UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSRS
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)
845 Third Avenue
New York, NY 10022
(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: July 31, 2004
Form N-CSRS 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-CSRS in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSRS, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSRS 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.
| American Heritage Growth Fund, Inc. |
Semi-Annual Report July 31, 2004 |
![[americanheritagegrowthfun002.jpg]](https://capedge.com/proxy/N-CSRS/0001162044-04-000434/americanheritagegrowthfun002.jpg)
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.
Statement of Assets & Liabilities
July 31, 2004 (Unaudited)
ASSETS
Investments in securities, at market value
(Cost $236,775) (Note 1)
$
176,522
Dividends and interest receivable
238
Receivable from Advisor
30,745
TOTAL ASSETS
207,505
LIABILITIES
Bank Overdraft…………..……………….. 21,921
Payable for securities purchased
3,561
Accrued expenses…
68
TOTAL LIABILITIES
25,550
NET ASSETS
Net Assets (equivalent to $0.07 per
share based on 2,766,543 shares
of capital stock outstanding) (Note 4)
$
181,955
Composition of net assets:
Capital Stock par value $0.001;
250,000,000 shares authorized;
2,766,043 shares issued and outstanding $ 2,767
Additional Paid in capital
3,266,375
Accumulated net investment loss
(245,063)
Accumulated net realized loss on
Investments
(2,781,871)
Net unrealized depreciation on
Investments
(60,253)
NET ASSETS, July 31, 2004
$
181,955
The accompanying notes are an integral part of these financial statements.
AMERICAN HERITAGE GROWTH FUND, INC.
Schedule of Investments in Securities
July 31, 2004 (Unaudited)
Number of
Shares
Value
COMMON STOCKS – 97.01%
Biotechnology & Research – 11.32%
AspenBio, Inc. *
3,000
3,030
Crucell NV *.
1,250
9,350
Oragenics, Inc. *
500
1,340
V I Technologies, Inc. *
8,500
6,885
20,605
Computer & Peripherals– 17.25%
3Com Corp *.
1,500
7,395
Int’l Microcomputer Software, Inc. *
3,000
3,480
Nuance Communication *
1,000
4,370
Simulations Plus, Inc. *.
2,500
8,250
Sun Microsystems *
2,000
7,900
31,395
Investors – 5.61%
Harris & Harris *
1,000
10,210
Gold & Silver Ores – 10.62%
Canarc Resource Corp. *
5,000
3,000
Goldcorp, Inc.
750
8,633
Gold Fields
750
7,695
19,328
Healthcare – 0.00%
FPA Medical *
5,000
1
Miscellaneous Materials & Ores – 0.54%
MEMS USA, Inc. *
500
975
National Commercial Banks – 5.13%
J.P. Morgan & Co., Inc. ………….
250
9,332
The accompanying notes are an integral part of these financial statements.
AMERICAN HERITAGE GROWTH FUND, INC.
Schedule of Investments in Securities
July 31, 2004 (Unaudited)
(continued)
Number of
Shares
Value
Pharmaceuticals – 17.30%
Avanir Pharma *
6,000
10,920
Millenia Hope, Inc. *
4,000
840
Nexmed, Inc. *
5,000
9,350
Teva Pharmaceuticals.
350
10,360
31,470
Security Brokers – 4.91%
TradeStation Group Inc *
1,500
8,925
Semiconductors – 6.39%
Intel Corp.
300
7,314
Lumera Corp. *
750
4,312
11,626
Telephone & Communications –17.95%
AT & T Corp.
500
7,550
Aware, Inc. *
2,500 9,100
Charter Communications *
2,500
7,725
Ecuity, Inc. *.
20,000
800
Wireless Facilities *
1,000
7,480
32,655
Total Common Stock
176,522
TOTAL INVESTMENTS
(Cost $236,775)
97.01%
176,522
OTHER ASSETS LESS LIABILITIES.. 2.99%
5,433
NET ASSETS
100.00%
$
181,955
*
Non-income producing security.
The accompanying notes are an integral part of these financial statements.
AMERICAN HERITAGE GROWTH FUND, INC.
Statement of Operations
For the six months ended
July 31, 2004 (Unaudited)
INVESTMENT INCOME:
Dividends
$
800
Interest
5
TOTAL INVESTMENT INCOME
805
EXPENSES:
Investment advisory fees (Note 2)
1,239
Fund Accounting / Transfer agent fees
6,483
Audit fees
3,241
Legal fees
3,491
Insurance fees
89
Custodian fees
2,255
Registration
1,123
Printing
1,745
Other expenses
996
TOTAL EXPENSES
20,662
Less: waiver of investment
Receivable from Advisor (Note 2)
(10,006)
Expense Waiver
(1,239)
NET EXPENSES
9,417
Net investment loss
(8,612)
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized loss from investment
transactions
31,088
Net change in unrealized
depreciation on investments
(52,233)
Net realized and unrealized loss
on investments
(21,145)
Net decrease in net assets
RESULTING FROM OPERATIONS
$(29,757)
The accompanying notes are an integral part of these financial statements.
AMERICAN HERITAGE GROWTH FUND, INC.
