<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIRECTORS
Michael L. Lucas, PRESIDENT
Sidney Feldman
Ronald L. Krise
William M. Bauman
OFFICERS
Michael L. Lucas, PRESIDENT
INVESTMENT ADVISER
Wedgewood Equities, Inc.
1100 Peachtree Street, N.E.
Suite 1661
Atlanta, Georgia 30309
ADMINISTRATOR
PFPC Inc.
P.O. Box 7488
Wilmington, Delaware 19805-7488
DISTRIBUTOR
Pryor, McClendon, Counts & Co., Inc.
1100 Peachtree Street
Suite 1660
Atlanta, Georgia 30309
TRANSFER AGENT
PFPC Inc.
P.O. Box 8950
Wilmington, Delaware 19885-9628
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless
accompanied or preceded by a current effective prospectus of the Fund, which
contains information concerning the investment policies of the Fund as well as
other pertinent information.
THE ATLANTA
GROWTH FUND, INC.
ANNUAL REPORT
MAY 31, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Dear Shareholder:
I am pleased to send you the annual report of The Atlanta
Growth Fund for the Fund's fiscal year which ended May 31, 1996.
During this period, The Atlanta Growth Fund produced a total
return of 24.56 percent versus the Standard and Poor's 500 Index
at 25.4 percent.
The equity markets performed well during fiscal year 1996 due
to lower expectations for inflation and a moderate economy.
Equities greatly benefited from technological improvements which
enhanced worker productivity and fueled merger activity. The
favorable economic cycle and low interest rates allowed
corporations to also improve balance sheets. Corporations
continued to shed jobs, thereby staving off concerns about wage
inflation.
Technology and telecommunications issues exploded in 1995 and
led the market's performance for much of the calendar year. The
technology sector corrected somewhat during the latter portion of
1995 and the first half of fiscal year 1996. Computer processing
companies, First Financial Management, National Data Corporation,
and Total System Services, Inc., benefited from the rally in the
technology sector. These firms continued to grow their respective
businesses through innovative new products and services, and
non-dilutive acquisitions. Healthcare software producer, HBO &
Company, continues to set the standard for this sector. HBO &
Company has strong cash flow, low debt, and a strong stock price
which allows the firm to make key strategic acquisitions. Turner
Broadcasting Systems, BellSouth Communications, and American
Telephone & Telegraph Company have benefited from proposed
acquisitions, strategic alliances and investments, and
divestitures.
The financial sector performed well during fiscal year 1996,
continuing the outlook from the fiscal year-end 1995 report.
Regional banking companies, including SunTrust Banks, Inc., First
Union Corporation, Savannah Bank Corporation, Synovus Financial
Corporation, and Bank South (purchased by NationsBank), performed
well during the year as interest rates declined and business
prospects improved. Regional banks should continue to perform well
due to clean balance sheets, a greater emphasis on fee generation,
and merger activity.
A mega-trend is developing as America continues to age.
Healthcare will become a larger component of the nation's gross
domestic product as Americans need more medicine, hospital care,
home care, and retirement care. Therefore, the Fund will
opportunistically acquire a more substantial stake in the
healthcare sector.
Management of The Atlanta Growth Fund has continued to adhere
to the strategy of investing for the long-term in high-quality
small-, medium-, and large-size companies with proprietary
products, services, niche positions, and superior management. The
companies are dynamic and occupy leadership or valued positions in
their respective industries. Management has invested its dollars
along with yours in a diverse mix of companies which appear to
have tremendous long-term prospects in the domestic and
international marketplaces.
I am appreciative of your interest in The Atlanta Growth Fund.
I will work hard to reward the trust you have placed in me. If you
should have comments about this report or questions regarding the
portfolio, please let The Atlanta Growth Fund hear from you.
Sincerely,
[sig cut]
Michael L. Lucas
President
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN THE ATLANTA GROWTH FUND, INC.
