ANNUAL REPORT
State Farm Growth Fund, Inc.
ONE STATE FARM PLAZA - BLOOMINGTON, ILLINOIS 61710
For Account Information and Shareowner
Services: (309) 766-2029
(800) 447-0740
November 30, 1997
This report is not to be distributed unless preceded or accompanied by a
prospectus.
<PAGE>
STATE FARM GROWTH FUND, INC.
Dear Shareowner:
The U.S. stock market has generated strong results over the past six and
twelve month periods. The S&P 500 Index produced total returns of 13.6% and
28.5% for the six and twelve months ended November 30, 1997, respectively. The
Growth Fund yielded total returns of 14.2% and 24.8% for the same periods.
Returns earned by U.S. common stocks have been extraordinary over the past
three years. In our opinion, returns of this magnitude are not sustainable
over long periods of time.
The following graph compares a $10,000 investment in the Growth Fund over
the last ten years to a theoretical investment of the same amount in the S&P
500 index:
GROWTH FUND S&P 500*
1987 10,000 10,000
1988 11,745 12,320
1989 15,329 16,113
1990 15,984 15,544
1991 20,746 18,710
1992 23,958 22,157
1993 23,802 24,390
1994 24,758 24,653
1995 33,094 33,750
1996 39,742 43,152
1997 49,600 55,468
* The S&P 500 Index is a capitalization - weighted measure of 500 widely held
common stocks listed on the New York and American Stock Exchanges and
traded in the Over-The-Counter Market.
The S&P 500 Index represents an unmanaged group of stocks that differs from
the composition of the Growth Fund. Unlike an investment in the Growth
Fund, a theoretical investment in the Index does not reflect any expenses.
The Growth Fund's common stock holdings of drug and medical device firms,
banks, consumer product firms and telecommunications companies performed quite
well over the past year. Results produced by the Fund's investments in electric
utilities, chemical companies, and mining and metals firms were below those of
the overall market.
2
<PAGE>
The general composition of your Fund's portfolio has changed some over
the last twelve months. Most transactions during the year were oriented
towards either further diversifying the portfolio or adding investments in
certain areas. Holdings of five banks were partially reduced with proceeds
reinvested in a broad group of financial institutions. New or expanded
positions in common stocks of several companies added to the investments of
the Fund in the electric utility, consumer and marketing, oil and gas,
chemical, electronic manufacturing and computer software sectors.
Common stock prices have experienced considerable volatility over the
past three months as a result of widespread turmoil in Asian equity, debt, and
currency markets. Increasingly, economic activity and financial markets are
linked globally. The U.S. stock market declined approximately 10% in October
of 1997 in reaction to the Asian weakness, but has recovered in subsequent
months.
The difficulties in Asian markets have received much attention from
investors and business commentators since the middle of the year. Leaders in
many parts of the world are struggling as they attempt to develop open
market-based economies with a global orientation. Flexibility and adaptability
are the strengths of market-based systems, so the efforts should be
worthwhile. However, we caution against paying much attention to those who
proclaim to know how the Asian difficulties will play out and adjusting the
composition of investment portfolios in response to a specific scenario.
Ultimate effects of the Asian situation on financial markets, financial
institutions and general economic conditions are probably not predictable. In
our opinion, the primary challenge for any investor is development of a
long-term investment program which makes one comfortable regardless of what
short-term direction markets might take.
When measured by virtually all general standards, U.S. common stocks are
selling at the high end of historical valuation levels. While expectations for
economic growth remain positive, we would like to remind shareowners that
unanticipated geopolitical and economic events can have a negative impact on
common stock prices. To cope with the inevitable uncertainties of financial
markets, we encourage a disciplined long-term program of periodic investments
in the Growth Fund. Such an investment program should allow shareowners to
capture the benefits of dollar cost averaging and to participate in any
long-term appreciation of common stock prices. We strive to invest the Fund's
assets in growing companies with fine managements and are confident that these
investments will produce satisfactory long-term results. Risk is managed
through broad diversification in globally competitive firms in essential
businesses.
