<PAGE> 1
[AMERICAN HERITAGE GROWTH FUND, INC. LETTERHEAD]
September 2000
To our Valued Shareholders:
The new millennium started with a bang, which lasted throughout most of the
first quarter. The subsequent sell off, however, was equally sobering.
Volatility and high volume became a trademark for most of the first nine months
of this year.
Our portfolio selection continues to focus specifically on five growth sectors:
technology (including Internet), telecommunication, pharmaceutical (including
biotech), as well as financial and consumer stocks. After the weakness in
September, we expect a strong finish towards the year-end for the market as a
whole.
Due to the small asset base of American Heritage Growth Fund, our expense ratio
failed to decline despite our efforts to reduce our costs. Management will focus
specifically on attracting new funds in order to spread the cost in a more
acceptable manner so that the expense ratio can not only be contained, but be
reduced from present levels. While there are no immediate solutions to guarantee
a lower expense ratio, we will review this issue again in our annual report to
shareholders early next year.
We presently maintain a significant cash position which reflects our immediate
outlook for the market. Because of our small asset base, we will be able to
employ those moneys easily when we feel the time is right. Our selection process
includes, apart from blue chips, smaller and lesser-known companies, which by
their nature show a higher volatility.
I appreciate your confidence and hope that your patience will be rewarded.
With kind regards
/s/ Heiko H. Thieme
<PAGE> 2
AMERICAN HERITAGE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
July 31, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (Cost $722,018) (Note 1) $ 447,839
Cash ....................................................... 44,430
Receivable for securities sold ............................. 23,562
Dividends and interest receivable ......................... 141
Prepaid expenses ........................................... 14,895
Due from investment advisor (Note 2) ....................... 50,161
-----------
TOTAL ASSETS .......................................... 581,028
-----------
LIABILITIES
Accrued expenses and other liabilities ..................... 14,347
-----------
TOTAL LIABILITIES ..................................... 14,347
-----------
NET ASSETS
Net Assets (equivalent to $.15 per share based on 3,716,262
shares of capital stock outstanding) (Note 4) ......... $ 566,681
===========
Composition of net assets:
Shares of common stock ..................................... $ 3,716
Paid in capital ............................................ 3,358,669
Accumulated net investment loss ............................ (84,254)
Accumulated net realized loss on investments ............... (2,437,271)
Net unrealized depreciation on investments ................. (274,179)
-----------
NET ASSETS, July 31, 2000 .................................. $ 566,681
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
AMERICAN HERITAGE GROWTH FUND
STATEMENT OF OPERATIONS
For the Six Months Ended July 31, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends ........................................... $ 4,545
Interest ............................................ 549
--------
TOTAL INVESTMENT INCOME ............................. 5,094
--------
EXPENSES:
Investment advisory fees (Note 2) ................... 3,830
Transfer agent fees ................................. 2,849
Legal fees .......................................... 8,500
Audit fees .......................................... 4,366
Custodian fees ...................................... 2,798
Fund accounting fees ................................ 6,199
Postage and printing ................................ 8,561
Registration fees and expenses ...................... 1,499
Miscellaneous ....................................... 2,133
--------
TOTAL EXPENSES ...................................... 40,735
--------
Less: waiver of investment advisory fee (Note 2) .... (3,830)
--------
Net expenses ........................................ 36,905
--------
Net investment loss ................................. (31,811)
--------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Net realized gains from investment transactions ..... 21,276
Net change in unrealized depreciation of investments (28,773)
--------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS .................................... (7,497)
