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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
(File No. 333-91317)
Pre-Effective Amendment No. 1 /X/
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Post-Effective Amendment No. / /
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AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
(File No. 811-09699)
Amendment No. 1 /X/
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(Check appropriate box or boxes.)
AMERICAN EAGLE FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
1550 UTICA AVENUE SOUTH, SUITE 950, MINNEAPOLIS, MN 55416
(Address of Principal Executive Offices) (Zip Code)
(612) 541-0677
(Registrant's Telephone Number, including Area Code)
JAMES R. JUNDT
1550 UTICA AVENUE SOUTH, SUITE 950, MINNEAPOLIS, MN 55416
(Name and Address of Agent for Service)
COPIES TO:
James E. Nicholson Matthew L. Thompson
Faegre & Benson LLP Faegre & Benson LLP
90 South Seventh Street, Suite 2200 90 South Seventh Street, Suite 2200
Minneapolis, Minnesota 55402 Minneapolis, Minnesota 55402
P. Graham van der Leeuw
Faegre & Benson LLP
90 South Seventh Street, Suite 2200
Minneapolis, Minnesota 55402
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b) of Rule 485
/ / On [date] pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/ / On [date] pursuant to paragraph (a)(1) of Rule 485
/ / 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/ / on [date] pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Approximate date of proposed public offering: As soon as practicable
following the effective date of this registration statement.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
elected to register an indefinite number of shares of common stock under the
Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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AMERICAN EAGLE FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-1A
EXPLANATORY NOTE TO REGISTRATION STATEMENT
American Eagle Funds, Inc. (the "Registrant") currently is authorized
to issue its shares in two series, as follows:
Series A - American Eagle Capital Appreciation Fund ("Capital
Appreciation Fund");
Series B - American Eagle Twenty Fund ("Twenty Fund");
Part A consists of one prospectus for Capital Appreciation Fund and
Twenty Fund.
Part B consists of one Statement of Additional Information ("SAI") for
Capital Appreciation Fund and Twenty Fund.
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AMERICAN EAGLE FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-1A
PART A
PROSPECTUS
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SEARCHING TODAY FOR THE GENIUSES OF TOMORROW-SM-
AMERICAN EAGLE CAPITAL APPRECIATION FUND
AMERICAN EAGLE TWENTY FUND
PROSPECTUS
December 28, 1999
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE FUNDS
The American Eagle Capital Appreciation Fund (Capital Appreciation
Fund) and American Eagle Twenty Fund (Twenty Fund) are professionally managed
mutual funds. An investor in any fund becomes a shareholder of that fund.
BEFORE YOU INVEST, PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE
REFERENCE.
RISK/RETURN SUMMARY
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
Each fund's investment objective is capital appreciation. A fund may
not change this objective without shareholder approval. As with any mutual fund,
there is no guarantee that any fund will meet its investment objective.
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
The funds' investment adviser seeks to invest in stocks of the fastest
growing American companies and, to a limited extent, in stocks of comparable
foreign companies. The investment adviser employs a fundamental bottom up
"growth" style approach to identify such companies. In other words, the
investment adviser looks at each company's revenue and earnings growth
potential, as well as its competitive, management, market and other
characteristics. In general, the investment adviser selects stocks without
regard to industry sectors and other defined selection criteria or for the
potential for dividends. In normal market conditions, the funds' investment
adviser will manage each of the funds as follows:
- CAPITAL APPRECIATION FUND maintains a core portfolio of 30 to 50
stocks of primarily American growth companies without regard to
their size. The fund may employ leverage, sell securities short and
buy and sell futures and options contracts to protect against
adverse market price changes and to generate additional investment
returns.
- TWENTY FUND maintains a more concentrated portfolio of
approximately, but not less than, 20 stocks of primarily American
growth companies without regard to their size. The fund may employ
leverage, sell securities short and buy and sell futures and
options contracts to protect against adverse market price changes
and to generate additional investment returns.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
Your fund investment will be subject to various risks. YOUR INVESTMENT
WILL NOT BE A BANK DEPOSIT AND WILL NOT BE INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. Some of the more
important risks of the funds are summarized below.
- GENERAL INVESTMENT RISK AND RISK OF OWNING EQUITY SECURITIES.
Mutual funds do not always meet their investment objectives. Common
stocks, the primary investment of each fund, tend to be more
volatile than other investment choices. The value of a fund's
portfolio may decrease if the value of an individual company in the
portfolio decreases. The value of a fund's portfolio could also
decrease if the stock market goes down. If the value of a fund's
portfolio decreases, a fund's net asset value (NAV) will also
decrease. Therefore, the biggest risk of investing in any fund is
that its NAV could go down, and you could lose money.
- RISK OF OWNING SMALLER AND MEDIUM SIZE COMPANY STOCKS. Investments
in stocks of smaller and medium size companies may fluctuate more
sharply than those of larger, more established companies and,
therefore, may expose the funds to greater price volatility.
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- RISK OF BEING NON-DIVERSIFIED. A non-diversified fund may hold
larger positions in a smaller number of issuers than a diversified
fund. As a result, a single security's increase or decrease in
value may have a greater impact on a fund's NAV and total return.
- RISK OF EMPLOYING "LEVERAGE." A fund that borrows money to purchase
additional investment securities (a practice known as "leverage")
increases such fund's market exposure and its risk. When a fund is
"leveraged" and its investments increase or decrease in value, the
fund's NAV will normally increase or decrease more than if it had
not been leveraged. In addition, the interest the fund must pay on
borrowed money will reduce any gains or increase any losses.
- RISK OF INVESTING IN OPTIONS AND FUTURES CONTRACTS. Each fund may
buy and sell put and call options and futures contracts (and
related options) to protect against changes in NAV and to attempt
to realize additional investment returns. These techniques involve
additional risks, and there is no guarantee that the funds will be
able to utilize them for their intended purposes. Their use may
involve risks similar to the use of leverage.
- RISK OF SELLING SECURITIES SHORT. When a security is sold "short",
the fund borrows the security sold and must replace the borrowed
security at a specified future date. If the value of the security
goes down between the sale date and the scheduled replacement date,
the fund makes a profit. If the value of the security goes up
between such dates, the fund incurs a loss. Moreover, the fund
cannot be assured that it will be able to close out a short sale
position at any particular time or at an acceptable price.
WHO SHOULD AND SHOULD NOT INVEST IN THE FUNDS?
The funds are designed for long-term investors who can bear the risks
that such an investment entails. Investors looking for current income or
short-swing market gains should not invest in the funds.
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FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if
you buy and hold fund shares.
<TABLE>
<CAPTION>
CAPITAL
APPRECIATION TWENTY FUND
FUND
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases None None
(as a percentage of offering price)...........................................................
Maximum Deferred Sales Charge (Load) (as a percentage of purchase price or
redemption proceeds, whichever is lower).................................................... None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees............................................................................. 1.30% 1.30%
Distribution and/or Service (12b-1) Fees.................................................... None None
Other Expenses *............................................................................ 5.66% 5.66%
Total Annual Fund Operating Expenses........................................................ 6.96% 6.96%
</TABLE>
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* Other Expenses are based on estimated amounts for the current fiscal year.
EXAMPLE: We provide this example to help you compare the cost of investing in
fund shares with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in each fund's shares for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual expenses may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Capital Appreciation Fund................................. $689 $2027
Twenty Fund............................................... $689 $2027
</TABLE>
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INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
INVESTMENT OBJECTIVE OF EACH FUND
Each fund's investment objective is capital appreciation. As with any
mutual fund, the funds cannot assure you that their investment objective will be
achieved. Generation of current income is not an objective. The funds are
designed for long-term investors. If you are looking for current income or
short-swing market gains, you should not invest in the funds.
A fund may not change its investment objective without the approval of
the fund's shareholders.
INVESTMENT STRATEGIES
In pursuing its investment objective, each fund employs its own
investment strategy and policies. An investment in each fund, therefore,
involves different risks.
- CAPITAL APPRECIATION FUND is a non-diversified fund that employs
an aggressive yet flexible investment program. In normal market
conditions, the fund emphasizes a core portfolio of 30 to 50 stocks
of primarily American growth companies, without regard to their
size. The fund may also employ leverage, sell securities short and
buy and sell futures and options contracts to generate additional
investment returns. As described below, these techniques involve
additional risk.
- TWENTY FUND is a non-diversified fund that, in normal market
conditions, maintains a more concentrated portfolio of
approximately, but not less than, 20 stocks of primarily American
growth companies, without regard to their size. The fund may also
employ leverage, sell securities short and buy and sell futures and
options contracts to generate additional investment returns. As
described below, these techniques involve additional risk.
Jundt Associates, Inc. (the "Investment Adviser"), each fund's
investment adviser, seeks to invest in stocks of the fastest growing American
companies and, to a limited extent, in domestically traded stocks of comparable
foreign companies. In normal market conditions, at least 65% of each fund's
assets must be invested in equity investments. For each of the funds, the
Investment Adviser seeks companies it believes offer significant potential for
growth in revenue and earnings. The Investment Adviser believes that such
companies offer investors the greatest potential for long-term capital
appreciation. The Investment Adviser employs a fundamental "bottom up" approach
to identify such companies. In other words, the Investment Adviser looks at each
company's revenue and earnings growth potential, as well as its competitive,
management, market and other characteristics. In general, the investment adviser
selects stocks without regard to industry sectors and other defined selection
criteria or the potential for dividends.
A fund's cash level (including similar investments in short-term debt
instruments) may temporarily increase without limitation when the Investment
Adviser believes that market conditions are unfavorable for profitable
investing, or when it is otherwise unable to locate attractive investment
opportunities. In other words, the funds do not always remain fully invested in
accordance with their primary strategies. When this occurs, the funds
temporarily may not pursue their primary strategies in that they may not
participate in market advances or declines to the same extent that they would
have done if they had remained more fully invested in stocks.
The funds generally intend to purchase securities for long-term
investment. To a limited extent, however, a fund may purchase securities in
anticipation of relatively short-term gains. In addition, each fund, to a
limited extent, may sell securities short, which are short-term transactions.
Short-term transactions may also result from liquidity needs, from securities
having reached a price objective or by reason of economic or other developments
not foreseen at the time of the investment. The Investment Adviser makes changes
in each fund's portfolio whenever the Investment Adviser believes such changes
are desirable.
A fund's "portfolio turnover rate" measures the degree of change in the
makeup of the fund's investment portfolio. A smaller, more rapidly growing fund
(such as Capital Appreciation Fund and Twenty Fund) generally will experience
higher portfolio turnover because new investments in the fund are being invested
in portfolio securities by the Investment Adviser.
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In addition, options and futures contracts, which each fund may employ to
protect against declines in market prices and to pursue additional income,
typically produce higher portfolio turnover rates. Each fund's portfolio
turnover rates are expected to be quite high from time to time. High portfolio
turnover rates may subject the funds to additional transaction costs and may
also result in faster realization of taxable capital gains.
Each fund is subject to various investment restrictions, which are
detailed in the Statement of Additional Information. Some of such restrictions
are designated as "fundamental" and, therefore, cannot be changed without the
approval of fund shareholders. Other "non-fundamental" restrictions may be
changed without the approval of shareholders.
In addition to the investments described above and in the following
sections, each fund may to a more limited extent invest in other types of
securities, including but not limited to: investment grade debt securities and,
to a more limited extent, non-investment grade debt securities; repurchase
agreements; zero coupon debt securities; and options. The funds may also engage
in various other practices, such as securities lending. These instruments and
practices and their related risks are described in the Statement of Additional
Information.
OVERALL RISKS OF INVESTING IN THE FUNDS
GENERAL. Mutual funds are a convenient and potentially rewarding way to
invest, but they do not always meet their investment objectives. The funds are
designed for long-term investors who can accept the risks of investing in a
portfolio with substantial common stock holdings. Common stocks tend to be more
volatile than other investment choices. The value of a fund's portfolio may
decrease if the value of an individual company in the portfolio decreases. The
value of a fund's portfolio could also decrease if the stock market goes down.
If the value of a fund's portfolio decreases, a fund's net asset value (NAV)
will also decrease. Therefore, the biggest risk of investing in any fund is that
its NAV could go down, and you could lose money.
DIVERSIFICATION. Diversification is a way to reduce risk by investing
in a broad range of stocks. A "non-diversified" fund has the ability to take
larger positions in a smaller number of issuers. Therefore, the appreciation or
depreciation of a single stock may have a greater impact on the NAV of a
non-diversified fund. However, neither fund may invest more than 25% of its
assets in any one issuer (excluding U.S. Government securities). Additionally,
50% of each such fund's assets must be fully diversified. This means that no one
issuer (excluding the U.S. Government) in the fully diversified half of the
portfolio may account for more than 5% of the fund's total assets.
SECTOR CONCENTRATION. At times, each fund may invest more than 25% of
its assets in one or more market sectors such as, for example, the technology
sector. A market sector may be made up of companies in a number of related
industries. When a fund concentrates in a market sector, financial, economic,
business and other developments affecting that sector may have a greater impact
on the fund's performance than if it had not concentrated in that sector.
YEAR 2000 RISK. Many existing computer programs and systems have been
written in such a way that, without modification, they will not properly process
and calculate date-related data after December 31, 1999. The funds have been
advised by the Investment Adviser and other of the funds' service providers that
required system modifications have been completed and that they are able to
properly process such data for the funds. However, should any of the funds'
service providers experience difficulties in this regard, it could have a
material adverse impact on the funds.
Additionally, the Investment Adviser considers Year 2000 compliance
when selecting portfolio holdings. However, there is no guarantee that the
information the Investment Adviser receives regarding a company's Year 2000
compliance is completely accurate. If a company in which a fund invests has not
satisfactorily addressed Year 2000 issues, the fund's investment performance
could suffer. The negative impact of Year 2000 issues may be greater for
companies in non-U.S. markets, since they may be less prepared for Year 2000
issues than domestic companies and markets.
RISKS RELATING TO CERTAIN PRINCIPAL INVESTMENT STRATEGIES
INVESTMENTS IN SMALLER COMPANIES. Each fund may from time to time
invest a substantial portion of its assets in securities issued by smaller
"emerging" companies. Investments in such companies may offer greater
opportunities for capital appreciation than investments in larger companies, but
may involve certain special risks. Such companies may have
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limited product lines, markets or financial resources and may be dependent on a
limited management group. The securities of such companies may trade less
frequently and in smaller volume than more widely held securities. Their values
may fluctuate more sharply than those of other securities. The funds may
experience difficulty in establishing or closing out positions in these
securities at prevailing market prices. There may be less publicly available
information about, and market interest in, smaller companies than is the case
with larger companies. It may take longer for the prices of such securities to
reflect the full value of their issuers' underlying earnings potential or
assets.
BORROWING AND LEVERAGE. Each fund may borrow money to invest in
additional portfolio securities. This practice, known as "leverage," increases
such fund's market exposure and risk. When a fund is "leveraged" and its
investments increase or decrease in value, the fund's net asset value will
normally increase or decrease more than if it had not leveraged its assets. In
addition, the interest the fund must pay on borrowed money will reduce any gains
or increase any losses. Successful use of leverage depends on the Investment
Adviser's ability to predict market movements correctly. The amount of money
borrowed by a fund for leverage may not exceed one-third of the fund's total
assets (including the amount borrowed).
OPTIONS AND FUTURES. Each fund may buy and sell call and put options
and futures contracts and related options to hedge (protect) against changes in
the prices of portfolio opportunities. Each fund may also employ such techniques
to attempt to realize additional investment returns. There is no guarantee that
the funds will be able to utilize them effectively for their intended purposes.
Options and futures contracts involve certain costs and risks, which are
described below and, in greater detail, in the Statement of Additional
Information.
If a fund purchases a put option on a security, the fund acquires the
right to sell the underlying security at a specified price at any time during
the term of the option. If the fund purchases a call option on a security, it
acquires the right to purchase the underlying security at a specified price at
any time during the term of the option. Each fund also may write "covered" call
options, giving such funds the obligation to sell to the option buyer the
underlying security at a specified price at any time during the term of the
option. The call option is "covered" because the fund must own or have the right
to acquire the security underlying the option.
If a fund sells a financial "futures" contract on an index, the fund
becomes obligated to deliver the value of the index at a specific future time
for a specified price. If a fund buys a financial futures contract on an index,
the fund becomes obligated to take delivery of the value of the index at a
specific future time at a specific price. An option on a futures contract gives
the buyer the right to buy from or sell to the seller a futures contract at a
specified price at any time during the period of the option. Upon exercise, the
writer of the option is obligated to pay the difference between the cash value
of the futures contract and the exercise price.
Successful use of futures contracts and related options depends greatly
on the Investment Adviser's ability to correctly forecast the direction of
market movements. In the case of an incorrect market forecast, the use of
futures contracts will reduce or eliminate gains or subject a fund to increased
risk of loss. In addition, changes in the price of futures contracts or options
may not correlate perfectly with the changes in the market value of the
securities the Investment Adviser is seeking to hedge. AS A RESULT, EVEN A
CORRECT MARKET FORECAST COULD RESULT IN AN UNSUCCESSFUL HEDGING TRANSACTION.
Other risks arise from a fund's potential inability to close out
futures contracts or options positions. Each fund will enter into options or
futures contracts transactions only if the Investment Adviser believes that a
liquid secondary market exists for such options or futures contracts. However,
there is no guarantee that the fund will be able to effect "closing
transactions" at any particular time or at an acceptable price.
Each fund may use futures contracts and related options to enhance
investment returns in addition to hedging against market risk. SUCH USE OF
FUTURES CONTRACTS INVOLVES RISKS SIMILAR TO THE USE OF LEVERAGE. Within
applicable regulatory limits, each fund can be subject to the same degree of
market risk as if approximately twice their net assets were fully invested in
securities. This may result in substantial additional gains in rising markets,
but likewise may result in substantial additional losses in falling markets.
SHORT SALES. The Investment Adviser may sell a security short on behalf
of each fund when it anticipates that the price of the security will decline. In
such cases, the fund borrows the security sold to complete the sale and must
replace the
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borrowed security at a future date. If the value of the borrowed security goes
down between the sale date and the scheduled replacement date, the fund makes a
profit. If the value of the security goes up between such dates, the fund incurs
a loss. Moreover, there is no guarantee that the fund will be able to close out
the position at a particular time or at an acceptable price. All short sales
must be fully secured by other securities (primarily U.S. Government
securities). Further, neither fund may sell securities short if, immediately
after the sale, the value of all securities sold short by the fund exceeds 25%
of the fund's total assets. In addition, each fund limits short sales of any one
issuer's securities to 5% of the fund's total assets and to 5% of any one class
of the issuer's securities.
MANAGEMENT OF THE FUNDS
The Investment Adviser serves as each fund's investment adviser and, as
such, is responsible for managing each fund's investment portfolio.
The Investment Adviser employs a team approach in managing the funds'
portfolios. All investment decisions are made by one or both of the firm's
portfolio managers: James R. Jundt (Chairman and Chief Executive Officer of the
Investment Adviser) and Marcus E. Jundt (Vice Chairman of the Investment
Adviser).
- JAMES R. JUNDT, CFA, began his investment career in 1964 with
Merrill Lynch, Pierce, Fenner & Smith Incorporated, New York, New
York, as a security analyst before joining Investors Diversified
Services, Inc. (now known as American Express Financial Advisers,
Inc.) in Minneapolis, Minnesota in 1969, where he served in
analytical and portfolio management positions until 1979. From 1979
to 1982, Mr. Jundt was a portfolio manager for St. Paul Advisers,
Inc. (now known as Fortis Advisers, Inc.) in Minneapolis. In
December 1982, Mr. Jundt left St. Paul Advisers and founded the
Investment Adviser. He has served as Chairman of the Board of
American Eagle Funds, Inc. since 1999, Jundt Funds, Inc. since
1995, and Jundt Growth Fund, Inc. since 1991. Mr. Jundt has
approximately 35 years of investment experience. Mr. Jundt also
serves as Chairman of the Board of U.S. Growth Investments, Inc.,
each fund's distributor.
- MARCUS E. JUNDT, son of James R. Jundt, has been Vice Chairman of
the Investment Adviser since 1992. Mr. Jundt was employed as a
research analyst for Victoria Investors in New York, New York from
1988 to 1992, and from 1987 to 1988 was employed by Cargill
Investor Services, Inc., where he worked on the floor of the
Chicago Mercantile Exchange. He has served as a President of
American Eagle Funds, Inc., Jundt Funds, Inc., and Jundt Growth
Fund, Inc. since 1999 and has been the President of U.S. Growth
Investments, Inc since 1997. Mr. Jundt has served as a portfolio
manager of Jundt Funds, Inc. since 1995 and Jundt Growth Fund since
1992. Mr. Jundt has approximately 12 years of investment and
related experience. Mr. Jundt also serves as a director of a
private company.
Each fund pays the Investment Adviser advisory fees of 1.30% per year
of such fund's average daily net assets.
Each fund also engages various other service providers, as set forth
under "Firms that Provide Services to the Funds" below.
HOW TO BUY FUND SHARES
GENERAL INFORMATION
You may purchase fund shares on any day the New York Stock Exchange
(NYSE) is open for business (generally, every week day other than customary
national holidays).
DETERMINATION OF NAV. If you purchase fund shares, you pay the
next-determined net asset value (NAV) of such shares. NAV generally is
calculated once daily as of 15 minutes after the close of normal trading on the
NYSE (generally 4:00 p.m., New York time) on each day the NYSE is open for
business. The NAV of each share is the value of that share's portion of the
fund's assets, minus its portion of the fund's liabilities. The most significant
asset of each fund is such fund's investments. Each fund generally values its
investments based on their closing market values. If closing market values are
not readily available for certain investments, such investments are valued at
their "fair value" as determined by or under the
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supervision of the funds' Board of Directors. Debt securities may be valued
based on quotations furnished by pricing services or by dealers who make a
market in such securities.
MINIMUM INVESTMENTS. The minimum initial investment in fund shares is
$1,000. You may make subsequent investments of at least $50. This minimum
initial investment does not apply to certain qualified retirement accounts or
custodial accounts for the benefit of minors. The minimum initial investment in
fund shares for qualified retirement accounts or custodial accounts for the
benefit of minors is $250. Contact the funds for more information.
OPENING AN ACCOUNT. You may open an account with and purchase fund
shares from the funds' distributor, U.S. Growth Investments (by contacting the
funds by mail or phone, as set forth below).
- PURCHASES BY MAIL. Complete the attached application and mail it,
along with a check payable to the applicable fund, to: The American
Eagle Funds, c/o Firstar Mutual Fund Services, LLC, P.O. Box 701,
Milwaukee, WI 53201-0701 (for regular mail) or The American Eagle
Funds, c/o Firstar Mutual Fund Services, LLC, 615 East Michigan
Street, 3rd Floor, Milwaukee, WI 53202-5207 (for overnight
delivery). YOU MAY NOT PURCHASE SHARES WITH A THIRD PARTY CHECK.
