(Logo)
Chase Vista Funds
THE GROWTH FUND OF WASHINGTON
Semi-Annual Report
June 30, 1998
(Logo)
THE GROWTH FUND OF WASHINGTON
Fund results in this letter were computed without a sales charge. Here are
the total and average annual compound returns for the following periods
ended June 30, 1998 on a $1,000 investment at the 5.75% maximum sales
charge with all distributions reinvested: 10 years: +261.08%, or +13.70% a
year; 5 years: +123.77%, or +17.48% a year; and 12 months: +24.22%. Sales
charges are lower for accounts of $100,000 or more.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. ALL INVESTMENTS ARE
SUBJECT TO CERTAIN RISKS. FOR EXAMPLE, THOSE WHICH INCLUDE COMMON STOCKS
ARE AFFECTED BY FLUCTUATING STOCK PRICES, SO YOU MAY GAIN OR LOSE MONEY BY
INVESTING IN THE FUND. ACCORDINGLY, INVESTORS SHOULD MAINTAIN A LONG-TERM
INVESTMENT PERSPECTIVE. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
INSURED, GUARANTEED OR ENDORSED BY, THE U.S. GOVERNMENT, ANY BANK, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY -
OTHER AGENCY, ENTITY OR PERSON.
Fellow Shareholders
The Growth Fund of Washington continued its upward momentum during the
first half of 1998. The Fund paid a 3-cent per share dividend on June 22
to shareholders of record at the opening of business on June 19th. The
Fund's net asset value rose to $29.22 on June 30, 1998 from $26.09 on
December 31, 1997, an increase of 12.11% with the June dividend taken in
shares. For the same period, the total return on the unmanaged Standard &
Poor's 500 Composite Index increased by 17.72%. At midyear, the weighted
average price-earnings multiple for the Fund's holdings was approximately
18.3 times 1998 estimated earnings, or about 23% less than the S&P 500's
multiple of about 23.9 times.
During this same six-month period, the financial markets have been focused
on the strength of the domestic economy, inflation and the slowdown in
Asian economies. The extraordinary focus on the latest economic news has
created greater volatility within these financial markets.
On June 30, 1998, The Growth Fund of Washington held securities of 32
companies in 13 industry groups. The Fund's five largest holdings,
representing 43.63% of net assets were Freddie Mac (11.54%); Fannie Mae
(10.91%); The Washington Post Co., Class B (8.06%); Lockheed Martin Corp.
(7.20%); and First Union Corporation (5.92%).
Since the first of the year, eight companies were added to the Fund's
portfolio: Columbia Energy Group, a utility holding company based in
Reston, Virginia, is engaged in all phases of the natural gas business;
COMSAT Corp., a telecommunications company based in Bethesda, Maryland, is
a global provider of satellite services; EXCEL Communications, Inc., a
long-distance carrier headquartered outside the region, is the fifth
largest long-distance company in the country; LCC International, Inc., a
McLean, Virginia-based telecommunications company, provides products and
services to the wireless industry; NEXTEL Communications, Inc., also based
in McLean, provides services to the wireless telecommunications industry;
Roanoke Gas Co. is a retailer of natural gas and propane based in Roanoke,
Virginia; Sunrise Assisted Living, Inc., providing housing and 24-hour
support services to the elderly, is based in Fairfax, Virginia; and United
Payors & United Providers, Inc., a Rockville, Maryland-based company that
serves as an intermediary on behalf of indemnity insurance companies,
third-party administrators and self-insured unions to produce cost savings
and other benefits.
In addition, the separate acquisitions of two Fund holdings were completed
and replaced with shares of two new companies: American Tower Corp. and
Qwest Communications International, Inc. American Tower is a spin off by
CBS's acquisition of American Radio Systems Corporation; and Qwest
Communications acquired LCI International, Inc.
The Growth Fund of Washington eliminated the following holdings during this
period: Allied Capital Corporation; Jackson Hewitt, Inc.; Prime Retail,
Inc.; and UOL Publishing, Inc.