--------
Net decrease in net assets resulting from operations $(39,308)
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
AMERICAN HERITAGE GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the six
months ended For the year ended
July 31, 2000 January 31, 2000
------------- ------------------
NET INCREASE (DECREASE) IN NET ASSETS (Unaudited)
FROM OPERATIONS:
<S> <C> <C>
Net investment loss ........................................... $ (31,811) $ (22,288)
Net realized gains from investment transactions ............... 21,276 102,518
Net change in unrealized appreciation (depreciation)
of investments .............................................. (28,773) 49,569
--------- ---------
Net increase (decrease) in net assets resulting from operations (39,308) 129,799
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ......................................... 0 0
Net realized gains on investments ............................. 0 0
CAPITAL SHARE TRANSACTIONS (Note 4) .......................... (57,836) (336,854)
--------- ---------
Net decrease in net assets .................................... (97,144) (207,055)
NET ASSETS:
Beginning of period ........................................... 663,825 870,880
--------- ---------
End of period ................................................. $ 566,681 $ 663,825
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
AMERICAN HERITAGE GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
July 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- ----------
<S> <C> <C>
COMMON STOCKS - 73.56%
AEROSPACE- 5.32%
Orbital Sciences Corp.* .............. 2,000 $30,125
-------
BANKS AND FINANCE - 15.59%
Allstate Corp ........................ 1,000 27,563
Credit Depot Corporation* ............ 8,000 96
Dime Bancorp, Inc. ................... 1,000 16,125
First Union Corp. .................... 1,000 25,813
Sotheby's Holdings, Inc.* ............ 1,000 18,750
-------
88,347
-------
BIOTECHNOLOGY - 4.53%
Senetek PLC Sponsored ADR*+ .......... 15,200 25,650
------
COMPUTERS AND PERIPHERALS - 13.40%
Compaq Computer Corp. ................ 1,000 28,063
Iomega Corp.* ........................ 4,000 15,250
Peoplesoft, Inc.* .................... 1,500 32,625
-------
75,938
-------
CONGLOMERATES - 5.93%
Honeywell, Inc. ...................... 1,000 33,625
-------
CONSUMER PRODUCTS - 14.69%
Group Sense International LTD ........ 360,000 30,468
Philip Morris Cos, Inc. ............. 1,500 37,875
Xerox Corporation .................... 1,000 14,875
-------
83,218
-------
HEALTHCARE - 0.00%
FPA Medical Management, Inc.* ........ 5,000 0
-------
MEDICAL TECHNOLOGY - 0.49%
Demegen, Inc.* ....................... 5,000 2,813
-------
NON HAZARDOUS WASTE MANAGEMENT - 3.30%
Waste Management, Inc. ............... 1,000 18,687
-------
RADIO - 6.76%
Sirius Satellite Radio, Inc.* ........ 1,000 38,312
-------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
AMERICAN HERITAGE GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
July 31, 2000
(Continued)-(Unaudited)
<TABLE>
<CAPTION>
Number of Market
Shares Value
--------- ---------
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT - 1.60%
Orckit Communication LTD.* .............. 1,000 $ 9,062
---------
TOYS - 1.95%
Mattel, Inc. ............................ 1,000 11,062
---------
TOTAL COMMON STOCKS
(Cost $691,018) ........................ 416,839
---------
SHORT TERM INVESTMENTS - 5.47%
Firstar Treasury Fund
(Cost $31,000) ......................... 31,000 31,000
---------
TOTAL INVESTMENTS
(Cost $722,018) ........................ 79.03% 447,839
OTHER ASSETS LESS LIABILITIES ........... 20.97% 118,842
---------- ---------
TOTAL NET ASSETS ........................ 100.00% $ 566,681
========== =========
</TABLE>
* Non-income producing
+ Foreign security
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
AMERICAN HERITAGE GROWTH FUND
FINANCIAL HIGHLIGHTS AND RELATED RATIOS/SUPPLEMENTAL DATA
(For a fund share outstanding throughout each period)
<TABLE>
<CAPTION>
For the six For the For the For the For the For the
months ended year ended year ended year ended year ended year ended
July 31, 2000 January 31, 2000 January 31, 1999 January 31, January 31, January 31,
1998 1997 1996
------------- ---------------- ---------------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 0.16 $ 0.13 $ 0.14 $ 0.16 $ 1.66 $ 3.57
-------- -------- -------- ---------- ---------- ----------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) .......... (0.07) 0.00 0.00 0.00 0.24 1.51