- PURCHASES BY TELEPHONE. Call 1-800-335-0333 to obtain an account
number and instructions (including instructions for wire
transferring your investment to the fund's bank account). You must
then promptly complete the attached application and mail it to the
fund (at the address set forth under "Purchases By Mail").
You may also open and account with and purchase fund shares from firms
that have selling agreements with U.S. Growth Investments. You may be charged an
additional fee at the time you purchase or redeem fund shares through a broker
or agent. U.S. Growth Investments currently imposes no such fees (other than
wire transfer charges) if you make purchases or redemptions directly through
U.S. Growth Investments.
AUTOMATIC INVESTMENT PLAN. You may make automatic monthly investments
of at least $50 through each fund's Automatic Investment Plan. For additional
information, call your broker or the funds.
RETIREMENT INVESTING. You may establish a fund account as an Individual
Retirement Account (IRA). You also may be able to purchase fund shares as an
investment for other qualified retirement plans in which you participate.
Examples include a profit-sharing or money purchase plan, a 401(k) plan, a
403(b) plan, or a Simplified Employer Pension (SEP) plan. You should consult
your tax advisor, employer and/or plan administrator before investing. Call the
funds for more information and application forms.
HOW TO SELL YOUR FUND SHARES
You normally may sell (redeem) your fund shares on any business day at
their next-determined NAV. The funds normally make payment within three days.
However, if you very recently purchased your shares by personal check, your
redemption payment may be delayed (typically for not more than 15 days) to
permit your check to clear. The value of shares redeemed may be more or less
than their original cost depending upon their NAV at the time of redemption.
You may not redeem your fund shares on any day that the NYSE is closed
(normally, weekends and customary national holidays). The funds also may suspend
your right of redemption if permitted by applicable laws and rules that are
designed to protect fund shareholders (for example, when emergencies or
restrictions in the securities markets make it difficult or impossible for the
funds to determine their net asset values or to sell their investments in an
orderly manner).
If redemptions cause any of your fund accounts to fall below $1,000,
and the account remains below $1,000 for 60 days after the fund notifies you in
writing, the fund may close your account and mail you a check for your account
balance.
SIGNATURE GUARANTEES. Your request to sell shares must be made in
writing and include a signature guarantee if any of the following situations
apply:
- you request to redeem more than $50,000 worth of shares;
9
<PAGE>
- you have changed your account registration or address within the
last 30 days;
- you request the check be mailed to a different address than the one
on your account;
- you request the check be made payable to someone other than the
account owner; or
- you request the redemption or exchange proceeds be transferred to
an account with a different registration.
You should be able to obtain a signature guarantee from a bank,
broker-dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency or savings association. A NOTARY PUBLIC CANNOT
PROVIDE A SIGNATURE GUARANTEE.
EXCHANGE PRIVILEGE. Except as provided below, you may exchange some or
all of your fund shares for shares of equal value of another fund. The minimum
amount which you may exchange is $1,000. The funds may restrict the frequency
of, or otherwise modify, condition, terminate or impose charges upon, exchanges.
An exchange is considered a sale of shares for income tax purposes.
EXPEDITED TELEPHONE REDEMPTIONS. The funds currently offer certain
expedited redemption procedures. If you are redeeming shares worth at least
$1,000 but not more than $50,000, you may redeem by calling the funds at
1-800-335-0333. You must have completed the relevant section of your account
application before the telephone request is received. The proceeds of the
redemption will be paid by check mailed to your address of record or, if
requested at the time of redemption, by wire transfer to the bank designated on
your account application. The funds' transfer agent charges a fee for wire
transfers.
Your broker may allow you to effect an expedited redemption of fund
shares purchased through your broker by notifying him or her of the amount of
shares to be redeemed. Your broker is then responsible for promptly placing the
redemption request with the fund on your behalf.
MONTHLY CASH WITHDRAWAL PLAN. If you own fund shares valued at $10,000
or more, you may open a Withdrawal Plan and have a designated amount of money
paid monthly to you or another person. Contact the funds for additional
information.
10
<PAGE>
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
Substantially all of each fund's net investment income and net capital
gains, if any, will be paid to investors once a year. You may elect to receive
distributions in cash or in additional fund shares. If you do not indicate a
choice, your distributions will be reinvested in additional fund shares.
TAXES
Distributions from the fund to you are taxable (unless you are exempt
from taxes). Distributions to you from a fund's income and short-term capital
gains will be taxable as "ordinary income." Long-term capital gain distributions
will be taxed at applicable long-term capital gains rates regardless of the
length of time you have held your fund shares. Although the Investment Adviser
will endeavor to have as great a portion as possible of each fund's
distributions qualify as long-term capital gains, the composition of
distributions in any year will depend upon a variety of market and other
conditions and cannot be predicted accurately. A portion of a fund's dividends
may qualify for the dividends received deduction for corporations. A fund's
distributions will be taxable when they are paid, whether you take them in cash
or reinvest them in additional fund shares, except that distributions declared
in December but paid in January are taxable as if paid on or before December 31.
The federal income tax status of all distributions will be reported to you
annually. In addition to federal income taxes, distributions may also be subject
to state or local taxes. If you live outside the United States, the dividends
and other distributions could also be taxed by the country in which you live.
"BUYING A DISTRIBUTION"
On the date of a distribution by a fund, the price of its shares is
reduced by the amount of the distribution. If you purchase shares of a fund on
or before the record date ("buying a distribution"), you will pay the full price
for the shares (which includes realized but undistributed earnings and capital
gains of the fund that accumulate throughout the year), and then receive a
portion of the purchase price back in the form of a taxable distribution. For
this reason, most taxable investors avoid buying fund shares at or near the time
of a large distribution.
THIS TAX INFORMATION IS GENERAL IN NATURE. YOU SHOULD CONSULT YOUR TAX
ADVISER REGARDING FEDERAL, STATE, LOCAL OR FOREIGN TAX ISSUES THAT MAY RELATE TO
YOU SPECIFICALLY.
11
<PAGE>
AMERICAN EAGLE FUNDS APPLICATION FORM
QUESTIONS: CALL THE FUNDS AT 1-800-335-0333
I wish to establish or revise my account in the funds checked below in
accordance with these instructions, the terms and conditions of this form and
the current prospectus of the funds, a copy of which I have received.
INSTRUCTIONS: 1) Please complete Sections A through G, as applicable.
Be sure to sign the certifications in Section G. ALL
SHAREHOLDERS MUST SIGN THE APPLICATION FORM EXACTLY
AS THEIR NAMES APPEAR IN SECTION A. BE SURE ALL
JOINT TENANTS SIGN. ONLY THE CUSTODIAN FOR A MINOR
MUST SIGN. FIDUCIARIES AND OFFICERS OF CORPORATIONS
OR OTHER ORGANIZATIONS SHOULD INDICATE THEIR CAPACITY
OR TITLE.
2) Please send this completed form and your check
payable to each fund in which you are investing to:
THE AMERICAN EAGLE FUNDS, C/O FIRSTAR MUTUAL FUND
SERVICES, LLC, P.O. BOX 701, MILWAUKEE WI 53201-0701
3) If you wish to invest by telephone, call your
investment dealer/adviser or the funds at
1-800-335-0333. The funds will assign a new account
number to you. Then instruct your commercial bank to
wire transfer "Federal Funds" via the Federal Reserve
System to: FIRSTAR BANK, N.A., 777 EAST WISCONSIN
AVENUE, MILWAUKEE, WI 53202; ABA #075000022; CREDIT
TO: FIRSTAR MUTUAL FUND SERVICES, LLC; ACCOUNT NO.:
112-952-137; FURTHER CREDIT TO: THE AMERICAN EAGLE
FUNDS; [NAME OF FUND]; ACCOUNT NUMBER: [ASSIGNED BY
TELEPHONE].
See "How to Buy Fund Shares" in the Prospectus for order
effectiveness and further information.
<TABLE>
<S><C>
- -----------------------------------------------------------------------------------------------------------------------------------
A. ACCOUNT
REGISTRATION /_/ Individual
----------------------------------------------------------------------------------------------
First Name Middle Last Name Social Security #
1. NAME /_/ Joint Investor*
-----------------------------------------------------------------------------------------
First Name Middle Last Name Social Security #
*The account will be registered "Joint tenants with rights of survivorship" unless otherwise specified.
/_/ Trust Account
-------------------------------------------------------------------------------------------
Name of Trust Tax Identification #
-------------------------------------------------------------------------------------------
Date of Trust Trustee(s)
/_/ Corporation, Partnership or Other Entity
---------------------------------------------------------------
Type of Entity Tax Identification #
--------------------------------------------------------------------------------------------------------------
Name of Entity
/_/ Transfer/Gift to Minors
---------------------------------------------------------------------------------
Custodian's Name (one name only) Minor's State of Residence
---------------------------------------------------------------------------------
Minor's Name Minor's Social Security #
2. ADDRESS ( )
---------------------------------------------------------- ---------------------------------------------
Address/Apt. No. Area Code Business Telephone
( )
---------------------------------------------------------- ---------------------------------------------
City State Zip Code Area Code Home Telephone
----------------------------------------------------------
E-mail Address (if any)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
B. INITIAL The minimum initial investment is $1,000. NOTE: THE FUNDS WILL NOT ACCEPT THIRD PARTY CHECKS.
INVESTMENT
- - Choose one dividend and capital gains distribution option for each fund. IF NO ELECTION IS MADE, DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS WILL AUTOMATICALLY BE REINVESTED. Indicate whether cash distributions should be sent by check to your address
of record or deposited directly in your bank account.
/_/ Deposit directly into my bank account. ATTACHED IS A VOIDED CHECK OR A SAVINGS DEPOSIT FORM SHOWING THE BANK
ACCOUNT WHERE I WOULD LIKE YOU TO DEPOSIT DIVIDENDS AND DISTRIBUTIONS.
/_/ Savings /_/ Checking
/_/ Mail check to my address listed in Section A.
</TABLE>
<TABLE>
<CAPTION>
DIVIDENDS AND
AMOUNT YOU ARE DISTRIBUTIONS
FUND NAME INVESTING REINVESTED IN CASH
<S> <C> <C> <C>
/_/ American Eagle Capital Appreciation Fund $_________________ /_/ /_/
/_/ American Eagle Twenty Fund $_________________ /_/ /_/
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S><C>
C. DEALER
INFORMATION
--------------------------------------------------------------------------------------------------------------
Name of Broker-Dealer Name of Representative Representative's Phone #
--------------------------------------------------------------------------------------------------------------
Branch Office Address Branch ID # Representative's ID #
- ------------------------------------------------------------------------------------------------------------------------------------
D. AUTOMATIC /_/ Please arrange with my bank to invest the amount indicated below ($50 minimum) per month in the funds
INVESTMENT indicated.
PLAN
Please charge my bank account on the 5th day (or next business day) of each month. ATTACHED IS A VOIDED
CHECK, PHOTOCOPY OF A CHECK OR A SAVINGS DEPOSIT FORM SHOWING THE BANK ACCOUNT ON WHICH THE INVESTMENT IS
GOING TO BE DRAWN.
/_/ Savings /_/ Checking
- - Choose one dividend and capital gains distribution option for each fund. IF NO ELECTION IS MADE, DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS WILL AUTOMATICALLY BE REINVESTED. Indicate whether cash distributions should be sent by check to your address of
record or deposited directly in your bank account.
/_/ Deposit directly into my bank account specified above.
/_/ Mail check to my address listed in Section A.
</TABLE>
<TABLE>
<CAPTION>
AMOUNT YOU WANT DIVIDENDS AND
INVESTED EACH DISTRIBUTIONS
FUND NAME MONTH REINVESTED IN CASH
<S> <C> <C> <C>
/_/ American Eagle Capital Appreciation Fund $_________________ /_/ /_/
/_/ American Eagle Twenty Fund $_________________ /_/ /_/
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S><C>
E. TELEPHONE SEE TERMS AND CONDITIONS FOR TELEPHONE REDEMPTIONS UNDER "HOW TO REDEEM FUND SHARES EXPEDITED REDEMPTIONS
REDEMPTION -- EXPEDITED TELEPHONE REDEMPTION" IN THE PROSPECTUS. Please indicated by checking the box below if you want
PRIVILEGE the Telephone Redemption Privilege:
/_/ I hereby elect the Telephone Redemption Privilege. I WILL INDEMNIFY AND HOLD HARMLESS THE TRANSFER
AGENT, THE DISTRIBUTOR AND THE FUNDS FROM AND AGAINST ALL LOSSES, CLAIMS, EXPENSES AND LIABILITIES THAT
MAY ARISE OUT OF, OR BE IN ANY WAY CONNECTED WITH, A REDEMPTION OF SHARES UNDER THIS EXPEDITED
REDEMPTION PROCEDURE. Proceeds will be mailed to my address of record or wired to the bank account
designated below. ATTACHED IS A VOIDED CHECK, PHOTOCOPY OF A CHECK OR A SAVINGS DEPOSIT FORM SHOWING
THE BANK ACCOUNT TO WHICH PROCEEDS OF $1,000 OR MORE MAY BE WIRED IF REQUESTED.
/_/ Savings /_/ Checking
- ------------------------------------------------------------------------------------------------------------------------------------
F. MONTHLY
WITHDRAWAL /_/ Please send a check for the amounts specified below on the 20th day (or preceding business day) of each
month (minimum $100) from the funds indicated below. This service is available only for accounts with
balances of $10,000 or more. A contingent deferred sales charge may apply to redemptions of shares.
Refer to "How to Redeem Fund Shares" in the prospectus.
</TABLE>
<TABLE>
<CAPTION>
AMOUNT OF MONTHLY
FUND NAME WITHDRAWAL
<S> <C>
/_/ American Eagle Capital Appreciation Fund $----------------
/_/ American Eagle Twenty Fund $----------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S><C>
G. SIGNATURE
AND
CERTIFICATION
Substitute Form W-9
AMERICAN EAGLE FUNDS
SIGNATURE CARD AND ------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER CERTIFICATION Account Number (to be completed by Fund)
- ------------------------------------------------------------------------------------------------------------------------------------
PART 1
------------------------------------------------------
Name PLEASE PRINT
------------------------------------------
Social Security Number
------------------------------------------
REQUIRED -- > or
------------------------------------------
Tax Identification Number
------------------------------------------
NOTE: If the account is in more than one name, give the actual
owner of the account or the first name listed on the NOTE: If UGMA/UTMA, provide minor's Social Security or
account and that person's Social Security Number or Tax Identification Number
Tax Identification Number.
Tax Residency: /_/ U.S. /_/ Other:
(If you are not a U.S. tax resident, please
attach Form W-8 to this application.)
- ------------------------------------------------------------------------------------------------------------------------------------
PART II Are you an organization that meets the Internal Revenue Service ("IRS") definition of an exempt payee (I.E.,
corporations, the United States and its agencies, a state, etc., qualify as exempt but individuals DO NOT qualify
as exempt)?
Yes /_/ No /_/
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATION: UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER; AND
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE I HAVE NOT BEEN NOTIFIED BY THE IRS THAT I AM SUBJECT TO BACKUP
WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR THE IRS HAS NOTIFIED ME THAT I AM NO
LONGER SUBJECT TO BACKUP WITHHOLDING.
CERTIFICATION INSTRUCTIONS: You must cross out item (2) above if you have been notified by IRS that you are currently subject to
backup withholding because of underreporting interest or dividends on your tax return.
I hereby certify that I have received a current Prospectus, agree to be bound by its terms, and that I am empowered and duly
authorized to execute and carry out the terms of this Application Form and to purchase and hold the shares subscribed for thereby,
and further certify that this Application Form has been duly and validly executed on behalf of the person or entity listed above
and constitutes a legal and binding obligation of such person or entity.
I hereby acknowledge that it is my obligation to notify my investment representative (at the time of investment) about my
eligibility for any of the special purchase plans detailed in the Prospectus. Absent such notification, none of such plans will
automatically be applied to any investment in Fund shares, and I have waived my eligibility for all applicable plans.
THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
- ------------------------------------------------------------------------------------------------------------------------------------
PLEASE REQUIRED
SIGN HERE Signature -- > Date -- >
- ------------------------------------------------------------------------------------------------------------------------------------
JOINT
INVESTORS Signature -- > Date -- >
----------------------------------------------------------------------------------------------------------------
PLEASE
SIGN HERE Signature -- > Date -- >
- ------------------------------------------------------------------------------------------------------------------------------------
Please be sure to have all joint shareholders sign this card.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: THIS SIGNED PAGE MUST ACCOMPANY THE PREVIOUS PAGE OF APPLICATION FORM
</TABLE>
<PAGE>
FIRMS THAT PROVIDE SERVICES TO THE FUNDS
INVESTMENT ADVISER
Jundt Associates, Inc.
1550 Utica Avenue South, Suite 950
Minneapolis, Minnesota 55416
DISTRIBUTOR
U.S. Growth Investments, Inc.
1550 Utica Avenue South, Suite 950
Minneapolis, Minnesota 55416
ADMINISTRATOR
Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, Wisconsin 53202-5207
TRANSFER AGENT
Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, Wisconsin 53202-5207
CUSTODIAN
Firstar Bank, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
INDEPENDENT AUDITORS
KPMG LLP
4200 Norwest Center
Minneapolis, Minnesota 55402
LEGAL COUNSEL
Faegre & Benson LLP
2200 Norwest Center
Minneapolis, Minnesota 55402
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUNDS
The funds' annual and semi-annual shareholder reports include
additional information about each fund's investments and about market conditions
and investment strategies that significantly affected each fund's performance
during the covered period. The funds' Statement of Additional Information
contains further information about each fund and is incorporated into this
Prospectus by reference.
You may make shareholder inquiries or obtain a free copy of the funds'
most recent annual and semi-annual shareholder report or the funds' current
Statement of Additional Information by:
- CALLING THE FUNDS at 1-800-335-0333; or
- WRITING THE FUNDS at 615 East Michigan Street, 3rd Floor,
Milwaukee, Wisconsin 53202-5207.
You may review or copy (for normal copying fees) information about the
funds (including the Statement of Additional Information) by visiting the SEC's
Public Reference Room in Washington, D.C. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You
also may request copies by writing to the Public Reference Section of the SEC at
Washington, D.C. 20549-6009. Reports and other information about the funds are
also available free on the SEC's Internet site at http://www.sec.gov.
TABLE OF CONTENTS
PAGE
----
THE FUNDS................................................................. 2
RISK/RETURN SUMMARY....................................................... 2
FEES AND EXPENSES......................................................... 4
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS................................ 5
MANAGEMENT OF THE FUNDS................................................... 8
HOW TO BUY FUND SHARES.................................................... 8
HOW TO SELL YOUR FUND SHARES.............................................. 9
DISTRIBUTIONS AND TAXES................................................... 11
FIRMS THAT PROVIDE SERVICES TO THE FUNDS.................................. 15
ADDITIONAL INFORMATION ABOUT THE FUNDS.................................... 16
IN DECIDING WHETHER OR NOT TO INVEST, YOU SHOULD NOT RELY ON ANY
INFORMATION CONCERNING THE FUNDS OTHER THAN INFORMATION CONTAINED OR REFERENCED
IN THIS PROSPECTUS. INFORMATION INCLUDED IN THIS PROSPECTUS IS CURRENT AS OF
DECEMBER 28, 1999 BUT MAY CHANGE WITHOUT NOTICE AFTER SUCH DATE.
Investment Company Act File No. 811-09699.
<PAGE>
AMERICAN EAGLE FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
AMERICAN EAGLE CAPITAL APPRECIATION FUND
AMERICAN EAGLE TWENTY FUND
1550 UTICA AVENUE SOUTH, SUITE 950
MINNEAPOLIS, MINNESOTA 55416
1-800-335-0333
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 28, 1999
The American Eagle Capital Appreciation Fund ("Capital Appreciation
Fund") and American Eagle Twenty Fund ("Twenty Fund") (collectively, the
"funds") are professionally managed open-end management investment companies
(commonly known as a mutual funds). Investors in each fund become fund
shareholders. Each fund is a separately managed series of American Eagle Funds,
Inc.
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the funds' applicable Prospectus, dated December 28,
1999 (the "Prospectus"), which has been filed with the Securities and Exchange
Commission (the "SEC"). To obtain a copy of the Prospectus, please call the
funds at 1-800-335-0333 or your investment executive.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Policies....................................................... 2
Investment Restrictions................................................... 9
Taxes..................................................................... 10
Advisory, Administrative and Distribution Agreements...................... 11
Special Purchase Plans.................................................... 14
Monthly Cash Withdrawal Plan.............................................. 14
Determination of Net Asset Value.......................................... 14
Calculation of Performance Data........................................... 14
Directors and Officers.................................................... 15
Counsel and Auditors...................................................... 18
General Information....................................................... 18
Financial and Other Information........................................... 19
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS STATEMENT OF ADDITIONAL
INFORMATION OR IN THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AMERICAN
EAGLE FUNDS, INC. OR THE FUNDS' INVESTMENT ADVISER OR DISTRIBUTOR. NEITHER THIS
STATEMENT OF ADDITIONAL INFORMATION NOR THE PROSPECTUS CONSTITUTES AN OFFER TO
SELL, OR THE SOLICITATION OF AN OFFER TO BUY, SHARES OF ANY FUND IN ANY STATE OR
JURISDICTION IN WHICH SUCH OFFERING OR SOLICITATION MAY NOT LAWFULLY BE MADE.
NEITHER THE DELIVERY OF THIS STATEMENT OF ADDITIONAL INFORMATION NOR ANY SALE
MADE HEREUNDER (OR UNDER THE PROSPECTUS) SHALL CREATE ANY IMPLICATION THAT
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
<PAGE>
INVESTMENT POLICIES
Capital Appreciation Fund and Twenty Fund are each a "non-diversified"
series of American Eagle Funds, Inc., an open-end management investment company.
Each fund's investment objective and principal investment policies and
strategies are set forth in the Prospectus. The following information is
intended to supplement the Prospectus disclosures.
OPTIONS
Each fund may purchase and sell put and call options on its portfolio
securities to protect against changes in market prices and to generate
additional investment returns. There is no assurance that the use of put and
call options will achieve these desired objectives, and the use of put and call
options could result in losses.
CALL OPTIONS. Each fund may sell covered call options on its securities
and on securities indices to realize a greater current return, through the
receipt of premiums, than it would realize on its securities alone. A call
option gives the holder the right to purchase, and obligates the seller to sell,
a security at the exercise price at any time before the expiration date. A call
option is "covered" if the seller, at all times while obligated as a seller,
either owns the underlying securities (or comparable securities satisfying the
cover requirements of the securities exchanges), or has the right to immediately
acquire such securities. In addition to covered call options, each fund may also
sell uncovered (or "naked") call options; however, SEC rules require that the
funds segregate assets on their books and records with a value equal to the
value of the securities or the index that the holder of the option is entitled
to call.