The Fund's holdings of Giant Food, Inc. were partially reduced prior to
finalization of the tender offer by Koninklijke Ahold N.V. of The
Netherlands, which is expected later this year.
Prospects remain bright for the regional economy, which currently mirrors
the national economy, with reasonable growth and inflation under control.
Consolidation activity in the banking industry continued during the first
half, especially in April when NationsBank Corporation, a Fund holding, and
BankAmerica Corp. announced a merger to close in September of this year.
Activity also increased in the telecommunications industry during this
period. Your Fund has benefited in this area from its holdings in Qwest
and EXCEL.
Since mid July, concerns about softer earnings and continued anxiety about
Asian economies have contributed to a period of marked volatility. As of
August 6, the most-recent date for which information is available before
this report goes to press, The Growth Fund of Washington was up 9.0%
year-to-date (versus 13.3% for the S&P 500). The Growth Fund of
Washington's lower than average price-earnings ratio should provide some
downside protection. We encourage you to maintain a long-term perspective
toward your holdings.
We welcome your comments, as always, and look forward to reporting to you
again in six months.
Sincerely,
(SIGNATURES)
James H. Lemon, Jr. Harry J. Lister
Chairman President
August 14, 1998
<TABLE>
<CAPTION>
Investment Portfolio as of June 30, 1998 (Unaudited)
Number
Industry of Market Percent of
Group Securities<F1> Shares Value Net Assets
<S> <S> <C> <C> <C>
Aerospace Lockheed Martin Corp. 48,563 $ 5,141,608 7.20%
Bethesda-based defense/aerospace company
that also designs and services communication
and information systems.
Banking Capital One Financial Corp. 31,000 3,849,812 5.39
Northern Virginia-based general purpose
credit card issuer, with $15 billion in
managed loans.
Crestar Financial Corp. 62,000 3,382,875 4.74
Richmond-based bank holding company
with approximately $26.2 billion in assets.
First Union Corporation 72,600 4,228,950 5.92
The sixth largest bank holding company in
the country serving 16 million corporate
and retail customers in investment and
mortgage banking.
NationsBank Corporation 44,400 3,396,600 4.76
A multi-bank holding company with
operations in many states and Washington,
DC with $308 billion in assets.
Provident Bankshares Corporation 52,147 1,538,336 2.15
Baltimore-based bank holding company for
Provident Bank.
TOTAL 16,396,573 22.96
Biotechnology Human Genome Sciences, Inc.<F2> 20,000 713,750 1.00
Rockville, Maryland-based leader in gene
sequencing, with licensing agreements for
therapeutic and diagnostic product
development.
Computer American Management Systems, Inc.<F2> 44,000 1,317,250 1.84
Services & Northern Virginia-based leading supplier
Hardware of information technologies.
MICROS Systems, Inc.<F2> 31,000 1,025,906 1.44
Maryland-based manufacturer and marketer
of systems and software for the hospitality
industry.
TOTAL 2,343,156 3.28
Financial Fannie Mae 128,320 $ 7,795,440 10.91%
Services Washington, DC-based, the largest
residential mortgage funding operation
through the secondary market
Freddie Mac 175,200 8,245,350 11.54
Northern Virginia-based company which
purchases, securitizes and guarantees
mortgages.
SLM Holding Corp. 17,500 857,500 1.20
Washington, DC-based, the largest source
of funding and servicing of education loans.
TOTAL 16,898,290 23.65
Health Services Sunrise Assisted Living, Inc. <F2> 10,000 343,750 .48
Fairfax, Virginia-based provider of housing
and 24-hour support services to the elderly.
Trigon Healthcare, Inc.<F2> 31,700 1,147,144 1.61
Richmond-based managed health care
company serving approximately 2 million
members.
United Payors & United Providers, Inc.<F2> 30,000 678,750 .95
Rockville-based intermediary for
discounted medical services.
