UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08386
American Heritage Growth Fund, Inc.
(Exact name of registrant as specified in charter)
1370 Avenue of the Americas,
New York, NY 10019
(Address of principal executive offices) (Zip code)
Jonathan B. Reisman
6975 NW 62 Terrace
Parkland, FL 33067
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 397-3900
Date of fiscal year end: January 31
Date of reporting period: January 31, 2004
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
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American Heritage Growth Fund, Inc. |
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Annual Report
January 31, 2004 |
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 or The American Heritage Fund, Inc. Such offering is made only by prospectus, which includes details as to offering price and other material information.
American Heritage Growth Fund, Inc.
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1370 Avenue of the Americas
New York City, NY 10019
Phone: (212) 397 – 3900
Fax: (212) 397 – 4036
March 2004
To our valued shareholders
American Heritage Growth Fund benefited from the new bull market. The portfolio turnover increased as a function of our trading activities, in order to take advantage of the volatility of the market. Constant sector rotation will also in future make frequent changes in our portfolio necessary in order to maximize returns. During the first quarter of this calendar year the Fund ranked number one in performance among the almost 1,500 growth funds in the United States according to Bloomberg services. The expense ratio remains well above average due to the small size of the Fund.
Our next shareholders’ conference call is scheduled for July 6 at 4:30 p.m. EST. Those who would like to participate should call ahead of time for the 800-number.
I remain one of the largest shareholders and thank all other shareholders for their confidence and patience.
Yours sincerely,
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American Heritage Growth Fund, Inc.
Statement of Assets and Liabilities
January 31, 2004
ASSETS
Investments in securities, at market value
(Cost $211,932) (Note 1)
$
203,912
Dividends and interest receivable
4
Due from Advisor and Officer
17,122
Receivable for securities sold
9,451
TOTAL ASSETS
230,489
LIABILITIES
Payable for securities purchased
11,465
Accrued expenses and other liabilities
7,375
TOTAL LIABILITIES
18,840
NET ASSETS
Net Assets (equivalent to $0.08 per
share based on 2,767,181 shares
of capital stock outstanding) (Note 4)
$
211,649
Composition of net assets:
Capital Stock 2,767
Paid in capital
3,266,222
Accumulated net investment loss
(236,451)
Accumulated net realized loss on
Investments
(2,812,869)
Net unrealized depreciation on
Investments
(8,020)
NET ASSETS, JANUARY 31, 2004
$
211,649
The accompanying notes are an integral part of these financial statements.
American Heritage Growth Fund, Inc.
Schedule of Investment in Securities
January 31, 2004
Number of
Shares
Value
COMMON STOCKS & WARRANTS – 90.70%
BIOTECHNOLOGY – 16.01%
Crucell NV *
500
3,775
Genelabs Technologies, Inc. *
1,000
2,900
Generex Biotechnology Corp. *
1,000
1,650
Hemispherx BioPharma, Inc *
500
2,125
Medimmune, Inc. * 200
4,698
Nexmed, Inc. *
2,000
8,200
Serono S.A.
250
4,795
V I Technologies, Inc. *
3,000
4,350
Viragen, Inc *
5,000
1,400
33,893
CHEMICALS – 4.14%
Dupont E I De Nemours & Co.
200
8,780
COMPUTER AND PERIPHERALS – 10.41%
Gigamedia LTD *
5,000
8,950
Simulations, Inc.
1,000
5,750
Xerox Corp. *
500
7,320
22,020
CRUDE PETROLEUM & NATURAL GAS – 4.54%
Whiting Petroleum Corp. *
500
9,620
ELECTRIC SERVICES – 3.72%
Centerpoint Energy Resources Corp.
750
7,875
GOLD & SILVER ORES – 1.54%
Canarc Resource Corp. *
5,000
3,250
HEALTH CARE – 0.72%
FPA Medical * +
5,000
1
PHC, Inc. Class A *.
1,000
1,530
1,531
The accompanying notes are an integral part of these financial statements.
American Heritage Growth Fund, Inc.
Schedule of Investment in Securities
January 31, 2004
(Continued)
Number of
Shares
Value
LABORATORY APPARATUS– 4.17%
MFIC Corp. *
2,250
8,820
MISCELLANEOUS MATERIALS & ORES – 0.64%
MEMS USA, Inc.
500
1,350
NEWSPAPERS – 4.55%
Thestreet Com *
2,000
9,620
SURGICAL APPLIANCES & SUPPLIES – 4.95%
Alpha Pro Tech LTD *
1,000
2,470
Biophan Technologies *
6,500
7,995
10,465
PHARMACEUTICALS – 23.08%
Abbott Laboratories
200
8,616
Acusphere, Inc. *
500
4,825
Ivax Corp. *
300
7,500
Merck & Co., Inc
150
7,140
Millenia Hope, Inc. *
5,000
400
Miravant Medical Technologies *
1,000
2,800
NitroMed, Inc. *
1,000
8,800
Schering Plough Corp.
