<PAGE> 1
AMERICAN HERITAGE GROWTH FUND, INC.
[LOGO]
1370 Avenue of the
Americas
New York, N.Y. 10019
Tel: (212)
397-3900
Fax: (212)
397-4036
March 2000
To Our Valued Shareholders:
American Heritage Growth Fund had its best annual performance in calendar year
1999 since its inception almost six years ago.
Our strategy continues to focus on the five most promising growth sectors:
technology, telecommunication, pharmaceuticals including biotechnology
companies, financial institutions and consumer products.
As the retail investor has become a more dominant factor in the stock market,
volatility has significantly increased. Therefore, flexibility becomes a key
factor. As a result, a high turnover from time to time should not come as a
surprise. Nevertheless, we will focus on long-term growth but also seek to
capitalize on short-term market movements in order to enhance performance. We
anticipate that our investments will generally consist of well-known
corporations including Blue Chips as well as smaller and lesser-known companies.
I appreciate your confidence and hope our relationship will be rewarding.
With kind regards,
/s/ HEIKO TIEME
Heiko H. Thieme
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AMERICAN HERITAGE GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 2000
- ---------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value
(cost $863,447).................. $ 618,041
Cash............................... 13,175
Dividends and interest
receivable....................... 197
Prepaid expenses................... 11,805
Due from investment advisor........ 50,161
-----------
TOTAL ASSETS..................... 693,379
-----------
LIABILITIES
Payable for capital stock
redeemed......................... 253
Accrued expenses and other
liabilities...................... 29,301
-----------
TOTAL LIABILITIES................ 29,554
-----------
NET ASSETS
Net Assets (equivalent to $.16 per
share based on 4,080,183 shares
of capital stock outstanding).... $ 663,825
===========
Composition of net assets:
Shares of common stock............. $ 4,080
Paid in capital.................... 3,416,142
Accumulated net investment loss.... (52,444)
Accumulated net realized loss on
investments...................... (2,458,547)
Net unrealized depreciation on
investments...................... (245,406)
-----------
NET ASSETS, January 31, 2000....... $ 663,825
===========
</TABLE>
<TABLE>
<CAPTION>
Number of Market
Shares Value
- ------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 88.43%
AEROSPACE - 5.25%
Orbital Sciences*............... 2,000 $ 34,875
--------
</TABLE>
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AMERICAN HERITAGE GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
JANUARY 31, 2000
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Number of Market
Shares Value
- ------------------------------------------------------
<S> <C> <C>
BANKS AND FINANCE - 18.39%
Bank One Corp.*................. 1,000 $ 29,813
Credit Depot Corp.*............. 8,000 160
Dime Bancorp Inc.*.............. 1,000 14,125
Donaldson Lufkin & Jenrette
Inc. ......................... 500 23,906
First Union Corp.*.............. 1,000 33,562
Sothebys Holdings Inc.*......... 1,000 20,500
--------
122,066
--------
BIOTECHNOLOGY - 6.66%
Senetek PLC Sponsored ADR*(+)... 24,400 44,225
--------
COMPUTERS AND PERIPHERALS - 13.33%
Compaq Computer Corp. .......... 1,000 27,375
Iomega Corp.*................... 4,000 16,250
Peoplesoft Inc.*................ 2,000 44,875
--------
88,500
--------
CONSUMER PRODUCTS - 9.45%
Philip Morris Cos Inc. ......... 2,000 41,875
Xerox Corporation*.............. 1,000 20,875
--------
62,750
--------
DIVERSIFIED MANUFACTURING OPERATIONS - 6.44%
Tyco International Ltd. ........ 1,000 42,750
--------
GOLD MINING - 2.47%
Barrick Gold Corp.*............. 1,000 16,375
--------
HEALTHCARE - 2.74%
FPA Medical Management Inc.*.... 5,000 0
Pfizer Inc. .................... 500 18,188
--------
18,188
--------
INSURANCE - 3.49%
Allstate Corp.*................. 1,000 23,187
--------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
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AMERICAN HERITAGE GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
JANUARY 31, 2000
(Continued)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Number of Market
Shares Value
- ------------------------------------------------------
<S> <C> <C>
MEDICAL TECHNOLOGY - 8.70%
Miravant Medical
Technologies*................. 2,000 $ 35,750
Schering Plough Corp.*.......... 500 22,000
--------
57,750
--------
NON HAZARDOUS WASTE MANAGEMENT - 2.64%
Waste Management Inc.*.......... 1,000 17,500
--------
OIL, GAS & MINERALS - 2.64%
Parker Drilling Co.*............ 5,000 17,500
--------