TOTAL 2,169,644 3.04
Manufacturing The Black & Decker Corp. 10,000 610,000 .85
Maryland-based maker of a wide range of
products sold to residential and commercial
markets in over 100 countries.
Danaher Corp. 50,000 1,834,375 2.57
Washington, DC-based manufacturer of
hand tools, transportation equipment, and
process & environmental controls.
Harman International Industries, Inc. 15,750 606,375 .85
Washington, DC-based specialty
manufacturer of electronic and audio
components.
TOTAL 3,050,750 4.27
Publishing & The Washington Post Co., Class B 10,000 $ 5,760,000 8.06%
Communications Washington, DC-based company that
publishes "The Washington Post" and
"Newsweek"; owns several TV stations
and over 50 cable TV systems.
Retail Circuit City Stores, Inc. 35,000 1,640,625 2.30
Richmond-based retailer of audio, video and
brand name consumer electronic products,
and has a presence in the used car market
through CarMax.
Giant Food, Inc., Class A 13,800 594,263 .83
Landover, Maryland-based company which
operates over 175 supermarkets and
pharmacies in the mid-Atlantic region,
including Washington, DC.
TOTAL 2,234,888 3.13
Telecommuni- American Tower Corp.<F2> 53,500 1,334,156 1.87
cations Owns and operates more than 1,800
wireless communication towers in 39
states and Washington, DC.
Bell Atlantic Corp. 56,000 2,555,000 3.58
Holding company for the mid-Atlantic
telephone companies serving a multi-state
area and Washington, DC.
COMSAT Corp. 15,000 424,688 .59
Bethesda-based global provider of satellite
services, digital networking services and
technology.
EXCEL Communications, Inc.<F2> 35,000 802,813 1.12
The fifth largest long-distance company in
the country, offering subscribers a variety
of communication products & services.
LCC International, Inc.<F2> 15,000 277,500 .39
McLean-based provider of radio frequency
engineering, network design products and
services to the wireless telecommunications
industry.
NEXTEL Communications, Inc.<F2> 10,000 248,750 .35
McLean-based provider of digital and analog
wireless communication services in the U.S.
Qwest Communications International, Inc.<F2> 34,983 $ 1,220,032 1.71%
Nation's fourth largest long-distance
company and a multimedia communications
company serving over 2 million customers.
TOTAL 6,862,939 9.61
Transportation CSX Corp. 70,000 3,185,000 4.46
Richmond-based holding company for
transportation and natural resources with
railroad, trucking, pipeline, and ocean
shipping units.
Utilities Columbia Energy Group 15,000 834,375 1.17
Reston, Virginia-based utility holding
company engaged in all phases of the
natural gas business.
Roanoke Gas Co. 20,000 410,000 .57
Roanoke, Virginia-based public service
company primarily in the retail distribution
and sale of natural gas and propane.
TOTAL 1,244,375 1.74
Wholesale Food Richfood Holdings, Inc. 140,000 2,896,250 4.05
Services Virginia-based wholesale supplier to and
operator of grocery retailers in the region.
Stocks in initial period of acquisition 123,750 .17
TOTAL INVESTMENT SECURITIES
(cost: $20,564,003) 69,020,973 96.62
Repurchase Agreement:
Donaldson, Lufkin & Jenrette Securities
Corporation 2,463,000 3.45
5.00%, issued 6/30/98, $2,463,342
including interest, due 7/1/98 (collateral-
ized by $9,604,000 United States Treasury
Strip Interest, due 11/15/21)
Payables over cash and receivables (49,238) (.07)
NET ASSETS $71,434,735 100.00%
<FN>
<F1> Securities listed are common stocks unless otherwise indicated.
<F2>Indicates security which has not paid dividends during the preceding twelve months.