The directors have declared a capital gains distribution of $1.13 per
Growth Fund share which will be paid on December 31, 1997. A semi-annual
income dividend of $.31 per share will also be paid on December 31, 1997.
Both will be used to purchase additional shares of your account unless you
have elected to receive payments directly by check.
Sincerely,
/s/ Kurt G. Moser /s/ Paul N. Eckley
Kurt G. Moser Paul N. Eckley
Vice President Vice President
December 19, 1997
3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareowners
State Farm Growth Fund, Inc.
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of State Farm Growth Fund, Inc., as of
November 30, 1997, the related statements of operations and changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the fiscal years since 1988. These financial statements
and financial highlights are the responsibility 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 investments
owned as of November 30, 1997, by correspondence with the custodian and
brokers. 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
State Farm Growth Fund, Inc. at November 30, 1997, the results of its
operations and changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the fiscal years
since 1988, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
December 12, 1997
4
<PAGE>
STATE FARM GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
SHARES VALUE
COMMON STOCKS (90.2%)
AGRICULTURE & FOOD (7.8%)
2,860,950 Archer-Daniels-Midland Company $ 60,079,950
92,000 Campbell Soup Company 5,077,250
320,000 The Coca-Cola Company 19,960,000
930,000 Kellogg Company 42,198,750
97,000 Pioneer Hi-Bred International, Inc. 9,827,312
104,000 Sara Lee Corporation 5,486,000
----------------
142,629,262
BANKS (11.5%)
170,000 ABN AMRO Holding N.V. 3,290,323
80,550 AmSouth Bancorporation 4,203,703
355,600 Banc One Corporation 18,224,500
145,100 First Chicago NBD Corporation 11,335,937
6,200 First Empire State Corporation 2,648,563
60,000 First Security Corporation 2,043,750
43,500 First Virginia Banks, Inc. 2,098,875
61,300 Golden West Financial Corporation 5,555,312
135,000 J.P. Morgan & Co. Incorporated 15,499,688
372,300 MBNA Corporation 9,865,950
404,900 National Commerce Bancorporation 11,893,937
72,000 Northern Trust Corporation 4,482,000
610,000 Norwest Corporation 22,341,250
320,037 Pacific Century Financial Corporation 16,261,880
415,158 Popular, Inc. 21,536,321
230,000 Southtrust Corporation 12,535,000
74,900 Suntrust Banks, Inc. 5,317,900
31,000 TCF Financial Corporation 1,825,125
22,650 U.S. Bancorp 2,424,966
238,900 Wachovia Corporation 18,350,506
58,300 Washington Federal, Inc. 1,851,025
48,200 Wells Fargo & Company 14,797,400
----------------
208,383,911
5
<PAGE>
STATE FARM GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
SHARES VALUE
CHEMICALS (7.7%)
415,000 Air Products and Chemicals, Inc. $ 31,643,750
81,000 The Dow Chemical Company 7,735,500
127,400 E.I. du Pont de Nemours and Company 7,747,512
364,300 Great Lakes Chemical Corporation 16,234,119
561,000 International Flavors & Fragrances Inc. 26,998,125
45,800 Raychem Corporation 4,333,825
1,261,200 Sigma-Aldrich Corporation 45,560,850
----------------
140,253,681
COMPUTERS AND SOFTWARE (7.6%)
30,800 Electronic Data Systems Corporation 1,176,175
1,437,000 Hewlett-Packard Company 87,207,937
248,200 International Business Machines Corporation 27,255,463
157,100(a) Microsoft Corporation 22,239,469
25,000(a) NCR Corporation 746,875
----------------
138,625,919
CONSUMERS & MARKETING (5.8%)
250,000 The Gillette Company 23,015,625
719,600 Hon Industries Inc. 38,588,550
43,728 Jostens, Inc. 1,049,472
59,900 McDonald's Corporation 2,908,894