RETAIL - 4.66%
Sears Roebuck & Co. ............ 1,000 30,937
--------
TOYS - 1.57%
Mattel Inc.*.................... 1,000 10,438
--------
TOTAL COMMON STOCKS............. 587,041
--------
SHORT TERM INVESTMENTS - 4.67%
Firstar Treasury Fund........... 31,000 31,000
--------
TOTAL INVESTMENTS - 93.10% $618,041
========
</TABLE>
<TABLE>
<C> <S>
* Non-income producing
(+) Foreign security
</TABLE>
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AMERICAN HERITAGE GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 2000
- ---------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends............................ $ 3,521
Interest............................. 5,897
Other................................ 2,176
--------
TOTAL INVESTMENT INCOME.............. 11,594
--------
EXPENSES:
Investment advisory fees............. 8,828
Transfer agent fees.................. 8,897
Legal fees........................... 11,858
Audit fees........................... 17,706
Custodian fees....................... 5,061
Fund accounting fees................. 11,133
Postage and printing................. 21,693
Registration fees and expenses....... 3,143
Miscellaneous........................ 4,552
--------
TOTAL EXPENSES....................... 92,871
--------
Less: expense reimbursement from
investment advisor................. (58,989)
--------
Net expenses......................... 33,882
--------
Net investment loss.................. (22,288)
--------
Net realized gain from investment
transactions....................... 102,518
Net change in unrealized appreciation
of investments..................... 49,569
--------
Net realized and unrealized gain on
investments........................ 152,087
--------
Net increase in net assets resulting
from operations.................... $129,799
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
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AMERICAN HERITAGE GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31,
2000 1999
----------- -----------
<S> <C> <C>
Net investment loss............ $ (22,288) $ (9,189)
Net realized gain from
investment transactions...... 102,518 168,870
Net change in unrealized
appreciation (depreciation)
of investments............... 49,569 (230,694)
--------- ----------
Net increase (decrease) in net
assets resulting from
operations................... 129,799 (71,013)
Distributions to shareholders:
Net investment income........ 0 0
Net realized gain on
investments................ 0 0
Capital share transactions... (336,854) (220,401)
--------- ----------
Net decrease in net assets... (207,055) (291,414)
NET ASSETS:
Beginning of year.............. 870,880 1,162,294
--------- ----------
End of year.................... $ 663,825 $ 870,880
========= ==========
</TABLE>
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AMERICAN HERITAGE GROWTH FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2000
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NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
American Heritage Growth Fund, Inc. (the "Fund") was incorporated on February
14, 1994 and commenced operations on May 25, 1994. The Fund is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
investment company having an investment objective of seeking growth of capital.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
Significant accounting policies of the Fund are as follows:
SECURITY VALUATIONS
The Fund values investment securities, where reliable market quotations are
available, at market value based on the last recorded sales price as reported on
the principal securities exchange on which the security is traded, or if the
security is not traded on an exchange, market value is based on the latest bid
price. Portfolio securities for which reliable market quotations are not readily
available are valued as the Board of Directors in good faith determines.
FEDERAL INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code that are applicable to regulated investment companies and to distribute all
its taxable income to its shareholders. Therefore, no federal income tax
provision is required.
DISTRIBUTIONS TO SHAREHOLDERS
The Fund intends to distribute to shareholders substantially all of its net
investment income, if any, and any net realized capital gains, after provision
for carryover losses, if any, during each fiscal year. Any undis-
The accompanying notes are an integral part of these financial statements.
4
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AMERICAN HERITAGE GROWTH FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2000
(Continued)
- ---------------------------------------------------------
tributed amounts for any fiscal year will be paid out of the subsequent year's
distributions.