</FN>
</TABLE>
See Notes to Financial Statements
Statement of Assets and Liabilities
as of June 30, 1998 (Unaudited)
Assets Investment in securities,
at market (cost: $20,564,003) $69,020,973
Repurchase agreement,
(cost: $2,463,000) 2,463,000
Cash 12,827
Dividends and interest receivable 2,192
Receivable for Fund's shares sold 56,120
Other assets 11,143 $71,566,255
Liabilities Payable for adviser and mgt. Services 41,398
Payable for distribution plan 35,392
Payable for Fund's shares repurchased 25,648
Accounts payable and accrued expenses 29,082 131,520
Net Assets Capital stock ($.01 par value,
2,444,393 shares outstanding,
25,000,000 authorized) 24,444
Paid-in capital 20,229,839
Undistributed investment income 14,872
Undistributed realized capital gains 2,708,610
Unrealized gains 48,456,970 $71,434,735
Net asset value per share $29.22
See Notes to Financial Statements
Statement of Operations
For the six-months ended June 30, 1998 (Unaudited)
Investment Income
Income:
Dividends $ 448,813
Interest 53,811 $ 502,624
Expenses:
Investment advisory fee 126,699
Business management fee 116,196
Distribution fee 83,575
Transfer agency fee and expenses 28,243
Auditing and legal fees 20,257
Custodian fee and expenses 18,585
Directors' fees 4,800
Postage, stationery and supplies 2,460
Reports to shareholders 7,566
Registration and prospectus expense 8,240
Other 965 417,586
Net investment income 85,038
Realized and Unrealized Gain on Investments
Net realized gain on equities,
identified cost basis 2,659,364
Net change in unrealized gain 4,834,987
Net realized and change in
unrealized gain on investments 7,494,351
Net increase in net assets resulting from operations $7,579,389
See Notes to Financial Statements
Statement of Changes in Net Assets
Six Months
Ended Year Ended
June 30, 1998 December 31,
(Unaudited) 1997
Increase in Net Assets
Operations:
Net investment income $ 85,038 $ 187,307
Net realized gain on equity investments 2,659,364 2,545,592
Net change in unrealized gain on investments 4,834,987 14,214,092
Net increase in net assets
resulting from operations 7,579,389 16,946,991
Dividends and Distributions Paid to Shareholders:
Dividends from net investment income (73,238) (194,029)
Distributions from net realized gains - (2,495,778)
Total (73,238) (2,689,807)
Capital Stock Transactions:
Net increase (decrease) in net assets resulting
from capital stock transactions 2,279,528 (1,409,588)
Total increase in net assets 9,785,679 12,847,596
Net Assets:
Beginning of period 61,649,056 48,801,460
End of period $71,434,735 $61,649,056
See Notes to Financial Statements
<TABLE>
<CAPTION>
Financial Highlights
For a share outstanding throughout the period
Six Months
Ended
June 30, 1998For the year ended December 31,
(Unaudited) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $26.09 $20.00 $18.19 $13.32 $15.37 $14.16
Income from investment operations:
Net investment income .04 .09 .07 .14 .18 .14
Net realized and unrealized
gain (loss) on investments 3.12 7.20 2.60 5.72 (1.61) 1.63
Total from investment operations 3.16 7.29 2.67 5.86 (1.43) 1.77
Less Distributions:
Dividends (from net investment
income) (.03) (.09) (.07) (.14) ( .18) (.14)
Distributions (from capital gains) - (1.11) (.79) (.85) (.44) (.42)
Total distributions (.03) (1.20) (.86) (.99) (.62) (.56)
Net asset value, end of period $29.22 $26.09 $20.00 $18.19 $13.32 $15.37
Total return<F1> 12.11% 36.56% 14.65% 44.25% (9.32%) 12.52%
Ratios/supplemental data:
Net assets, end of period
(in thousands) $71,435 $61,649 $48,801 $45,397 $33,715 $39,990
Ratio of expenses to average
net assets 1.23%<F2> 1.25% 1.42% 1.46% 1.50% 1.55%
Ratio of net income to average
net assets .25%<F2> .35% .35% .87% 1.20% .87%
Average commissions paid<F3> 6.93cents 6.55cents 6.96cents
Portfolio turnover rate 14.14%<F2> 13.03% 24.20% 25.65% 13.34% 13.52%
<FN>
<F1> Excludes maximum sales charge of 5.75% of the Fund's offering price.