Net realized and unrealized gains
(losses) on investments .......... 0.06 0.03 (0.01) (0.01) (0.32) (0.69)
-------- -------- -------- ---------- ---------- ----------
Total from investment operations ...... (0.01) 0.03 (0.01) (0.01) (0.08) 0.82
-------- -------- -------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income .. 0.00 0.00 0.00 (0.01) (1.42) (2.73)
Distribution from realized gains from
security transactions ............ 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- ---------- ---------- ----------
Total distributions ................... 0.00 0.00 0.00 (0.01) (1.42) (2.73)
-------- -------- -------- ---------- ---------- ----------
Net asset value, end of period ........ $ 0.15 $ 0.16 $ 0.13 $ 0.14 $ 0.16 $ 1.66
======== ======== ======== ========== ========== ==========
Total return .......................... (6.25)% 23.08% (7.14)% (9.00)% (4.66)% 29.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ............. $566,681 $663,825 $870,880 $1,162,294 $2,240,860 $4,932,970
Ratio of expenses to average net
assets, before reimbursement ..... 13.30% 13.25% 11.45% 10.46% 4.82% 3.94%
Ratio of expenses to average net
assets, net of reimbursement ..... 12.05% 4.83% 2.50% 2.67% 2.81% 2.62%
Ratio of net investment income (loss)
to average net assets, before
reimbursement .................... (11.64)% (11.60)% (9.89)% (9.04)% 23.96% 43.14%
Ratio of net investment income (loss)
to average net assets, net of
reimbursement ...................... (10.39)% (3.18)% (0.94)% (1.25)% 25.97% 44.46%
Portfolio turnover rate ................. 33.57% 418.34% 274.25% 172.20% 1,378.14% 4,262.64%
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
AMERICAN HERITAGE GROWTH FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
July 31, 2000
(Unaudited)
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 undistributed
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 period. Actual
results could differ from those estimates.
<PAGE> 9
AMERICAN HERITAGE GROWTH FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
July 31, 2000
(Continued) - (Unaudited)
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 an annual fee of 1.25% of the Fund's
average net asset value, computed daily, and payable monthly. AHMC has agreed 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.
For the six months ended July 31, 2000 the Fund waived its advisory fee of
$3,830. Additionally, the Fund has a receivable of $50,161 due from AHMC for
prior year's accrual reimbursement.
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.
For the six months ended July 31, 2000, the Fund paid brokerage commissions of
$1,050 to Thieme Securities, Inc., of which Mr. Thieme is the owner. Thieme
Securities, Inc. received 53.43% 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 $.0875.
NOTE 3 INVESTMENTS
For the six months ended July 31, 2000, purchases and sales of investment
securities, other than short-term investments, aggregated $176,647 and $339,352,
respectively. The gross unrealized appreciation for all securities totaled
$20,831 and the gross unrealized depreciation for all securities totaled
$295,010 for a net unrealized depreciation of $274,179. The aggregate cost of
securities for federal income tax purposes at July 31, 2000 was $722,018.
<PAGE> 10
AMERICAN HERITAGE GROWTH FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
July 31, 2000
(Continued) - (Unaudited)
NOTE 4 CAPITAL SHARE TRANSACTIONS
As of July 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 $3,362,385.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
For the six For the year
months ended ended January
July 31, 2000 31, 2000
Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C>
Shares sold ..... 45,216 $ 7,270 169,134 $ 23,659
Shares issued
in reinvestment
of dividends ... 0 0 0 0
Shares redeemed . (409,137) (65,107) (2,560,855) (360,513)
--------- -------- ----------- ---------
Net decrease .... (363,921) $(57,837) (2,391,721) $(336,854)
========= ========= =========== ==========
</TABLE>
<PAGE> 11
AMERICAN HERITAGE GROWTH FUND, INC.
1370 Avenue of the Americas AMERICAN
New York, NY 10019 [LOGO] HERITAGE
GROWTH
FUND, INC.
_________________________________
SEMI-ANNUAL
REPORT
July 31, 2000
ADDRESS CORRECTION REQUESTED
BULK RATE This report and the financial
U.S. POSTAGE statements contained herein are
PAID submitted for the general information
JERSEY CITY, NY of shareholders and are not authorized
PERMIT NO. 412 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.