OPTION WRITING
When the Fund writes an option, an amount equal to the premium received by the
Fund is recorded as a liability and is subsequently adjusted to the current
market value of the option written. Premiums received from writing options which
expire unexercised are treated by the Fund on the expiration date as realized
gains from the sale of securities. The difference between the premium and the
amount paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium is less than
the amount paid for the closing purchase transaction, as a realized loss.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements as a money market alternative with
respect to its otherwise uninvested cash. There is no limitation of the amount
of repurchase agreements which may be entered into by the Fund. In connection
with a repurchase agreement, the Fund will acquire a security and simultaneously
agree to resell at a higher price. A repurchase agreement, therefore, involves a
loan by the Fund, which loan is collateralized by the value of the underlying
security. Delays or losses could result if the other party to the repurchase
agreement defaults or becomes insolvent. All repurchase agreements entered into
by the Fund will be fully collateralized by securities issued by the United
States Government.
ESTIMATES
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting
- ---------------------------------------------------------
AMERICAN HERITAGE GROWTH FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2000
(Continued)
- ---------------------------------------------------------
period. Actual results could differ from those estimates.
OTHER
The Fund follows industry practice and records security transactions on the
trade date. The specific identification method is used in determining gains and
losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis.
NOTE 2. INVESTMENT ADVISORY AGREEMENT
AND OTHER RELATED TRANSACTIONS
The Fund has an investment advisory agreement with American Heritage Management
Corporation (AHMC), whereby AHMC receives a fee of 1.25% of the Fund's average
net asset value, computed daily, and payable monthly. Effective November 5, 1999
AHMC terminated the agreement to reimburse the Fund to the extent that the
Fund's expenses exceed 2.50% of average net assets after giving effect to the
payment of the advisory fee. AHMC continues to waive any investment advisory
fees from the Fund to the extent that operating expenses exceed 2.50% after
giving effect to the payment of the fee.
During the current period the Fund received $75,610 for the prior year's accrual
for reimbursement from AHMC. At January 31, 2000 the Fund had a receivable of
$58,989 due from AHMC. Additionally, the Fund owed AHMC $8,828 for the current
period's management fee, for a net receivable of $50,161.
Heiko H. Thieme is the Fund's Chairman of the Board of Directors and Chief
Executive Officer. Heiko H. Thieme is the Chairman of the Board of Directors,
Chief Executive Officer, and Secretary of AHMC, of which he owns all of the
outstanding shares.
During the year ended January 31, 2000, the Fund paid brokerage commissions of
$12,435 to Thieme Securities, Inc. of which Mr. Thieme is the owner. Thieme
5
<PAGE> 6
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AMERICAN HERITAGE GROWTH FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2000
(Continued)
- ---------------------------------------------------------
Securities, Inc. received 87.75% of all commissions paid by the Fund on security
transactions where a commission was charged. The average commission per share
paid to Thieme Securities, Inc. was $.089.
NOTE 3. INVESTMENTS
For the year ended January 31, 2000, purchases and sales of investment
securities other than short-term investments aggregated $1,982,846 and
$1,963,161, respectively. The gross unrealized appreciation for all securities
totaled $34,138 and the gross unrealized depreciation for all securities totaled
$279,544 for a net unrealized depreciation of $245,406. The aggregate cost of
securities for federal income tax purposes at January 31, 2000 was $863,447.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of January 31, 2000 there were 250,000,000 shares of $0.001 par value capital
stock authorized and total par value and paid in capital aggregated $3,420,222.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JANUARY 31, 2000 JANUARY 31, 1999
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Shares sold.......... 169,134 $ 23,659 1,935,149 $ 271,669
Shares issued in
reinvestment of
dividends........... 0 0 0 0
Shares redeemed...... (2,560,855) (360,513) (3,550,208) (492,070)
---------- --------- ---------- ---------
Net decrease......... (2,391,721) $(336,854) (1,615,059) $(220,401)
========== ========= ========== =========
</TABLE>
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AMERICAN HERITAGE GROWTH FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2000
(Continued)
- ---------------------------------------------------------
NOTE 5. DISTRIBUTIONS
As of January 31, 2000, the Fund had available for federal income tax purposes
an unused capital loss carryover of approximately $2,459,000 which will expire
between 2003 and 2006. If not utilized by then, the loss will be charged against
paid in capital.
