940 at February 28, 1994) $280,969,035
$222,232,970
- ------------------------------------------------------------------------------
- ----------
</TABLE>
See Notes to Financial Statements
10
Smith Barney Shearson
Aggressive Growth Fund Inc.
Financial Highlights
For a Class A share outstanding throughout each period.
<TABLE>
<CAPTION>
Six
Months Year Year
Year Year
Ended Ended Ended
Ended Ended
2/28/94 8/31/93(+) 8/31/92(+)
8/31/91(+) 8/31/90(+)
(unaudited)
<S> <C> <C> <C>
<C> <C>
Net Asset Value, beginning of period $ 23.59 $ 18.94 $ 20.12
$ 16.16 $ 19.25
- ------------------------------------------------------------------------------
- --------------------
Income from investment operations:
Net investment loss (0.15) (0.21) (0.07)
(0.05) (0.02)
Net realized and unrealized gain/(loss)
on investments 4.31 4.86 (0.35)
4.95 (1.02)
- ------------------------------------------------------------------------------
- --------------------
Total from investment operations 4.16 4.65 (0.42)
4.90 (1.04)
Less distributions:
Distributions from net investment
income -- -- --
- -- (0.02)
Distributions from net realized capital
gains -- -- (0.76)
(0.94) (2.03)
- ------------------------------------------------------------------------------
- --------------------
Total distributions -- -- (0.76)
(0.94) (2.05)
- ------------------------------------------------------------------------------
- --------------------
Net Asset Value, end of period $ 27.75 $ 23.59 $ 18.94
$ 20.12 $ 16.16
- ------------------------------------------------------------------------------
- --------------------
Total return(+)(+) 17.63% 24.55% (2.42)%
31.97% (6.38)%
- ------------------------------------------------------------------------------
- --------------------
Ratios/supplemental data:
Net assets, end of period (in 000's) $191,940 $150,471 $181,459
$144,587 $86,169
Ratio of operating expenses to average
net assets 1.35%** 1.34% 1.05%
1.17% 1.13%
Ratio of net investment income/(loss)
to average net assets (1.18)%** (1.01)% (0.31)%
(0.24)% (0.11)%
Portfolio turnover rate 7% 13% 3%
23% 14%
- ------------------------------------------------------------------------------
- --------------------
<FN>
**Annualized.
(+)Per share amounts have been calculated using the monthly average method,
which more appropriately presents
the per share data for these periods, since use of the undistributed method
does not accord with results of
operations for all classes of shares.
(+)(+)Total return represents aggregate total return for each period indicated
and does not reflect any
applicable sales charge.
</TABLE>
See Notes to Financial Statements
11
Smith Barney Shearson
Aggressive Growth Fund Inc.
Financial Highlights
For a Class A share outstanding throughout each period. (continued)
<TABLE>
<CAPTION>
Year Year Year
Year Year Period
Ended Ended Ended
Ended Ended Ended
8/31/89(+) 8/31/88 8/31/87
8/31/86 8/31/85 8/31/84*
<S> <C> <C> <C>
<C> <C> <C>
Net Asset Value, beginning of period $ 13.68 $ 21.63 $ 16.43
$ 11.45 $ 10.62 $ 11.40
- ------------------------------------------------------------------------------
- ------------------------------------
Income from investment operations:
Net investment income/(loss) 0.02 (0.12) (0.11)
(0.09) (0.04) 0.11
Net realized and unrealized gain/(loss)
on investments 5.98 (5.36) 6.15
5.07 1.00 (0.89)
- ------------------------------------------------------------------------------
- ------------------------------------
Total from investment operations 6.00 (5.48) 6.04
4.98 0.96 (0.78)
Less distributions:
Distributions from net investment
income -- -- --
- -- (0.08) --
Distributions from net realized capital
gains (0.43) (2.47) (0.84)
- -- (0.05) --
- ------------------------------------------------------------------------------
- ------------------------------------
Total distributions (0.43) (2.47) (0.84)
- -- (0.13) --
- ------------------------------------------------------------------------------
- ------------------------------------
Net Asset Value, end of period $ 19.25 $ 13.68 $ 21.63
$ 16.43 $ 11.45 $ 10.62
- ------------------------------------------------------------------------------
