SUNSTONE FINANCIAL GROUP, INC
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
Phone - 414/271-5885
Fax - 414/271-9717
March 4, 1996
VIA EDGAR
- ---------
Securities and Exchange Commission
Division of Investment Management
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: CharterCapital Blue Chip Growth Fund, Inc. Annual Report
(Registration Nos.: 2-90082; 811-3993)
Gentlemen:
On behalf of the Fund, we hereby file the Fund's Annual Report to Shareholders
for the period ended December 31, 1995 pursuant to Rule 30b2-1 and Section
24(b) under the Investment Company Act of 1940, as amended.
If you have any questions regarding this filing, please do not hesitate to
contact me.
Sincerely,
/s/ Lea E. Grunig
Lea E. Grunig
Client Services and Tax Manager
LEG/kg
cc: Rick Teigen (paper copy)
Lauren Toll (paper copy)
John Malloy (paper copy)
CharterCapital BLUE CHIP GROWTH FUND, INC.
4920 West Vliet Street Milwaukee, Wisconsin 53208 (414) 257-1842
Dear Shareholder:
Management is pleased to report that for the calendar year of 1995 the Charter
Capital Blue Chip Growth Fund, Inc. appreciated +22.6%. This return includes a
dividend distribution of $.11 per share. During this same period, the total
return for the Standard and Poors 500 Index was +37.5%.
The S&P 500 Index is a composite of 500 companies consisting of many diverse
sectors of our economy, such as technology, auto manufacturing,
pharmaceuticals, utilities, agricultural equipment, etc. During 1995,
technology stocks were the standout performers of the stock market. Over this
period, the Charter Capital Blue Chip Growth Fund, on average, was
underweighted in technology issues. This underexposure was the primary reason
for the fund's total return trailing that of the S&P 500 Index.
Management's investment style has emphasized maintaining a broadly diversified
portfolio that seeks to lower volatility and reduce risk. Subsequently, we
attempt to avoid overweighting the more aggressive sectors of the market.
OUTLOOK FOR 1996
The economy remains sluggish allowing for additional interest rate reductions.
The 5 year trailing inflation factor, as measured by the Consumer Price Index,
is at a 30 year low. We have to go back to the middle 1960's to find a period
of comparable low inflation. Corporate America continues to become more cost
efficient, thus improving their bottom line, that of corporate profits.
Historically, the combination of low inflation, lower interest rates and
improving corporate profits has provided a solid background for higher stock
prices.
Respectfully,
/s/Lauren E. Toll
Lauren E. Toll
President
Average Annual Total Return
For the Period ended 12/31/95
1 Year 5 Year Since Commencement
CharterCapital 22.64% 10.33% 7.21%
S&P 500 37.58% 16.59% 16.75%
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/1/84 5/85 5/86 5/87 5/88 12/88 12/89 12/90 12/91 12/92 12/93 12/94 12/95
CharterCapital 10,000 11,100 13,270 15,412 12,461 12,761 13,929 13,705 19,978 18,850 19,202 18,271 22,408
S&P 500 10,000 13,175 17,872 21,654 20,249 21,906 28,846 27,951 36,466 39,244 43,200 43,770 60,218
This chart assumes an initial gross investment of $10,000 made on 6/1/84 (commencement). Returns show the reinvestment of all
dividends. Past performance is not predictive of future performance. Investment return and principal value will fluctuate, so that
your shares, when redeemed, may be worth more or less than the original cost.
The S&P 500 Stock Incex is an unmanaged but commonly used measure of common stock total return performance.