In return for the premiums received when it sells a covered call
option, a fund gives up some or all of the opportunity to profit from an
increase in the market price of the securities covering the call option during
the life of the option. The fund retains the risk of loss should the price of
such securities decline. If the option expires unexercised, the fund realizes a
gain equal to the premium, which may be offset by a decline in price of the
underlying security. If the option is exercised, the fund realizes a gain or
loss equal to the difference between the fund's cost for the underlying security
and the proceeds of sale (exercise price minus commission) plus the amount of
the premium.
A fund may terminate a call option that it has sold before it expires
by entering into a closing purchase transaction. The fund may enter into closing
transactions in order to free itself to sell the underlying security or to sell
another call option on the security, realize a profit or loss on a previously
written call option, or protect a security from being called in an unexpected
market rise. Any profits from a closing purchase transaction may be offset by a
decline in the value of the underlying security. Conversely, because increases
in the market price of a call option will generally reflect increases in the
market price of the underlying security, any loss resulting from a closing
purchase transaction is likely to be offset in whole or in part by unrealized
appreciation of the underlying security owned by the fund.
PUT OPTIONS. Each fund may sell covered put options in order to enhance
its current return. A put option gives the holder the right to sell, and
obligates the seller to buy, a security, or the notional value of an index, at
the exercise price at any time before the expiration date. A put option is
"covered" if the seller segregates permissible collateral equal to the price to
be paid if the option is exercised.
In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, a fund also receives
interest on the cash and debt securities maintained to cover the exercise price
of the option. By writing a put option, the fund assumes the risk that it may be
required to purchase the underlying security for an exercise price higher than
its then current market value, resulting in a potential capital loss unless the
security later appreciates in value.
A fund may terminate a put option that it has written before it expires
by a closing purchase transaction. Any loss from this transaction may be
partially or entirely offset by the premium received on the terminated option.
PURCHASING PUT AND CALL OPTIONS. Each fund may also purchase put
options to protect portfolio holdings against a decline in market value. This
protection lasts for the life of the put option because the fund, as the holder
of the option, may sell the underlying security or index at the exercise price
regardless of any decline in its market price. In order for a put option to be
profitable, the market price of the underlying security or index must decline
sufficiently below the exercise
B-2
<PAGE>
price to cover the premium and transaction costs that the fund must pay. These
costs will reduce any profit the fund might have realized had it sold the
underlying security instead of buying the put option.
Each fund may purchase call options to hedge against an increase in the
price of securities that the fund ultimately wants to buy and to enhance its
current return. Such hedge protection is provided during the life of the call
option since the fund, as holder of the call option, is able to buy the
underlying security (or an index representative of the underlying security) at
the exercise price regardless of any increase in the underlying security's or
index's market price. In order for a call option to be profitable, the market
price of the underlying security or index must rise sufficiently above the
exercise price to cover the premium and transaction costs. These costs will
reduce any profit the fund might have realized had it bought the underlying
security at the time it purchased the call option.
RISKS INVOLVED IN THE SALE OF OPTIONS. Options transactions involve
certain risks, including the risks that Jundt Associates, Inc., each fund's
investment adviser (the "Investment Adviser"), will not forecast market
movements correctly, that a fund may be unable at times to close out such
positions, or that hedging transactions may not accomplish their purpose because
of imperfect market correlations.
An exchange-listed option may be closed out only on an exchange which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. If no secondary market were to
exist, it would be impossible to enter into a closing transaction to close out
an option position. As a result, a fund may be forced to continue to hold, or to
purchase at a fixed price, a security on which it has sold an option at a time
when the Investment Adviser believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other
unforeseen events might cause The Options Clearing Corporation or an exchange to
institute special trading procedures or restrictions that might restrict the
funds' use of options. The exchanges have established limitations on the maximum
number of calls and puts of each class that may be held or written by an
investor or group of investors acting in concert. It is possible that the funds
and other clients of the Investment Adviser may be considered such a group.
These position limits may restrict a fund's ability to purchase or sell options
on particular securities.
Options which are not traded on national securities exchanges may be
closed out only with the other party to the option transaction. For that reason,
it may be more difficult to close out unlisted options than listed options.
Furthermore, unlisted options are not subject to the protection afforded
purchasers of listed options by The Options Clearing Corporation.
SPECIAL EXPIRATION PRICE OPTIONS
Each fund may purchase over-the-counter ("OTC") put and call options
with respect to specified securities ("special expiration price options")
pursuant to which the fund in effect may create a custom index relating to a
particular industry or sector that the Investment Adviser believes will increase
or decrease in value generally as a group. In exchange for a premium, the
counterparty, whose performance is guaranteed by a broker-dealer, agrees to
purchase (or sell) a specified number of shares of a particular stock at a
specified price and further agrees to cancel the option at a specified price
that decreases straight line over the term of the option. Thus, the value of the
special expiration price option is comprised of the market value of the
applicable underlying security relative to the option exercise price and the
value of the remaining premium. However, if the value of the underlying security
increases (or decreases) by a pre-negotiated amount, the special expiration
price option is canceled and becomes worthless. A portion of the dividends
during the term of the option are applied to reduce the exercise price if the
option is exercised. Brokerage commissions and other transaction costs will
reduce a fund's profits if a special expiration price option is exercised. A
fund will not purchase special expiration price options with respect to more
than 25% of the value of its net assets.
FUTURES CONTRACTS
INDEX FUTURES CONTRACTS AND OPTIONS. Each fund may buy and sell index
futures contracts and related options for hedging purposes and to attempt to
increase investment return. A stock index futures contract is a contract to buy
or sell units of a stock index at a specified future date at a price agreed upon
when the contract is made. A unit is the current value of the stock index.
B-3
<PAGE>
The following example illustrates generally the manner in which index
futures contracts operate. The Standard & Poor's 100 Stock Index (the "S&P 100
Index") is composed of 100 selected common stocks, most of which are listed on
the New York Stock Exchange. The S&P 100 Index assigns relative weightings to
the common stocks included in the Index, and the Index fluctuates with changes
in the market values of those common stocks. In the case of the S&P 100 Index,
contracts are to buy or sell 100 units. Thus, if the value of the S&P 100 Index
were $180, one contract would be worth $18,000 (100 units x $180). The stock
index futures contract specifies that no delivery of the actual stocks making up
the index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract. For example, if a fund enters into a futures contract to buy 100
units of the S&P 100 Index at a specified future date at a contract price of
$180 and the S&P 100 Index is at $184 on that future date, the fund will gain
$400 (100 units x gain of $4). If a fund enters into a futures contract to sell
100 units of the stock index at a specified future date at a contract price of
$180 and the S&P 100 Index is at $182 on that future date, the fund will lose
$200 (100 units x loss of $2).
Positions in index futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market for such futures
contracts.
In order to hedge its investments successfully using futures contracts
and related options, a fund must invest in futures contracts with respect to
indexes or sub-indexes the movements of which will, in the Investment Adviser's
judgment, have a significant correlation with movements in the prices of the
fund's securities.
Options on index futures contracts give the purchaser the right, in
return for the premium paid, to assume a position in an index futures contract
(a long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the option.
Upon exercise of the option, the holder would assume the underlying futures
position and would receive a variation margin payment of cash or securities
approximating the increase in the value of the holder's option position. If an
option is exercised on the last trading day prior to the expiration date of the
option, the settlement will be made entirely in cash based on the difference
between the exercise price of the option and the closing level of the index on
which the futures contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
As an alternative to purchasing and selling call and put options on
index futures contracts, each fund may purchase and sell call and put options on
the underlying indexes themselves to the extent that such options are traded on
national securities exchanges. Index options are similar to options on
individual securities in that the purchaser of an index option acquires the
right to buy (in the case of a call) or sell (in the case of a put), and the
seller undertakes the obligation to sell or buy (as the case may be), units of
an index at a stated exercise price during the term of the option. Instead of
giving the right to take or make actual delivery of securities, the holder of an
index option has the right to receive a cash "exercise settlement amount." This
amount is equal to the amount by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of the exercise, multiplied by
a fixed "index multiplier."
A fund may purchase or sell options on stock indices in order to close
out outstanding positions in options on stock indices which it has purchased or
may allow such options to expire unexercised.
Compared to the purchase or sale of futures contracts, the purchase of
call or put options on an index involves less potential risk to a fund because
the maximum amount at risk is the premium paid for the options plus transactions
costs. The writing of a put or call option on an index involves risks similar to
those risks relating to the purchase or sale of index futures contracts.
MARGIN PAYMENTS. When a fund purchases or sells a futures contract, it
is required to deposit with its custodian an amount of cash, U.S. Treasury
bills, or other permissible collateral equal to a small percentage of the amount
of the futures contract. This amount is known as "initial margin." The nature of
the initial margin is different from that of margin in security transactions in
that it does not involve borrowing money to finance transactions. Rather,
initial margin is similar to a performance bond or good faith deposit that is
returned to the fund upon termination of the contract, assuming the fund
satisfies its contractual obligations.
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Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market." These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a fund sells a futures contract and the price of the
underlying index rises above the delivery price, the fund's position declines in
value. The fund then pays the broker a variation margin payment equal to the
difference between the delivery price of the futures contract and the value of
the index underlying the futures contract. Conversely, if the price of the
underlying index falls below the delivery price of the contract, the fund's
future position increases in value. The broker then must make a variation margin
payment equal to the difference between the delivery price of the futures
contract and the value of the index underlying the futures contract.
When a fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
fund, and the fund realizes a loss or a gain. Such closing transactions involve
additional commission costs.
Consistent with the rules and regulations of the Commodity Futures
Trading Commission exempting each fund from regulation as a "commodity pool,"
each fund will not purchase or sell futures contracts or related options if, as
a result, the sum of the initial margin deposit on the fund's existing futures
contracts and related options positions and premiums paid for options on futures
contracts entered into for other than bona fide hedging purposes would exceed 5%
of the fund's assets. (For options that are "in-the-money" at the time of
purchase, the amount by which the option is "in-the-money" is excluded from this
calculation.)
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS
LIQUIDITY RISKS. Positions in futures contracts may be closed out only
on an exchange or board of trade which provides a secondary market for such
futures contracts. Although each fund intends to purchase or sell futures
contracts only on exchanges or boards of trade where there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange or board of trade will exist for any particular futures contract or
at any particular time. If there is not a liquid secondary market at a
particular time, it may not be possible to close a futures contract position at
such time and, in the event of adverse price movements, a fund would continue to
be required to make daily variation margin payments. However, in the event
financial futures contracts are used to hedge portfolio securities, such
securities will not generally be sold until the financial futures contracts can
be terminated. In such circumstances, an increase in the price of the portfolio
securities, if any, may partially or completely offset losses on the financial
futures contracts.
The ability to establish and close out positions in options on futures
contracts will be subject to the development and maintenance of a liquid
secondary market. It is not certain that such a market will develop. Although
each fund generally will purchase only those options for which there appears to
be an active secondary market, there is no assurance that a liquid secondary
market on an exchange will exist for any particular option or at any particular
time. In the event no such market exists for particular options, it might not be
possible to effect closing transactions in such options, with the result that a
fund would have to exercise the options in order to realize any profit.
HEDGING RISKS. There are several risks in connection with the use by a
fund of futures contracts and related options as a hedging device. One risk
arises because of the imperfect correlation between movements in the prices of
the futures contracts and options and movements in the underlying securities or
index or movements in the prices of the fund's securities which are the subject
of the hedge. The Investment Adviser will attempt to reduce the risk by
purchasing and selling, to the extent possible, futures contracts and related
options on securities and indexes the movements of which will, in its judgment,
correlate closely with movements in the prices of the underlying securities or
index and the fund's portfolio securities sought to be hedged.
Successful use of futures contracts and options by a fund for hedging
purposes is also subject to the Investment Adviser's ability to predict
correctly movements in the direction of the market. It is possible that, where a
fund has purchased puts on futures contracts to hedge its portfolio against a
decline in the market, the securities or index on which the puts are purchased
may increase in value and the value of securities held in the portfolio may
decline. If this occurred, the fund would lose money on the puts and also
experience a decline in value in its portfolio securities. In addition, the
prices of futures contracts, for a number of reasons, may not correlate
perfectly with movements in the underlying securities or index
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due to certain market distortions. All participants in the futures market are
subject to margin deposit requirements. Such requirements may cause investors to
close futures contracts through offsetting transactions which could distort the
normal relationship between the underlying security or index and futures
contracts markets. Further, the margin requirements in the futures contracts
markets are less onerous than margin requirements in the securities markets in
general, and as a result the futures contracts markets may attract more
speculators than the securities markets do. Increased participation by
speculators in the futures contracts markets may also cause temporary price
distortions. Due to the possibility of price distortion, even a correct forecast
of general market trends by the Investment Adviser may not result in a
successful hedging transaction over a short time period.
Each fund may use futures contracts and related options to enhance
investment returns in addition to hedging against market risk. Such use of
futures contracts involves risk similar to the use of leverage. Within
applicable regulatory limits (which require that each fund segregate securities
and other assets on its books and records with a value equal to the value of all
long futures contracts positions, less margin deposits), each fund can be
subject to the same degree of market risk as if approximately twice its net
assets were fully invested in securities. This may result in substantial
additional gains in rising markets, but may result in substantial additional
losses in falling markets.
OTHER RISKS. Each fund will incur brokerage fees in connection with its
futures contracts and options transactions. In addition, while futures contracts
and options on futures contracts may be purchased and sold to reduce certain
risks, those transactions themselves entail certain other risks. Thus, while a
fund may benefit from the use of futures contracts and related options,
unanticipated changes in market movements may result in a poorer overall
performance for the fund than if it had not entered into any futures contracts
or options transactions. Moreover, in the event of an imperfect correlation
between the futures contract position and the portfolio position which is
intended to be protected, the desired protection may not be obtained and a fund
may be exposed to risk of loss.
FOREIGN SECURITIES
Each fund may invest up to 25% of its total assets in securities of
foreign issuers. Each fund may only purchase foreign securities that are
represented by American Depository Receipts listed on a domestic securities
exchange or included in the NASDAQ National Market System, or foreign securities
listed directly on a domestic securities exchange or included in the NASDAQ
National Market System. Interest or dividend payments on such securities may be
subject to foreign withholding taxes. The funds' investments in foreign
securities involve considerations and risks not typically associated with
investments in securities of domestic companies, including unfavorable changes
in currency exchange rates, reduced and less reliable information about issuers
and markets, different accounting standards, illiquidity of securities and
markets, local economic or political instability and greater market risk in
general.
DEBT SECURITIES
In normal market conditions, each fund may invest up to 35% of its
total assets in "investment grade" debt securities. However, when the Investment
Adviser believes that a defensive investment posture is warranted, each fund may
invest without limitation in investment grade debt securities. Debt securities
are "investment grade" if they are rated Baa or higher by Moody's Investors
Service, Inc. ("Moody's") or BBB or higher by Standard & Poor's Corporation
("S&P") or, if they are unrated, if the Investment Adviser believes that they
are comparable in quality. Securities rated Baa or BBB (and similar unrated
securities) lack outstanding investment characteristics, have speculative
characteristics, and are subject to greater credit and market risks than
higher-rated securities. A fund will not necessarily dispose of an investment
if, after its purchase, its rating slips below investment grade. However, the
Investment Adviser will monitor such investments closely and will sell such
investments if the Investment Adviser at any time believes that it is in the
fund's best interests. Each fund may also invest in non-investment grade
"convertible" debt securities. See "Convertible Securities."
CONVERTIBLE SECURITIES
Each fund may invest in convertible securities. A convertible security
(a bond or preferred stock) may be converted at a stated price within a
specified period of time into a certain number of common shares of the same or a
different issuer. Convertible securities are senior to common stock in an
issuer's capital structure, but are usually subordinate to similar
non-convertible securities. While providing a fixed income stream (generally
higher in yield than the income from common
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stocks but lower than that afforded by a similar non-convertible security), a
convertible security also affords an investor the opportunity, through its
conversion feature, to participate in the capital appreciation of the issuer's
common stock. Each fund may invest in non-investment grade convertible debt
securities. Such securities (sometimes referred to as "junk bonds") are
considered speculative and may be in poor credit standing or even in default as
to payments of principal or interest. Moreover, such securities generally are
less liquid than investment grade debt securities.
INDEXED SECURITIES
Each fund may purchase securities whose prices are indexed to the
prices of other securities, securities indices or other financial indicators.
Indexed securities typically, but not always, are debt securities or deposits
whose value at maturity or coupon rate is determined by reference to a specific
instrument or statistic. The performance of indexed securities depends to a
great extent on the performance of the security or other instrument to which
they are indexed. At the same time, indexed securities are subject to the credit
risks associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations and certain U.S. Government
agencies.
REPURCHASE AGREEMENTS
Each fund may enter into repurchase agreements. A repurchase agreement
is a contract under which a fund acquires securities for a relatively short
period (usually not more than one week) subject to the obligation of the seller
to repurchase and the fund to resell such securities at a fixed time and price
(representing the fund's cost plus interest). Each fund presently intends to
enter into repurchase agreements only with member banks of the Federal Reserve
System and securities dealers meeting certain criteria as to creditworthiness
and financial condition established by the Board of Directors and only with
respect to obligations of the U.S. Government or its agencies or
instrumentalities or other high-quality, short-term debt obligations. Repurchase
agreements may also be viewed as loans made by a fund which are collateralized
by the securities subject to repurchase. The Investment Adviser will monitor
such transactions to ensure that the value of the underlying securities will be
at least equal at all times to the total amount of the repurchase obligation,
including the interest factor. If the seller defaults, a fund could realize a
loss on the sale of the underlying securities to the extent that the proceeds of
sale are less than the resale price provided in the agreement including
interest. In addition, if the seller should be involved in bankruptcy or
insolvency proceedings, a fund may incur delay and costs in selling the
underlying securities or may suffer a loss of principal and interest if the fund
is treated as an unsecured creditor and required to return the underlying
collateral to the seller's estate.
LEVERAGE
Each fund may borrow money to purchase additional portfolio securities.
Leveraging a fund creates an opportunity for increased net income but, at the
same time, creates special risk considerations. For example, leveraging may
exaggerate changes in the net asset value of a fund's shares and in the yield on
the fund's portfolio. Although the principal of such borrowings will be fixed,
the fund's assets may change in value during the time the borrowing is
outstanding. Since any decline in value of the fund's investments will be borne
entirely by the fund's shareholders (and not by those persons providing the
leverage to the fund), the effect of leverage in a declining market would be a
greater decrease in net asset value than if the fund were not so leveraged.
Leveraging will create an interest expense for the fund, which can exceed the
investment return (if any) from the borrowed funds. To the extent the investment
return derived from securities purchased with borrowed funds exceeds the
interest the fund will have to pay, the fund's investment return will be greater
than if leveraging were not used. Conversely, if the investment return from the
assets retained with borrowed funds is not sufficient to cover the cost of
leveraging, the investment return of the fund will be less than if leveraging
were not used.
REVERSE REPURCHASE AGREEMENTS
In connection with its leveraging activities, each fund may enter into
reverse repurchase agreements, in which a fund sells securities and agrees to
repurchase them at a mutually agreed date and time. A reverse repurchase
agreement may be viewed as a borrowing by the fund, secured by the securities
which are the subject of the agreement. In addition to the general risks
involved in leveraging, reverse repurchase agreements involve the risk that, in
the event of the bankruptcy or insolvency of the fund's counterparty, the fund
would be unable to recover the securities which are the subject of the
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agreement, that the amount of cash or other property transferred by the
counterparty to the fund under the agreement prior to such insolvency or
bankruptcy is less than the value of the securities subject to the agreement, or
that the fund may be delayed or prevented, due to such insolvency or bankruptcy,
from using such cash or property or may be required to return it to the
counterparty or its trustee or receiver.
SECURITIES LENDING
Each fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government securities,
cash or cash equivalents adjusted daily to have a market value at least equal to
the current market value of the securities loaned; (2) the fund may at any time
call the loan and regain the securities loaned; (3) the fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities of the fund loaned will not at any time exceed
one-third (or such other limit as the Board of Directors may establish) of the
total assets of the fund. In addition, it is anticipated that the fund may share
with the borrower some of the income received on the collateral for the loan or
that it will be paid a premium for the loan.
Before a fund enters into a loan, the Investment Adviser considers all
relevant facts and circumstances, including the creditworthiness of the
borrower. The risks in lending portfolio securities, as with other extensions of
credit, consist of possible delay in recovery of the securities or possible loss
of rights in the collateral should the borrower fail financially. Although
voting rights or rights to consent with respect to the loaned securities pass to
the borrower, a fund retains the right to call the loans at any time on
reasonable notice, and it will do so in order that the securities may be voted
by the fund if holders of such securities are asked to vote upon or consent to
matters materially affecting the investment. The funds will not lend portfolio
securities to borrowers affiliated with the funds.
SHORT SALES
Each fund may seek to hedge investments or realize additional gains
through short sales. Short sales are transactions in which a fund sells a
security it does not own, in anticipation of a decline in the market value of
that security. To complete such a transaction, the fund must borrow the security
to make delivery to the buyer. The fund then is obligated to replace the
security borrowed by purchasing it at the market price at or prior to the time
of replacement. The price at such time may be more or less than the price at
which the security was sold by the fund. Until the security is replaced, the
fund is required to repay the lender any dividends or interest that accrue
during the period of the loan. To borrow the security, the fund also may be
required to pay a premium, which would increase the cost of the security sold.
The net proceeds of the short sale will be retained by the broker (or by the
fund's custodian in a special custody account), to the extent necessary to meet
margin requirements, until the short position is closed out. A fund also will
incur transaction costs in effecting short sales.
A fund will incur a loss as a result of a short sale if the price of
the security increases between the date of the short sale and the date on which
the fund replaces the borrowed security. The fund will generally realize a gain
if the security declines in price between those dates. The amount of any gain
will be decreased, and the amount of any loss increased, by the amount of the
premium, dividends, interest or expenses the fund may be required to pay in
connection with the short sale. An increase in the value of the security sold
short by the fund over the price at which it was sold short will result in a
loss to the fund, and there can be no assurance that the fund will be able to
close out the position at any particular time or at an acceptable price.
ZERO-COUPON DEBT SECURITIES
Zero-coupon securities in which each fund may invest are debt
obligations which are generally issued at a discount and payable in full at
maturity, and which do not provide for current payments of interest prior to
maturity. Zero-coupon securities usually trade at a deep discount from their
face or par value and are subject to greater market value fluctuations from
changing interest rates than debt obligations of comparable maturities which
make current distributions of interest. As a result, the net asset value of
shares of a mutual fund investing in zero-coupon securities may fluctuate over a
greater range than shares of other mutual funds investing in securities making
current distributions of interest and having similar maturities.