- ------------------------------------
Total return(+)(+) 44.97% (24.40)% 39.36%
43.49% 9.22% (6.84)%
- ------------------------------------------------------------------------------
- ------------------------------------
Ratios/supplemental data:
Net assets, end of period (in 000's) $94,228 $81,287 $143,572
$115,212 $100,140 $128,272
Ratio of operating expenses to average
net assets 1.25% 1.10% 1.10%
1.20% 1.20% 1.10%**
Ratio of net investment income/(loss)
to average net assets 0.15% (0.6)% (0.6)%
(0.6)% (0.3)% 1.20%**
Portfolio turnover rate 8% 10% 25%
24% 33% 72%
- ------------------------------------------------------------------------------
- ------------------------------------
<FN>
*The Fund commenced operations on October 24, 1983. On November 6, 1992 the
Fund commenced selling Class B and
Class C shares. Those shares in existence prior to November 6, 1992 were
designated Class A shares. On May 13,
1993 the Fund commenced selling Class D shares.
**Annualized.
(+)Per share amounts have been calculated using the monthly average method,
which more appropriately presents
the per share data for these periods, since use of the undistributed method
does not accord with results of
operations for all classes of shares.
(+)(+)Total return represents aggregate total return for each period indicated
and does not reflect any
applicable sales charge.
</TABLE>
See Notes to Financial Statements
12
Smith Barney Shearson
Aggressive Growth Fund Inc.
Financial Highlights
For a Class B share outstanding throughout each period.
<TABLE>
<CAPTION>
Six
Months Period
Ended Ended
2/28/94 8/31/93*(+)
(unaudited)
<S> <C> <C>
Net Asset Value, beginning of period $ 23.46 $ 20.52
- --------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.15) (0.30)
Net realized and unrealized gain on investments 4.19 3.24
- --------------------------------------------------------------------------
Total from investment operations 4.04 2.94
- --------------------------------------------------------------------------
Net Asset Value, end of period $ 27.50 $ 23.46
- --------------------------------------------------------------------------
Total return(++) 17.22% 14.33%
- --------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (in 000's) $35,257 $18,139
Ratio of operating expenses to average net
assets 2.20%** 2.18%**
Ratio of net investment loss to average net
assets (2.03)%**
(1.86)%**
Portfolio turnover rate 7% 13%
- --------------------------------------------------------------------------
<FN>
*The Fund commenced selling Class B shares on November 6, 1992.
**Annualized.
(+)Per share amounts have been calculated using the monthly average method,
which more appropriately presents
the per share data for this period, since use of the undistributed method does
not accord with results of
operations for all classes of shares.
(++)Total return represents aggregate total return for each period indicated
and does not reflect any
applicable sales charge.
</TABLE>
See Notes to Financial Statements
13
Smith Barney Shearson
Aggressive Growth Fund Inc.
Financial Highlights
For a Class C share outstanding throughout each period.
<TABLE>
<CAPTION>
Six
Months Period
Ended Ended
2/28/94 8/31/93*(+)
(unaudited)
<S> <C> <C>
Net Asset Value, beginning of period $ 23.67 $ 20.52
- --------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.10) (0.12)
Net realized and unrealized gain on investments 4.30 3.27
- --------------------------------------------------------------------------
Total from investment operations 4.20 3.15
- --------------------------------------------------------------------------
Net Asset Value, end of period $ 27.87 $ 23.67
- --------------------------------------------------------------------------
Total return(++) 17.74% 15.35%
- --------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (in 000's) $53,616 $53,599
Ratio of operating expenses to average net
assets 0.96%** 0.99%**
Ratio of net investment loss to average net
assets (0.79)%**
(0.67)%**
Portfolio turnover rate 7% 13%
- --------------------------------------------------------------------------
<FN>
*The Fund commenced selling Class C shares on November 6, 1992.