173,200 Minnesota Mining and Manufacturing Company 16,843,700
589,000 Rubbermaid Incorporated 14,283,250
115,200 The Procter & Gamble Company 8,719,200
----------------
105,408,691
ELECTRONIC MANUFACTURING (3.0%)
109,400 Emerson Electric Co. 6,030,675
418,000 General Electric Company 30,696,875
222,000 Intel Corporation 17,010,750
----------------
53,738,300
6
<PAGE>
STATE FARM GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
SHARES VALUE
HEALTH CARE (15.6%)
820,000 Ballard Medical Products $ 18,911,250
1,550,000 Biomet, Inc. 37,006,250
107,050(a) Covance, Inc. 1,967,044
1,240,800 Johnson & Johnson 77,782,650
947,200 Eli Lilly and Company 58,963,200
40,000 Medtronic, Inc. 1,890,000
182,000 Merck & Co., Inc. 17,153,500
960,000 Pfizer Inc. 69,660,000
53,525(a) Quest Diagnostics, Inc. 883,162
----------------
284,217,056
MEDIA (5.6%)
873,180 The Walt Disney Company 82,515,510
153,500 Reuters Holdings PLC (ADR) 10,601,094
360,181(a) Scandinavian Broadcasting System SA 9,229,638
----------------
102,346,242
MINING AND METALS (1.1%)
195,000 Nucor Corporation 9,664,688
185,000 Rio Tinto PLC (ADR) 9,157,500
81,250(a) Steel Dynamics, Inc. 1,477,734
----------------
20,299,922
NON-ELECTRIC MANUFACTURING (1.2%)
370,000 Caterpillar Inc. 17,505,625
70,000 Illinois Tool Works Inc. 3,780,000
----------------
21,285,625
OIL AND GAS (7.4%)
122,000 Amoco Corporation 10,941,875
440,400(a) Barrett Resources Corporation 13,156,950
530,000 Chevron Corporation 42,300,625
580,000 Exxon Corporation 35,488,750
237,100 Pennzoil Company 15,618,963
334,400 Royal Dutch Petroleum Company (ADR) 17,702,300
----------------
135,209,463
RETAILING (0.4%)
169,000 Wal-Mart Stores, Inc. 6,738,875
7
<PAGE>
STATE FARM GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
SHARES VALUE
TELECOMMUNICATIONS & EQUIPMENT (9.5%)
450,000(a) ADC Telecommunications, Inc. $ 16,762,500
400,000 AT&T Corp. 22,375,000
86,000(a) Airtouch Communications, Inc. 3,354,000
116,000 Ameritech Corporation 8,816,000
290,200 Deutsche Telekom (ADR) 5,785,863
246,000 LM Ericsson Telephone Company (ADR) 9,855,375
129,633 Lucent Technologies Inc. 10,508,375
823,000 MCI Communications Corporation 35,800,500
264,000 Motorola, Inc. 16,747,500
596,100 SBC Communications Inc. 43,589,812
----------------
173,594,925
UTILITIES - ELECTRIC (2.2%)
248,000 Central and South West Corporation 6,029,500
132,000 Duke Energy Corporation 6,921,750
88,500 FPL Group, Inc. 4,950,469
305,000 Pacificorp 7,015,000
288,000 Southern Company 6,840,000
166,000 Teco Energy, Inc. 4,243,375
98,500 Texas Utilities Company 3,940,000
----------------
39,940,094
MISCELLANEOUS (3.8%)
428,200 Corning Incorporated 17,957,638
37,300 Diebold, Inc. 1,706,475
337,500(a) Osmonics, Inc. 4,830,468
425,000 Pall Corporation 8,925,000
346,400 Vulcan Materials Company 35,419,400
----------------
68,838,981
----------------
Total common stocks
(cost: $677,520,588) 1,641,510,947
8
<PAGE>
STATE FARM GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (9.9%)
$50,000,000 U.S. Treasury bills, 4.88% to 4.96%
effective yield, due December, 1997
to January, 1998 $ 49,688,800
16,000,000 Ford Motor Credit Co., 5.55%, due
December, 1997 16,004,935
53,300,000 General Electric Capital Corp., 5.56%
to 5.62%, due December, 1997 53,315,964
61,300,000 General Motors Acceptance Corp., 5.59%,
due December 1997 61,385,787
----------------
Total short-term investments
(cost: $180,400,796) 180,395,486
----------------
TOTAL INVESTMENTS (100.1%) (cost: $857,921,384) 1,821,906,433
CASH AND OTHER ASSETS, LESS LIABILITIES (-.1 %) (811,812)
----------------
NET ASSETS (100.0%) $1,821,094,621
================
Notes: (a) Non-income producing security.