AND THE S&P 500 STOCK INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
QUARTER ATLANTA GROWTH S&P 500 STOCK INDEX
<S> <C> <C>
06/22/92 $ 9,625 $ 10,000
08/31/92 9,990 10,264
11/30/92 10,790 10,693
02/28/93 11,211 10,991
05/31/93 11,161 11,160
08/31/93 11,583 11,491
11/30/93 11,482 11,447
02/28/94 11,997 11,580
05/31/94 11,411 11,315
08/31/94 11,809 11,785
11/30/94 11,140 11,244
02/28/95 11,767 12,079
05/31/95 12,222 13,219
08/31/95 13,337 13,971
11/30/95 13,486 15,040
02/29/96 13,948 15,968
05/31/96 15,223 16,579
ATLANTA GROWTH
1-YEAR RETURN 24.56%
FROM INCEPTION 11.24%
</TABLE>
2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To The Shareholders and
Board of Directors of
The Atlanta Growth Fund, Inc.:
We have audited the accompanying statement of net assets of The Atlanta Growth
Fund, Inc., as of May 31, 1996, the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years in
the period then ended and the financial highlights for each of the respective
periods presented. These financial statements and financial highlights are the
responsiblity 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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 May
31, 1996 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Atlanta Growth Fund, Inc. as of May 31, 1996, 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 its financial highlights for each of the respective
periods presented in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
July 9, 1996
3
<PAGE>
THE ATLANTA GROWTH FUND, INC.
STATEMENT OF NET ASSETS
MAY 31, 1996
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCK -- 99.5%
ACCIDENT & HEALTH INSURANCE -- 1.1%
AFLAC, Inc. ........................................................ 1,500 $ 45,187
-----------
AIR TRANSPORTATION, SCHEDULED -- 4.5%
Atlantic Southeast Airlines, Inc.................................... 2,000 53,000
Delta Air Lines, Inc................................................ 1,500 124,312
-----------
177,312
-----------
BAKERY PRODUCTS -- 0.9%
Flowers Industries, Inc............................................. 2,250 35,437
-----------
BOTTLED & CANNED SOFT DRINKS -- 7.9%
Coca-Cola Enterprises, Inc.......................................... 3,200 101,600
The Coca-Cola Co. .................................................. 4,600 211,600
-----------
313,200
-----------
CABLE & OTHER PAY TELEVISION SERVICES -- 0.8%
Cox Communications, Inc. Class A*................................... 1,500 33,750
-----------
CARPETS AND RUGS -- 1.2%
Mohawk Industries, Inc.*............................................ 2,000 33,500
Shaw Industries, Inc................................................ 1,000 13,000
-----------
46,500
-----------
COMMERCIAL BANKS -- 8.8%
First Union Corp.................................................... 984 60,147
NationsBank Corporation............................................. 1,760 142,780
SunTrust Banks, Inc................................................. 4,000 146,000
-----------
348,927
-----------
COMMERCIAL PRINTING -- 2.0%
John H. Harland Co. ................................................ 3,000 81,375
-----------
ELECTRIC SERVICES -- 2.3%
The Southern Co..................................................... 4,000 92,500
-----------
ELECTRICAL LIGHTING & WIRING EQUIPMENT -- 1.4%
National Services Industries, Inc. ................................. 1,400 54,425
-----------
ELECTROMEDICAL APPARATUS -- 3.7%
Healthdyne Information Enterprises*................................. 2,200 16,225
Healthdyne Technologies, Inc.*...................................... 1,431 18,961
Medaphis Corp.*..................................................... 3,000 113,250
-----------
148,436
-----------
</TABLE>
4
<PAGE>
THE ATLANTA GROWTH FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
MAY 31, 1996
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- -----------
<S> <C> <C>
ELECTRONIC COMPONENTS -- 0.7%
Electromagnetic Sciences, Inc.*..................................... 2,000 $ 29,000
-----------
FARM MACHINERY & EQUIPMENT -- 2.3%
AGCO Corp........................................................... 3,000 90,375
-----------
IN VITRO DIAGNOSTIC SUBSTANCES -- 0.3%
International Murex Technologies Corp.*............................. 3,500 13,781
-----------
INDUSTRIAL INORGANIC CHEMICALS -- 1.8%
Georgia Gulf Corp. ................................................. 2,100 71,925
-----------
INSURANCE AGENTS, BROKERS & SERVICES -- 2.3%
Crawford & Co. Class B.............................................. 3,200 52,800
Fuqua Enterprises, Inc.*............................................ 1,400 39,900
-----------
92,700
-----------
KNIT OUTERWEAR MILLS -- 1.4%
