<PAGE>
SEMI-ANNUAL REPORT
STATE FARM GROWTH FUND, INC.
ONE STATE FARM PLAZA . BLOOMINGTON, ILLINOIS 61710
For Account Information and Shareowner
Services: (309) 766-2029
For Price Information ONLY:
1-800/447-0740
May 31, 1995
This report is not to be distributed unless preceded or accompanied by a
prospectus.
<PAGE>
STATE FARM GROWTH FUND, INC.
Dear Shareowner:
Financial markets have exhibited extraordinary strength over the past six
months. General common stock prices and share values of the Growth Fund have
been moving regularly to record highs in 1995. The S&P 500 Index, which tends
to be the most widely followed of the broadly based stock market indexes,
produced total returns of 19.1% and 20.1% respectively for the past six and
twelve months. Fortunately the Growth Fund has more or less followed suit by
yielding total returns of 16.9% since last November and 22.9% since May, 1994.
The recent dramatic improvement in common stock prices coincides with
significant declines in interest rates. It seems that we are now reaching a
point where simultaneous strength in the stock and bond markets is less
likely. The current level of bond prices looks to be anticipating a marked
general economic slowdown, while strength in the stock market signals
expectations of continuing good business conditions.
Virtually all the economic data which has been released over the past
couple months or so indicates that a slowdown of some sort is now in progress.
Nobody really knows whether this is a pause in a long expansion or a pause
which presages a serious general decline. Since many of the telltale signs of
identifiable problems or excesses which typically accompany major declines in
the economy are not presently evident, we tend to believe the slowdown will be
moderate and short. However, the economy is probably slowing enough to
restrict the growth in earnings at some companies to levels which will be
below investors' expectations. Since stock prices have been supported by
vigorous growth in corporate earnings over the past couple years, developments
along these lines may cause difficulties for some stock prices given present
valuations.
Of course uncertainty always exists, but we are probably in the midst of a
period where conditions are somewhat more unsettled than they have been so far
in this business cycle which began about four years ago. Larger, and perhaps
more frequent fluctuations, in financial markets are the likely byproduct of
these circumstances. We remind you that returns of good quality,
equity-oriented portfolios, such as the portfolio of the Growth Fund, tend to
be lumpy. Periods which provide particularly good returns are inevitably
offset to some degree by times when flat or negative results occur. Focusing
on long term results, please be prepared to tolerate this volatility -
history tells us it is the price one pays to achieve returns which exceed
those provided by fixed income investments.
The directors have declared a semi-annual dividend of $.28 per Growth Fund
share which will be used to purchase additional shares for your account at the
net asset value at the close of business on June 30, 1995 unless you have
elected to receive payment directly by check.
Sincerely,
Kurt G. Moser Paul N. Eckley
Vice President Vice President
June 16, 1995
1
<PAGE>
STATE FARM GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS (95.1%)
AGRICULTURAL PRODUCTS (8.4%):
2,471,398 Archer-Daniels-Midland Company........................ $ 45,720,863
465,000 Kellogg Company....................................... 31,213,125
------------
76,933,988
BANKS (10.3%):
382,537 Bancorp Hawaii, Inc................................... 11,571,744
529,029 Banponce Corporation.................................. 18,317,629
207,850 National Commerce Bancorporation...................... 5,248,212
490,000 Norwest Corporation................................... 13,903,750
530,000 PNC Bank Corp......................................... 14,310,000
810,000 Wachovia Corporation.................................. 30,678,750
------------
94,030,085
CHEMICALS (14.4%):
540,000 Air Products and Chemicals, Inc....................... 28,687,500
777,300 Great Lakes Chemical Corporation...................... 47,415,300
561,000 International Flavors & Fragrances Inc................ 27,629,250