(b) At November 30, 1997, net unrealized appreciation of $963,985,049
consisted of gross unrealized appreciation of $967,773,503 and
gross unrealized depreciation of $3,788,454 based on cost of
$857,921,384 for federal income tax purposes.
See accompanying notes to financial statements.
9
<PAGE>
STATE FARM GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
ASSETS
Investments, at value (cost $857,921,384) $1,821,906,433
Cash 913,690
Receivable for:
Dividends $ 3,189,791
Shares of the Fund sold 784,516
Sundry 8,859 3,983,166
-----------
Prepaid expenses 43,772
--------------
Total assets 1,826,847,061
LIABILITIES AND NET ASSETS
Payable for:
Shares of the Fund redeemed 1,888,505
Securities purchased 3,300,000
Other accounts payable (including $484,177
to Manager) 563,935
-----------
Total liabilities 5,752,440
--------------
Net assets applicable to 46,132,240 shares
outstanding of $.50 par value common stock
(100,000,000 shares authorized) $1,821,094,621
==============
Net asset value, offering price and redemption
price per share $ 39.48
==============
ANALYSIS OF NET ASSETS
Excess of amounts received from sales of shares
over amounts paid on redemptions of shares
on account of capital $ 785,124,865
Undistributed net realized gain on sales of investments 52,537,716
Net unrealized appreciation of investments 963,985,049
Undistributed net investment income 19,446,991
--------------
Net assets applicable to shares outstanding $1,821,094,621
==============
See accompanying notes to financial statements.
10
<PAGE>
STATE FARM GROWTH FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED NOVEMBER 30,
1997 1996
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of
$205,192 in 1997 and $83,607 in 1996) $ 23,828,520 18,232,750
Interest 5,877,994 5,377,917
--------------------------
Total investment income 29,706,514 23,610,667
EXPENSES:
Investment advisory and management fees 1,705,166 1,325,421
Professional fees 37,364 35,869
ICI dues 48,215 41,711
Registration fees 65,847 30,249
Fidelity bond expense 6,932 7,951
Directors' fees 9,900 9,000
Reports to shareowners 19,799 21,876
Franchise taxes 15,568 10,078
Custodian fees 23,607 32,062
Other 3,463 1,933
--------------------------
Total expenses 1,935,861 1,516,150
Less: custodian fees paid indirectly - 31,713
--------------------------
Net expenses 1,935,861 1,484,437
--------------------------
Net investment income 27,770,653 22,126,230
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on sales of investments 52,537,716 90,788,938
Change in net unrealized appreciation 270,232,368 111,162,700
--------------------------
Net realized and unrealized gain on investments 322,770,084 201,951,638
--------------------------
Net change in net assets resulting from operations $350,540,737 224,077,868
==========================
See accompanying notes to financial statements.
11
<PAGE>
STATE FARM GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED NOVEMBER 30,
1997 1996
From operations:
Net investment income $ 27,770,653 22,126,230
Net realized gain on sales of investments 52,537,716 90,788,938
Change in net unrealized appreciation 270,232,368 111,162300
----------------------------
Net change in net assets resulting
from operations 350,540,737 224,077,868
Undistributed net investment income included in
price of shares issued and redeemed 1,240,326 718,903
Distributions to shareowners from:
Net investment income (per share $.61 in
1997 and $.53 in 1996) (25,616,492) (18,174,400)
Net realized gain (per share $2.31 in 1997 and
$.12 in 1996) (90,788,938) (6,015,663)
----------------------------
Total distributions to shareowners (116,405,430) (24,190,063)
From Fund share transactions:
Proceeds from shares sold 252,636,657 177,516,771
Reinvestment of ordinary income dividends
and capital gain distributions 113,414,471 23,554,851
----------------------------
366,051,128 201,071,622
Less payments for shares redeemed 143,241,394 107,416,790
----------------------------
Net increase in net assets from Fund share
transactions 222,809,734 93,654,832
----------------------------
Total increase in net assets 458,185,367 294,261,540
Net assets:
Beginning of year 1,362,909,254 1,068,647,714
----------------------------
End of year (including undistributed net
investment income of $19,446,991 in 1997
and $16,052,505 in 1996) $1,821,094,621 1,362,909,254
=============================
See accompanying notes to financial statements.