**Annualized.
(+)Per share amounts have been calculated using the monthly average method,
which more appropriately presents
the per share data for this period, since use of the undistributed method does
not accord with results of
operations for all classes of shares.
(++)Total return represents aggregate total return for each period indicated
and does not reflect any
applicable sales charge.
</TABLE>
See Notes to Financial Statements
14
Smith Barney Shearson
Aggressive Growth Fund Inc.
Financial Highlights
For a Class D share outstanding throughout each period.
<TABLE>
<CAPTION>
Six
Months Period
Ended Ended
2/28/94 8/31/93*(+)
(unaudited)
<S> <C> <C>
Net Asset Value, beginning of period $23.47 $21.14
- --------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.11) (0.13)
Net realized and unrealized gain on investments 4.14 2.46
- --------------------------------------------------------------------------
Total from investment operations 4.03 2.33
- --------------------------------------------------------------------------
Net Asset Value, end of period $27.50 $23.47
- --------------------------------------------------------------------------
Total return(++) 17.17% 11.02%
- --------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (in 000's) $ 155 $ 24
Ratio of operating expenses to average net
assets 2.11%** 2.11%**
Ratio of net investment loss to average net
assets (1.95)%**
(1.76)%**
Portfolio turnover rate 7% 13%
- --------------------------------------------------------------------------
<FN>
*The Fund commenced selling Class D shares on May 13, 1993.
**Annualized.
(+)Per share amounts have been calculated using the monthly average method,
which more appropriately presents
the per share data for this period, since use of the undistributed method does
not accord with results of
operations for all classes of shares.
(++)Total return represents aggregate total return for each period indicated
and does not reflect any
applicable sales charge.
</TABLE>
See Notes to Financial Statements
15
Smith Barney Shearson
Aggressive Growth Fund Inc.
Notes to Financial Statements (unaudited)
1. Significant Accounting Policies
Smith Barney Shearson Aggressive Growth Fund Inc. (the "Fund") was
incorporated
under the laws of the State of Maryland on May 12, 1983 and is registered as a
diversified, open-end management investment company with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, (the
"1940 Act"). As of November 6, 1992, the Fund offered three classes of
shares:
Class A, Class B and Class C. On January 29, 1993 the Fund offered a fourth
class of shares, Class D shares, to investors eligible to participate in the
Smith Barney Shearson 401(k) Program. Class A and Class B shares are offered
to
the general public. Class A shares are sold with a front-end sales charge.
Class B shares may be subject to a contingent deferred sales charge ("CDSC")
upon redemption. Class B shares will convert automatically to Class A shares
approximately eight years after the date of purchase. Class C shares are
offered exclusively to tax-exempt employee benefit and retirement plans of
Smith
Barney Shearson Inc. ("Smith Barney Shearson") and its affiliates and unit
investment trusts sponsored by Smith Barney Shearson. Class C and Class D
shares are offered without a front-end sales load or CDSC. All classes of
shares have identical rights and privileges except with respect to the effect
of
the respective sales charges to each class, if any, the distribution and/or
service fees borne by each class, expenses allocable exclusively to each
class,
voting rights on matters affecting a single class, the exchange privilege of
each class and the conversion feature of Class B shares. The following is a
summary of significant accounting policies consistently followed by the Fund
in
the preparation of its financial statements.
Portfolio valuation: Listed securities traded on a national securities
exchange
are valued at the last reported sales price; securities traded in the
over-the-counter market and listed securities for which no sale was reported
are
valued at the bid price or, in the absence of a recent bid price, at the bid
equivalent as obtained from one or more of the major market makers in the
securities. Investments in securities for which market quotations are not
available are valued at fair value as determined in good faith by the Board of
Directors. Short-term investments that mature in 60 days or less are valued
at
amortized cost.