</TABLE>
CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in securities, at value (cost $2,777,097) ......... $ 3,039,331
Dividends and interest receivable ............................. 11,510
---------
TOTAL ASSETS ............................................. 3,050,841
---------
LIABILITIES:
Payable to adviser for advisory,
management and administrative fees .......................... 4,102
Distributions payable ......................................... 22,094
Other accrued expenses ........................................ 22,720
---------
TOTAL LIABILITIES ........................................ 48,916
---------
TOTAL NET ASSETS ......................................... $ 3,001,925
=========
NET ASSETS CONSIST OF:
Capital shares ($0.01 par value, 10,000,000
shares authorized, 200,764 shares outstanding) .............. $ 3,483,504
Accumulated realized losses ................................... (743,813)
Net unrealized appreciation on investments .................... 262,234
---------
TOTAL NET ASSETS ......................................... $ 3,001,925
=========
Net asset value, offering and redemption price per share
($3,001,925 divided by 200,764 shares outstanding) .......... $ 14.95
=========
The accompanying notes to financial statements
are an integral part of this statement.
CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
Number of
Shares Value
------ -----
COMMON STOCKS - 91.01%
BASIC INDUSTRY - 12.03%
Avnet, Inc. ............................. 2,000 $ 89,500
Betz Laboratories ....................... 3,000 123,000
Sigma-Aldrich Corp. ..................... 3,000 148,500
-------
361,000
-------
BANKING AND FINANCIAL SERVICES - 14.73%
First Union Corp. ....................... 1,500 83,438
Fleet Financial Group, Inc. ............. 3,000 122,250
NationsBank Corp. ....................... 1,500 104,437
Norwest Corp. ........................... 4,000 132,000
-------
442,125
-------
CAPITAL GOODS - 26.30%
<F1> Compaq Computer Corp. .............. 2,000 96,000
<F1> EMC Corp. .......................... 4,000 61,500
Motorola, Inc. .......................... 2,000 114,000
Olsten Corp. ............................ 6,000 237,000
<F1> Oracle Systems Corp. ............... 2,000 84,750
<F1> U.S. Filter Corp. .................. 4,000 106,500
WMX Technologies, Inc. .................. 3,000 89,625
-------
789,375
-------
CONSUMER - 21.67%
Abbott Laboratories ..................... 2,000 83,500
<F1> Best Buy Co., Inc. ................. 3,500 56,875
Home Depot, Inc. ........................ 2,000 95,750
Merck & Co., Inc. ....................... 2,000 131,500
Newell Co. .............................. 4,000 103,500
PepsiCo, Inc. ........................... 1,500 83,812
Sara Lee Corp. .......................... 3,000 95,625
-------
650,562
-------
UTILITIES - 16.28%
American Telephone & Telegraph Co. ...... 2,000 129,500
BellSouth Corp. ......................... 3,000 130,500
New England Electric System ............. 3,000 118,875
NICOR, Inc. ............................. 4,000 110,000
-------
488,875
-------
TOTAL COMMON STOCKS (cost $2,424,288) 2,731,937
---------
CONVERTIBLE PREFERRED STOCKS - 2.91%
MascoTech, Inc. ......................... 7,000 87,500
------
TOTAL CONVERTIBLE PREFERRED
STOCKS (cost $132,915) 87,500
------
Principal Amount
----------------
DEMAND NOTES - 7.33% (variable rate)
Pitney Bowes Credit Corp. ............... $ 42,000 42,000
Sara Lee Corp. .......................... 69,894 69,894
Wisconsin Electric Power Co. ............ 108,000 108,000
--------
TOTAL DEMAND NOTES (cost $219,894) 219,894
--------
TOTAL INVESTMENTS 101.25% (cost $2,777,097) 3,039,331
LIABILITIES, LESS CASH AND OTHER ASSETS (1.25)% (37,406)
---------
NET ASSETS 100.00% $3,001,925
=========
<F1> Non-income producing.
The accompanying notes to financial statements
are an integral part of this schedule.
CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
INVESTMENT INCOME:
Dividend income .......................................... $ 122,054
Interest income .......................................... 24,553
--------
TOTAL INVESTMENT INCOME ............................. 146,607
--------
EXPENSES:
Adviser fee .............................................. 68,039
Professional fees ........................................ 23,424
Transfer agent fees and expenses ......................... 18,566
Custodian fee ............................................ 3,992
Printing and postage ..................................... 3,443
Directors' fees .......................................... 2,713
Registration fees ........................................ 2,495
Other operating expenses ................................. 1,841
--------
TOTAL EXPENSES ...................................... 124,513
--------
NET INVESTMENT INCOME ............................... 22,094
-------
NET REALIZED GAIN ON INVESTMENTS ........................... 545,666
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION
ON INVESTMENTS ........................................... 413,895
-------
NET GAIN ON INVESTMENTS .................................... 959,561
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....... $ 981,655
=======
The accompanying notes to financial statements
are an integral part of this statement.
CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
---- ----
OPERATIONS:
Net investment income $ 22,094 $ 91,434
Net realized gain on investments 545,666 407,727
Increase in unrealized
appreciation/depreciation on investments 413,895 (833,472)
------- ---------
INCREASE (DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS 981,655 (334,311)
-------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (36,454) (77,073)
-------- --------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (36,454) (77,073)
-------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued
(6,427 and 5,654 shares, respectively) 89,137 75,690
Distributions reinvested
(7,397 and 0 shares, respectively) 91,382 --
Cost of shares redeemed (309,482 and
231,046 shares, respectively) (4,235,583) (3,009,189)
----------- -----------
DECREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (4,055,064) (2,933,499)
----------- -----------
TOTAL DECREASE IN NET ASSETS (3,109,863) (3,344,883)
NET ASSETS AT THE BEGINNING OF THE PERIOD 6,111,788 9,456,671
--------- ---------
NET ASSETS AT THE END OF THE PERIOD $3,001,925 $6,111,788
========= =========
The accompanying notes to financial statements
are an integral part of these statements.
CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
For the Year Ended
December 31,
------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Net asset value, beginning of period $12.31 $13.10 $12.86 $13.63 $9.35
Income from investment operations:
Net investment income (loss) 0.11 0.18 (0.05) (0.08) (0.04)
Net realized and unrealized gains
(losses) on securities 2.67 (0.82) 0.29 (0.69) 4.32
---- ------ ---- ------ ----
Total from investment operations 2.78 (0.64) 0.24 (0.77) 4.28
Less distributions:
Distributions from net
investment income (0.14) (0.15) -- -- --
------ ------ ----- ----- -----
Total distributions (0.14) (0.15) -- -- --
------ ------ ----- ----- -----
Net asset value, end of period $14.95 $12.31 $13.10 $12.86 $13.63
====== ====== ====== ====== ======
Total return 22.64% (4.85)% 1.87% (5.65)% 45.78%
Supplemental data and ratios:
Net assets, in thousands,
end of period $3,002 $6,112 $9,457 $11,878 $12,560
Ratio of expenses to average
net assets 2.75% 2.26% 2.18% 2.15% 2.28%
Ratio of net investment income (loss)
to average net assets 0.49% 1.13% (0.13)% (0.60)% (0.39)%
Portfolio turnover rate 99% 133% 295% 166% 112%
The accompanying notes to financial statements
are an integral part of this information.
CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CharterCapital Blue Chip Growth Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 as an open-end management investment
company. The following is a summary of the significant accounting policies
of the Fund:
a. All securities, excluding short-term investments, are valued at the last
sale price reported by the principal security exchange on which the issue
is traded, or, if no sale is reported, the latest bid price. Securities
which are traded over-the-counter are valued at the latest bid price if no
sale is reported. Short-term investments are valued at amortized cost
which approximates market value. Investment transactions are recorded no
later than the first business day after the trade date.
b. Net realized gains and losses on investments, excluding short-term
investments, were computed on the basis of the first-in, first-out cost
method.
c. Provision has not been made for federal income taxes since the Fund has
elected to be taxed as a "regulated investment company" and intends to
distribute substantially all taxable income to its shareholders and
otherwise comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies.
d. Dividend income is recognized on the ex-dividend date and interest income
is recognized on an accrual basis.