Oxford Industries, Inc. ............................................ 3,000 54,750
-----------
LAND SUBDIVIDERS & DEVELOPERS -- 1.6%
IRT Property Co..................................................... 6,800 63,750
-----------
MANIFOLD BUSINESS FORMS -- 0.7%
American Business Products, Inc. Ga. ............................... 1,400 30,275
-----------
NATURAL GAS DISTRIBUTION -- 1.3%
AGL Resources, Inc.................................................. 3,000 52,875
-----------
OIL & GAS FIELD EQUIPMENT -- 1.2%
RPC, Inc.*.......................................................... 3,700 46,250
-----------
PAPER MILLS -- 3.6%
Georgia-Pacific Corp................................................ 2,000 144,500
-----------
PAPERBOARD CONTAINERS & BOXES -- 2.0%
Caraustar Industries, Inc. ......................................... 3,100 80,600
-----------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.8%
Metromedia International Group, Inc.*............................... 2,200 30,800
-----------
PRIMARY PRODUCTION OF ALUMINUM -- 2.2%
Alumax, Inc.*....................................................... 2,600 86,450
-----------
RADIO & TV BROADCASTING EQUIPMENT -- 1.2%
Scientific-Atlanta, Inc............................................. 2,600 49,075
-----------
</TABLE>
5
<PAGE>
THE ATLANTA GROWTH FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
MAY 31, 1996
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- -----------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUST -- 2.7%
Cousins Properties, Inc. ........................................... 3,500 $ 68,250
Post Properties, Inc................................................ 1,200 40,200
-----------
108,450
-----------
RETAIL -- LUMBER & BUILDING MATERIALS -- 3.3%
The Home Depot, Inc................................................. 2,600 132,925
-----------
SERVICES -- COMMERCIAL SERVICES -- 2.1%
Norrell Corp........................................................ 2,000 82,750
-----------
SERVICES -- COMPUTER PROCESSING -- 12.1%
First Data Corp..................................................... 2,254 179,757
National Data Corp.................................................. 2,750 103,813
Total System Services, Inc. ........................................ 7,800 196,950
-----------
480,520
-----------
SERVICES -- CONSUMER CREDIT REPORTING -- 1.9%
Equifax, Inc........................................................ 3,000 74,250
-----------
SERVICES -- DWELLINGS & OTHER BUILDINGS -- 1.2%
Rollins, Inc........................................................ 2,050 46,637
-----------
SERVICES -- EQUIPMENT RENTAL & LEASING -- 2.6%
Aaron Rents, Inc. Non-Voting........................................ 3,610 102,885
-----------
SERVICES -- HOME HEALTH CARE -- 0.5%
Matria Healthcare, Inc.*............................................ 2,200 18,425
-----------
SERVICES -- NURSING FACILITIES -- 1.0%
Health Images, Inc. ................................................ 4,000 38,500
-----------
SERVICES -- PREPACKAGED SOFTWARE -- 4.7%
HBO & Co............................................................ 1,500 187,313
-----------
STATE COMMERCIAL BANKS -- 2.1%
Savannah Bank Corp.................................................. 2,200 41,800
Synovus Financial Corp. ............................................ 1,875 43,125
-----------
84,925
-----------
TELEPHONE & TELEGRAPH APPARATUS -- 0.8%
American Telephone & Telegraph Co................................... 500 31,188
-----------
TELEPHONE COMMUNICATIONS -- 2.0%
BellSouth Corp...................................................... 2,000 81,250
-----------
TELEVISION BROADCASTING SYSTEMS -- 2.2%
Turner Broadcasting System, Inc. Class B............................ 3,200 87,200
-----------
</TABLE>
6
<PAGE>
THE ATLANTA GROWTH FUND, INC.
STATEMENT OF NET ASSETS -- (CONCLUDED)
MAY 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- -----------
<S> <C> <C>
WHOLESALE -- MOTOR VEHICLE SUPPLIES -- 2.3%
Genuine Parts Co. .................................................. 2,000 $ 91,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL COMMON STOCK INVESTMENTS (Cost $2,230,947+)..................... 99.5% 3,962,373
OTHER ASSETS IN EXCESS OF LIABILITIES................................. 0.5% 21,180
----- -----------
NET ASSETS (Equivalent to $12.53 per share based on 317,956 shares
outstanding)........................................................ 100.0% $ 3,983,553
----- -----------
----- -----------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE..................................... $ 12.53
-----------
-----------
MAXIMUM OFFERING PRICE PER SHARE ($12.53 DIVIDED BY .9625)........................ $ 13.02
-----------
-----------
</TABLE>
- ------------
* Non-income producing.