Repurchase agreements: The Fund engages in repurchase agreement transactions.
Under the terms of a typical repurchase agreement, the Fund takes possession
of
an underlying debt obligation subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby
16
Smith Barney Shearson
Aggressive Growth Fund Inc.
Notes to Financial Statements (unaudited) (continued)
determining the yield during the Fund's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Fund's holding period. The value of the collateral is at least
equal
at all times to the total amount of the repurchase obligations including
interest. In the event of counterparty default, the Fund has the right to use
the collateral to offset losses incurred. There is potential loss to the Fund
in the event the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities, including the risk of a possible decline
in the value of the underlying securities during the period while the Fund
seeks
to assert its rights. The Fund's investment adviser or administrator, acting
under the supervision of the Board of Directors, reviews the value of the
collateral and the creditworthiness of those banks and dealers with which the
Fund enters into repurchase agreements to evaluate potential risks.
Securities transactions and investment income: Securities transactions are
recorded as of the trade date. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on an accrual basis. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Investment income and realized and unrealized gains and losses are allocated
based upon the relative net assets of each class of shares.
Dividends and distributions to shareholders: Distributions from net investment
income, if any, are determined on a class level and will be declared and paid
at
least annually. Distributions from net realized capital gains, if any, after
utilization of capital loss carryforwards, are determined on a Fund level and
will be distributed at least annually. Additional distributions may be made
at
the discretion of the Board of Directors in order to avoid the application of
a
4% nondeductible excise tax on certain amounts of undistributed ordinary
income
and capital gains. Income distributions and capital gain distributions on a
Fund level are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing treatments of income and gains on various
investment
securities held by the Fund, timing differences and differing characterization
of distributions made by the Fund as a whole.
Federal income taxes: It is the Fund's policy to comply with the requirements
of
the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its taxable income
to its shareholders. Therefore, no Federal income tax provision is required.
17
Smith Barney Shearson
Aggressive Growth Fund Inc.
Notes to Financial Statements (unaudited) (continued)
2. Investment Advisory Fee, Administration Fee
and Other Transactions
The Fund has entered into an investment advisory agreement (the "Advisory
Agreement") with Smith Barney Shearson Asset Management, a division of Smith,
Barney Advisers, Inc. which is controlled by Smith Barney Shearson Holdings
Inc. ("Holdings"). Holdings is a wholly owned subsidiary of The Travelers
Inc.
Under the Advisory Agreement, the Fund pays a monthly fee at the annual rate
of
0.60% of the value of its average daily net assets.
The Boston Company Advisors, Inc. ("Boston Advisors"), an indirect wholly
owned
subsidiary of Mellon Bank Corporation ("Mellon"), serves as the Fund's
administrator pursuant to an administration agreement (the "Administration
Agreement"). Under the Administration Agreement, the Fund pays a monthly fee
at
the annual rate of 0.20% of the value of the Fund's average daily net assets.
For the six months ended February 28, 1994, the Fund incurred total brokerage
commissions of $23,516, of which $2,300 was paid to Smith Barney Shearson.
For the six months ended February 28, 1994, Smith Barney Shearson received
from
investors $116,030 representing commissions (sales charges) on sales of Class
A
shares.
A CDSC is generally payable by a shareholder in connection with the redemption
of Class B shares within five years (eight years in the case of purchases by
certain 401(k) plans) after the date of purchase. In circumstances in which
the
CDSC is imposed, the amount of the charge ranges between 5% and 1% of net
asset
value depending on the number of years since the date of purchase (except in
the
case of purchases by certain 401(k) plans in which case a 3% CDSC is imposed
for
the eight year period after the date of the purchase). For the six months
ended
February 28, 1994, Smith Barney Shearson received $67,077 from shareholders in
CDSCs on the redemption of Class B shares.