2. INVESTMENT ADVISORY AGREEMENT
The Fund has an agreement with Charter Capital Management, Inc., (the
"Adviser"), with whom certain officers and directors of the Fund are
affiliated, to serve as Investment Adviser and Manager.
The annual fee paid to the Adviser is paid monthly and is based on the
average daily closing net assets of the Fund. The annual fee is equal to
the sum of the following amounts: (i) 1.50% of the first $25,000,000; (ii)
1.15% of the next $25,000,000; and (iii) 0.75% of the excess over
$50,000,000.
3. DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-dividend date.
As of December 31, 1995, the Fund has net realized capital loss
carryforwards of $727,334 which expire December 31, 1998.
It is management's intention to make no distribution of any future realized
capital gains until the federal income tax capital loss carryforward is
exhausted. For the year ended December 31, 1995, the Fund utilized capital
loss carryforwards of $549,099.
4. NET UNREALIZED APPRECIATION
Net unrealized appreciation on investments as of December 31, 1995, is
comprised of the following:
Aggregate gross unrealized appreciation ....... $ 411,496
Aggregate gross unrealized depreciation ....... (149,262)
--------
Net unrealized appreciation ................... $ 262,234
========
The cost of securities for federal income tax purposes is $2,793,576.
5. INVESTMENT TRANSACTIONS
For the year ended December 31, 1995, purchases and proceeds from sales of
investment securities (excluding short-term securities) were $4,034,074 and
$6,577,148, respectively.
6. SUBSEQUENT EVENT
On January 22, 1996, the Board of Directors approved the liquidation and
termination of the Fund. Under the approved Plan of Liquidation, sales of
shares of the Fund ceased on January 22, 1996. The Fund, subject to
shareholder approval, plans to liquidate its securities holdings and
distribute the proceeds to its shareholders. No liquidation reserve has been
established as the Advisor has informed the Fund that it will assume all
obligations of the Fund that have not been paid prior to the date of the
final liquidating distribution as well as any unknown or contingent
liabilities of the Fund.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
CharterCapital Blue Chip Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
CharterCapital BLUE CHIP GROWTH FUND, INC. (a Wisconsin corporation), including
the schedule of investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended and the financial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audit 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 financial highlights 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 December 31, 1995
by correspondence with the custodian and brokers. 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 audit provided a reasonable basis for our opinion.
As explained in Note 6 of the Notes to Financial Statements, the Board of
Directors voted on January 22, 1996 to liquidate the Fund.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
CharterCapital BLUE CHIP GROWTH FUND, INC. as of December 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
Milwaukee, Wisconsin,
January 19, 1996
CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC.
Officers and Directors
LAUREN E. TOLL
President, Treasurer and Director
President,
Charter Capital Management, Inc.
JOEL T. HASSLER
Secretary
Assistant Vice President,
Charter Capital Management, Inc.
RICHARD H. HAVENER
Director
Past President, Consultant,
J.F. Cook Co., Inc.
BARBRA R. LASKY, CPA
Director
President,
Hafner, Lasky, & Diller, S.C.
LAWRENCE A. LIEBE
Director
President,
Office Essentials, Inc.
THIS REPORT HAS BEEN PREPARED FOR THE INFORMATION OF SHAREHOLDERS OF
CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC., AND IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
INVESTMENT ADVISER
Charter Capital Management, Inc.
4920 West Vliet Street
Milwaukee, Wisconsin 53208
SHAREHOLDER SERVICING AGENT
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
AUDITORS
Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
CharterCapital
BLUE CHIP GROWTH FUND, INC.
4920 West Vliet Street
Milwaukee, Wisconsin 53208
414/257-1842
ANNUAL REPORT
DECEMBER 31, 1995
CHARTERCAPITAL
BLUE CHIP GROWTH FUND, INC.
