STRATTON MUTUAL FUNDS
Stratton Growth Fund, Inc.
Stratton Monthly Dividend REIT Shares, Inc.
The Stratton Funds, Inc.
Stratton Small-Cap Yield Fund
Prospectus dated May 1, 1999
(as supplemented through January 18, 2000)
The following information replaces and supersedes any contrary information
contained in the Funds' Prospectus:
* Effective January 18, 2000, Stratton Small-Cap Yield Fund, will change
its name to Stratton Small-Cap Value Fund.
* Effective January 18, 2000, the paragraphs in the "Principal Strategy"
section for the Small-Cap Fund on page 6 of the Prospectus are deleted
and replaced with the following:
Principal Strategy Under normal market conditions, the fund invests at
least 80% of its assets in common stock and securities convertible into
common stock of small capitalization companies. In selecting stocks for
the fund to buy, small capitalization companies are defined as companies
with market capitalizations, at the time of purchase, that are below the
market capitalization of the largest company in the Russell 2000 Index.
These common stocks, including dividend-paying common stocks, are of
well-established U.S. companies that the investment advisor believes are
undervalued. Value stocks are stocks that appear to be under-priced based
on traditional measures such as lower price-to-earnings ratios and
price-to-book ratios. The fund also may invest in real estate investment
trusts.
Generally, small company stocks are considered more volatile than large
company stocks because they have limited product lines and financial
resources. Stocks of these companies may experience more abrupt price
movements than larger capitalization stocks.
The fund's investment advisor employs a three-step process that focuses
on a stock's fundamental valuation, earnings projections and, as a
confirming factor, relative price strength. Fundamental valuation is
the largest component of the process and takes in to consideration both
a company's valuation relative to its peers and its valuation relative
to its private market value. The investment advisor believes that
undervalued companies with good earnings prospects have superior
appreciation potential with reasonable levels of risk.
Securities in the portfolio that the investment advisor may sell are
those stocks with either poor earnings prospects relative to their
peers or stocks that have excessive valuations relative to their peers.
* Effective December 1, 1999, the name of the entity which provides
most of the back office services on the funds' behalf is PFPC Inc.
("PFPC"). Pursuant to certain agreements, PFPC provides the services
commonly and separately referred to as: Fund Administration, Fund Accounting,
Transfer Agency and Custody Administration.
There are no changes to the phone numbers or addresses with respect to a
shareholder's questions, investments or account activity.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT
WITH THE PROSPECTUS
PFPC Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
January 18, 2000
Securities and Exchange Commission
Judiciary Plaza
Public Filing Desk
450 Fifth Street, NW
Washington, DC 20549
Re: Stratton Growth Fund, Inc. (the "Registrant")
File No.: 2-44752
To the Staff of the Commission:
Pursuant to Rule 497(e) under the Securities Act of 1933, as
amended, enclosed for filing on behalf of the Registrant is the
EDGAR transmission of the Supplement to the Prospectus dated
May 1, 1999 as supplemented January 18, 2000.
The purpose of this filing is to (i) alert shareholders of the
name change of Stratton Small-Cap Yield Fund to Stratton
Small-Cap Value Fund; (ii) alert shareholders of changes
to the Small-Cap Fund's principal strategy; and (iii) incorporate
information contained in a previous supplement.
Should you have any questions, comments or require further
information, I can be reached directly at 610.239.4753.
Thank you for your continued courtesy and cooperation.
Sincerely,
Michelle A. Whalen
Manager, Compliance Administrator
cc: Terry Reilly, Esquire (Drinker Biddle & Reath LLP)
Jim Beers (Stratton Management Company)