+ Aggregate cost for Federal income tax purposes. The aggregate gross unrealized
appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost.................................... $ 1,783,046
Excess of tax cost over value.................................... (51,620)
-----------
$ 1,731,426
-----------
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
7
<PAGE>
THE ATLANTA GROWTH FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
MAY 31, 1996
------------
<S> <C>
INVESTMENT INCOME:
Dividends....................................................................................... $ 76,029
Interest........................................................................................ 2,630
------------
Total Income.............................................................................. 78,659
------------
EXPENSES:
Investment advisory fee......................................................................... 23,448
Administration fee.............................................................................. 99,600
Distribution expenses........................................................................... 10,861
Directors fees.................................................................................. 24,000
Custodian fees.................................................................................. 19,306
Transfer agent fee.............................................................................. 46,950
Legal fees...................................................................................... 62,900
Audit fees...................................................................................... 19,610
Registration fees............................................................................... 18,356
Amortization of organizational costs............................................................ 39,528
Printing........................................................................................ 18,350
Insurance....................................................................................... 20,016
Miscellaneous................................................................................... 7,570
------------
Total Expenses............................................................................ 410,495
Less fees waived................................................................................ (47,448)
------------
Net Expenses.............................................................................. 363,047
------------
NET INVESTMENT LOSS............................................................................... (284,388)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions.................................................... 730,337
Net unrealized appreciation of investments...................................................... 500,291
------------
Net gain on investments......................................................................... 1,230,628
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................................. $ 946,240
------------
------------
</TABLE>
See Accompanying Notes to Financial Statements.
8
<PAGE>
THE ATLANTA GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MAY 31, 1996 MAY 31, 1995
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss............................................................. $ (284,388) $ (256,492)
Net realized gain from security transactions.................................... 730,337 224,743
Net unrealized appreciation of investments...................................... 500,291 377,011
------------- -------------
Increase in net assets resulting from operations............................ 946,240 345,262
------------- -------------
Distributions to Shareholders:
Net realized gain on investments................................................ (467,804) (187,475)
------------- -------------
Total distributions......................................................... (467,804) (187,475)
------------- -------------
Capital Share Transactions:
Proceeds from sale of shares.................................................... 265,445 196,787
Value of shares issued in reinvestment.......................................... 253,325 99,944
Cost of shares repurchased...................................................... (1,964,189) (2,086,031)
------------- -------------
Decrease in net assets from capital share transactions.......................... (1,445,419) (1,789,300)
------------- -------------
Total decrease in net assets................................................ (966,983) (1,631,513)
------------- -------------
NET ASSETS:
Beginning of period............................................................... 4,950,536 6,582,049
------------- -------------
End of period..................................................................... $ 3,983,553 $ 4,950,536
------------- -------------
------------- -------------
</TABLE>
See Accompanying Notes to Financial Statements.
9
<PAGE>
THE ATLANTA GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED JUNE 22, 1992(1) TO
MAY 31, 1996 MAY 31, 1995 MAY 31, 1994 MAY 31, 1993
------------ ------------ ------------ -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 11.29 $10.92 $11.12 $10.00
------------ ------ ------ ------
Income from investment operations:
Net investment loss (5)............... (.77) (.50) (.33) (.04)
Net realized and unrealized gain on
investments......................... 3.34 1.24 .59 1.20
------------ ------ ------ ------
Total from investment operations........ 2.57 .74 .26 1.16
------------ ------ ------ ------
Less distributions:
Dividends to shareholders from net
investment income................... -- -- -- (.02)
Dividends to shareholders from net
capital gains....................... (1.33) (.37) (.46) (.02)
------------ ------ ------ ------
Total distributions..................... (1.33) (.37) (.46) (.04)
------------ ------ ------ ------
Net asset value, end of period.......... $ 12.53 $11.29 $10.92 $11.12
------------ ------ ------ ------
------------ ------ ------ ------
Total return:........................... 24.56% 7.10% 2.24% 12.40%(2)
Ratios/Supplemental Data:
Net assets, end of period $ (000)....... $ 3,984 $4,951 $6,582 $9,122
Ratio of expenses to average daily net
assets (3)............................ 8.36% 6.49% 4.82% 2.53%(2)
Ratio of net investment loss to average
daily net assets...................... (6.55%) (4.56%) (2.89%) (.36%)(2)
Portfolio turnover rate................. 3.34% .11% 11.56% 8.70%(2)
Average commission rate (4)............. $0.0635 N/A N/A N/A
</TABLE>
- ------------
(1) Commencement of operations.
(2) Annualized.
(3) Without the voluntary fee waivers, the ratio of expenses to average daily
net assets would have been 9.45%, 7.65% and 5.85%, respectively, for each of
the years ended May 31, 1996, 1995 and 1994, and 4.85% (annualized) for the
period ended May 31, 1993.