500
8,770
48,851
RETAIL (HOME IMPROVEMENT) – 4.19%
The Home Depot, Inc
250
8,867
SECURITY BROKERS – 2.36%
TradeStation Group, Inc. *
500
4,990
TELEPHONE COMMUNICATIONS – 5.68%
AT & T Corp.
250
4,865
Vodavi Technology, Inc. *
1,000
7,160
12,025
The accompanying notes are an integral part of these financial statements.
American Heritage Growth Fund, Inc.
Schedule of Investment in Securities
January 31, 2004
(Continued)
Number of
Shares
Value
TOTAL COMMON STOCKS
191,957
SHORT TERM INVESTMENTS– 5.64%
First American Treasury Fund Cl S
11,955
11,955
TOTAL INVESTMENTS
(Cost $211,932)
96.34%
203,912
OTHER ASSETS LESS
LIABILITIES
3.66%
7,737
TOTAL NET ASSETS
100.00%
$
211,649
*
Non-income producing security.
+
Illiquid security.
The accompanying notes are an integral part of these financial statements.
American Heritage Growth Fund, Inc.
Statement of Operations
For the year ended January 31, 2004
INVESTMENT INCOME:
Dividends
$
1,146
Interest
2
TOTAL INVESTMENT INCOME
1,148
EXPENSES:
Trustee Fees
2,500
Investment advisory fees (Note 2)
2,376
Fund Accounting / Transfer agent fees
7,962
Audit fees
14,075
Legal fees
4,830
Custodian fees
6,812
Registration
75
Printing
1,652
Other expenses
1,030
TOTAL EXPENSES
41,312
Less: waiver of investment
Receivable from Advisor (Note 2)
(17,122)
Expense Waiver
(2,376)
NET EXPENSES
21,814
Net investment loss
(20,666)
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized loss from investment
transactions
(34,718)
Net change in unrealized
depreciation on investments
100,766
Net realized and unrealized loss
on investments
(66,048)
Net decrease in net assets
resulting from operations
$
45,382
The accompanying notes are an integral part of these financial statements.
American Heritage Growth Fund, Inc.
Statement of Changes in Net Assets
For the two years ended January 31, 2004
Year
Year
ending
ending
January 31
January 31
2004
2003
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment loss
$
(20,666) $
(38,541)
Net realized loss from
investment transactions
(34,718)
(166,482)
Net change in unrealized depreciation
on investments
100,766
97,492
Net decrease in net assets
resulting from operations
45,382
(107,531)
Distributions to shareholders:
Net investment income
0
0
Net realized gains on investments
0
0
Capital share transactions
Proceeds from shares sold
6,500
58
Payment for shares redeemed
(10,730)
(21,875)
Net decrease from capital
share transactions
(4,230)
(21,817)
Net increase (decrease)
in net Assets
41,152
(129,348)
NET ASSETS:
Beginning of year
170,497
299,845
End of year
$
211,649 $
170,497
CAPITAL SHARE ACTIVITY
Shares sold
87,368
689
Shares redeemed
(154,523)
(300,265)
Net decrease in shares outstanding
(67,155)
(299,576)
Shares outstanding at the
beginning of the period
2,834,336
3,133,912
Shares outstanding at the
end of the period
2,767,181
2,834,336
The accompanying notes are an integral part of these financial statements.
American Heritage Growth Fund, Inc.
Notes to Financial Statements
January 31, 2004
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 based upon the best information available to the Board of Directors.
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.
As of January 31, 2004, the Fund had available for federal income purposes an unused capital loss carryover of approximately $2,812,869, which expires between 2004 and 2019. If not utilized by then, the loss will be charged against paid in capital.
Distribution to Shareholders
The Fund intends to distribute to shareholders substantially all of its net investment income, if any, and any net realized capital gains, 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 that 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 a repurchase agreement 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 these 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 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. However, for the year ending January 31, 2004, AHMC agreed to waive its investment advisory fees which amounted to $2,376.
Heiko H. Thieme, the Fund’s Chairman of the Board of Directors and Chief Executive Officer, is also the Chairman of the Board of Directors, Chief Executive Officer, and Secretary of AHMC, of which he owns all of the outstanding shares.
AHMC and Heiko H. Thieme have jointly agreed to reimburse the Fund to the extent that operating expenses of the Fund, exclusive of any expenses related to litigation or arbitration exceed 9.5% of the Fund’s average net assets. Brokerage commissions are not considered to be operating expenses for purposes of the computation of the amount of the reimbursement. The joint agreement will be in effect until June 30, 2004. The amount of the required reimbursement through January 31, 2004 was $17,122. Should no payment be made by June 30 ,2004, the Fund will redeem the shares of the Fund collateralizing the agreement to the extent required and retain the cash proceeds.