No officer, director or employee of Smith Barney Shearson, Boston Advisors or
of
any parent or subsidiary of those corporations receives any compensation from
the Fund for serving as a Director or officer of the Fund. The Fund pays each
Director who is not an officer, director or employee of Smith Barney Shearson,
18
Smith Barney Shearson
Aggressive Growth Fund Inc.
Notes to Financial Statements (unaudited) (continued)
Boston Advisors or any of their affiliates $3,000 per annum plus $500 per
meeting attended and reimburses each such Director for travel and out-of-
pocket
expenses.
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary of
Mellon, serves as the Fund's custodian. The Shareholder Services Group, Inc.,
a
subsidiary of First Data Corporation, serves as the Fund's transfer agent.
3. Distribution Agreement
Smith Barney Shearson acts as distributor of the Fund's shares pursuant to a
distribution agreement with the Fund and sells shares of the Fund through
Smith
Barney Shearson or its affiliates.
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a Services and
Distribution Plan (the "Plan"). Under this Plan, the Fund compensates Smith
Barney Shearson for servicing shareholder accounts for Class A, Class B and
Class D shareholders, and covers expenses incurred in distributing Class B and
Class D shares. Smith Barney Shearson is paid an annual service fee with
respect to Class A, Class B and Class D shares of the Fund at the rate of
0.25%
of the value of the average daily net assets of each respective class of
shares.
Smith Barney Shearson is also paid an annual distribution fee with respect to
Class B and Class D shares at the rate of 0.75% of the value of the average
daily net assets of each respective class of shares. For the six months ended
February 28, 1994, the Fund incurred a service fee of $218,510, $30,595 and
$95
for Class A, Class B and Class D shares, respectively. For the six months
ended
February 28, 1994, the Fund incurred distribution fees of $91,785 and $285 for
Class B and Class D shares, respectively.
4. Expense Allocation
Expenses of the Fund not directly attributable to the operation of any class
of
shares are prorated among the classes based upon the relative net assets of
each
class. Operating expenses directly attributable to a class of shares are
charged to that class' operations. In addition to the above servicing and
distribution fees, class specific operating expenses include transfer agent
fees. For the six months ended February 28, 1994, the Fund incurred $125,885,
$29,529, $58 and $58, in transfer agent fees for Class A, Class B, Class C and
Class D shares, respectively.
19
Smith Barney Shearson
Aggressive Growth Fund Inc.
Notes to Financial Statements (unaudited) (continued)
5. Purchases and Sales of Securities
Cost of purchases and proceeds from sales of securities, excluding short-term
investments and U.S. government securities, for the six months ended February
28, 1994, were $18,613,578 and $30,072,566, respectively.
At February 28, 1994, aggregate gross unrealized appreciation for all
securities
in which there was an excess of value over tax cost was $144,157,919, and
aggregate gross unrealized depreciation for all securities in which there was
an
excess of tax cost over value was $15,373,906.
6. Common Stock
At February 28, 1994, the Fund had authorized 100 million shares of $.01 par
value common stock divided into four classes (Class A, Class B, Class C and
Class D).
Changes in common stock outstanding were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
2/28/94 8/31/93
Class A shares: Shares Amount Shares
Amount
- ------------------------------------------------------------------------------
- -------
<S> <C> <C> <C> <C>
Sold 1,646,285 $ 33,712,111 3,043,908 $
63,507,753
Issued in exchange for
shares of
Smith Barney Shearson
1990s
Fund (Note 9) 997,919 26,604,524 --
- --
Redeemed (2,103,674) (54,437,067) (6,245,040)
(132,006,919)
- ------------------------------------------------------------------------------
- -------
Net increase/(decrease) 540,530 $ 5,879,568 (3,201,132) $
(68,499,166)
- ------------------------------------------------------------------------------
- -------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Period Ended
2/28/94 8/31/83*
Class B shares: Shares Amount Shares
Amount
- ------------------------------------------------------------------------------
- ----
<S> <C> <C> <C> <C>
Sold 1,678,418 $ 43,879,861 1,450,574 $
31,569,205
Issued in exchange for
shares of
Smith Barney Shearson
1990s
Fund (Note 9) 18,212 482,442 --
- --
Redeemed (1,187,360) (30,784,727) (677,534)
(14,744,216)
- ------------------------------------------------------------------------------
- ----
Net increase 509,720 $ 13,577,576 773,040 $
16,824,989
- ------------------------------------------------------------------------------
- ----
</TABLE>
20
Smith Barney Shearson
Aggressive Growth Fund Inc.