<F2> Annualized
<F3> Brokerage commissions paid on portfolio transactions increase the cost
of securities being purchased or reduce the proceeds of securities sold,
and are not separately reflected in the Fund's Statement of Operations.
Shares traded on a principal basis, such as most over-the-counter and
fixed-income transactions, are excluded.
</FN>
</TABLE>
See Notes to Financial Statements
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
The Growth Fund of Washington, Inc. (the "Fund") was incorporated in
Maryland on May 24, 1985. The Fund is registered under the Investment
Company Act of 1940 (the "Act"), as amended, as an open end, diversified
investment company. The Fund's objective is to provide for long-term
growth of capital by investing primarily in securities of companies
headquartered or having a major place of business in Washington, D.C.,
Maryland or Virginia. Washington Investment Advisers, Inc. ("WIA") is the
Fund's investment adviser (the "Investment Adviser"). Washington
Management Corporation ("WMC") is the Fund's business manager (the
"Business Manager"). The Investment Adviser and the Business Manager are
wholly-owned subsidiaries of The Johnston-Lemon Group, Incorporated. Vista
Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary of
The BISYS Group, Inc., is the distributor of the Fund's shares.
Security Valuation: Securities (except for short-term obligations) are
valued at the last sales price on the exchange or national securities
market on which the securities primarily are traded. Securities not listed
on an exchange or national securities market, or securities in which there
were no reported transactions, are valued at the latest reliable quoted bid
price. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which approximates market value. Any securities
for which reliable recent market quotations are not readily available are
valued at fair value as determined in good faith under policies approved by
the Board of Directors.
Premiums received for covered call options written are deferred until the
contract expires or is closed. Such premiums are valued at the last sales
price of the option or, in the absence of a sale, the mean between the last
reliable bid and ask price.
Securities Transactions and Investment Income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recorded on the ex-dividend date and interest income, including, where
applicable, amortization of discount on short-term investments, is recorded
on the accrual basis.
Pursuant to the custodian agreement, the Fund received credits against its
custodian fee for imputed interest on certain balances with the custodian
bank. The custodian fee of $18,585 includes $955 that was paid by these
credits rather than in cash.
Federal Income Taxes: It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income, including
any net realized gain on investments, to its shareholders. Therefore, no
federal income tax provision is required. Cost of securities for tax
purposes is the same as for financial reporting purposes.
Note 2 - Investment Adviser and Business Management Fees and Other
Transactions with Affiliates
WIA was paid a fee of $126,699 for investment management services. The
Investment Advisory Agreement provides for monthly fees, accrued daily,
based on an annual rate of 0.375% on the Fund's net assets up to
$100,000,000, decreasing to 0.35% on the net assets in excess of
$100,000,000. WMC was paid a fee of $116,196 for business management
services. The Business Management Agreement provides for monthly fees,
accrued daily, based on an annual rate of 0.375% on the Fund's first
$40,000,000 of net assets, 0.30% on net assets in excess of $40,000,000 but
not exceeding $100,000,000 and 0.25% on net assets in excess of
$100,000,000. The Fund pays all expenses not assumed by the Investment
Adviser or Business Manager.
Pursuant to a Distribution Plan, the Fund pays a fee at a maximum annual
rate of 0.25% of the Fund's net assets. Payments under this plan are
primarily intended to result in the sale and retention of Fund shares
including, but not limited to, advertising, salaries and other expenses of
the Distributor relating to selling or servicing efforts, expenses of
organizing and conducting sales seminars, printing of prospectuses and
reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature and payments to dealers whose
customers purchase Fund shares.