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When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The principal
is sold at a deep discount because the buyer receives only the right to receive
a future fixed payment on the security and does not receive any rights to
periodic cash interest payments. Once stripped or separated, the principal and
coupons may be sold separately. Typically, the coupons are sold separately or
grouped with other coupons with like maturity dates and sold in such bundled
form. Purchasers of stripped obligations acquire, in effect, discount
obligations that are economically identical to the zero-coupon securities issued
directly by the obligor.
Zero-coupon securities allow an issuer to avoid the need to generate
cash to meet current interest payments. Even though zero-coupon securities do
not pay current interest in cash, a fund is nonetheless required to accrue
interest income on them and to distribute the amount of that interest at least
annually to shareholders. Thus, a fund could be required at times to liquidate
other investments in order to satisfy its distribution requirements.
INVESTMENT RESTRICTIONS
Each fund has adopted certain FUNDAMENTAL INVESTMENT RESTRICTIONS that
may not be changed except by a vote of shareholders owning a "majority of the
outstanding voting securities" of the fund, as defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act"). Under the Investment
Company Act, a "majority of the outstanding voting securities" means the
affirmative vote of the lesser of: (a) more than 50% of the outstanding shares
of the fund; or (b) 67% or more of the shares present at a meeting if more than
50% of the outstanding shares are represented at the meeting in person or by
proxy. In addition, each fund has adopted certain NON-FUNDAMENTAL INVESTMENT
RESTRICTIONS that may be changed by the fund's Board of Directors without the
approval of the fund's shareholders.
CAPITAL APPRECIATION FUND AND TWENTY FUND
FUNDAMENTAL INVESTMENT RESTRICTIONS
Neither Capital Appreciation Fund nor Twenty Fund may:
1. Invest more than 25% of its total assets in any one
industry (securities issued or guaranteed by the United States
Government, its agencies or instrumentalities are not considered to
represent industries); HOWEVER, each fund may invest more than 25% of
its assets in one or more market sectors which may be made up of
companies in a number of related industries;
2. Borrow money, except from banks for temporary or
emergency purposes or as required in connection with otherwise
permissible leverage activities (as described elsewhere in the funds'
Prospectus and in this Statement of Additional Information), and then
only in an amount not in excess of one-third of the value of the fund's
total assets;
3. Purchase or sell commodities or commodity contracts,
except as required in connection with otherwise permissible options,
futures contracts and commodity activities (as described elsewhere in
the funds' Prospectus and in this Statement of Additional Information);
4. Make loans of its assets to other parties, including
loans of its securities (although it may, subject to the other
restrictions or policies stated in the funds' Prospectus and in this
Statement of Additional Information, purchase debt securities or enter
into repurchase agreements with banks or other institutions to the
extent a repurchase agreement is deemed to be a loan), in excess of
one-third of its total assets;
5. Issue senior securities, as defined in the Investment
Company Act, except as required in connection with otherwise
permissible options, futures contracts and leverage activities (as
described elsewhere in the funds' Prospectus and in this Statement of
Additional Information);
6. Purchase or sell real estate or any interest therein,
including interests in real estate limited partnerships, except
securities issued by companies (including real estate investment
trusts) that invest in real estate or interests therein; or
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7. Underwrite securities of other issuers, except insofar
as it may be deemed an underwriter under the Securities Act in selling
certain of its portfolio securities.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
Neither Capital Appreciation Fund nor Twenty Fund may:
1. Mortgage, hypothecate, or pledge any of its assets as
security for any of its obligations, except as required to secure
otherwise permissible borrowings (including reverse repurchase
agreements), short sales, financial options and other hedging
activities;
2. Invest in securities issued by other investment
companies in excess of limitations imposed by applicable law;
3. Make investments for the purpose of exercising control
or management;
4. Invest more than 15% of its net assets in illiquid
securities; or
5. Purchase equity securities in private placements.
* * *
With respect to each of the foregoing fundamental and non-fundamental
investment restrictions involving a percentage of a fund's assets, if a
percentage restriction or limitation is adhered to at the time of an investment
or sale (other than a maturity) of a security, a later increase or decrease in
such percentage resulting from a change of values or net assets will not be
considered a violation thereof.
TAXES
Each fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). To
so qualify, each fund must, among other things: (a) derive in each taxable year
at least 90% of its gross income from dividends, interest, payments with respect
to securities loans, gains from the sale or other disposition of stock,
securities or foreign currencies, or other income derived with respect to its
business of investing in such stock, securities or currencies; and (b) satisfy
certain diversification requirements at the close of each quarter of the fund's
taxable year.
As a regulated investment company, each fund will not be liable for
federal income taxes on the part of its taxable net investment income and net
capital gains, if any, that it distributes to shareholders, provided it
distributes at least 90% of its "investment company taxable income" (as that
term is defined in the Code) to fund shareholders in each taxable year. However,
if for any taxable year a fund does not satisfy the requirements of Subchapter M
of the Code, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and
such distributions will be taxable to shareholders as ordinary income to the
extent of the fund's current or accumulated earnings and profits.
Each fund will be liable for a nondeductible 4% excise tax on amounts
not distributed on a timely basis in accordance with a calendar year
distribution requirement. To avoid the tax, during each calendar year each fund
must distribute: (a) at least 98% of its taxable ordinary income (not taking
into account any capital gains or losses) for the calendar year; (b) at least
98% of its capital gain net income for the twelve month period ending on October
31 (or December 31, if the fund so elects); and (c) any portion (not taxed to
the fund) of the respective balances from the prior year. To the extent
possible, each fund intends to make sufficient distributions to avoid this 4%
excise tax.
Each fund, or the shareholder's broker with respect to the fund, is
required to withhold federal income tax at a rate of 31% of dividends, capital
gains distributions and proceeds of redemptions if a shareholder fails to
furnish the fund with a
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correct taxpayer identification number ("TIN") or to certify that he or she is
exempt from such withholding, or if the Internal Revenue Service notifies the
fund or broker that the shareholder has provided the fund with an incorrect TIN
or failed to properly report dividend or interest income for federal income tax
purposes. Any such withheld amount will be fully creditable on the shareholder's
federal income tax return. An individual's TIN is his or her social security
number.
Each fund may write, purchase or sell options or futures contracts.
Generally, options and futures contracts that are "Section 1256 contracts" will
be "marked to market" for federal income tax purposes at the end of each taxable
year, I.E., each option or futures contract will be treated as sold for its fair
market value on the last day of the taxable year. Gain or loss from transactions
in options and futures contracts that are subject to the "marked to market" rule
will be 60% long-term and 40% short-term capital gain or loss. However, a fund
may be eligible to make a special election under which certain "Section 1256
contracts" would not be subject to the "marked to market" rule.
Code Section 1092, which applies to certain "straddles," may affect the
taxation of each fund's transactions in options and futures contracts. Under
Section 1092, a fund may be required to postpone recognition for tax purposes of
losses incurred in certain closing transactions in options and futures
contracts.
ADVISORY, ADMINISTRATIVE AND DISTRIBUTION AGREEMENTS
INVESTMENT ADVISORY AGREEMENT
Jundt Associates, Inc. (the "Investment Adviser"), 1550 Utica Avenue
South, Suite 950, Minneapolis, Minnesota 55416, serves as each fund's investment
adviser. James R. Jundt serves as Chairman of the Board and Chief Executive
Officer of the Investment Adviser and owns 95% of its stock. A trust benefiting
Mr. Jundt's children and grandchildren owns the remaining 5% of the Investment
Adviser's stock. The Investment Adviser was incorporated in December 1982.
The Investment Adviser has been retained as each fund's investment
adviser pursuant to investment advisory agreements between the Investment
Adviser and each fund (the "Investment Advisory Agreements"). Under the terms of
the Investment Advisory Agreements, the Investment Adviser furnishes continuing
investment supervision to each fund and is responsible for the management of
each fund's portfolio. The responsibility for making decisions to buy, sell or
hold a particular security rests with the Investment Adviser, subject to review
by the Board of Directors.
The Investment Adviser furnishes office space, equipment and personnel
to each fund in connection with the performance of its investment management
responsibilities. In addition, the Investment Adviser pays the salaries and fees
of all officers and directors of each fund who are affiliated persons of the
Investment Adviser.
Each fund pays all other expenses incurred in its operation including,
but not limited to, brokerage and commission expenses; interest charges; fees
and expenses of legal counsel and independent auditors; the fund's
organizational and offering expenses, whether or not advanced by the Investment
Adviser; taxes and governmental fees; expenses (including clerical expenses) of
issuance, sale or repurchase of the fund's shares; membership fees in trade
associations; expenses of registering and making notice filings with respect to
shares of the fund for sale under federal and state securities laws; expenses of
printing and distributing reports, notices and proxy materials to existing
shareholders; expenses of regular and special shareholders meetings; expenses of
filing reports and other documents with governmental agencies; charges and
expenses of the fund's administrator, custodian and registrar, transfer agent
and dividend disbursing agent; expenses of disbursing dividends and
distributions; compensation of officers, directors and employees who are not
affiliated with the Investment Adviser; travel expenses of directors for
attendance at meetings of the Board of Directors; insurance expenses;
indemnification and other expenses not expressly provided for in the Investment
Advisory Agreement; costs of stationery and supplies; and any extraordinary
expenses of a non-recurring nature.
For its services, the Investment Adviser receives from each fund a
monthly fee at an annual rate of 1.3% of the fund's average daily net assets.
The Investment Advisory Agreements continue in effect from year to
year, if specifically approved at least annually by a majority of the Board of
Directors, including a majority of the directors who are not "interested
persons" (as defined in the Investment Company Act) of American Eagle Funds,
Inc. or the Investment Adviser ("Independent Directors") at a
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<PAGE>
meeting in person. Each Investment Advisory Agreement may be terminated by
either party, by the Independent Directors or by a vote of the holders of a
majority of the outstanding securities of the fund that is a party thereto, at
any time, without penalty, upon 60 days' written notice, and automatically
terminates in the event of its "assignment" (as defined in the Investment
Company Act).
PORTFOLIO TRANSACTIONS, BROKERAGE COMMISSIONS AND PORTFOLIO TURNOVER RATE
The Investment Adviser is responsible for investment decisions and for
executing each fund's portfolio transactions. The funds have no obligation to
execute transactions with any particular broker-dealer. The Investment Adviser
seeks to obtain the best combination of price and execution for each fund's
transactions. However, the funds do not necessarily pay the lowest commission.
Where best price and execution may be obtained from more than one
broker-dealer, the Investment Adviser may purchase and sell securities through
broker-dealers that provide research and other valuable information to the
Investment Adviser. Such information may be useful to the Investment Adviser in
providing services to clients other than the funds.
Consistent with the rules and regulations of the National Association
of Securities Dealers, Inc., the Investment Adviser may, from time to time,
consider the distribution of the shares of other fund companies managed by the
Investment Adviser, and referrals of investors to investment partnerships
managed by the Investment Adviser, when allocating transactions among
broker-dealers that otherwise offer best price and execution. The Investment
Adviser may also agree from time to time to direct a portion of a client's
brokerage transactions to a particular broker-dealer if such broker-dealer is
among those that offer best price and execution. Because the Investment Adviser
frequently aggregates multiple contemporaneous client purchase or sell orders
into a block order for execution, such considerations and directions may
influence the Registrant's allocation of brokerage transactions for all client
accounts.
Other clients of the Investment Adviser have investment objectives
similar to those of the funds. The Investment Adviser, therefore, may combine
the purchase or sale of investments for the funds and its other clients. Such
simultaneous transactions may increase the demand for the investments being
purchased or the supply of the investments being sold, which may have an adverse
effect on price or quantity. The Investment Adviser's policy is to allocate
investment opportunities fairly and equitably among the clients involved,
including the funds. When two or more clients are purchasing or selling the same
security on a given day from or through the same broker-dealer, such
transactions are averaged as to price.
For its clients, the Investment Adviser regularly purchases and
receives allocations of new issue stocks. New issue shares consist of both
initial public offerings and additional offerings of issues already publicly
traded (i.e., secondary offerings). The Investment Adviser's total allocation of
such stocks typically is not large enough to permit each of the Investment
Adviser's suitable clients to participate in a meaningful way. In such cases,
the Investment Adviser will determine which of its client accounts are the most
appropriate participants and will allocate any such shares equitably among such
clients. The Investment Adviser has a policy to ensure that, over time, each of
its clients for which new issue stocks are suitable investments will participate
fairly and equitably in allocations of such stocks.
ADMINISTRATION AGREEMENT
Firstar Mutual Fund Services, LLC (the "Administrator"), 615 East
Michigan Street, 3rd Floor, Milwaukee, WI 53202-5207, an affiliate of the funds'
custodian, performs various administrative and accounting services for the
funds.
Under the terms of an administration agreement between the
Administrator and each fund (the "Administration Agreements"), the Administrator
performs or arranges for the performance of the following administrative
services to each fund: (a) maintenance and keeping of certain books and records
of the fund; (b) preparation or review and filing of certain reports and other
documents required by federal, state and other applicable U.S. laws and
regulations to maintain the funds' registrations as open-end investment
companies; (c) coordination of tax related matters; (d) responses to inquiries
from fund shareholders; (e) calculation and dissemination for publication of the
net asset value of the fund's shares; (f) oversight and, as the Board of
Directors may request, preparation of reports and recommendations to the Board
of Directors on the performance of administrative and professional services
rendered to the fund by others, including the funds' custodian and
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<PAGE>
any subcustodian, registrar, transfer agency, and dividend disbursing agent, as
well as accounting, auditing and other services; (g) provision of competent
personnel and administrative offices necessary to perform its services under the
Administration Agreement; (h) arrangement for the payment of fund expenses; (i)
consultations with fund officers and various service providers in establishing
the accounting policies of the fund; (j) preparation of such financial
information and reports as may be required by any banks from which the fund
borrows funds; and (k) provision of such assistance to the Investment Adviser,
the custodian and any subcustodian, and the fund's counsel and auditors as
generally may be required to carry on properly the business and operations of
the fund.
The Administrator is obligated, at its expense, to provide office
space, facilities, equipment and necessary personnel in connection with its
provision of services under the Administration Agreements; however, each fund
(in addition to the fees payable to the Administrator under the Administration
Agreement, as described below) has agreed to pay reasonable travel expenses of
persons who perform administrative, clerical and bookkeeping functions on behalf
of the fund. Additionally, the expenses of legal counsel and accounting experts
retained by the Administrator, after consulting with the fund's counsel and
independent auditors, as may be necessary or appropriate in connection with the
Administrator's provision of services to the fund, are deemed expenses of, and
shall be paid by, the fund.
For administration services rendered to each fund and the facilities
furnished, each fund is obliged to pay the Administrator, subject to an annual
minimum fee of $20,000 for the fiscal year ending December 31, 2000, $25,000 for
the fiscal year ending December 31, 2001, and $30,000 for the fiscal year ending
December 31, 2002, a monthly fee at an annual rate of .06% of the first $200
million of the fund's average daily net assets, .05% of the next $500 million of
the fund's average daily net assets and .03% of the fund's average daily net
assets in excess of $500 million.
The Administration Agreements will remain in effect unless and until
terminated in accordance with their terms. They may be terminated at any time,
without the payment of any penalty, by American Eagle Funds, Inc. on 60 days'
written notice to the Administrator and by the Administrator on 90 days' written
notice to American Eagle Funds, Inc. The Administration Agreements terminate
automatically in the event of their assignment.
The principal address of the Administrator is 615 East Michigan Street,
3rd Floor, Milwaukee, WI 53202-5207.
DISTRIBUTOR
Pursuant to Distribution Agreements by and between U.S. Growth
Investments, Inc. (the "Distributor"), 1550 Utica Avenue South, Suite 950,
Minneapolis, Minnesota 55416, and each of the funds (the "Distribution
Agreements"), the Distributor serves as the principal underwriter of each fund's
shares. Each fund's shares are offered continuously by and through the
Distributor. As agent of each fund, the Distributor accepts orders for the
purchase and redemption of fund shares. The Distributor may enter into selling
agreements with other dealers and financial institutions, pursuant to which such
dealers and/or financial institutions also may sell fund shares.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, FUND ACCOUNTANT AND CUSTODIAN
Firstar Mutual Fund Services, LLC, 615 East Michigan Street, 3rd Floor,
Milwaukee, WI 53202-5207, an affiliate of the fund's custodian, serves as the
fund's transfer agent and dividend disbursing agent. For the services rendered
to each fund, each fund is obliged to pay the fund's transfer agent and dividend
disbursing agent, subject to an annual minimum fee of $10,000, an annual fee of
$16.00 per shareholder account.
Firstar Mutual Fund Services, LLC, 615 East Michigan Street, 3rd Floor,
Milwaukee, WI 53202-5207, an affiliate of the fund's custodian, serves as the
fund's accountant. For the services rendered to each fund, each fund is obliged
to pay the fund's accountant, an annual minimum fee of $18,000 for the fist 12
months of operations (or until the net assets of the funds exceed $10 million),
thereafter $30,000 for the first $100 million of the fund's average daily net
assets, .0125% of the next $200 million of the fund's average daily net assets
and .0075% of the fund's average daily net assets in excess of $200 million.
Firstar Bank, N.A., 777 East Wisconsin Avenue, Milwaukee, WI 53202,
serves as the funds' custodian. For the services rendered to each fund, each
fund is obliged to pay the fund's custodian, subject to an annual minimum fee of
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<PAGE>
$3,000, an annual fee at an annual rate of .01% of the fund's average daily net
assets. In addition, the funds may compensate certain broker-dealers that sell
fund shares for performing various accounting and administrative services with
respect to large street-name accounts maintained by such broker-dealers.
SPECIAL PURCHASE PLANS
AUTOMATIC INVESTMENT PLAN. As a convenience to investors, shares may be
purchased through an automatic investment plan. Under such a plan, the investor
authorizes a fund to withdraw a specific amount (minimum dollars $50 per
withdrawal) from the investor's bank account and to invest such amount in shares
of the fund. Such purchases are normally made on the 5th day of each month, or
the next business day thereafter. Further information is available from the
Distributor.
MONTHLY CASH WITHDRAWAL PLAN
Any investor who owns or buys shares of the funds valued at $10,000 or
more at the current offering prices may open a Withdrawal Plan and have a
designated sum of money paid monthly to the investor or another person. Shares
are deposited in a Withdrawal Plan account and all distributions are reinvested
at net asset value in additional shares of the fund to which such distributions
relate. Shares in a Withdrawal Plan account are then redeemed at net asset value
to make each withdrawal payment. Redemptions for the purpose of withdrawal are
made on the 20th day of the month (or on the preceding business day if the 20th
day falls on a weekend or is a holiday) at that day's closing net asset value,
and checks are mailed on the next business day. Payments will be made to the
registered shareholder or to another party if preauthorized by the registered
shareholder. As withdrawal payments may include a return on principal, they
cannot be considered a guaranteed annuity or actual yield of income to the
investor. The redemption of shares in connection with a Withdrawal Plan may
result in a gain or loss for tax purposes. Continued withdrawals in excess of
income will reduce and possibly exhaust invested principal, especially in the
event of a market decline. Each fund or the Distributor may terminate or change
the terms of the Withdrawal Plan at any time. The Withdrawal Plan is fully
voluntary and may be terminated by the shareholder at any time without the
imposition of any penalty.
Since the Withdrawal Plan may involve invasion of capital, investors
should consider carefully with their own financial advisers whether the
Withdrawal Plan and the specified amounts to be withdrawn are appropriate in
their circumstances. The funds make no recommendations or representations in
this regard.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each fund is determined in accordance
with generally accepted accounting principles and applicable SEC rules and
regulations.
The portfolio securities in which each fund invests fluctuate in value,
and hence each fund's net asset value per share also fluctuates. The net asset
value per share of each fund's shares will be calculated by dividing the fund's
net asset value by the number of its shares outstanding.
CALCULATION OF PERFORMANCE DATA
For purposes of quoting and comparing the performance of each fund's
shares to that of other mutual funds and to other relevant market indices in
advertisements or in reports to shareholders, performance may be stated in terms
of "average annual total return" or "cumulative total return." Under the rules
of the SEC, funds advertising performance must include average annual total
return quotations calculated according to the following formula:
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of such
period.
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<PAGE>
This calculation assumes all dividends and capital gains distributions
are reinvested at net asset value on the appropriate reinvestment dates as
described in the Prospectus, and includes all recurring fees, such as investment
advisory and management fees, charged to all shareholder accounts.
Cumulative total return is computed by finding the cumulative
compounded rate of return over the period indicated in the advertisement that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
CTR = ( ERV - P ) x 100
---------
P
Where: CTR = Cumulative total return;
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of such
period; and
P = initial payment of $1,000.
This calculation assumes all dividends and capital gain distributions
are reinvested at net asset value on the appropriate reinvestment dates as
described in the Prospectus, and includes all recurring fees, such as investment
advisory and management fees, charged to all shareholder accounts.
Under each of the above formulas, the time periods used in advertising
will be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertisement for publication.
Past performance is not predictive of future performance. All
advertisements containing performance data of any kind will include a legend
disclosing that such performance data represent past performance and that the
investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
DIRECTORS AND OFFICERS
The Board of Directors of American Eagle Funds, Inc. is responsible for
the overall management and operation of each fund. The officers of American
Eagle Funds, Inc. employed by the Investment Adviser are responsible for the
day-to-day operations of the fund under the Board's supervision. Directors and
officers of American Eagle Funds, Inc., together with information as to their
principal occupations during the past five years, are set forth below.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITIONS HELD PRINCIPAL OCCUPATION DURING
---------------- -------------- PAST 5 YEARS AND OTHER AFFILIATIONS
-----------------------------------
<S> <C> <C> <C>
James R. Jundt (1)(2) Chairman of the Board Chairman of the Board, Chief Executive Officer, Secretary
Age: 58 and portfolio manager of the Investment Adviser since its
Suite 950 inception in 1982. Chairman of the Board and a portfolio
1550 Utica Avenue South manager of American Eagle Funds, Inc. since 1999, Jundt
Minneapolis, MN 55416 Growth Fund, Inc. since 1991 and Jundt Funds, Inc. since
1995. President of Jundt Growth Fund, Inc. from 1991 to
1999 and Jundt Funds, Inc. from 1995 to 1999. Chairman of
the Board of the Distributor since 1995. Also a trustee of
Gonzaga University and a director of three private companies.
B-15
<PAGE>
<CAPTION>
<S> <C> <C>
John E. Clute Director Dean and Professor of Law, Gonzaga University School of Law,
Age: 65 since 1991; previously Senior Vice President Human
1221 West Riverside Avenue Resources and General Counsel, Boise Cascade Corporation
Spokane, WA 99201 (forest products). Director of American Eagle Funds, Inc.
since 1999, Jundt Growth Fund, Inc. since 1991 and Jundt
Funds, Inc. since 1995. Also a director of Hecla Mining
Company (mining) and two private companies.