When the Fund deducts a distribution from its net asset value (NAV), automatic
reinvestments are made at the Fund's NAV at the close of business that day. Cash
distributions will be mailed within seven days of the distribution.
6
<PAGE> 7
AMERICAN HERITAGE GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS AND RELATED
RATIOS/SUPPLEMENTAL DATA
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 0.13 $ 0.14 $ 0.16 $ 1.66 $ 3.57
-------- -------- ---------- ---------- ----------
Income from investment operations:
Net investment income................. 0.00 0.00 0.00 0.24 1.51
Net realized and unrealized gain (loss)
on investments........................ 0.03 (0.01) (0.01) (0.32) (0.69)
-------- -------- ---------- ---------- ----------
Total from investment operations........ 0.03 (0.01) (0.01) (0.08) 0.82
-------- -------- ---------- ---------- ----------
Less distributions:
Dividends from net investment
income............................. 0.00 0.00 (0.01) (1.42) (2.73)
Distributions from realized gains from
security transactions.............. 0.00 0.00 0.00 0.00 0.00
-------- -------- ---------- ---------- ----------
Total distributions................... 0.00 0.00 (0.01) (1.42) (2.73)
-------- -------- ---------- ---------- ----------
Net asset value, end of period.......... $ 0.16 $ 0.13 $ 0.14 $ 0.16 $ 1.66
======== ======== ========== ========== ==========
Total return............................ 23.08% (7.14)% (9.00)% (4.66)% 29.48%
Net assets end of period................ $663,825 $870,880 $1,162,294 $2,240,860 $4,932,970
Ratio of expenses to average net
assets................................ 4.83% 2.50% 2.67% 2.81% 2.62%
Ratio of net investment income (loss) to
average net assets.................... (3.18)% (.94)% (1.25)% 25.97% 44.46%
Portfolio turnover rate................. 418.34% 274.25% 172.20% 1,378.14% 4,262.64%
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
[MATHIESON AITKEN JEMISON LOGO]
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
American Heritage Growth Fund, Inc.
New York, NY
We have audited the accompanying statement of assets and liabilities of American
Heritage Growth Fund, Inc., including the schedule of investments in securities
as of January 31, 2000, and the related statement of operations for the year
then ended, the statement of changes in net assets and the financial highlights
and related ratios/ supplemental data for each of the periods indicated. These
financial statements and financial highlights and related ratios/supplemental
data are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
and related ratios/supplemental data based on our audit.
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 and related ratios/supplemental data 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 January 31, 2000, by correspondence with
the custodian and the application of alternative auditing procedures for
unsettled security transactions. 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 the financial highlights and
related ratios/supplemental data referred to above present fairly, in all
material respects, the financial position of The American Heritage Growth Fund,
Inc. as of January 31, 2000, the results of its operations for the year then
ended, the changes in its net assets and the financial highlights and related
ratios/supplemental data for each of the periods indicated, in conformity with
generally accepted accounting principles.
/s/ Mathieson Aitken Jemison, LLP
March 29, 2000
[INPACT LOGO]
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AMERICAN HERITAGE GROWTH FUND,
INC. 1370 Avenue of the Americas
ADDRESS CORRECTION REQUESTED New York, NY 10019
FIRST CLASS MAIL
U.S. POSTAGE
PAID
JERSEY CITY, NJ
PERMIT NO. 412
<TABLE>
<S> <C>
AMERICAN
HERITAGE
[Logo] GROWTH
FUND, INC.
- -------------------------------------
ANNUAL
REPORT
January 31, 2000
</TABLE>
This report and the financial statements contained herein are submitted for the
general information of shareholders and are not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
Nothing herein contained is to be considered an offer of sale or solicitation of
an offer to buy shares of American Heritage Growth Fund, Inc. Such offering is
made only by prospectus, which includes details as to offering price and other
material information.