630,600 Sigma-Aldrich Corporation............................. 27,746,400
------------
131,478,450
COMMUNICATIONS (10.1%):
400,000 American Telephone and Telegraph Company.............. 20,300,000
470,000 Capital Cities/ABC, Inc............................... 45,355,000
823,000 MCI Communications Corporation........................ 16,665,750
50,000 Reuters Holdings PLC (ADR)............................ 2,243,750
360,181 Scandinavian Broadcasting System SA................... 7,923,982
------------
92,488,482
COMPUTERS AND OTHER OFFICE
EQUIPMENT (10.5%):
800,000 Hewlett-Packard Company............................... 52,900,000
719,600 Hon Industries Inc.................................... 19,609,100
255,100 International Business Machines Corporation........... 23,788,075
------------
96,297,175
CONSUMER PRODUCTS (6.9%):
593,200 Corning Incorporated.................................. 18,982,400
414,728 Jostens, Inc.......................................... 8,346,401
497,600 Rubbermaid Incorporated............................... 15,861,000
160,000 The Coca-Cola Company................................. 9,900,000
125,000 The Gillette Company.................................. 10,546,875
------------
63,636,676
</TABLE>
2
<PAGE>
STATE FARM GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
DRUGS AND MEDICAL SUPPLIES (14.8%):
820,000 Ballard Medical Products............................. $ 9,532,500
1,550,000 Biomet, Inc.......................................... 23,056,250
620,400 Johnson & Johnson.................................... 41,101,500
236,800 Eli Lilly and Company................................ 17,671,200
187,500 Medaphis Corporation................................. 11,296,875
240,000 Pfizer Inc........................................... 21,150,000
266,794 Rhone-Poulenc Rorer Inc.............................. 11,005,253
------------
134,813,578
ENTERTAINMENT (2.3%):
380,000 The Walt Disney Company.............................. 21,137,500
HOUSING AND CONSTRUCTION (2.1%):
346,400 Vulcan Materials Company............................. 18,922,100
MACHINERY AND EQUIPMENT (3.3%):
450,000 ADC Telecommunications, Inc.......................... 13,950,000
264,000 Motorola, Inc........................................ 15,807,000
------------
29,757,000
OIL AND GAS (5.0%):
530,000 Chevron Corporation.................................. 26,036,250
394,100 Pennzoil Company..................................... 19,458,688
------------
45,494,938
UTILITIES (3.4%):
270,000 SBC Communications Inc............................... 12,150,000
523,600 Texas Utilities Company.............................. 18,915,050
------------
31,065,050
MISCELLANEOUS (3.6%):
169,622 Mine Safety Appliances Company....................... 7,972,234
195,000 Nucor Corporation.................................... 9,311,250
337,500 Osmonics, Inc........................................ 5,948,437
425,000 Pall Corporation..................................... 9,350,000
------------
32,581,921
------------
Total common stocks (cost: $405,343,553)........... 868,636,943
</TABLE>
3
<PAGE>
STATE FARM GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM INVESTMENTS (4.7%)
$12,000,000 U.S. Treasury bills, due June, July, and August 1995.. $ 11,933,932
12,455,000 General Motors Acceptance Corp., 6.00%, 6-6-1995...... 12,473,726
625,000 General Motors Acceptance Corp., 6.00%, 6-6-1995...... 625,835
150,000 General Motors Acceptance Corp., 5.95%, 6-6-1995...... 150,174
840,000 General Motors Acceptance Corp., 5.92%, 6-6-1995...... 840,830
2,000,000 General Motors Acceptance Corp., 6.03%, 6-6-1995...... 2,000,335
14,680,000 Ford Motor Credit Co., 5.95%, 6-13-1995............... 14,684,865
------------
Total short-term investments (cost: $42,709,697).... 42,709,697
------------
TOTAL INVESTMENTS (99.8%) (cost: $448,053,250)........ 911,346,640
CASH AND OTHER ASSETS, LESS
LIABILITIES (.2%).................................. 2,182,510
------------
NET ASSETS (100.0%)................................... $913,529,150
============
</TABLE>
Note: At May 31, 1995, net unrealized appreciation of $463,293,390 consisted
of gross unrealized appreciation of $470,627,210 and gross unrealized
depreciation of $7,333,820 based on cost of $448,053,250 for federal
income tax purposes.
See accompanying notes to financial statements.