Floyd Hall Director Chairman, President and Chief Executive Officer of K-Mart
Age: 61 Corporation since 1995. Chairman from 1989 to 1998 and Chief
3100 West Big Beaver Road Executive Officer from 1989 to 1995 of The Museum Company
Troy, MI 48084 and Alva Replicas. Chairman and Chief Executive Officer
from 1984 to 1989 of The Grand Union Company. Chairman and
Chief Executive Officer from 1981 to 1984 of Target Stores.
President and Chief Executive Officer from 1974 to 1981 of
B. Dalton Bookseller. Director of American Eagle Funds,
Inc. since 1999, Jundt Growth Fund, Inc. since 1991 and
Jundt Funds, Inc. since 1995.
Demetre M. Nicoloff Director Cardiac and thoracic surgeon, Cardiac Surgical Associates,
Age: 66 P.A., Minneapolis, Minnesota. Director of American Eagle
1492 Hunter Drive Funds, Inc. since 1999, Jundt Growth Fund, Inc. since 1991
Wayzata, MN 55391 and Jundt Funds, Inc. since 1995. Also a director of Optical
Sensors Incorporated (patient monitoring equipment);
Micromedics, Inc. (instrument trays, ENT specialty products
and fibrin glue applicators); Applied Biometrics, Inc.
(cardiac output measuring devices); and Sonometrics, Inc.
(ultrasound imaging equipment).
Darrell R. Wells Director Managing Director, Security Management Company (asset
Age: 57 management firm) in Louisville, Kentucky. Director of
Suite 310 American Eagle Funds, Inc. since 1999, Jundt Growth Fund,
4350 Brownsboro Road, Inc. since 1991 and Jundt Funds, Inc. since 1995. Also a
Louisville, KY 40207 director of Churchill Downs Inc. (race track operator) and
Citizens Financial Inc. (insurance holding company), as well
as several private companies.
Clark W. Jernigan Director Product Engineering Director, Cirrus Logic, Inc., Crystal
Age: 38 Industrial & Communications Division, Austin, Texas since
1201 Verdant Way 1997; Research Associate Analyst, Alex. Brown & Sons
Austin, TX 78746 Incoporated., New York, New York from 1996 to 1997; Product
Development Engineering Manager, Advanced Micro Devices,
Inc., Embedded Processor Division, Austin, Texas from June
1991 to 1996; Director of the American Eagle Funds, Inc.,
Jundt Growth fund, Inc. and Jundt Funds, Inc. since 1999.
B-16
<PAGE>
<CAPTION>
<S> <C> <C>
Marcus E. Jundt President Vice Chairman of the Investment Adviser since 1992. Research
Age: 34 Analyst, Victoria Investors, New York, New York from 1988 to
Suite 950 1992. Employed by Cargill Investor Services, Inc. from 1987
1550 Utica Avenue South to 1988. President of American Eagle Funds, Inc., Jundt
Minneapolis, MN 55416 Funds, Inc., and Jundt Growth Fund, Inc. since 1999.
Portfolio Manager of Jundt Funds, Inc. since 1995 and Jundt
Growth Fund since 1992. President of U.S. Growth
Investments, Inc. since 1997. Also a director of a private
company.
Jon C. Essen, CPA Treasurer Chief Financial Officer of the Investment Adviser since
Age: 36 1998. Treasurer of American Eagle Funds, Inc. since 1999 and
Suite 950 Treasurer of Jundt Growth Fund, Inc. and Jundt Funds, Inc.
1550 Utica Avenue South since 1999. Senior Financial Analyst, Norwest Investment
Minneapolis, MN 55416 Services, Inc., 1997 to 1998. Fund Reporting and Control
Supervisor, Voyageur Funds Inc., 1994 to 1997.
James E. Nicholson Secretary Partner with the law firm of Faegre & Benson LLP,
Age: 48 Minneapolis, Minnesota, which has served as general counsel
2200 Norwest Center to the Investment Adviser, American Eagle Funds, Inc., Jundt
Minneapolis, MN 55402 Growth Fund, Inc., Jundt Funds, Inc. and the Distributor
since their inception. Secretary of American Eagle Funds,
Inc. since 1999, Jundt Growth Fund, Inc. since 1991 and
Jundt Funds, Inc. since 1995.
</TABLE>
- -----------
(1) Director who is an "interested person" of each fund, as defined in the
Investment Company Act.
(2) "Controlling person" of the Investment Adviser, as defined in the
Investment Company Act. Mr. Jundt beneficially owns 95% of the stock of
the Investment Adviser. Mr. Jundt also owns 100% of the stock of the
Distributor and is, therefore, a controlling person of the Distributor
as well.
Each of the directors of American Eagle Funds, Inc. is also a director
of other fund companies managed by the Investment Adviser. American Eagle Funds,
Inc., and each of the other fund companies managed by the Investment Adviser,
has agreed to pay its pro rata share (based on the relative net assets of each
fund company) of the fees payable to each director who is not an "interested
person" of American Eagle Funds, Inc. or any other fund company managed by the
Investment Adviser. In the aggregate, the American Eagle Funds, Inc. and the
other fund companies have agreed to pay each such director a fee of $15,000 per
year plus $1,500 for each meeting attended and to reimburse each such director
for the expenses of attendance at such meetings. No compensation is paid to
officers or directors who are "interested persons" of American Eagle Funds, Inc.
or the other fund companies managed by the Investment Adviser.
COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FROM FUND AND FUND
NAME OF PERSON, POSITION COMPENSATION ACCRUED AS PART OF BENEFITS UPON COMPLEX PAID TO
FROM FUND* FUND EXPENSES RETIREMENT DIRECTORS*/**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James R. Jundt, Chairman of the Board $0 $0 $0 $0
- -----------------------------------------------------------------------------------------------------------------------------------
John E. Clute, Director $243 $0 $0 $21,000
- -----------------------------------------------------------------------------------------------------------------------------------
Floyd Hall, Director $243 $0 $0 $21,000
- -----------------------------------------------------------------------------------------------------------------------------------
Demetre M. Nicoloff, Director $243 $0 $0 $21,000
- -----------------------------------------------------------------------------------------------------------------------------------
Darrell R. Wells, Director $243 $0 $0 $21,000
- -----------------------------------------------------------------------------------------------------------------------------------
Clark W. Jernigan, Director $243 $0 $0 $21,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
* Estimated payments for the fiscal year ending December 31, 2000 based on the
projected relative net assets of each fund company for the same fiscal year.
** Total Compensation projected to be paid to directors for services on the
board of the Fund and the boards of two other investment companies in the Fund
Complex managed by the Investment Adviser.
COUNSEL AND AUDITORS
Faegre & Benson LLP, 2200 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 55402, serves as the funds' general counsel. KPMG LLP,
2200 Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota 55402, has
been selected as the funds' independent auditors for the fiscal years ending
December 31, 1999 and December 31, 2000.
GENERAL INFORMATION
American Eagle Funds, Inc. was organized as a Minnesota corporation on
November 3, 1999. Although American Eagle Funds, Inc. is registered with the
Securities and Exchange Commission, the SEC does not supervise their management
or investments.
Shares of each fund generally have the same voting, dividend,
liquidation and other rights. Shares of both funds generally vote together (with
each share being entitled to one vote) with respect to the Board of Directors,
independent auditors and other general matters affecting American Eagle Funds,
Inc. Each fund's shares are freely transferable. The Board of Directors may
designate additional classes of shares of each fund, each with different sales
arrangements and expenses, but has no current intention of doing so. In
addition, the Board of Directors may designate additional series of American
Eagle Funds, Inc., each to represent a new mutual fund.
As of December 21, 1999, Marcus E. Jundt of the Investment Adviser,
1550 Utica Avenue South, Suite 950, Minneapolis, Minnesota 55416, was the
beneficial owner of 100% of Capital Appreciation Fund and 100% of Twenty Fund
shares. Depending on prevailing economic and market conditions, the presence of
one or more large beneficial owners in a fund could pose certain risks to the
fund and its other shareholders. For example, the presence of such a shareholder
could raise liquidity concerns which could require the fund to invest in a
manner that may not optimize investment returns. As of the date of this
Statement of Additional Information, the Investment Manager does not believe
that the presence of any of the aforementioned beneficial owners poses such a
risk.
Under Minnesota law, the Board of Directors has overall responsibility
for managing the funds. In doing so, the directors must act in good faith, in
the funds' best interests and with ordinary prudence.
Under Minnesota law, each director of a company, such as American Eagle
Funds, Inc., owes certain fiduciary duties to the company and to its
shareholders. Minnesota law provides that a director "shall discharge the duties
of the position of director in good faith, in a manner the director reasonably
believes to be in the best interest of the corporation, and with the care an
ordinary prudent person in a like position would exercise under similar
circumstances." Fiduciary duties of a director of a Minnesota corporation
include, therefore, both a duty of "loyalty" (to act in good faith and act in a
manner reasonably believed to be in the best interests of the corporation) and a
duty of "care" (to act with the care an ordinarily prudent person in a like
position would exercise under similar circumstances). Minnesota law authorizes a
corporation to eliminate or limit the liability of directors to the corporation
or its shareholders for monetary damages for breaches of fiduciary duty as a
director. However, a corporation cannot eliminate or limit the liability of a
director: (a) for any breach of the director's duty of "loyalty" to the
corporation or its shareholders; (b) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, for certain
illegal distributions or for violation of certain provisions of Minnesota
securities laws; or (c) for any transaction from which the director derived an
improper personal benefit. The Articles of Incorporation of American Eagle
Funds, Inc. limits the liability of its directors to the fullest extent
permitted by Minnesota statutes, except to the extent that such liability cannot
be limited as provided in the Investment Company Act (which prohibits any
provisions which purport to limit the liability of directors arising from such
directors' willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their role as directors).
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<PAGE>
Minnesota law does not permit a corporation to eliminate the duty of
"care" imposed upon a director. It only authorizes a corporation to eliminate
monetary liability for violations of that duty. Minnesota law, further, does not
permit elimination or limitation of liability of "officers" to the corporation
for breach of their duties as officers (including the liability of directors who
serve as officers for breach of their duties as officers). Minnesota law does
not permit elimination of the availability of equitable relief, such as
injunctive or rescissionary relief. These remedies, however, may be ineffective
in situations where shareholders become aware of such a breach after a
transaction has been consummated and rescission has become impractical. Further,
Minnesota state law does not affect a director's liability under the Securities
Act or the Securities Exchange Act of 1934, as amended, both of which are
federal statutes. It is also uncertain whether and to what extent the
elimination of monetary liability would extend to violations of duties imposed
on directors by the Investment Company Act and the rules and regulations
thereunder.
American Eagle Funds, Inc. is not required under Minnesota law to hold
annual or periodically scheduled regular meetings of shareholders. Regular and
special shareholder meetings are held only at such times and with such frequency
as required by law. Minnesota corporation law provides for the Board of
Directors to convene shareholder meetings when it deems appropriate. In
addition, if a regular meeting of shareholders has not been held during the
immediately preceding 15 months, a shareholder or shareholders holding three
percent or more of the voting shares of a company may demand a regular meeting
of shareholders of the company by written notice of demand given to the chief
executive officer or the chief financial officer of the company. Within 90 days
after receipt of the demand, a regular meeting of shareholders must be held at
the expense of the company. Irrespective of whether a regular meeting of
shareholders has been held during the immediately preceding 15 months, in
accordance with Section 16(c) under the Investment Company Act, the Board of
Directors of American Eagle Funds, Inc. is required to promptly call a meeting
of shareholders for the purpose of voting upon the question of removal of any
director when requested in writing to do so by the record holders of not less
than 10% of the outstanding shares of the company. Additionally, the Investment
Company Act requires shareholder votes for all amendments to fundamental
investment policies and restrictions and for all investment advisory contracts
and amendments thereto.
Upon issuance and sale in accordance with the terms of the Prospectus
and Statement of Additional Information, each fund share will be fully paid and
non-assessable. Shares have no preemptive, subscription or conversion rights and
are redeemable as set forth under "How To Sell Your Fund Shares" in the
Prospectus.
The Funds and the Investment Adviser have adopted a Code of Ethics,
which prohibits the Investment Adviser's employees (and members of their
households) from purchasing any security in which the Funds may invest. The Code
strictly regulates other personal investments (other than investments in mutual
funds and certain other securities) and requires quarterly reporting of all such
investments.
FINANCIAL AND OTHER INFORMATION
The Prospectus and this Statement of Additional Information do not
contain all the information included in the Registration Statement of American
Eagle Funds, Inc. filed with the SEC under the Securities Act and the Investment
Company Act (the "Registration Statement") with respect to the securities
offered by the Prospectus and this Statement of Additional Information. Certain
portions of the Registration Statement have been omitted from the Prospectus and
this Statement of Additional Information pursuant to the rules and regulations
of the SEC. The Registration Statement including the exhibits filed therewith
may be examined at the SEC's Public Reference Room in Washington, D.C. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. You also may request copies by writing to the Public
Reference Section of the SEC at Washington, D.C. 20549-6009. Reports and other
information about the funds are also available free on the SEC's Internet site
at http://www.sec.gov.
Statements contained in the Prospectus or in this Statement of
Additional Information as to any contract or other document referred to are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
form a part, each such statement being qualified in all respects by such
reference.
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<PAGE>
Independent Auditors' Report
The Shareholder and Board of Directors of
American Eagle Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of
American Eagle Capital Appreciation Fund and American Eagle Twenty Fund (funds
within American Eagle Funds, Inc.) as of December 27, 1999 and the statement of
operations for the day then ended. These financial statements are the
responsibility of fund management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit 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 are free of material
misstatement. An audit of a includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of cash owned with the custodian. 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 referred to above present fairly, in
all material respects, the financial position of American Eagle Capital
Appreciation Fund and American Eagle Twenty Fund as of December 27, 1999 and the
result of their operations for the day then ended, in conformity with generally
accepted principles.
KPMG LLP
Minneapolis, Minnesota
December 27, 1999
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EAGLE FUNDS, INC
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 27, 1999
AMERICAN EAGLE AMERICAN EAGLE
CAPITAL APPRECIATION TWENTY
FUND FUND
----------------- -----------------
<S> <C> <C>
ASSETS:
Cash on deposit with custodian $ 100,000 $ 100,000
----------------- -----------------
LIABILITIES:
Payable to adviser for organizational costs 25,500 25,500
----------------- -----------------
NET ASSETS:
Net proceeds of capital stock, par value
$.01 per share - authorized 10 billion shares;
outstanding; 7,450 and 7,450 shares , respectively 100,000 100,000
Undistibuted net investment loss (25,500) (25,500)
----------------- -----------------
TOTAL NET ASSETS $ 74,500 $ 74,500
----------------- -----------------
----------------- -----------------
NET ASSET VALUE PER SHARE $ 10.00 $ 10.00
----------------- -----------------
----------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
AMERICAN EAGLE FUNDS, INC
STATEMENTS OF OPERATIONS
FOR THE DAY ENDED DECEMBER 27, 1999
AMERICAN EAGLE AMERICAN EAGLE
CAPITAL APPRECIATION TWENTY
FUND FUND
----------------- -----------------
<S> <C> <C>
EXPENSES:
Organizational Costs $ 25,500 $ 25,500
----------------- -----------------
NET INVESTMENT LOSS $ (25,500) $ (25,500)
----------------- -----------------
----------------- -----------------
</TABLE>
<PAGE>
AMERICAN EAGLE FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
American Eagle Capital Appreciation Fund ("Capital Appreciation Fund") and
American Eagle Twenty Fund ("Twenty Fund") are separate non-diversified
investment portfolios and series of capital stock of American Eagle Funds, Inc.
(the "Funds"), an open-end management investment company. The investment
objectives of the Funds are as follows:
- Capital Appreciation Fund's objective is capital appreciation. The
Fund will maintain a core portfolio of long positions in 30 to 50 of
primarily American growth companies without regard to their size. The
Fund may employ leverage, sell securities short and buy and sell
futures and options contracts to protect against adverse market price
changes and to generate additional investment returns.
- Twenty Fund's objective is capital appreciation. The Fund will
maintain a more concentrated portfolio of long positions in
approximately, but not less than, 20 stocks of primarily American
growth companies without regard to their size. The Fund may employ
leverage, sell securities short and buy and sell futures and options
contracts to protect against adverse market price changes and to
generate additional investment returns.
The Articles of Incorporation of American Eagle Funds, Inc. permits the Board of
Directors to create additional portfolios in the future.
The inception of the Funds was December 27, 1999 and the commencement of
operations is anticipated to be December 31, 1999.
The Funds will incur the organizational costs and may not be deductible for tax
purposes.
2. PAYMENTS TO RELATED PARTIES:
Jundt Associates, Inc. is the investment adviser for the Funds. For its
services, the investment adviser receives from each Fund a monthly fee at an
annual rate of 1.3% of each Fund's average daily net assets.
Legal fees incurred will be paid to a law firm of which the secretary of the
Funds is a partner.
<PAGE>
AMERICAN EAGLE FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-1A
PART C
OTHER INFORMATION
<PAGE>
PART C
OTHER INFORMATION
Item 23 -- Exhibits
- -------------------
(a) Articles of Incorporation(1)
(b) Bylaws(1)
(c) Not applicable
(d)(1) American Eagle Capital Appreciation Fund Investment
Advisory Agreement(1)
(d)(2) American Eagle Twenty Fund Investment Advisory
Agreement(1)
(e)(1) American Eagle Capital Appreciation Fund Distribution
Agreement(1)
(e)(2) American Eagle Twenty Fund Distribution Agreement(1)
(f) Not applicable
(g) Custody Agreement
(h)(1) Transfer Agent Servicing Agreement
(h)(2) Fund Administration Servicing Agreement
(h)(3) Fund Accounting Servicing Agreement
(i) Opinion and Consent of Faegre & Benson LLP(1)
(j) Consent of KPMG LLP
(k) Not applicable
(l) Initial Capital Agreement(1)
(m) Not applicable
(n) Not applicable
(o) Code of Ethics(1)
(p) Power of Attorney(1)
(1) (Incorporated by reference to the Registration Statement filed on or
about November 19, 1999.)
Item 24 -- Persons Controlled by or Under Common Control with Registrant
- ------------------------------------------------------------------------
See the information set forth under the caption "Management of the
Funds" in the accompanying Prospectuses (Part A of this Registration Statement)
and under the captions "Advisory, Administrative and Distribution Agreements"
and "Directors and Officers" in the accompanying Statements of Additional
Information (Part B of this Registration Statement).
Item 25 -- Indemnification
- --------------------------
The Articles of Incorporation (Exhibit (a)) and Bylaws (Exhibit (b)) of
the Registrant provide that the Registrant shall indemnify such persons, for
such expenses and liabilities, in such manner, under such circumstances, and to
the full extent permitted by Section 302A.521 of the Minnesota Statutes, as now
enacted or hereafter amended, provided that no such indemnification may be made
if it would be in violation of Section 17(h) of the Investment Company Act of
1940, as now enacted or hereafter amended. Section 302A.521 of the Minnesota
Statutes, as now enacted, provides that a corporation shall indemnify a person
made
C-1
<PAGE>
or threatened to be made a party to a proceeding against judgments, penalties,
fines, settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by the person in connection with the proceeding, if,
with respect to the acts or omissions of the person complained of in the
proceeding, the person: (a) has not been indemnified by another organization for
the same judgments, penalties, fines, settlements and reasonable expenses
incurred by the person in connection with the proceeding with respect to the
same acts or omissions; (b) acted in good faith; (c) received no improper
personal benefit; (d) complied with the Minnesota Statute dealing with
directors' conflicts of interest, if applicable; (e) in the case of a criminal
proceeding, had no reasonable cause to believe the conduct was unlawful; and (f)
reasonably believed that the conduct was in the best interests of the
corporation or, in certain circumstances, reasonably believed that the conduct
was not opposed to the best interests of the corporation.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 26 -- Business and Other Connections of Investment Adviser
- ---------------------------------------------------------------
Information on the business of the Registrant's investment adviser and
on the officers and directors of the investment adviser is set forth under the
caption "Management of the Funds" in the accompanying Prospectus (Part A of this
Registration Statement) and under the captions "Advisory, Administrative and
Distribution Agreements" and "Directors and Officers" in the accompanying
Statement of Additional Information (Part B of this Registration Statement).
Item 27 -- Principal Underwriters
- ---------------------------------
(a) As set forth in the accompanying Prospectus and Statement of
Additional Information, U.S. Growth Investments, Inc. ("U.S. Growth
Investments") serves as the principal underwriter of the Registrant's shares of
common stock. As of the date of this filing, U.S. Growth Investments also serves
as a principal underwriter for Jundt U.S. Emerging Growth Fund, Jundt
Opportunity Fund and Jundt Twenty-Five Fund, each of which is a series of Jundt
Funds, Inc., and for The Jundt Growth Fund, Inc.
(b) The principal business address of U.S. Growth Investments, and of
each director and officer of U.S. Growth Investments, is 1550 Utica Avenue
South, Suite 950, Minneapolis,
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<PAGE>
Minnesota 55416. The names, positions and offices of the directors and senior
officers of U.S. Growth Investments are set forth below.
Name Positions and Offices with Underwriter
- ---- --------------------------------------
James R. Jundt Chairman of the Board
Marcus E. Jundt President
Jon C. Essen Treasurer
(c) Not applicable.
Item 28 -- Location of Accounts and Records
- -------------------------------------------
The custodian of the Registrant is Firstar Bank, N.A., 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202. The dividend disbursing agent,
transfer agent and fund accounting agent of the Registrant is Firstar Mutual
Fund Services, LLC, 615 East Michigan Street, 3rd Floor, Milwaukee, Wisconsin
53202-5207. Other records will be maintained by the Registrant at its principal
offices, which are located at 1550 Utica Avenue South, Suite 950, Minneapolis,
Minnesota 55416.
Item 29 -- Management Services
- ------------------------------
Not applicable.
ITEM 30 -- UNDERTAKINGS
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Minneapolis, and State of Minnesota, on the 27th
day of December, 1999.
AMERICAN EAGLE FUNDS, INC.
By /s/ JAMES R. JUNDT
-----------------------------------
James R. Jundt
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated.
Name/Signature Title Date
- -------------- ----- ----
/s/ James R. Jundt Chairman of the Board December 27, 1999
- ------------------------------
James R. Jundt
John E. Clute* Director
Floyd Hall* Director
Demetre M. Nicoloff* Director
Darrell R. Wells* Director
Clark W. Jernigan* Director
*By /s/ James R. Jundt December 27, 1999
------------------------
James R. Jundt,
Attorney-in-Fact
(Pursuant to Powers of Attorney dated November 4, 1999, filed as Exhibit (p) to
the Registration Statement filed on or about November 19, 1999.)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
(a) Articles of Incorporation(1)
(b) Bylaws(1)
(c) Not applicable
(d)(1) American Eagle Capital Appreciation Fund
Investment Advisory Agreement(1)
(d)(2) American Eagle Twenty Fund
Investment Advisory Agreement(1)
(e)(1) American Eagle Capital Appreciation Fund
Distribution Agreement(1)
(e)(2) American Eagle Twenty Fund
Distribution Agreement(1)
(f) Not applicable
(g) Custody Agreement Filed Electronically
(h)(1) Transfer Agent Servicing Agreement Filed Electronically
(h)(2) Fund Administration Servicing Agreement Filed Electronically
(h)(3) Fund Accounting Servicing Agreement Filed Electronically
(i) Opinion and Consent of Faegre & Benson LLP(1)
(j) Consent of KPMG LLP Filed Electronically
(k) Not applicable
(l) Initial Capital Agreement(1)
(m) Not applicable
(n) Not applicable
(o) Code of Ethics(1)
(p) Power of Attorney(1)
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Incorporated by reference to the Registration Statement filed on or about
November 19, 1999.