During the fiscal years ended January 31, 2004 and 2003, Thieme Securities, Inc., which is wholly owned by Heiko H. Thieme, received brokerage commissions from the Fund of $11,171 and $6,055, respectively.
NOTE 3. INVESTMENTS
During the year ended January 31, 2004, purchases and sales of investment securities, other than short-term investments, aggregated $2,375,475 and $2,419,646, respectively.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of January 31, 2004, there were 250,000,000 shares of $0.001 par value capital stock authorized of which 2,767,181 were outstanding and the total par value and paid in capital aggregated $3,266,222.
American Heritage Growth Fund, Inc.
FINANCIAL HIGHLIGHTS AND RELATED
RATIO/SUPPLEMENTAL DATA
For a fund share outstanding throughout each period
For fiscal years ended January 31
2004
2003
2002
2001
2000
Net asset value, beginning of period
$
0.06
0.10
0.16
$
0.16
$
0.13
Income (loss) from investment operations:
Net investment income (loss)
(0.01)
(0.01)
(0.01)
(0.02)
0.00
Net gains (losses) on securities (both
realized and unrealized)
0.03
(0.03)
(0.05)
0.02
0.03
Total from investment operations
0.02
(0.04)
(0.06)
0.00
0.03
Less distributions:
Dividends (from net investment
income)
0.00
0.00
0.00
0.00
0.00
Distributions (from capital gains)
0.00
0.00
0.00
0.00
0.00
Net asset value, end of period
$
0.08
$
0.06
$
0.10
$
0.16
$
0.16
Total return
33.33%
(40.00)%
(37.50)%
0.00%
23.08%
Ratios/Supplemental data:
Net assets, end of period
$
211,649
$
170,497
$
299,845
$
555,393
$
663,825
Ratio of expenses to average net assets
11.47%
18.77%
14.70%
12.41%
4.83%
Ratio of net loss to average net assets
(10.87)%
(18.66)%
(14.30)%
(10.95)%
(3.18)%
Portfolio turnover rate
1840.13%
597.61%
154.30%
212.83%
418.34%
MEYLER & COMPANY, LLC
One Arin Park
1715 Highway 35
Middletown, NJ 07748
INDEPENDENT AUDITOR’S REPORT
Board of Directors and Shareholders
American Heritage Growth Fund, Inc.
New York, NY
We have audited the accompanying statement of assets and liabilities of the American Heritage Growth Fund, Inc., including the schedule of investments in securities, as of January 31, 2004, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the three years in the period then ended. 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 the financial highlights based on our audits. The financial highlights data for each of the two periods ended January 31, 2001 were audited by Larson, Allen, Weishair & Co., LLP whose auditors’ report, dated May 10, 2001, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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, 2004, 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred to above present fairly, in all material respects, the financial position of the American Heritage Growth Fund, Inc. as of January 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the three years in the period then ended, in conformity with auditing standards generally accepted in the United States of America.
/s/Meyler & Company, LLC.
Middletown, NJ
March 27, 2004
Item 2. Code of Ethics.
(a)
As of the end of the period covered by this report, the registrant had not adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. The registrant did not adopt such a code because the Board of Directors did not believe it necessary due to the registrant’s small size and as it only has one executive officer who is also the senior financial officer.
(b)
Not applicable.
(c), (d), (e) and (f)
Not applicable.
Item 3. Audit Committee Financial Expert.
The registrant does not have an audit committee.
Item 4. Principal Accountant Fees and Services.
(a)
Audit Fees
FY 2003
$ 7,000
FY 2004
$ 8,500
(b)
Audit-Related Fees
Registrant
FY 2003
$ 0
FY 2004
$ 0
(c)
Tax Fees
Registrant
FY 2003
$ 1,200
FY 2004
$ 0
(d)
All Other Fees
Registrant
FY 2003
$ 0
FY 2004
$ 0
(e)
Not applicable..
(f)
During audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
(g)
The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant:
Registrant
FY 2003
$ 0
FY 2004
$ 0
(h)
Not applicable.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. Schedule of Investments. Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Funds. Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item.
Item 10. Controls and Procedures.
(a)
Based upon an evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures within 90 days of the filing of this Report, the registrant’s Chief Executive Officer and Chief Financial Officer believes that the disclosure controls and procedures were effective.
(b)
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal year that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 11. Exhibits.
(a)(2)
EX-99.CERT Filed herewith.
(a)(3)
Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b)
EX-99.906CERT Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
American Heritage Growth Fund, Inc.
By /s/ Heiko H. Thieme CEO
*Heiko H. Thieme CEO
Date April 23, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/ Heiko H. Thieme CEO
*Heiko H. Thieme CEO
Date April 23, 2004
* Print the name and title of each signing officer under his or her signature.
The accompanying notes are an integral part of these financial statements.
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