12
<PAGE>
STATE FARM GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. OBJECTIVE
The investment objective of the State Farm Growth Fund, Inc. (the Fund)
is long-term growth of capital and income. The Fund seeks to achieve this
objective by investing most of its assets in income producing equity-type
securities that are believed collectively to have potential for long-term
growth of capital and income.
2. 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 last reported
bid price for the day. Long-term debt securities and U.S. Treasury bills are
valued using quotations provided by an independent pricing service. Short-term
debt securities, other than U.S. Treasury bills, are valued at amortized cost
which approximates market value. 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 closings, 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 December 12, 1997, an ordinary income dividend of $.31 per share and a
capital gain distribution of $1.13 per share were declared, payable December
31, 1997 (reinvestment date December 31, 1997) to shareowners of record on
December 12, 1997.
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.
CUSTODIAN FEES - For the period ended November 30, 1997, the Fund no
longer receives fee reductions for balances maintained with the custodian, as
interest on cash balances ($16,912) is reflected as income rather than an
offset to custodian fees. Custodian fees for the year ended November 30, 1996
were reduced based on the Fund's cash balances maintained with the custodian.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
13
<PAGE>
STATE FARM GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
3. 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 (computed on a daily basis and paid
quarterly) 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 expenses of the
Fund, including the compensation of the Manager but excluding franchise 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 $1,705,166,
for 1997 and $1,325,421 for 1996. The Fund pays no fees for transfer agent
services provided by the Manager. The Fund does not pay any discount,
commission or other compensation for 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 two years ended November 30, 1997, except for directors'
fees of $9,900 for 1997 and $9,000 for 1996, paid to the Fund's independent
directors.
4. INVESTMENT TRANSACTIONS
Investment transactions (exclusive of short-term instruments) for each of
the two years ended November 30 were as follows:
1997 1996
Purchases $132,033,944 255,225,023
Proceeds from sales 89,316,149 172,902,528
5. 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:
YEAR ENDED NOVEMBER 30,
1997 1996
Shares sold 7,264,071 5,839,467
Shares issued in reinvestment of
ordinary income dividends and capital
gain distributions 3,552,864 788,486
------------------------
10,816,935 6,627,953
Less shares redeemed 4,136,630 3,526,507
------------------------
Net increase in shares outstanding 6,680,305 3,101,446
========================
14
<PAGE>
STATE FARM GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
Per Share Income and Capital Changes (For a share outstanding throughout each
year)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 34.55 29.40 22.63 22.21 23.05 20.33 16.77 16.90 13.34 11.96
Income from Investment
----------------------
Operations
----------
Net investment Income .62 .63 .50 .44 .45 .43 .42 .47 .41 .43
Net gain or losses on
securities (both realized
and unrealized) 7.23 5.17 6.97 .43 (.60) 2.70 4.32 .26 3.57 1.62
--------------------------------------------------------------------------------------------------
Total from investment
operations 7.85 5.80 7.47 .87 (.15) 3.13 4.74 .73 3.98 2.05
Less Distributions
------------------
Net investment income (.61) (.53) (.52) (.45) (.45) (.41) (.54) (.40) (.42) (.39)
Capital gain (2.31) (.12) (.18) - (.24) - (.64) (.46) - (.28)
--------------------------------------------------------------------------------------------------
Total distributions (2.92) (.65) (.70) (.45) (.69) (.41) (1.18) (.86) (.42) (.67)
Net asset value, end of year $ 39.48 34.55 29.40 22.63 22.21 23.05 20.33 16.77 16.90 13.34
==================================================================================================
Total Return 24.80% 20.09% 33.67% 4.02% (.65%) 15.42% 29.79% 4.27% 30.51% 17.45%
- ------------
Ratios/Supplemental Data
- ------------------------
Net assets, end of year
(millions) $1,821.1 1,362.9 1,068.6 771.7 725.1 696.1 558.4 414.3 383.0 295.5
Ratio of expenses to
average net assets .12% .13% .14%(a) .14% .14% .16% .19% 21% .21% .24%
Ratio of net investment
income to average
net assets 1.78% 1.88% 1.95% 2.00% 2.05% 1.99% 2.22% 2.84% 2.69% 3.32%
Portfolio turnover rate 6% 16% 3% 3% 2% 2% 1% 16% 9% 5%
Number of shares
outstanding at end
of year (millions) 46.1 39.5 36.4 34.1 32.7 30.2 27.5 24.7 22.7 22.1
</TABLE>
Average commission rate paid per share on stock transactions for the year
ended November 30, 1997 was $.0440.