<PAGE>
EXHIBIT (g)
CUSTODY AGREEMENT
This AGREEMENT, dated as of December 31, 1999, by and between the Jundt
Growth Fund, Inc., Jundt Funds, Inc. and American Eagle Funds, Inc. (each
hereinafter referred to as the "Company"), a business Company organized under
the laws of the State of Minnesota, acting with respect to collectively, the
"Funds", each a series of the Company individually, a "Fund" and each of them
operated and administered by the Company, and FIRSTAR BANK, N.A., a national
banking association (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Company desires that the Fund's Securities and cash be held
and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "AUTHORIZED PERSON" means any Officer or other person duly authorized
by resolution of the Board of Directors to give Oral Instructions and
Written Instructions on behalf of the Fund and named in Exhibit A
hereto or in such resolutions of the Board of Directors, certified by
an Officer, as may be received by the Custodian from time to time.
1.2 "BOARD OF DIRECTORS" shall mean the Companies from time to time
serving under the Company's Agreement and Declaration of Company, as
from time to time amended.
1.3 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies
as are substantially in the form of such Subpart O.
-1-
<PAGE>
1.4 "BUSINESS DAY" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the
Company computes the net asset value of Shares of the Fund.
1.5 "FUND CUSTODY ACCOUNT" shall mean any of the accounts in the name of
the Company, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.7 "OFFICER" shall mean the Chairman, President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Company.
1.8 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i)
reasonably believed by the Custodian to have been given by an
Authorized Person, (ii) recorded and kept among the records of the
Custodian made in the ordinary course of business and (iii) orally
confirmed by the Custodian. The Company shall cause all Oral
Instructions to be confirmed by Written Instructions prior to the end
of the next Business Day. If such Written Instructions confirming Oral
Instructions are not received by the Custodian prior to a transaction,
it shall in no way affect the validity of the transaction or the
authorization thereof by the Company. If Oral Instructions vary from
the Written Instructions which purport to confirm them, the Custodian
shall notify the Company of such variance but such Oral Instructions
will govern unless the Custodian has not yet acted.
1.9 "PROPER INSTRUCTIONS" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written
Instructions when deemed appropriate by both parties.
1.10 "SECURITIES DEPOSITORY" shall mean The Depository Company and
(provided that Custodian shall have received a copy of a resolution of
the Board of Directors, certified by an Officer, specifically
approving the use of such clearing agency as a depository for the
Fund) any other clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities and Exchange
Act of 1934 as amended (the "1934 Act"), which acts as a system for
the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system
are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "SECURITIES" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed
securities or other obligations, and any
-2-
<PAGE>
certificates, receipts, warrants or other instruments or documents
representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or
any similar property or assets that the Custodian has the facilities
to clear and to service.
1.12 "SHARES" shall mean, with respect to a Fund, the units of beneficial
interest issued by the Company on account of the Fund.
1.13 "SUB-CUSTODIAN" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii)
any "Eligible Foreign Custodian," as that term is defined in Rule
17f-5 under the 1940 Act, having a contract with the Custodian which
the Custodian has determined will provide reasonable care of assets of
the Funds based on the standards specified in Section 3.3 below. Such
contract shall include provisions that provide: (i) for
indemnification or insurance arrangements (or any combination of the
foregoing) such that the Funds will be adequately protected against
the risk of loss of assets held in accordance with such contract; (ii)
that the Funds' assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the
Sub-Custodian or its creditors except a claim of payment for their
safe custody or administration, in the case of cash deposits, liens or
rights in favor of creditors of the Sub-Custodian arising under
bankruptcy, insolvency, or similar laws; (iii) that beneficial
ownership for the Funds' assets will be freely transferable without
the payment of money or value other than for safe custody or
administration; (iv) that adequate records will be maintained
identifying the assets as belonging to the funds or as being held by a
third party for the benefit of the Funds; (v) that the Funds'
independent public accountants will be given access to those records
or confirmation of the contents of those records; and (vi) that the
Funds will receive periodic reports with respect to the safekeeping of
the Funds' assets, including, but not limited to, notification of any
transfer to or from a Fund's account or a third party account
containing assets held for the benefit of the Fund. Such contract may
contain, in lieu of any or all of the provisions specified above, such
other provisions that the Custodian determines will provide, in their
entirety, the same or a greater level of care and protection for Fund
assets as the specified provisions, in their entirety.
1.14 "WRITTEN INSTRUCTIONS" shall mean (i) written communications actually
received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more
persons reasonably believed by the Custodian to be Authorized Persons,
or (iii) communications between electro-mechanical or electronic
devices provided that the use of such devices and the procedures for
the use thereof shall have been approved by resolutions of the Board
of Directors, a copy of which, certified by an Officer, shall have
been delivered to the Custodian.
-3-
<PAGE>
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 APPOINTMENT. The Company hereby constitutes and appoints the Custodian
as custodian of all Securities and cash owned by or in the possession
of the Fund at any time during the period of this Agreement.
2.2 ACCEPTANCE. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
2.3 DOCUMENTS TO BE FURNISHED. The following documents, including any
amendments thereto, will be provided contemporaneously with the
execution of the Agreement to the Custodian by the Company:
a. A copy of the Declaration of Company certified by the
Secretary;
b. A copy of the Bylaws of the Company certified by the
Secretary;
c. A copy of the resolution of the Board of Directors of the
Company appointing the Custodian, certified by the
Secretary;
d. A copy of the then current Prospectus of the Fund; and
e. A certification of the Chairman and Secretary of the Company
setting forth the names and signatures of the current
Officers of the Company and other Authorized Persons.
2.4 NOTICE OF APPOINTMENT OF DIVIDEND AND TRANSFER AGENT. The Company
agrees to notify the Custodian in writing of the appointment,
termination or change in appointment of any Dividend and Transfer
Agent of the Fund.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 SEGREGATION. All Securities and non-cash property held by the
Custodian for the account of the Fund (other than Securities
maintained in a Securities Depository or Book-Entry System) shall be
physically segregated from other Securities and non-cash property in
the possession of the Custodian (including the Securities and non-cash
property of the other Funds) and shall be identified as subject to
this Agreement.
3.2 FUND CUSTODY ACCOUNTS. As to each Fund, the Custodian shall open and
maintain in its Company department a custody account in the name of
the Company coupled with the name of the Fund, subject only to draft
or order of the Custodian, in which the Custodian shall enter and
carry all Securities, cash and other assets of such Fund which are
delivered to it.
3.3 APPOINTMENT OF AGENTS. (a) In its discretion, the Custodian may
appoint one or more Sub-Custodians to act as Securities Depositories
or as sub-custodians to
-4-
<PAGE>
hold Securities and cash of the Funds and to carry out such other
provisions of this Agreement as it may determine, provided, however,
that the appointment of any such agents and maintenance of any
Securities and cash of the Fund shall be at the Custodian's expense
and shall not relieve the Custodian of any of its obligations or
liabilities under this Agreement.
(b) If, after the initial approval of Sub-Custodians by the Board of
Directors in connection with this Agreement, the Custodian wishes to
appoint other Sub-Custodians to hold property of the Fund, it will so
notify the Company and provide it with information reasonably
necessary to determine any such new Sub-Custodian's eligibility under
Rule 17f-5 under the 1940 Act, including a copy of the proposed
agreement with such Sub-Custodian. The Company shall at the meeting of
the Board of Directors next following receipt of such notice and
information give a written approval or disapproval of the proposed
action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Directors of the placement of
the Securities and cash of the Funds with a particular Sub-Custodian
and of any material changes in the Funds' arrangements. The Custodian
shall promptly take such steps as may be required to withdraw assets
of the Funds from any Sub-Custodian that has ceased to meet the
requirements of Rule 17f-5 under the 1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Company that it agrees to exercise
reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of property of the Funds. The
Custodian further warrants that a Fund's assets will be subject to
reasonable care, based on the standards applicable to custodians in
the relevant market, if maintained with each Sub-Custodian, after
considering all factors relevant to the safekeeping of such assets,
including, without limitation: (i) the Sub-Custodian's practices,
procedures, and internal controls, for certificated securities (if
applicable), the method of keeping custodial records, and the security
and data protection practices; (ii) whether the Sub-Custodian has the
requisite financial strength to provide reasonable care for Fund
assets; (iii) the Sub-Custodian's general reputation and standing and,
in the case of a Securities Depository, the Securities Depository's
operating history and number of participants; and (iv) whether the
Fund will have jurisdiction over and be able to enforce judgments
against the Sub-Custodian, such as by virtue of the existence of any
offices of the Sub-Custodian in the United States or the
Sub-Custodian's consent to service of process in the United States.
(f) The Custodian shall establish a system to monitor the appropriateness
of
-5-
<PAGE>
maintaining the Fund's assets with a particular Sub-Custodian and the
contract governing the Funds' arrangements with such Sub-Custodian.
3.3 DELIVERY OF ASSETS TO CUSTODIAN. The Company shall deliver, or cause
to be delivered, to the Custodian all of the Funds' Securities, cash
and other assets, including (a) all payments of income, payments of
principal and capital distributions received by the Fund with respect
to such Securities, cash or other assets owned by the Fund at any time
during the period of this Agreement, and (b) all cash received by the
Fund for the issuance, at any time during such period, of Shares. The
Custodian shall not be responsible for such Securities, cash or other
assets until actually received by it.
3.4 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities
Depository or in a Book-Entry System, subject to the following
provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Company shall deliver to the
Custodian a resolution of the Board of Directors, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry System
all Securities eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent possible and
practical in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns
of collateral consisting of Securities.
(b) Securities of the Funds kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which
includes only assets held by the Custodian as a fiduciary, custodian
or otherwise for customers.
(c) The records of the Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall, by
book-entry, identify such Securities as belonging to such Fund.
(d) If Securities purchased by a Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that such Securities have been transferred to
the Depository Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the account
of such Fund. If Securities sold by a Fund are held in a Book-Entry
System or Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that payment for such Securities has been
transferred to the Depository Account, and
-6-
<PAGE>
(ii) the making of an entry on the records of the Custodian to reflect
such transfer and payment for the account of such Fund.
(e) The Custodian shall provide the Company with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities
Depository in which Securities of the Fund are kept) on the internal
accounting controls and procedures for safeguarding Securities
deposited in such Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Company for any loss or damage to the
Fund resulting (i) from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the
part of Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above or any of its or their employees, or (ii) from failure of
Custodian or any such Sub-Custodian to enforce effectively such rights
as it may have against a Book-Entry System or Securities Depository.
At its election, the Company shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System or
Securities Depository or any other person from any loss or damage to
the Fund arising from the use of such Book-Entry System or Securities
Depository, if and to the extent that the Funds has not been made
whole for any such loss or damage.
3.5 DISBURSEMENT OF MONEYS FROM FUND CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the Fund
Custody Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in accordance
with Section 4.1 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to the Custodian
(or any Sub-Custodian appointed pursuant to Section 3.3 above) of such
Securities registered as provided in Section 3.9 below or in proper
form for transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in accordance
with the conditions set forth in Section 3.5 above; (ii) in the case
of options on Securities, against delivery to the Custodian (or such
Sub-Custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to the
Custodian (or such Sub-Custodian) of evidence of title thereto in
favor of the Fund or any nominee referred to in Section 3.9 below; and
(iv) in the case of repurchase or reverse repurchase agreements
entered into between the Company and a bank which is a member of the
Federal Reserve System or between the Company and a primary dealer in
U.S. Government securities, against delivery of the purchased
Securities either
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in certificate form or through an entry crediting the Custodian's
account at a Book-Entry System or Securities Depository with such
Securities;
(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in Section
5.1 below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
the Fund: interest; taxes; administration, investment advisory,
accounting, auditing, transfer agent, custodian, Company and legal
fees; and other operating expenses of the Fund; in all cases, whether
or not such expenses are to be in whole or in part capitalized or
treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement among
the Company, the Custodian and a broker-dealer registered under the
1934 Act and a member of the NASD, relating to compliance with rules
of The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions
by the Fund;
(g) For transfer in accordance with the provision of any agreement among
the Company, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations)
regarding account deposits in connection with transactions by the
Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less;
and
(i) For any other proper purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of
Directors, certified by an Officer, specifying the amount and purpose
of such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made.
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3.6 DELIVERY OF SECURITIES FROM FUND CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, the Custodian shall release and deliver
Securities from the Fund Custody Account but only in the following
cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that,
in any such case, the cash or other consideration is to be
delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund, the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of
any of the foregoing, or (ii) for exchange for a different number
of certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such case,
the new Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Company
shall have specified to the Custodian in Proper Instructions;
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(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Company, but only
against receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Company;
(l) For delivery in accordance with the provisions of any agreement
among the Company, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Company, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund; or
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Directors, certified by an Officer, specifying the
Securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made.
3.7 Actions Not Requiring Proper Instructions. Unless otherwise instructed by
the Company, the Custodian shall with respect to all Securities held for
the Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either by
law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
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(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the Internal Revenue
Service ("IRS") and to the Company at such time, in such manner
and containing such information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities
Depository, all rights and similar securities issued with respect
to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.8 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for a
Fund that are issued or issuable only in bearer form shall be held by
the Custodian in that form, provided that any such Securities shall be
held in a Book-Entry System if eligible therefor. All other Securities
held for the Fund may be registered in the name of such Fund, the
Custodian, or any Sub-Custodian appointed pursuant to Section 3.3
above, or in the name of any nominee of any of them, or in the name of
a Book-Entry System, Securities Depository or any nominee of either
thereof. The Company shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form
for transfer, or to register in the name of any of the nominees
hereinabove referred to or in the name of a Book-Entry System or
Securities Depository, any Securities registered in the name of a
Fund.
3.9 RECORDS.
(a) The Custodian shall maintain, by Fund, complete and accurate
records with respect to Securities, cash or other property held
for the Fund, including (i) journals or other records of original
entry containing an itemized daily record in detail of all
receipts and deliveries of Securities and all receipts and
disbursements of cash; (ii) ledgers (or other records) reflecting
(A) Securities in transfer, (B) Securities in physical
possession, (C) monies and Securities borrowed and monies and
Securities loaned (together with a record of the collateral
therefor and substitutions of such collateral), (D) dividends and
interest received, and (E) dividends receivable and interest
receivable; and (iii) canceled checks and bank records related
thereto. The Custodian shall keep such other books and
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records of the Funds as the Company shall reasonably request, or
as may be required by the 1940 Act, including, but not limited
to, Section 31 of the 1940 Act and Rule 31a-2 promulgated
thereunder.
(b) All such books and records maintained by the Custodian shall (i)
be maintained in a form acceptable to the Company and in
compliance with rules and regulations of the Securities and
Exchange Commission, (ii) be the property of the Company and at
all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized
officers, employees or agents of the Company and employees or
agents of the Securities and Exchange Commission, and (iii) if
required to be maintained by Rule 31a-1 under the 1940 Act, be
preserved for the periods prescribed in Rule 31a-2 under the 1940
Act.
3.10 FUND REPORTS BY CUSTODIAN. The Custodian shall furnish the Company
with a daily activity statement and a summary of all transfers to or
from each Fund Custody Account on the day following such transfers. At
least monthly and from time to time, the Custodian shall furnish the
Company with a detailed statement of the Securities and moneys held by
the Custodian and the Sub-Custodians for the Fund under this
Agreement.
3.11 OTHER REPORTS BY CUSTODIAN. The Custodian shall provide the Company
with such reports, as the Company may reasonably request from time to
time, on the internal accounting controls and procedures for
safeguarding Securities, which are employed by the Custodian or any
Sub-Custodian appointed pursuant to Section 3.3 above.
3.12 PROXIES AND OTHER MATERIALS. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the
Fund, to be promptly executed by the registered holder of such
Securities, without indication of the manner in which such proxies are
to be voted, and shall promptly deliver to the Company such proxies,
all proxy soliciting materials and all notices relating to such
Securities.
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3.13 INFORMATION ON CORPORATE ACTIONS. The Custodian shall promptly deliver
to the Company all information received by the Custodian and
pertaining to Securities being held by the Fund with respect to
optional tender or exchange offers, calls for redemption or purchase,
or expiration of rights as described in the Standards of Service Guide
attached as Exhibit B. If the Company desires to take action with
respect to any tender offer, exchange offer or other similar
transaction, the Company shall notify the Custodian at least five
Business Days prior to the date on which the Custodian is to take such
action. The Company will provide or cause to be provided to the
Custodian all relevant information for any Security which has unique
put/option provisions at least five Business Days prior to the
beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for
the Fund, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities,
and the title or other description thereof, (b) the number of shares,
principal amount (and accrued interest, if any) or other units
purchased, (c) the date of purchase and settlement, (d) the purchase
price per unit, (e) the total amount payable upon such purchase, and
(f) the name of the person to whom such amount is payable. The
Custodian shall upon receipt of such Securities purchased by such Fund
pay out of the moneys held for the account of a Fund the total amount
specified in such Written Instructions to the person named therein.
The Custodian shall not be under any obligation to pay out moneys to
cover the cost of a purchase of Securities for the Fund, if in the
Fund Custody Account there is insufficient cash available to the Fund
for which such purchase was made.
4.2 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
In any and every case where payment for the purchase of Securities for
a Fund is made by the Custodian in advance of receipt of the
Securities purchased but in the absence of specified Written
Instructions to so pay in advance, the Custodian shall be liable to
the Fund for such Securities to the same extent as if the Securities
had been received by the Custodian.
4.3 SALE OF SECURITIES. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title
or other description thereof, (b) the number of shares, principal
amount (and accrued interest, if any), or other units sold, (c) the
date of sale and settlement, (d) the sale price per unit, (e) the
total amount payable upon such sale, and (f) the person to whom such
Securities are to be delivered. Upon receipt of the total amount
payable to the Fund as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person
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specified in such Written Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to
it, and may deliver Securities and arrange for payment in accordance
with the customs prevailing among dealers in Securities.
4.4 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to
deliver Securities against payment, shall be entitled, if in
accordance with generally accepted market practice, to deliver such
Securities prior to actual receipt of final payment therefor. In any
such case, the Fund shall bear the risk that final payment for such
Securities may not be made or that such Securities may be returned or
otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any for
the foregoing.
4.5 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from time
to time, the Custodian may credit the Fund Custody Account, prior to
actual receipt of final payment thereof, with (i) proceeds from the
sale of Securities which it has been instructed to deliver against
payment, (ii) proceeds from the redemption of Securities or other
assets of the Fund, and (iii) income from cash, Securities or other
assets of the Fund. Any such credit shall be conditional upon actual
receipt by Custodian of final payment and may be reversed if final
payment is not actually received in full. The Custodian may, in its
sole discretion and from time to time, permit the Fund to use funds so
credited to the Fund Custody Account in anticipation of actual receipt
of final payment. Any such funds shall be repayable immediately upon
demand made by the Custodian at any time prior to the actual receipt
of all final payments in anticipation of which funds were credited to
the Fund Custody Account.
4.6 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its sole
discretion and from time to time, advance funds to the Company to
facilitate the settlement of a Fund's transactions in the Fund Custody
Account. Any such advance shall be repayable immediately upon demand
made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 TRANSFER OF FUNDS. From such funds as may be available for the purpose
in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares
of the Fund, the Custodian shall wire each amount specified in such
Proper Instructions to or through such bank as the Company may
designate with respect to such amount in such Proper Instructions.
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5.2 NO DUTY REGARDING PAYING BANKS. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated in
Proper Instructions given pursuant to Section 5.1 above of any amount
paid by the Custodian to such bank in accordance with such Proper
Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Company, the Custodian and a broker-dealer registered under the
1934 Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating
to compliance with the rules of The Options Clearing Company and
of any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in
connection with financial futures contracts (or options thereon)
purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by the
Fund,
(d) for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and firm
commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Directors, certified by an Officer, setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
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ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 STANDARD OF CARE. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement,
and shall be without liability to the Company or any Fund for any
loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim unless such loss, damage, cost,
expense, liability or claim arises from negligence, bad faith or
willful misconduct on its part or on the part of any Sub-Custodian
appointed pursuant to Section 3.3 above. The Custodian shall be
entitled to rely on and may act upon advice of counsel on all matters,
and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. The Custodian shall promptly notify
the Company of any action taken or omitted by the Custodian pursuant
to advice of counsel. The Custodian shall not be under any obligation
at any time to ascertain whether the Company or the Fund is in
compliance with the 1940 Act, the regulations thereunder, the
provisions of the Company's charter documents or by-laws, or its
investment objectives and policies as then in effect.
7.2 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to a Fund or any
money represented by a check, draft or other instrument for the
payment of money, until the Custodian or its agents actually receive
such cash or collect on such instrument.
7.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property or
evidence of title thereto received or delivered by it pursuant to this
Agreement.
7.4 LIMITATION ON DUTY TO COLLECT. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or
property due and payable with respect to Securities held for the Fund
if such Securities are in default or payment is not made after due
demand or presentation.
7.5 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in
writing received by it and reasonably believed by it to be genuine.
The Custodian shall be entitled to rely upon any Oral Instructions and
any Written Instructions actually received by it pursuant to this
Agreement.
7.6 EXPRESS DUTIES ONLY. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set
forth in this Agreement, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
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7.7 CO-OPERATION. The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Company to keep
the books of account of the Funds and/or compute the value of the
assets of the Funds. The Custodian shall take all such reasonable
actions as the Company may from time to time request to enable the
Company to obtain, from year to year, favorable opinions from the
Company's independent accountants with respect to the Custodian's
activities hereunder in connection with (a) the preparation of the
Company's reports on Form N-1A and Form N-SAR and any other reports
required by the Securities and Exchange Commission, and (b) the
fulfillment by the Company of any other requirements of the Securities
and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY COMPANY. The Company shall indemnify and hold
harmless the Custodian and any Sub-Custodian appointed pursuant to
Section 3.3 above, and any nominee of the Custodian or of such
Sub-Custodian, from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability (including,
without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from
the fact that Securities are registered in the name of any such
nominee, or (b) from any action or inaction by the Custodian or such
Sub-Custodian (i) at the request or direction of or in reliance on the
advice of the Company, or (ii) upon Proper Instructions, or (c)
generally, from the performance of its obligations under this
Agreement or any sub-custody agreement with a Sub-Custodian appointed
pursuant to Section 3.3 above, provided that neither the Custodian nor
any such Sub-Custodian shall be indemnified and held harmless from and
against any such loss, damage, cost, expense, liability or claim
arising from the Custodian's or such Sub-Custodian's negligence, bad
faith or willful misconduct.