Statements of Changes in Net Assets
Six months ended
Year
July 31 ended
2004
January 31
(Unaudited) 2004
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment loss
$
(8,612)
$(20,666)
Net realized loss from
investment transactions
(31,088)
(34,718)
Net change in unrealized depreciation
on investments
(52,233)
100,766
Net decrease/increase in net assets
resulting from operations
(29,757)
45,382
Distributions to shareholders:
Net investment income
0
0
Net realized gains on investments
0
0
Capital share transactions
Proceeds from shares sold
2,500
6,500
Payment for shares redeemed
(2,437)
(10,730)
Net decrease from capital
share transactions
63
(4,230)
Net increase (decrease)
in net Assets
(29,694)
41,152
NET ASSETS:
Beginning of year
211,649
170,497
End of year
$
181,955
$211,649
CAPITAL SHARE ACTIVITY
Shares sold
33,409
87,368
Shares redeemed
(34,047)
(154,523)
Net decrease in shares outstanding
(638)
(67,155)
Shares outstanding at the
beginning of the period
2,767,181
2,834,336
Shares outstanding at the
end of the period
2,766,543
2,767,181
Note: The Fund had no undistributed net investment income accumulated loss or accumulated distributions in excess of net investment income for each of the periods presented.
The accompanying notes are an integral part of these financial statements.
AMERICAN HERITAGE GROWTH FUND, INC.
Notes to Financial Statements
July 31, 2004 (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.
Security valuations
The Fund values investment securities, where reliable market quotations are readily 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.
As of January 31, 2004, the Fund had available for federal income purposes unused capital losses carryover of approximately $2,812,869, which expire between 2004 and 2019. If not utilized by then, the loss will be charged against paid in capital.
AMERICAN HERITAGE GROWTH FUND, INC.
Notes to Financial Statements
July 31, 2004 (Unaudited)
(Continued)
The aggregate cost of securities, gross unrealized gain, gross unrealized losses and net unrealized loss is the same
for cost for Federal Income Tax purposes as that reflected in the accompanying financial statements.
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
AMERICAN HERITAGE GROWTH FUND, INC.
Notes to Financial Statements
July 31, 2004 (Unaudited)
(Continued)
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 six months ending July 31, 2004, AHMC agreed to waive its investment advisory fees which amounted to $1,239. The Fund does not seek to recapture the fees waived.
AHMC and Heiko H Thieme have jointly agreed to reimburse the Fund to the extent that the 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
AMERICAN HERITAGE GROWTH FUND, INC.
Notes to Financial Statements
July 31, 2004 (Unaudited)
(Continued)
will be in effect until June 30, 2004. The amount of requited reimbursement through July 31, 2004 was $30,745 of which $17,122 has been collateralized with marketable securities.
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.
During the six months ended July 31, 2004 and the fiscal year ended January 31, 2004, Thieme Securities, Inc., which is wholly owned by Heiko H. Thieme, received brokerage commissions from the Fund of $1,958 and $11,171, respectively.
NOTE 3. INVESTMENTS
During the six months ended July 31, 2004, purchases and sales of investment securities, other than short-term investments, aggregated $297,699 and $291,681, respectively.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of July 31, 2004, there were 250,000,000 shares of $0.001 par value capital stock authorized.
NOTE 5. CAPITAL AND OPERATING LOSS CARRY FORWARDS
At July 31, 2004, the Fund had net capital loss carry forwards of approximately $2,820,000 which expire between 2004 and 2012.
AMERICAN HERITAGE GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS AND RELATED
RATIO/SUPPLEMENTAL DATA
For a fund share outstanding throughout each period
Six months
Ending
7/31/2004
Fiscal years ending January 31
(Unaudited)
2004
2003
2002
2001
Net asset value, beginning of period
$
0.08
0.06
0.10
$
0.16
0.16
Income (loss) from investment operations:
Net investment income (loss)
0.00
(0.01)
(0.01)
(0.01)
(0.02)
Net gains (losses) on securities (both
realized and unrealized)
(0.01)
0.03
(0.03)
(0.05)
0.02
Total from investment operations
0.00
0.02
(0.04)
(0.06)
0.00
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
$
0.07
$
0.08
$
0.06
$
0.10
$
0.16
Total return
(12.50)%
33.33%
(40.00)%
(37.50)%
0.00%
Ratios/Supplemental data:
Net assets, end of period
$
181,955
$
211,649
$
170,497
$
299,845
$
555,393
Ratio of expenses to average net assets
9.49%
11.47%
18.77%
14.70%
12.41%
Ratio of net loss to average net assets
(8.68)%
(10.87)%
(18.66)%
(14.30)%
(10.95)%
Portfolio turnover rate
141.62%
1840.13%
597.61%
154.30%
212.83%
The accompanying notes are an integral part of these financial statements.
Item 2. Code of Ethics. Not applicable.
Item 3. Audit Committee Financial Expert. Not applicable.
Item 4. Principal Accountant Fees and Services. Not applicable.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. Schedule of Investments.
Not applicable – schedule filed with Item 1.
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 half-year that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 11. Exhibits.
(a)(1)
EX-99.CODE ETH. Not applicable
(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 October 7, 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 October 7, 2004
* Print the name and title of each signing officer under his or her signature.