4
<PAGE>
STATE FARM GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (cost $448,053,250)............... $911,346,640
Cash.................................................... 1,549,656
Receivable for:
Dividends and interest................................ $2,376,975
Shares of the Fund sold............................... 6,292
Sundry................................................ 8,859 2,392,126
----------
Prepaid expenses........................................ 61,147
------------
Total assets........................................ 915,349,569
LIABILITIES AND NET ASSETS
Payable for:
Shares of the Fund redeemed........................... 1,549,401
Other accounts payable (including $257,734 to
Manager)............................................. 271,018
----------
Total liabilities................................... 1,820,419
------------
Net assets applicable to 35,173,256 shares outstanding
of $.50 par value common stock (100,000,000
shares authorized)..................................... $913,529,150
============
Net asset value, offering price and redemption
price per share........................................ $ 25.97
============
ANALYSIS OF NET ASSETS
Excess of amounts received from sales of shares over
amounts paid on redemptions of shares on account of
capital................................................ $436,360,703
Accumulated net realized gain on sales of investments... 1,956,769
Unrealized appreciation of investments.................. 463,293,390
Undistributed net investment income..................... 11,918,288
------------
Net assets applicable to shares outstanding............. $913,529,150
============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
STATE FARM GROWTH FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1995 1994
(UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of
$70,684 in 1995 and $128,357 in 1994)........ $ 8,025,129 14,162,426
Interest...................................... 1,330,738 1,731,471
------------ ----------
Total investment income..................... 9,355,867 15,893,897
EXPENSES:
Investment advisory and management fees....... 496,280 892,798
Audit fees.................................... 12,875 25,657
Legal fees.................................... 9,723 14,544
Fidelity bond expense......................... 3,372 6,798
Directors' fees............................... 3,600 6,600
Reports to shareowners........................ 20,372 31,679
Taxes......................................... 5,098 8,730
Other......................................... 26,657 53,638
------------ ----------
Total expenses.............................. 577,977 1,040,444
------------ ----------
Net investment income........................... 8,777,890 14,853,453
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of
investments.................................. 1,956,769 7,117,419
Net change in unrealized appreciation......... 119,637,270 7,405,430
------------ ----------
Net realized and unrealized gain
on investments................................. 121,594,039 14,522,849
------------ ----------
Net change in net assets resulting
from operations................................ $130,371,929 29,376,302
============ ==========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
STATE FARM GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C>
From operations:
Net investment income.................... $ 8,777,890 14,853,453 14,514,511
Net realized gain (loss) on sales of
investments............................. 1,956,769 7,117,419 (1,257,073)
Net change in unrealized appreciation.... 119,637,270 7,405,430 (17,607,772)
------------ ---------------------------
Net change in net assets resulting
from operations......................... 130,371,929 29,376,302 (4,350,334)
Undistributed net investment
income included in price of
shares issued and redeemed.............. 195,625 294,170 433,052
Distributions to shareowners from:
Net investment income (per share $.24
in 1995, $.45 in 1994 and $.45 in
1993)................................. (8,277,666) (14,871,521) (14,044,461)
Net realized gain (per share $.175
in 1995 and $.24 in 1993)............. (5,860,346) -- (7,223,613)
------------ ---------------------------
Total distributions to shareowners....... (14,138,012) (14,871,521) (21,268,074)
From Fund share transactions:
Proceeds from shares sold................ 54,579,311 98,159,876 103,806,621
Reinvestment of ordinary income dividends
and capital gain distributions.......... 13,737,269 14,438,092 20,732,037
------------ ---------------------------
68,316,580 112,597,968 124,538,658
Less payments for shares redeemed........ 42,909,466 80,845,641 70,347,276
------------ ---------------------------
Net increase in net assets from Fund
share transactions...................... 25,407,114 31,752,327 54,191,382
------------ ---------------------------
Total increase in net assets............... 141,836,656 46,551,278 29,006,026
Net assets:
Beginning of period...................... 771,692,494 725,141,216 696,135,190
------------ ---------------------------
End of period (including undistributed
net investment income of $11,918,288
in 1995, $11,222,439 in 1994 and
$10,946,337 in 1993).................... $913,529,150 771,692,494 725,141,216
============ ===========================
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
STATE FARM GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION -- Investments are stated at value. Stocks traded on
securities exchanges, or in the over-the-counter market in which transaction
prices are reported, are valued at the last sales prices on the day of valuation
or, if there are no reported sales on that day, at the mean of the last bid and
asked quotations. Other stocks traded over-the-counter are valued at the mean of
the last bid and asked prices. Debt securities are valued using quotations
provided by an independent pricing service, except short-term debt securities
having a maturity of 60 days or less from the valuation date are valued on an
amortized cost basis. Any securities not valued as described above are valued at
fair value as determined in good faith by the Board of Directors or its
delegate.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date (date the order to buy or sell is executed)
and dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis. Realized gains and losses from security
transactions are reported on an identified cost basis.
FUND SHARE VALUATION -- Fund shares are sold and redeemed on a
continuous basis at net asset value. Net asset value per share is determined
daily as of 3:00 p.m. Bloomington, Illinois time on each business day other
than weekend and holiday closing, except that the Fund need not compute a net
asset value on any day when no purchase or redemption order has been received
by the Fund. The net asset value per share is computed by dividing the total
value of the Fund's investments and other assets, less liabilities, by the
number of Fund shares outstanding.
FEDERAL INCOME TAXES, DIVIDENDS AND DISTRIBUTIONS TO SHAREOWNERS -- It
is the Fund's policy to comply with the special provisions of the Internal
Revenue Code available to investment companies and, in the manner provided
therein, to distribute all of its taxable income, as well as any net realized
gain on sales of investments reportable for federal income tax purposes. The
Fund has complied with this policy and, accordingly, no provision for federal
income taxes is required.
On June 16, 1995 an ordinary income dividend of $.28 per share was
declared, payable June 30, 1995 (reinvestment date June 30, 1995) to
shareowners of record on June 16, 1995.