8.2 INDEMNIFICATION BY CUSTODIAN. The Custodian shall indemnify and hold
harmless the Company from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability (including
without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities
and/or banking laws) or claim arising from the negligence, bad faith
or willful misconduct of the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or any nominee of the Custodian or of
such Sub-Custodian.
8.3 INDEMNITY TO BE PROVIDED. If the Company requests the Custodian to
take any action with respect to Securities, which may, in the opinion
of the Custodian, result in the Custodian or its nominee becoming
liable for the payment of money
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or incurring liability of some other form, the Custodian shall not be
required to take such action until the Company shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory
to the Custodian.
8.4 SECURITY. If the Custodian advances cash or Securities to the Fund for
any purpose, either at the Company's request or as otherwise
contemplated in this Agreement, or in the event that the Custodian or
its nominee incurs, in connection with its performance under this
Agreement, any loss, damage, cost, expense (including attorneys' fees
and disbursements), liability or claim (except such as may arise from
its or its nominee's negligence, bad faith or willful misconduct),
then, in any such event, any property at any time held for the account
of such Fund shall be security therefor, and should the Fund fail
promptly to repay or indemnify the Custodian, the Custodian shall be
entitled to utilize available cash of such Fund and to dispose of
other assets of such Fund to the extent necessary to obtain
reimbursement or indemnification.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Company shall be liable for any failure
or delay in performance of its obligations under this Agreement arising out
of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God;
earthquakes; fires; floods; wars; civil or military disturbances; sabotage;
strikes; epidemics; riots; power failures; computer failure and any such
circumstances beyond its reasonable control as may cause interruption, loss
or malfunction of utility, transportation, computer (hardware or software)
or telephone communication service; accidents; labor disputes; acts of
civil or military authority; governmental actions; or inability to obtain
labor, material, equipment or transportation; provided, however, that the
Custodian in the event of a failure or delay (i) shall not discriminate
against the Funds in favor of any other customer of the Custodian in making
computer time and personnel available to input or process the transactions
contemplated by this Agreement and (ii) shall use its best efforts to
ameliorate the effects of any such failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 EFFECTIVE PERIOD. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated
as hereinafter provided.
10.2 TERMINATION. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than sixty (60) days after
the date of the giving of such notice. If a successor custodian shall
have been appointed by the Board of Directors, the Custodian shall,
upon receipt of a notice of acceptance by the successor custodian, on
such specified date of termination (a) deliver directly to the
successor
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custodian all Securities (other than Securities held in a Book-Entry
System or Securities Depository) and cash then owned by the Fund and
held by the Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System or Securities Depository to an account of
or for the benefit of the Funds at the successor custodian, provided
that the Company shall have paid to the Custodian all fees, expenses
and other amounts to the payment or reimbursement of which it shall
then be entitled. Upon such delivery and transfer, the Custodian shall
be relieved of all obligations under this Agreement. The Company may
at any time immediately terminate this Agreement in the event of the
appointment of a conservator or receiver for the Custodian by
regulatory authorities or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian is
not designated by the Company on or before the date of termination
specified pursuant to Section 10.1 above, then the Custodian shall
have the right to deliver to a bank or corporation company of its own
selection, which (a) is a "bank" as defined in the 1940 Act and (b)
has aggregate capital, surplus and undivided profits as shown on its
then most recent published report of not less than $25 million, all
Securities, cash and other property held by Custodian under this
Agreement and to transfer to an account of or for the Funds at such
bank or Company company all Securities of the Funds held in a
Book-Entry System or Securities Depository. Upon such delivery and
transfer, such bank or Company company shall be the successor
custodian under this Agreement and the Custodian shall be relieved of
all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Company and the Custodian. The fees and other charges
in effect on the date hereof and applicable to the Fund are set forth in
Exhibit C attached hereto.
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ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Company hereunder
shall not be binding upon any of the Companies, shareholders, nominees,
officers, agents or employees of the Company personally, but shall bind
only the property of the Company as provided in the Company's Agreement and
Articles of Incorporation, as from time to time amended. The execution and
delivery of this Agreement have been authorized by the Company, and this
Agreement has been signed and delivered by an authorized officer of the
Company, acting as such, and neither such authorization by the Company nor
such execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the corporation property of the Company as
provided in the above-mentioned Agreement and Articles of Incorporation.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and
shall be sent or delivered to the recipient at the address set forth after
its name hereinbelow:
TO THE COMPANY:
Jundt Associates, Inc.
Attn: Jon Essen
1550 Utica Avenue South, Suite 950
Minneapolis, MN 55416
TO CUSTODIAN:
Firstar Bank, N.A.
425 Walnut Street, M.L. CN-WN-06TC
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (513) 632_____
Facsimile: (513) 632-3299
or at such other address as either party shall have provided to the other
by notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
-20-
<PAGE>
14.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 REFERENCES TO CUSTODIAN. The Company shall not circulate any printed
matter which contains any reference to Custodian without the prior
written approval of Custodian, excepting printed matter contained in
the prospectus or statement of additional information for the Fund and
such other printed matter as merely identifies Custodian as custodian
for the Fund. The Company shall submit printed matter requiring
approval to Custodian in draft form, allowing sufficient time for
review by Custodian and its counsel prior to any deadline for
printing.
14.3 NO WAIVER. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by either party hereto of any right
hereunder shall not preclude the exercise of any other right, and the
remedies provided herein are cumulative and not exclusive of any
remedies provided at law or in equity.
14.4 AMENDMENTS. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
14.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each
of which shall be deemed an original but all of which together shall
constitute but one and the same instrument.
14.6 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions
shall not be affected or impaired thereby.
14.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall
not be assignable by either party hereto without the written consent
of the other party hereto.
14.8 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
-21-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: JUNDT GROWTH FUND, INC.
JUNDT FUNDS, INC.
AMERICAN EAGLE FUNDS, INC.
______________________________ By:_____________________________
ATTEST: FIRSTAR BANK, N.A.
______________________________ By:____________________________
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Company to administer the Fund Custody Accounts.
AUTHORIZED PERSONS SPECIMEN SIGNATURES
President: ___________________
Secretary: ___________________
Treasurer: ___________________
Vice President: ___________________
Adviser Employees: ___________________
-22-
<PAGE>
EXHIBIT B
FIRSTAR BANK, N.A.
STANDARDS OF SERVICE GUIDE
EXHIBIT C
FIRSTAR BANK, N.A.
DOMESTIC CUSTODY FEE SCHEDULE
Firstar Bank, N.A., as Custodian, will receive monthly compensation for
services according to the terms of the following Schedule:
Annual fee based upon market value
1 basis points per year
Minimum annual fee per fund - $3,000
Investment transactions (purchase, sale, exchange, tender, redemption,
maturity, receipt, delivery):
$12.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical)
$25.00 per mutual fund trade
$75.00 per Euroclear
$ 8.00 per principal reduction on pass-through certificates
$ 6.00 per short sale/liability transaction
$35.00 per option/futures contracts
$15.00 per variation margin $15.00 per Fed wire deposit or withdrawl
Variable Amount Demand Notes: Used as a short-term investment, variable
amount notes offer safety and prevailing high interest rates. Our charge,
which is 1/4 of 1%, is deducted from the variable amount note income at the
time it is credited to your account.
Plus out-of-pocket expenses, and extraordinary expenses based upon
complexity
Fees are billed monthly, based upon market value at the beginning of the
month
-23-
<PAGE>
EXHIBIT (h)(1)
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 31st day of December,
1999, by and between Jundt Growth Fund, Inc., Jundt Funds, Inc. and American
Eagle Funds, Inc., corporations organized under the laws of the State of
Minnesota (each hereinafter referred to as the "Company"), and Firstar Mutual
Fund Services, LLC, a limited liability company organized under the laws of the
State of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, the Company is an open-end investment management company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create separate series, each with its
own separate investment portfolio;
WHEREAS, FMFS is in the business of providing, among other things, transfer
agent and dividend disbursing agent services to investment companies; and
WHEREAS, the Company desires to retain FMFS to provide transfer agent
services to each of the portfolios of the Company, (each a "Fund") and each
additional series of the Company listed on Exhibit A attached hereto, as it may
be amended from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company and FMFS agree as follows:
1. APPOINTMENT OF TRANSFER AGENT
The Company hereby appoints FMFS as Transfer Agent of the Company on the
terms and conditions set forth in this Agreement, and FMFS hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
FMFS shall perform all of the customary services of a transfer agent and
dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders with prompt delivery, where appropriate, of
payment and supporting documentation to the Company's custodian, and
issue the appropriate
<PAGE>
PAGE 2
number of uncertificated shares with such uncertificated shares being
held in the appropriate shareholder account;
C. Arrange for issuance of Shares obtained through transfers of funds
from Shareholders' accounts at financial institutions and arrange for
the exchange of Shares for shares of other eligible investment
companies, when permitted by Prospectus.
D. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Company's
custodian;
E. Pay monies upon receipt from the Company's custodian, where relevant,
in accordance with the instructions of redeeming shareholders;
F. Process transfers of shares in accordance with the shareholder's
instructions;
G. Process exchanges between funds and/or classes of shares of funds.
H. Prepare and transmit payments for dividends and distributions declared
by the Company with respect to the Fund, after deducting any amount
required to be withheld by any applicable laws, rules and regulations
and in accordance with shareholder instructions;
I. Make changes to shareholder records, including, but not limited to,
address changes in plans (i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Fund and maintain, pursuant to
Rule 17ad-10(e) promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), a record of the total number of
shares of the Fund which are authorized, issued and outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail, receive
and tabulate proxies;
L. Mail shareholder reports and prospectuses to current shareholders;
M. Prepare and file U.S. Treasury Department Forms 1099 and other
appropriate information returns required with respect to dividends and
distributions for all shareholders;
N. Provide shareholder account information upon request and prepare and
mail confirmations and statements of account to shareholders for all
purchases, redemption's and other confirmable transactions as agreed
upon with the Company;
<PAGE>
PAGE 3
O. Mail requests for shareholders' certifications under penalties of
perjury and pay on a timely basis to the appropriate Federal
authorities any taxes to be withheld on dividends and distributions
paid by the Company, all as required by applicable Federal tax laws
and regulations;
P. Provide a Blue Sky System, which will enable the Company to monitor
the total number of shares of the Fund, sold in each state. In
addition, the Company or its agent, including FMFS, shall identify to
FMFS in writing those transactions and assets to be treated as exempt
from the Blue Sky reporting for each state. The responsibility of FMFS
for the Company's Blue Sky state registration status is solely limited
to the initial compliance by the Company and the reporting of such
transactions to the Company or its agent;
Q. Answer correspondence from shareholders, securities brokers and others
relating to FMFS's duties hereunder and such other correspondence as
may from time to time be mutually agreed upon between FMFS and the
Company.
Reimburse the Fund each month for all material losses resulting from "as
of" processing errors for which FMFS is responsible in accordance with the "as
of" processing guidelines set forth in the following paragraph.
FMFS will reimburse the Fund(s) for any net material loss that may exist on
the Fund(s) books and for which FMFS is responsible, at the end of each calendar
month. "Net Material Loss" shall be defined as any remaining loss, after netting
losses against any gains, which impacts the Fund's net asset value by more than
1/2 cent. Gains and losses will be accumulated on a daily basis, will be
reflected on the Fund's daily share sheet, and will be settled on a monthly
basis. FMFS will notify the Fund's advisor on the daily share sheet of any
losses for which the Fund's adviser may be held accountable.
3. COMPENSATION
FMFS shall be compensated for providing the services set forth in this
Agreement in accordance with the Fee Schedule attached hereto as Exhibit A and
as mutually agreed upon and amended from time to time. The Company agrees to pay
all fees and reimbursable expenses within ten (10) business days following the
receipt of the billing notice.
4. REPRESENTATIONS OF FMFS
FMFS represents and warrants to the Company that:
A. It is a corporation duly organized, existing and in good standing
under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act.
<PAGE>
PAGE 4
C. It is duly qualified to carry on its business in the State of
Wisconsin;
D. It is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize it to
enter and perform this Agreement;
F. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement; and
G. It will comply with all applicable requirements of the Securities Act
of 1933, as amended, and the Exchange Act, the 1940 Act, and any laws,
rules, and regulations of governmental authorities having
jurisdiction.
5. REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to FMFS that:
A. The Company is an open-end investment company under the 1940 Act;
B. The Company is organized, existing, and in good standing under the
laws of Minnesota;
C. The Company is empowered under applicable laws and by its Articles of
Incorporation and Bylaws to enter into and perform this Agreement;
D. All necessary proceedings required by the Articles of Incorporation
have been taken to authorize it to enter into and perform this
Agreement;
E. The Company will comply with all applicable requirements of the
Securities Act, the Exchange Act, the 1940 Act, and any laws, rules
and regulations of governmental authorities having jurisdiction; and
F. A registration statement under the Securities Act will be made
effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect
to all shares of the Company being offered for sale.
6. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
FMFS shall exercise reasonable care in the performance of its duties under
this Agreement. FMFS shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Company in connection with matters to which
this Agreement relates, including losses resulting from mechanical breakdowns or
the failure of communication or power supplies beyond FMFS's control, except a
loss arising out of or relating to the refusal or failure to comply
<PAGE>
PAGE 5
with the terms of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement, if FMFS has exercised
reasonable care in the performance of its duties under this Agreement, the
Company shall indemnify and hold harmless FMFS from and against any and all
claims, demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable attorneys'
fees) which FMFS may sustain or incur or which may be asserted against FMFS by
any person arising out of any action taken or omitted to be taken by it in
performing the services hereunder, except for any and all claims, demands,
losses expenses, and liabilities arising out of or relating to FMFS's refusal or
failure to comply with the terms of this Agreement or from bad faith, negligence
or from willful misconduct on its part in performance of its duties under this
Agreement, (i) in accordance with the foregoing standards, or (ii) in reliance
upon any written or oral instruction provided to FMFS by any duly authorized
officer of the Company, such duly authorized officer to be included in a list of
authorized officers furnished to FMFS and as amended from time to time in
writing by resolution of the Board of Directors of the Company.
The Company will indemnify and hold FMFS harmless against any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) resulting from any claim, demand, action, or suit as a result
of the negligence of the Company or the principal underwriter (unless
contributed to by FMFS breach of this Agreement or other Agreements between the
Fund and FMFS, or FMFS own negligence or bad faith); or as a result of FMFS
acting upon telephone instructions relating to the exchange or redemption of
shares received by FMFS and reasonably believed by FMFS under a standard of care
customarily used in the industry to have originated from the record owner of the
subject shares; or as a result of acting in reliance upon any genuine instrument
or stock certificate signed, countersigned, or executed by any person or persons
authorized to sign, countersign, or execute the same.
FMFS shall indemnify and hold the Company harmless from and against any and
all claims, demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable attorneys'
fees) which the Company may sustain or incur or which may be asserted against
the Company by any person arising out of any action taken or omitted to be taken
by FMFS as a result of FMFS's refusal or failure to comply with the terms of
this Agreement, its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of communication or power
supplies beyond its control, FMFS shall take all reasonable steps to minimize
service interruptions for any period that such interruption continues beyond
FMFS's control. FMFS will make every reasonable effort to restore any lost or
damaged data and correct any errors resulting from such a breakdown at the
expense of FMFS. FMFS agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable provision for
emergency use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Company shall be entitled to
inspect FMFS's premises and operating capabilities at any time during regular
business hours of FMFS, upon reasonable notice to FMFS.
<PAGE>
PAGE 6
Regardless of the above, FMFS reserves the right to reprocess and correct
administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will use all reasonable care to
notify the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for indemnification. The
indemnitor shall have the option to defend the indemnitee against any claim,
which may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon the
indemnitor shall take over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall in no case
confess any claim or make any compromise in any case in which the indemnitor
will be asked to indemnify the indemnitee except with the indemnitor's prior
written consent.
7. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and employees
to treat confidentially and as proprietary information of the Company all
records and other information relative to the Company and prior, present, or
potential shareholders (and clients of said shareholders) and not to use such
records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where FMFS may be exposed to civil or criminal
contempt proceedings for failure to comply after being requested to divulge such
information by duly constituted authorities, or when so requested by the
Company.
8. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and, unless
sooner terminated as provided herein, shall continue automatically in effect for
successive annual periods. The Agreement may be terminated by either party upon
giving ninety (90) days prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties. However, this Agreement may be
amended by mutual written consent of the parties.
9. RECORDS
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Company but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act of 1940 as amended (the "Investment Company Act"),
and the rules thereunder. FMFS agrees that all such records prepared or
maintained by FMFS relating to the services to be performed by FMFS hereunder
are the
<PAGE>
PAGE 7
property of the Company and will be preserved, maintained, and made available
with such section and rules of the Investment Company Act and will be promptly
surrendered to the Company on and in accordance with its request.
10. GOVERNING LAW
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner inconsistent with the 1940 Act or
any rule or regulation promulgated by the Securities and Exchange Commission
thereunder.
11. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of FMFS's duties or responsibilities hereunder is designated by the Company by
written notice to FMFS, FMFS will promptly, upon such termination and at the
expense of the Company, transfer to such successor all relevant books, records,
correspondence, and other data established or maintained by FMFS under this
Agreement in a form reasonably acceptable to the Company (if such form differs
from the form in which FMFS has maintained, the Company shall pay any expenses
associated with transferring the data to such form), and will cooperate in the
transfer of such duties and responsibilities, including provision for assistance
from FMFS's personnel in the establishment of books, records, and other data by
such successor.
12. NOTICES
Notices of any kind to be given by either party to the other party shall be
in writing and shall be duly given if mailed or delivered as follows: Notice to
FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
Attn: Julie Paulus
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Funds shall be sent to:
Jundt Associates, Inc.
Attn: Jon Essen
1550 Utica Avenue South, Suite 950
Minneapolis, MN 55416
<PAGE>
PAGE 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer or one or more counterparts as of the day and year
first written above.
JUNDT GROWTH FUND, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
JUNDT FUNDS, INC.
AMERICAN EAGLE FUNDS, INC.
By:______________________________ By: ______________________________
Attest:__________________________ Attest:___________________________
<PAGE>
PAGE 9
TRANSFER AGENT AND SHAREHOLDER SERVICING
ANNUAL FEE SCHEDULE
EXHIBIT A
<TABLE>
<CAPTION>
NAME OF SERIES DATE ADDED
-------------- ----------
<S> <C>
Jundt Growth Fund, Inc. 12/31/99
Jundt Growth Fund (Class A, B, C, I)
Jundt Funds, Inc. 12/31/99
Jundt Opportunity Fund (Class A, B, C, I)
Jundt Twenty-Five Fund (Class A, B, C, I)
Jundt U. S. Emerging Growth Fund (Class A, B, C, I)
American Eagle Funds, Inc. 12/31/99
American Eagle Capital Appreciation
American Eagle Twenty Fund
</TABLE>
<TABLE>
<S> <C>
Annual Fee
$16.00 per shareholder account
Minimum annual fees of $12,000 per class - Jundt Funds
Minimum annual fees of $10,000 per class - American Eagle
Extraordinary services quoted separately.
Conversion estimate (Jundt Growth Fund, Inc. and Jundt Funds,
Inc.) - $55,000 - $85,000
Activity Charges
Telephone Call - $1.00 per call
Draft Check Processing - $1.00 per draft
Daily Valuation Trades - $6.75 per trade
ACH Shareholder Services
$125.00 per month per fund group
$ .50 per ACH item, setup and/or change
$ 5.00 per correction, reversal, return item
Plus Out-of-Pocket Expenses, including but not limited to:
Telephone - toll free lines Proxies
Postage Retention of records
Programming Microfilm/fiche of records
Programming for select data requests Special reports
Stationery/envelopes ACH fees
Mailing NSCC charges
File transfers - $160.00 per month and $.01 per record
Qualified Plan Fees (Billed to Investors)
Annual maintenance fee per account $12.50 / acct. (Cap at $25.00 per SSN)
Education IRA $ 5.00 / acct. (Cap at $25.00 / per SSN)
Transfer to successor trustee $15.00 / trans.
Distribution to participant $15.00 / trans. (Exclusive of SWP)
Refund of excess contribution $15.00 / trans.
<PAGE>
PAGE 10
Additional Shareholder Fees (Billed to Investors)
Any outgoing wire transfer $12.00 / wire
Telephone Exchange $ 5.00 / exchange transaction
Return check fee $25.00 / item
Stop payment $20.00 / stop
(Liquidation, dividend, draft check)
Research fee $ 5.00 / item
(For requested items of the second calendar year [or previous] to the request)(Cap at $25.00)
MISCELLANEOUS
OUT-OF-POCKET CHARGES
NSCC Interfaces
Setup
Fund/SERV, Networking ACATS, Exchanges $5,000 setup (one time)
Commissions $5,000 setup (one time)
Processing
Fund/SERV $ 50.00 / month
Networking $250.00 / month
CPU Access $ 40.00 / month
Fund/SERV Transactions $ .35 / trade
Networking - per item $ .025 / monthly dividend fund
Networking - per item $ .015 / non-mo. dividend fund
First Data $ .10 / next-day Fund/SERV trade
First Data $ .15 / same-day Fund?SERV trade
NSCC Implementation
8 to 10 weeks lead time
DAZL (Direct Access Zip Link - Electronic mail interface to financial advisor
network)
Setup $5,000 / fund group
Monthly Usage $1,000 / month
Transmission $ .015 / price record
$ .025 / other record
Enhancement $ 125 / hour
Forms Costs
Statement Paper $ .038 / item
#9, #10 Envelopes $ .043 / item
Check/Statement Paper $ .25 / item
Certificate $ 1.00 / item
Wire Order Confirm (non-NSCC) $ .22 / item
Presort Postage (one ounce) $ .34 / item
Shareholder System Select Request $200,00/request
Systems Development/Programming $150.00 / hour
Fund Group Additions $2,000.00 / fund group
Lost Shareholder Search (Keane Tracers) $ 3.00 / search
Custom Programming $150.00 / hour
</TABLE>
Fees and out-of-pocket expenses are billed to the Funds monthly.