Johnston, Lemon & Co. Incorporated, a wholly-owned subsidiary of The
Johnston-Lemon Group, Incorporated, earned $89,916 on its retail sales of
shares of the Fund and Distribution Plan fee and received no brokerage
commissions resulting from purchases and sales of securities for the
investment account of the Fund. Sales charges are not an expense of the
Fund and hence are not reflected in the accompanying Statement of
Operations.
All Officers and two Directors of the Fund are "affiliated persons" (as
defined in the Act) of the Investment Adviser or Business Manager and
received no remuneration from the Fund in such capacities.
Note 3 - Investment Transactions
The Fund made purchases of investment securities, other than short-term
securities, of $6,628,607 and sales of $4,676,881 during the six months
ended June 30, 1998. Net unrealized gains at June 30, 1998 included
unrealized gains of $48,661,101 and unrealized losses of $204,131.
The Fund held no option contracts at January 1, 1998 and did not engage in
any option transactions during the six months ended June 30, 1998.
Note 4 - Capital Stock Transactions
Transactions in capital stock were:
For the For the
Six Months Ended Year Ended
June 30, 1998 December 31, 1997
In shares:
Shares sold 149,200 93,946
Shares issued in reinvestment
of dividends 2,349 95,256
Total shares issued 151,549 189,202
Shares redeemed (69,619) (266,908)
Net increase (decrease) 81,930 (77,706)
In dollars:
Shares sold $4,175,273 $2,328,468
Shares issued in reivestment
of dividends 67,008 2,432,163
Total shares issued 4,242,281 4,760,631
Shares redeemed (1,962,753) (6,170,219)
Net increase (decrease) $2,279,528 $(1,409,588)
(logo)
THE
GROWTH FUND
OF WASHINGTON
Board of Directors
James H. Lemon, Jr.
Chairman
Chairman of the Board and
Chief Executive Officer,
The Johnston-Lemon Group, Incorporated
Harry J. Lister
President
President, Washington Management Corporation
Cyrus A. Ansary
President, Investment Services International Company
T. Eugene Smith
President,
T. Eugene Smith Inc.
Leonard P. Steuart, II
Vice President,
Steuart Investment Co.
Margita E. White
President, Association for Maximum Service Television Inc.
Officers
Stephen Hartwell
Executive Vice President
Chairman of the Board,
Washington Management Corporation
Howard L. Kitzmiller
Senior Vice President,
Secretary and Treasurer
Senior Vice President,
Secretary and Assistant Treasurer,
Washington Management Corporation
Prabha S. Carpenter
Senior Vice President
Vice President, Washington Investment Advisers, Inc.
Lois A. Erhard
Vice President
Vice President, Washington Management Corporation
Michael W. Stockton
Assistant Vice President, Assistant Secretary,
and Assistant Treasurer
Assistant Vice President,
Assistant Secretary and Assistant Treasurer,
Washington Management Corporation
J. Lanier Frank
Assistant Vice President
Assistant Vice President,
Washington Management Corporation
(Logo)
CHASE VISTA FUNDS
Chase Vista Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
1-800-34-VISTA
Office of the Fund and Business Manager
Washington Management Corporation
1101 Vermont Avenue, NW
Washington, DC 20005
(202) 842-5665
Investment Adviser
Washington Investment
Advisers, Inc.
Custodian
The Chase Manhattan
Bank
Transfer Agent
DST Systems, Inc.
Distributor
Vista Fund
Distributors, Inc.
Independent
Accountants
Johnson Lambert & Co.
Counsel
Dechert Price & Rhoads
This report is for the information of the shareholders of The Growth Fund
of Washington, Inc., but it may be used as sales literature when preceded
or accompanied by the current prospectus, which gives details about
charges, expenses, investment objectives and operating policies of the
Fund. If used as sales material after September 30, 1998, this report must
also be accompanied by the Fund's most recent calendar quarter statistical
update.
Vista Fund Distributors, Inc. is unaffiliated with The Chase Manhattan
Bank.
GFW-3-698
The Growth Fund of Washington, Inc.
1101 Vermont Avenue, NW
Washington, DC 20005
Bulk Rate
U.S. Postage
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