Note: (a) The ratio based on net custodian expenses would have been .13% in
1995.
--------------------
STATE FARM GROWTH FUND, INC.
TAX INFORMATION
The Fund paid ordinary income dividends of $.32 per share in June 1997
and $.31 per share in December 1997. Of these dividends, 79% qualifies for the
70% deduction for dividends received by corporations as provided by the
Internal Revenue Code.
In December 1997, the Fund made a capital gain distribution of $1.13 per
share, 100% of which was paid from long-term capital gain and is designated as
a capital gain dividend.
NOTE: Dividends and distributions paid to you must be included in
your federal income tax return and must be reported by the
Fund to the Internal Revenue Service in accordance with the
provisions of the Internal Revenue Code.
15
<PAGE>
ANNUAL
REPORT
November 30, 1997
STATE
FARM
GROWTH
FUND, INC.
ONE STATE FARM PLAZA
BLOOMINGTON, ILLINOIS 61710
TELEPHONE (309) 766-2029
(800) 447-0740
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000093715
<NAME> STATE FARM GROWTH FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 857921384
<INVESTMENTS-AT-VALUE> 1821906433
<RECEIVABLES> 3983166
<ASSETS-OTHER> 957462
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1826847061
<PAYABLE-FOR-SECURITIES> 3300000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2452440
<TOTAL-LIABILITIES> 5752440
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 785124865
<SHARES-COMMON-STOCK> 46132240
<SHARES-COMMON-PRIOR> 39451935
<ACCUMULATED-NII-CURRENT> 19446991
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 52537716
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 963985049
<NET-ASSETS> 1821094621
<DIVIDEND-INCOME> 23828520<F1>
<INTEREST-INCOME> 5877994
<OTHER-INCOME> 0
<EXPENSES-NET> 1935861
<NET-INVESTMENT-INCOME> 27770653
<REALIZED-GAINS-CURRENT> 52537716
<APPREC-INCREASE-CURRENT> 270232368
<NET-CHANGE-FROM-OPS> 350540737
<EQUALIZATION> 1240326
<DISTRIBUTIONS-OF-INCOME> (25616492)<F2>
<DISTRIBUTIONS-OF-GAINS> (90788938)<F3>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7264071
<NUMBER-OF-SHARES-REDEEMED> 4136630
<SHARES-REINVESTED> 3552864
<NET-CHANGE-IN-ASSETS> 458185367
<ACCUMULATED-NII-PRIOR> 16052505
<ACCUMULATED-GAINS-PRIOR> 90788938
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1705166
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1935861
<AVERAGE-NET-ASSETS> 1555898971
<PER-SHARE-NAV-BEGIN> 34.55
<PER-SHARE-NII> .62
<PER-SHARE-GAIN-APPREC> 7.23
<PER-SHARE-DIVIDEND> (.61)
<PER-SHARE-DISTRIBUTIONS> (2.31)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 39.48
<EXPENSE-RATIO> .12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Net of foreign withholding taxes of $205,192
<F2>Per share $.61
<F3>Per share $2.31
</FN>
</TABLE>