<PAGE>
EXHIBIT (h)(2)
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 31st day of December,
1999, by and between Jundt Growth Fund, Inc., Jundt Funds, Inc. and American
Eagle Funds, Inc., corporations organized under the laws of the State of
Minnesota (each hereinafter referred to as the "Company"), and Firstar Mutual
Fund Services, LLC, a limited liability company organized under the laws of the
State of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, the Company is an open-end investment management company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create separate series, each with its
own separate investment portfolio;
WHEREAS, FMFS is in the business of providing, among other things, mutual
fund administration services to investment companies; and
WHEREAS, the Company desires to retain FMFS to provide mutual fund
administration services to each of the portfolios of the Funds, (each a "Fund")
and each additional series of the Company listed on Exhibit A attached hereto,
as it may be amended from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company and FMFS agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Company hereby appoints FMFS as Administrator of the Company on the
terms and conditions set forth in this Agreement, and FMFS hereby
accepts such appointment and agrees to perform the services and duties
set forth in this Agreement in consideration of the compensation
provided for herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
A. General Fund Management
1. Act as liaison among all Fund service providers
2. Supply:
a. Corporate secretarial services, if required
b. Office facilities (which may be in FMFS's or its affiliate's
own offices)
c. Non-investment-related statistical and research data as needed
3. Assist independent legal counsel with board communication by:
<PAGE>
PAGE 2
a. Preparing board materials based on financial and administrative
data
b. Evaluating independent auditor
c. Securing and monitoring fidelity bond and director and officer
liability coverage, and making the necessary SEC filings relating
thereto
d. Recommend dividend declarations to the Board, prepare and
distribute to appropriate parties' notices announcing declaration
of dividends and other distributions to shareholders
e. Provide personnel to serve as officers of the Funds if so elected
by the Board and attend Board meetings to present materials for
Board review
4. Audits
a. Prepare appropriate schedules and assist independent auditors
b. Provide information to SEC and facilitate audit process
c. Provide office facilities
5. Assist in overall operations of the Fund
6. Pay Fund expenses upon written authorization from the Company
7. Monitor arrangements under shareholder services or similar plan
B. Compliance
1. Regulatory Compliance
a. Monitor compliance with 1940 Act requirements, including:
1) Asset diversification tests
2) Total return and SEC yield calculations
3) Maintenance of books and records under Rule 31a-3
4) Code of Ethics for the disinterested Directors of the Fund
b. Monitor Fund's compliance with the policies and investment
limitations of the Funds as set forth in its Prospectus and
Statement of Additional Information
c. Maintain awareness of applicable regulatory and operational
service issues and recommend dispositions
2. Blue Sky Compliance
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings relating to
the registration of the securities of the Funds so as to enable
the Funds to make a continuous offering of its shares in all
states
b. Monitor status and maintain registrations in each state
<PAGE>
PAGE 3
c. Provide information regarding material developments in state
securities regulation
3. SEC Registration and Reporting
a. Assist Company counsel in updating Prospectus and Statement of
Additional Information and in preparing proxy statements and Rule
24f-2 notices
b. Prepare annual and semiannual reports, Form N-SAR filings and
Rule 24f-2 notices
c. Coordinate the printing, filing and mailing of publicly
disseminated Prospectuses and reports
d. File fidelity bond under Rule 17g-1
e. File shareholder reports under Rule 30b2-1
f. Monitor sales of each Fund's shares and ensure that such shares
are properly registered with the SEC and the appropriate state
authorities
g. File Rule 24f-2 notices
4. IRS Compliance
a. Monitor Company's status as a regulated investment company
under Subchapter M, including without limitation, review of
the following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Calculate required distributions (including excise tax
distributions)
C. Financial Reporting
1. Provide financial data required by Fund's Prospectus and
Statement of Additional Information;
2. Prepare financial reports for officers, shareholders, tax
authorities, performance reporting companies, the board, the SEC,
and independent auditors;
3. Supervise the Funds Custodian and Accountants in the maintenance
of the Funds general ledger and in the preparation of the Fund's
financial statements, including oversight of expense accruals and
payments, of the determination of net asset value of the Funds
net assets and of the Funds shares, and of the declaration and
payment of dividends and other distributions to shareholders;
4. Compute the yield, total return and expense ratio of each class
of each Portfolio, and each Portfolio's portfolio turnover rate;
and
5. Monitor the expense accruals and notify Company management of any
proposed adjustments.
<PAGE>
PAGE 4
6. Prepare monthly financial statements, which will include without
limitation the following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses
7. Prepare quarterly broker security transaction summaries.
D. Tax Reporting
1. Prepare and file on a timely basis appropriate federal and
state tax returns including, without limitation, Forms
1120/8610 with any necessary schedules
2. Prepare state income breakdowns where relevant
3. File Form 1099 Miscellaneous for payments to Directors and other
service providers
4. Monitor wash losses
5. Calculate eligible dividend income for corporate shareholders
3. COMPENSATION
FMFS shall be compensated for providing the services set forth in this
Agreement in accordance with the Fee Schedule attached hereto as
Exhibit A and as mutually agreed upon and amended from time to time.
The Company agrees to pay all fees and reimbursable expenses within ten
(10) business days following the receipt of the billing notice.
4. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FMFS shall exercise reasonable care in the performance of its
duties under this Agreement. FMFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Company in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FMFS's control, except a loss
arising out of or relating to FMFS's refusal or failure to comply with
the terms of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this
Agreement. Notwithstanding any other provision of this Agreement, if
FMFS has exercised reasonable care in the performance of its duties
under this Agreement, the Funds shall indemnify and hold harmless FMFS
from and against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any and
every nature (including reasonable attorneys' fees) which FMFS may
sustain or incur or which may be asserted against FMFS by any person
arising out of any action taken or omitted to be taken by it in
performing the services hereunder, except for any and all claims,
demands, losses, expenses, and liabilities arising out of or relating
to
<PAGE>
PAGE 5
FMFS's refusal or failure to comply with the terms of this Agreement
or from bad faith, negligence or from willful misconduct on its part
in performance of its duties under this Agreement, (i) in accordance
with the foregoing standards, or (ii) in reliance upon any written or
oral instruction provided to FMFS by any duly authorized officer of
the Company, such duly authorized officer to be included in a list of
authorized officers furnished to FMFS and as amended from time to time
in writing by resolution of the Board of Directors of the Company.
FMFS shall indemnify and hold the Company harmless from and
against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the Company may sustain
or incur or which may be asserted against the Company by any person
arising out of any action taken or omitted to be taken by FMFS as a
result of FMFS's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FMFS shall take
all reasonable steps to minimize service interruptions for any period
that such interruption continues beyond FMFS's control. FMFS will make
every reasonable effort to restore any lost or damaged data and
correct any errors resulting from such a breakdown at the expense of
FMFS. FMFS agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable
provision for emergency use of electrical data processing equipment to
the extent appropriate equipment is available. Representatives of the
Funds shall be entitled to inspect FMFS's premises and operating
capabilities at any time during regular business hours of FMFS, upon
reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee harmless,
the indemnitor shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further
understood that the indemnitee will use all reasonable care to notify
the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the
indemnitee against any claim, which may be the subject of this
indemnification. In the event that the indemnitor so elects, it will
so notify the indemnitee and thereupon the indemnitor shall take over
complete defense of the claim, and the indemnitee shall in such
situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall in
no case confess any claim or make any compromise in any case in which
the indemnitor will be asked to indemnify the indemnitee except with
the indemnitor's prior written consent.
<PAGE>
PAGE 6
5. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of
the Company all records and other information relative to the Company
and prior, present, or potential shareholders of the Company (and
clients of said shareholders), and not to use such records and
information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification
to and approval in writing by the Company, which approval shall not be
unreasonably withheld and may not be withheld where FMFS may be
exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Funds.
6. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue subject to
Board approval in effect for successive annual periods. The Agreement
may be terminated by either party upon giving ninety (90) days prior
written notice to the other party or such shorter period as is
mutually agreed upon by the parties. However, this Agreement may be
amended by mutual written consent of the parties.
7. RECORDS
FMFS shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Funds but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules thereunder. FMFS
agrees that all such records prepared or maintained by FMFS relating
to the services to be performed by FMFS hereunder are the property of
the Funds and will be preserved, maintained, and made available in
accordance with such section and rules of the 1940 Act and will be
promptly surrendered to the Funds on and in accordance with its
request.
8. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or regulation promulgated
by the Securities and Exchange Commission thereunder.
9. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of FMFS's duties or responsibilities hereunder is designated by the
Company by written notice to FMFS, FMFS will promptly, upon such
termination and at the expense of the Company, transfer
<PAGE>
PAGE 7
to such successor all relevant books, records, correspondence, and
other data established or maintained by FMFS under this Agreement in a
form reasonably acceptable to the Company (if such form differs from
the form in which FMFS has maintained, the Funds shall pay any
expenses associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities,
including provision for assistance from FMFS's personnel in the
establishment of books, records, and other data by such successor.
10. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS
to act as agent for the other party to this Agreement, or to conduct
business in the name of, or for the account of the other party to this
Agreement.
11. DATA NECESSARY TO PERFORM SERVICES
The Company or its agent, which may be FMFS, shall furnish to FMFS the
data necessary to perform the services described herein at times and
in such form as mutually agreed upon if FMFS is also acting in another
capacity for the Company, nothing herein shall be deemed to relieve
FMFS of any of its obligations in such capacity.
12. NOTICES
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
Attn: Julie Paulus
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Funds shall be sent to:
Jundt Associates, Inc.
Attn: Jon Essen
1550 Utica Avenue South, Suite 950
Minneapolis, MN 55416
<PAGE>
PAGE 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer or one or more counterparts as of the day and year
first written above.
JUNDT GROWTH FUND, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
JUNDT FUNDS, INC.
AMERICAN EAGLE FUNDS, INC.
By:______________________________ By: ________________________________
Attest:__________________________ Attest:_____________________________
<PAGE>
PAGE 9
FUND ADMINISTRATION AND COMPLIANCE
ANNUAL FEE SCHEDULE
EXHIBIT A
NAME OF SERIES DATE ADDED
-------------- ----------
Jundt Growth Fund, Inc. 12/31/99
Jundt Growth Fund (Class A, B, C, I)
Jundt Funds, Inc. 12/31/99
Jundt Opportunity Fund (Class A, B, C, I)
Jundt Twenty-Five Fund (Class A, B, C, I)
Jundt U. S. Emerging Growth Fund (Class A, B, C, I)
American Eagle Funds, Inc. 12/31/99
American Eagle Capital Appreciation
Jundt Growth Fund and Jundt Funds (4 classes each Fund)
Annual fee based upon fund group assets:
11 basis points on the first $200 million
9 basis points on the next $500 million
7 basis points on the balance
Minimum annual fee: $45,000 per fund
American Eagle Funds (1 Class, NL)
Annual fee based upon fund group assets:
6 basis points on the first $200 million
5 basis points on the next $500 million
3 basis points on the balance
Minimum annual fee:
$20,000 per fund year 1
$25,000 per fund year 2
$30,000 per fund year 3
Extraordinary services quoted separately.
Plus out-of-pocket expense reimbursements, including but not limited to:
Postage
Programming
Stationery
Proxies
Insurance
Retention of records
Special reports
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of Directors meetings
Auditing and legal expenses
Multiple class funds quoted separately
Assumes Firstar services Jundt Funds
Fees and out-of-pocket expense reimbursements are billed to the Funds monthly
<PAGE>
EXHIBIT (h)(3)
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 31st day of December,
1999, by and between Jundt Growth Fund, Inc., Jundt Funds, Inc. and American
Eagle Funds, Inc., corporations organized under the laws of the State of
Minnesota (each hereinafter referred to as the "Company"), and Firstar Mutual
Fund Services, LLC, a limited liability company organized under the laws of the
State of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, the Company is an open-end investment management company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create separate series, each with its
own separate investment portfolio;
WHEREAS, FMFS is in the business of providing, among other things, mutual
fund accounting services to investment companies; and
WHEREAS, the Company desires to retain FMFS to provide accounting services
to each of the portfolios of the Company, (each a "Fund") and each additional
series of the Company listed on Exhibit A attached hereto, as it may be amended
from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company and FMFS agree as follows:
1. APPOINTMENT OF FUND ACCOUNTANT
The Company hereby appoints FMFS as Fund Accountant of the Company on the
terms and conditions set forth in this Agreement, and FMFS hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis using
security trade information communicated from the investment manager.
(2) For each valuation date, obtain prices from a pricing source
approved by the Board of Directors of the Company and apply those
prices to the portfolio positions. For those securities where market
quotations are not readily available, the
<PAGE>
PAGE 2
Board of Directors of the Company shall approve, in good faith, the
method for determining the fair value for such securities.
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for the
accounting period.
(4) Determine gain/loss on security sales and identify them as,
short-term or long-term; account for periodic distributions of gains
or losses to shareholders and maintain undistributed gain or loss
balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by Company as to methodology, rate or dollar
amount.
(2) Record payments for Fund expenses upon receipt of written
authorization from Company.
(3) Account for Fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by FMFS and
the Company.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund share activity as
reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Company.
(3) Determine net investment income (earnings) for the Fund as of
each valuation date. Account for periodic distributions of earnings to
shareholders and maintain undistributed net investment income balances
as of each valuation date.
(4) Maintain a general ledger and other accounts, books, and
financial records for the Fund in the form as agreed upon.
(5) Determine the net asset value of the Fund according to the
accounting policies and procedures set forth in the Fund's Prospectus.
(6) Calculate per share net asset value, per share net earnings,
and other per share amounts reflective of Fund operations at such time
as required by the nature and characteristics of the Fund.
<PAGE>
PAGE 3
(7) Communicate, at an agreed upon time, the per share price for
each valuation date to parties as agreed upon from time to time.
(8) Prepare monthly reports, which document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment portfolio of
the Fund to support the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using the tax
lot relief method designated by the Funds.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions to the
transfer agent to support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support financial
statement preparation by making the Fund's accounting records
available to Company, the Securities and Exchange Commission, and the
outside auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder
F. FMFS will perform the following accounting functions on a daily
basis:
(1) Reconcile cash and investment balances of each Portfolio with
the Custodian, and provide the Advisor with the beginning cash balance
available for investment purposes;
(2) Transmit or mail a copy of the portfolio valuation to the
Advisor;
(3) Review the impact of current day's activity on a per share
basis, review changes in market value.
G. In addition, FMFS will:
(1) Prepare monthly security transactions listings;
<PAGE>
PAGE 4
(2) Supply various Company, Portfolio and class statistical data
as requested on an ongoing basis.
3. PRICING OF SECURITIES
For each valuation date, obtain prices from a pricing source selected by FMFS
but approved by the Board of Directors of the Company and apply those prices to
the portfolio positions of the Fund. For those securities where market
quotations are not readily available, the Board of Directors of the Company
shall approve, in good faith, the method for determining the fair value for such
securities.
If the Company desires to provide a price, which varies from the pricing source,
the Company shall promptly notify and supply FMFS with the valuation of any such
security on each valuation date. All pricing changes made by the Company will be
in writing and must specifically identify the securities to be changed by CUSIP,
name of security, new price or rate to be applied, and, if applicable, the time
period for which the new price(s) is/are effective.
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Directors of the Company that affects
accounting practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by the FMFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
FMFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules, operating
schedules and equipment, so long as such changes do not adversely affect the
service provided to the Company under this Agreement.
6. COMPENSATION
FMFS shall be compensated for providing the services set forth in this Agreement
in accordance with the Fee Schedule attached hereto as Exhibit A and as mutually
agreed upon and amended from time to time. The Company agrees to pay all fees
and reimbursable expenses within ten (10) business days following the receipt of
the billing notice.
7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FMFS shall exercise reasonable care in the performance of its
duties under this Agreement. FMFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Company in
connection with matters to which this Agreement relates, including losses
resulting from mechanical breakdowns or the failure of communication or
power supplies beyond FMFS's control, except a loss arising out of or
relating to FMFS's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence, or willful misconduct on its part
in the performance of its
<PAGE>
PAGE 5
duties under this Agreement. Notwithstanding any other provision of this
Agreement, if FMFS has exercised reasonable care in the performance of its
duties under this Agreement, the Company shall indemnify and hold harmless
FMFS from and against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any and every
nature (including reasonable attorneys' fees) which FMFS may sustain or
incur or which may be asserted against FMFS by any person arising out of
any action taken or omitted to be taken by it in performing the services
hereunder, except for any and all claims, demands, losses, expenses, and
liabilities arising out of or relating to FMFS's refusal or failure to
comply with the terms of this Agreement or from bad faith, negligence or
from willful misconduct on its part in performance of its duties under this
Agreement, (i) in accordance with the foregoing standards, or (ii) in
reliance upon any written or oral instruction provided to FMFS by any duly
authorized officer of the Funds, such duly authorized officer to be
included in a list of authorized officers furnished to FMFS and as amended
from time to time in writing by resolution of the Board of Directors of the
Company.
FMFS shall indemnify and hold the Company harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which the Company may sustain or incur or which
may be asserted against the Company by any person arising out of any action
taken or omitted to be taken by FMFS as a result of FMFS's refusal or
failure to comply with the terms of this Agreement, its bad faith,
negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FMFS shall take all reasonable steps to
minimize service interruptions for any period that such interruption
continues beyond FMFS's control. FMFS will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from such
a breakdown at the expense of FMFS. FMFS agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available. Representatives
of the Company shall be entitled to inspect FMFS's premises and operating
capabilities at any time during regular business hours of FMFS, upon
reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the indemnitor
may be asked to indemnify or hold the indemnitee harmless, the indemnitor
shall be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the indemnitee
will use all reasonable care to notify the indemnitor promptly concerning
any situation which presents or appears likely to present the probability
of a claim for indemnification. The indemnitor shall have the option to
defend the indemnitee against
<PAGE>
PAGE 6
any claim, which may be the subject of this indemnification. In the event
that the indemnitor so elects, it will so notify the indemnitee and
thereupon the indemnitor shall take over complete defense of the claim, and
the indemnitee shall in such situation initiate no further legal or other
expenses for which it shall seek indemnification under this section.
Indemnitee shall in no case confess any claim or make any compromise in any
case in which the indemnitor will be asked to indemnify the indemnitee
except with the indemnitor's prior written consent.
8. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and employees to
treat confidentially and as proprietary information of the Funds all records and
other information relative to the Funds and prior, present, or potential
shareholders of the Funds (and clients of said shareholders), and not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where FMFS may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Funds.
9. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and, unless sooner
terminated as provided herein, shall continue automatically in effect for
successive annual periods. This Agreement may be terminated by either party upon
giving ninety (90) days prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties. However, this Agreement may be
replaced or modified by a subsequent agreement between the parties.
10. RECORDS
FMFS shall keep records relating to the services to be performed hereunder, in
the form and manner, and for such period as it may deem advisable and is
agreeable to the Funds but not inconsistent with the rules and regulations of
appropriate government authorities, in particular, Section 31 of the 1940 Act,
and the rules thereunder. FMFS agrees that all such records prepared or
maintained by FMFS relating to the services to be performed by FMFS hereunder
are the property of the Company and will be preserved, maintained, and made
available in accordance with such section and rules of the 1940 Act and will be
promptly surrendered to the Funds on and in accordance with its request.
11. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or regulation promulgated by the SEC thereunder.
<PAGE>
PAGE 7
12. DUTIES IN THE EVENT OF TERMINATION
In the event that in connection with termination, a successor to any of FMFS's
duties or responsibilities hereunder is designated by the Company by written
notice to FMFS, FMFS will promptly, upon such termination and at the expense of
the Company transfer to such successor all relevant books, records,
correspondence and other data established or maintained by FMFS under this
Agreement in a form reasonably acceptable to the Company (if such form differs
from the form in which FMFS has maintained the same, the Company shall pay any
expenses associated with transferring the same to such form), and will cooperate
in the transfer of such duties and responsibilities, including provision for
assistance from FMFS's personnel in the establishment of books, records and
other data by such successor.
13. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS to act as
agent for the other party to this Agreement, or to conduct business in the name
of, or for the account of the other party to this Agreement.
14. DATA NECESSARY TO PERFORM SERVICES
The Company or its agent, which may be FMFS, shall furnish to FMFS the data
necessary to perform the services described herein at such times and in such
form as mutually agreed upon. If FMFS is also acting in another capacity for the
Company, nothing herein shall be deemed to relieve FMFS of any of its
obligations in such capacity.
15. NOTIFICATION OF ERROR
The Company will notify FMFS of any balancing or control error caused by FMFS
the later of: within three (3) business days after receipt of any reports
rendered by FMFS to the Funds; within three (3) business days after discovery of
any error or omission not covered in the balancing or control procedure, or
within three (3) business days of receiving notice from any shareholder.
<PAGE>
PAGE 8
16. NOTICES
Notices of any kind to be given by either party to the other party shall be in
writing and shall be duly given if mailed or delivered as follows: Notice to
FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
Attn: Julie Paulus
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Funds shall be sent to:
Jundt Associates, Inc.
Attn: Jon Essen
1550 Utica Avenue South, Suite 950
Minneapolis, MN 55416
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the day
and year first written above.
JUNDT GROWTH FUND, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
JUNDT FUNDS, INC.
AMERICAN EAGLE FUNDS, INC.
By: ______________________________ By: ________________________________
Attest: __________________________ Attest: ____________________________
<PAGE>
PAGE 9
FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
EXHIBIT A
<TABLE>
<CAPTION>
NAME OF SERIES DATE ADDED
--------------- -----------
<S> <C>
Jundt Growth Fund, Inc. 12/31/99
Jundt Growth Fund (Class A, B, C, I)
Jundt Funds, Inc. 12/31/99
Jundt Opportunity Fund (Class A, B, C, I)
Jundt Twenty-Five Fund (Class A, B, C, I)
Jundt U. S. Emerging Growth Fund (Class A, B, C, I)
American Eagle Funds, Inc. 12/31/99
American Eagle Capital Appreciation
American Eagle Twenty Fund
</TABLE>
Jundt Growth Fund and Jundt Funds (4 classes each Fund)
Annual fee per fund:
$45,000 for the first $100 million
3 basis points on the next $200 million
1.5 basis points on the balance
American Eagle Funds (1 class)
Annual fee per fund:
$30,000 for the first $100 million
($18,000 - First 12 months or until the Fund exceeds $10 million in
assets)
1.25 basis points on the next $200 million
.75 basis point on the balance
Extraordinary services - quoted separately
NOTE: - All schedules subject to change depending upon the use of derivatives -
options, futures, short sales, etc.
<TABLE>
<CAPTION>
<S> <C>
Domestic and Canadian Equities $.15
Options $.15
Corp/Gov/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80
Mutual Funds $125/fund/mo
</TABLE>
<TABLE>
Factor Services (BondBuyer)
<S> <C>
Per CMO $1.50/month
Per Mortgage Backed $0.25/month
Minimum $300/month
</TABLE>
Fees and out-of-pocket expenses are billed to the Company monthly
<PAGE>
EXHIBIT (j)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
American Eagle Funds, Inc.
We consent to the use of our report included herein and the reference to our
Firm under "COUNSEL AND AUDITORS" in Part B of the Registration Statement on
Form N-1A.
KPMG LLP
Minneapolis, Minnesota
December 27, 1999