Notes to Financial Statements (unaudited) (continued)
<TABLE>
<CAPTION>
Six Months Ended Period Ended
2/28/94 8/31/93*
Class C shares: Shares Amount Shares Amount
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 262,103 $ 7,024,540 2,588,331 $55,409,780
Redeemed (602,019) (16,029,548) (324,274) (7,032,081)
- -----------------------------------------------------------------------
Net
increase/(decrease) (339,916) $ (9,005,008) 2,264,057 $48,377,699
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended Period Ended
2/28/94 8/31/93*
Class D
shares: Shares Amount Shares Amount
- ---------------------------------------------------
<S> <C> <C> <C> <C>
Sold 4,700 $124,362 1,042 $22,852
Redeemed (98) (2,578) -- --
- ---------------------------------------------------
Net increase 4,602 $121,784 1,042 $22,852
- ---------------------------------------------------
<FN>
*The Fund commenced selling Class B and Class C shares on November 6, 1992.
Any
shares outstanding prior to November 6, 1992 were designated Class A shares.
The
Fund commenced selling Class D shares on May 13, 1993.
</TABLE>
7. Capital Loss Carryforward
At August 31, 1993, the Fund had available for Federal income tax purposes an
unused capital loss of $968,326 expiring in the year 2001.
8. Line of Credit
The Fund and several affiliated entities participate in a $50 million line of
credit provided by Continental Bank N.A. under an Amended and Restated Line
of
Credit Agreement (the "Agreement") dated April 30, 1992, primarily for
temporary
or emergency purposes, including the meeting of redemption requests that
otherwise might require the untimely disposition of securities. The Fund may
borrow up to the lesser of $25 million or 20% of its net assets. Interest is
payable either at the bank's Money Market Rate or the London Interbank Offered
Rate (LIBOR) plus .375% on an annualized basis. Under this Agreement, the
Fund
and the other affiliated entities are charged an aggregate commitment fee of
$125,000 which is allocated equally among each of the participants. The
Agreement requires, among other provisions, each participating fund to
maintain
a ratio of net
21
Smith Barney Shearson
Aggressive Growth Fund Inc.
Notes to Financial Statements (unaudited) (continued)
assets (not including funds borrowed pursuant to the Agreement) to aggregate
amount of indebtedness pursuant to the Agreement of no less than 5 to 1.
During
the six months ended February 28, 1994, the Fund had an average outstanding
balance of $359,116 with interest rates ranging from 3.3125% to 3.8750%.
Interest expense totalled $6,163 for the six months ended February 28, 1994
and
is offset against interest income on the Fund's Statement of Operations for
this
period. At February 28, 1994, the Fund had no outstanding borrowings under
this
Agreement.
9. Reorganization
On October 15, 1993, the Fund (Acquiring Fund) acquired the assets and certain
liabilities of Smith Barney Shearson 1990s Fund (Acquired Fund), in exchange
for
shares of the Acquiring Fund, pursuant to a plan of reorganization approved by
the Acquired Fund's shareholders on October 12, 1993. Total shares issued by
the Acquiring Fund, the value of the shares issued by the Acquiring Fund, the
total net assets of the Acquired Fund and the Acquiring Fund and any
unrealized
appreciation included in the Acquired Fund's total net assets are as follows:
<TABLE>
<CAPTION>
Shares Total Net Total
Net
Issued by Assets of
Assets of
Acquiring Acquiring Acquired
Acquiring
Fund Acquired Fund Fund Fund
Fund
<S> <C> <C> <C>
<C>
- ------------------------------------------------------------------------------
- ------
The Fund Smith Barney Shearson
1990s Fund 1,016,131 $27,086,966
$247,422,920
</TABLE>
The total net assets of the Acquired Fund before acquisition included
unrealized
appreciation of $9,088,361. The total net assets of
immediately after the acquisition were $274,509,886.