Dividends and distributions payable to its shareowners are recorded by the
Fund on the ex-dividend date.
EQUALIZATION ACCOUNTING -- A portion of proceeds from sales and payments
on redemptions of Fund shares is credited or charged to undistributed net
investment income. As a result, undistributed net investment income per share
is unaffected by sales or redemptions of shares.
RECLASSIFICATION -- Beginning in 1994, taxes withheld on dividends of
foreign issuers have been classified as a reduction in dividend income in the
statement of operations. Such withheld taxes were previously classified as tax
expense. Prior year amounts have been reclassified to conform to the 1994
presentation.
2. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory and management services agreement with
State Farm Investment Management Corp. (Manager) pursuant to which the Fund
pays the Manager an annual fee of .20% of the first $100 million of average net
assets, .15% of the next $100 million of average net assets and .10% of the
average net assets in excess of $200 million. The Manager guarantees that all
8
<PAGE>
STATE FARM GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
expenses of the Fund, including the compensation of the Manager but excluding
taxes, interest, extraordinary litigation expenses, brokerage commissions and
other portfolio transaction costs, shall not exceed .40% of average net assets
annually.
Under the terms of this agreement, the Fund incurred fees of $496,280, for
the six months ended May 31, 1995 and $892,798 for the year ended November 30,
1994. The Fund does not pay any discount, commission or other compensation for
transfer agent or underwriting services provided by the Manager.
Certain officers and/or directors of the Fund are also officers and/or
directors of the Manager. The Fund made no payments to its officers or
directors during the six months ended May 31, 1995 or the year ended November
30, 1994, except for directors' fees of $3,600 for the six months ended May
31, 1995 and $6,600 for the year ended November 30, 1994 paid to the Fund's
independent directors.
3. INVESTMENT TRANSACTIONS
Investment transactions (exclusive of money market instruments) are as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 1995 1994 1993
<S> <C> <C> <C>
Purchases........................... $28,036,572 49,125,581 54,039,348
Proceeds from sales................. 3,915,485 20,805,090 10,516,360
============ ========== ==========
</TABLE>
4. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund shares as shown in the statement of changes
in net assets are in respect of the following number of shares:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 1995 1994 1993
<S> <C> <C> <C>
Shares sold.............................. 2,255,468 4,460,689 4,713,736
Shares issued in reinvestment of ordinary
income dividends and capital gain
distributions........................... 603,306 670,054 932,172
--------- --------- ---------
2,858,774 5,130,743 5,645,908
Less shares redeemed..................... 1,788,426 3,678,175 3,200,852
--------- --------- ---------
Net increase in shares
outstanding............................. 1,070,348 1,452,568 2,445,056
========= ========= =========
</TABLE>
9
<PAGE>
STATE FARM GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
Per Share Income and Capital Changes (For a share outstanding throughout the
period)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 1995 1994 1993 1992 1991 1990
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................ $ 22.63 22.21 23.05 20.33 16.77 16.90
Income from Investment
Operations
Net Investment Income...... .25 .44 .45 .43 .42 .47
Net Gains or Losses on
Securities (both realized
and unrealized)........... 3.51 .43 (.60) 2.70 4.32 .26
------------------------------------------------------
Total from Investment
Operations.................. 3.76 .87 (.15) 3.13 4.74 .73
Less Distributions
Dividends (from net
investment income)........ (.24) (.45) (.45) (.41) (.54) (.40)
Distributions (from
capital gains)............ (.18) -- (.24) -- (.64) (.46)
------------------------------------------------------
Total Distributions.......... (.42) (.45) (.69) (.41) (1.18) (.86)
Net Asset Value, End of Period. $ 25.97 22.63 22.21 23.05 20.33 16.77
======================================================
Total Return................... 16.85% 4.02% (.65%) 15.42% 29.79% 4.27%
Ratios/Supplemental Data
Net assets, end of period
(millions).................... $913.5 771.7 725.1 696.1 558.4 414.3
Ratio of expenses to average
net assets.................... .15%(a) .14% .14% .16% .19% .21%
Ratio of net investment income
to average net assets......... 2.08%(a) 2.00% 2.05% 1.99% 2.22% 2.84%
Portfolio turnover rate........ 1%(a) 3% 2% 2% 1% 16%
Number of shares outstanding
at end of period (millions)... 35.2 34.1 32.7 30.2 27.5 24.7
</TABLE>
Notes: (a) Determined on an annualized basis.
10
<PAGE>
SEMI-ANNUAL
REPORT
MAY 31, 1995
STATE
FARM
GROWTH
FUND, INC.
ONE STATE FARM PLAZA
BLOOMINGTON, ILLINOIS 61710
TELEPHONE (309) 766-2029
G 4031.100