(4) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
(5) Average shares method used.
See Accompanying Notes to Financial Statements.
10
<PAGE>
THE ATLANTA GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The Atlanta Growth Fund, Inc. ("the Fund") is a non-diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended, and seeks as its objective long-term growth of capital through
investments in certain publicly traded companies concentrated in the
metropolitan area of Atlanta, Georgia. The Fund commenced operations on June 22,
1992.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statement and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
A. SECURITY VALUATION -- Securities listed on a national securities
exchange are valued at last sale price. Over-the-counter securities and listed
securities for which a sales price is not available are valued at the last
quoted bid price. When market quotations are not readily available, securities
are valued based on prices received from recognized broker-dealers in the same
or similar securities. Debt securities with a maturity of less than 60 days are
valued at amortized cost, which approximates market value.
B. SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
Federal income tax purposes. Dividends are recorded on the ex-dividend date.
Interest income is recorded on the accrual basis.
C. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The policy of the Fund is
to pay dividends from net investment income, if any, and make distributions of
net realized capital gains, if any, at least annually. Income distributions and
capital gain distributions are determined in accordance with U.S. Federal Income
tax regulations which may differ from generally accepted accounting principles.
D. FEDERAL INCOME TAXES -- No provision is made for Federal taxes since the
Fund intends to continue to qualify as a regulated investment company and to
make the requisite distributions to its shareholders, which will be sufficent to
relieve it from Federal income and excise taxes.
E. ORGANIZATION COSTS -- Costs incurred by the Fund in connection with its
organization, registration and initial public offering of shares have been
deferred and are being amortized using the straight-line method for a five-year
period beginning with commencement of operations.
F. REPURCHASE AGREEMENTS -- The Fund may purchase money market instruments,
subject to the seller's agreement to repurchase them at an agreed upon date and
price. The seller will be required on a daily basis to maintain the value of the
securities subject to the agreement at not less than the repurchase price. The
agreements are conditioned upon collateral being deposited under the Federal
Revenue book-entry system or with the Fund's custodian or a third party
sub-custodian.
11
<PAGE>
THE ATLANTA GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONCLUDED)
NOTE 2. INVESTMENT ADVISORY, DISTRIBUTOR AND OTHER RELATED PARTY TRANSACTIONS
The Fund has entered into investment advisory agreements with Wedgewood
Equities, Inc. ("Wedgewood") and Astrop Advisory Corporation ("Astrop
Advisory"). Effective April 16, 1996, Astrop Advisory voluntarily resigned as
investment adviser to the Fund. For the advisory services provided, Wedgewood
and Astrop Advisory, in the aggregate, were entitled to receive from the Fund a
fee, computed daily and payable monthly, at an annual rate of 0.54% of the
average daily net assets of the Fund. The advisers may, at their discretion,
voluntarily waive all or any portion of their advisory fees. For the year ended
May 31, 1996, the advisers waived their fee in total, which amounted to $23,448.
The Fund has adopted a plan of distribution with Pryor, McClendon, Counts &
Co., Inc., an affiliate of Wedgewood, whereby the Fund may reimburse the
distributor in an amount up to 0.25% per annum of the Fund's average daily net
assets.
For the year ended May 31, 1996, the Fund's directors waived fees totalling
$24,000.
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the year ended May 31, 1996, purchases and sales of securities, other
than short-term investments, were $142,065 and $2,194,136, respectively.
NOTE 4. CAPITAL SHARES
On May 31, 1996 there were 500 million shares of common stock authorized at
no par value per share.
Transactions in capital shares of the Fund were are follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MAY 31, 1996 MAY 31, 1995
------------ ------------
<S> <C> <C>
Shares sold................................................. 23,477 18,437
Shares redeemed............................................. (167,211) (192,470)
Shares reinvested........................................... 23,348 9,601
------------ ------------
Net decrease in shares...................................... (120,386) (164,432)
Shares outstanding:
Beginning of the period................................... 438,342 602,774
------------ ------------
End of period............................................. 317,956 438,342
------------ ------------
------------ ------------
</TABLE>
NOTE 5. NET ASSETS
At May 31, 1996, net assets consisted of the following:
<TABLE>
<S> <C>
Paid-in capital............................................. $ 1,824,381
Accumulated net realized gain............................... 427,746
Net unrealized appreciation of investments.................. 1,731,426
------------
Total Net Assets.......................................... $ 3,983,553
------------
------------
</TABLE>
12