22
Smith Barney Shearson
Aggressive Growth Fund Inc.
Participants
Distributor
Smith Barney Shearson Inc.
388 Greenwich Street
New York, New York 10013
Investment Adviser
Smith Barney Shearson
Asset Management
Two World Trade Center
New York, New York 10048
Administrator
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
Auditors and Counsel
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Transfer Agent
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
Custodian
Boston Safe Deposit
and Trust Company
One Boston Place
Boston, Massachusetts 02108
23
Smith Barney Shearson
Aggressive Growth Fund Inc.
Glossary of Commonly Used Mutual Fund Terms
Capital Gain (or loss) This is the increase (or decrease) in the market value
(price) of a security in your portfolio. If a stock or bond appreciates in
price, there is a capital gain; if it depreciates there is a capital loss. A
capital gain or loss is "realized" upon the sale of a security; if net
capital gains exceed net capital losses, there may be a capital gain
distribution to shareholders.
Contingent Deferred Sales Charge (CDSC) One kind of back-end load, a CDSC may
be imposed if shares are redeemed during the first few years of ownership.
The CDSC may be expressed as a percentage of either the original purchase
price or the redemption proceeds. Most CDSCs decline over time, and some will
not be charged if shares are redeemed after a certain period of time.
Dividend This is income generated by securities in a portfolio and
distributed after expenses to shareholders.
Front-End Sales Charge This is the sales charge applied to an investment at
the time of initial purchase.
Net Asset Value (NAV) Net asset value is the total market of all securities
held by a fund, minus any liabilities, divided by the number of shares
outstanding. It is the value of a single share of a mutual fund on a given
day. The total value of your investment would be the NAV multiplied by the
number of shares you own.
Total Return Total return measures a fund's performance, taking into account
the combination of dividends paid and the gain or loss in the value of the
securities held in the portfolio. It may be expressed on an average annual
basis or cumulative basis (total change over a given period). In addition,
total return may be expressed with or without the effects of sales charges or
the reinvestment of dividends and capital gains.
Whenever a fund reports any type of performance, it must also report the
average annual total return according to the standardized calculation
developed by the SEC. The SEC average annual total return calculation
includes the effects of all fees and sales charges and assumes the rein-
vestment of all dividends and capital gains.
24
Aggressive
Growth
Fund Inc.
Directors
Paul R. Ades
Herbert Barg
Allan R. Johnson
Heath B. McLendon
Ken Miller
John F. White
Officers
Heath B. McLendon
Chairman of the Board and
Investment Officer
Stephen J. Treadway
President
Richard P. Roelofs
Executive Vice President
Richard A. Freeman
Vice President and
Investment Officer
Vincent Nave
Treasurer
Francis J. McNamara, III
Secretary
This report is submitted for the general information of the shareholders of
Smith Barney Shearson Aggressive Growth Fund Inc. It is not authorized for
distribution to prospective investors unless accompanied or preceded by an
effective Prospectus for the Fund, which contains information concerning the
Fund's investment policies, fees and expenses as well as other pertinent
information.
Performance cited is through February 28, 1994. Please consult Smith Barney
Shearson Mutual Funds Quarterly Performance Update for figures through the
most
recent calendar quarter.
SMITH BARNEY SHEARSON
- ---------------------
Smith Barney Shearson
Mutual Funds
Two World Trade Center
New York, New York 10048
Fund 9, 188, 189, 214
FD2208 D4
