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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. 33-____)
Pre-Effective Amendment No. __
Post-Effective Amendment No.__
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
(File No. 811-____)
Amendment No. __
(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:
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<S><C>
James E. Nicholson Matthew L. Thompson P. Graham van der Leeuw
Faegre & Benson LLP Faegre & Benson LLP Faegre & Benson LLP
90 South Seventh Street, Suite 2200 90 South Seventh Street, Suite 2200 90 South Seventh Street, Suite 2200
Minneapolis, Minnesota 55402 Minneapolis, Minnesota 55402 Minneapolis, Minnesota 55402
</TABLE>
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
hereby elects 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
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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
__________, 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 long
positions in 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 long
positions in approximately 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 None None
redemption proceeds, whichever is lower)....................................................
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>
- -----------
* EXPENSE REIMBURSEMENTS. The fund's investment adviser may reimburse certain
fund operating expenses. The investment adviser expects to reimburse total
operating expenses charged to each fund in the amount of approximately
4.71% of net assets for the fiscal years ending December 31, 1999 and
December 31, 2000. Total annual operating expenses for each fund, after the
investment adviser's reimbursement, is expected to be 2.25% for the fiscal
years ending December 31, 1999 and December 31, 2000. The investment
adviser may continue, discontinue or change reimbursements at any time in
its sole discretion.
** Other Expenses are based on estimated amounts for the current fiscal year,
before reimbursements.
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 $___
Twenty Fund............................................... $2027 $___
</TABLE>
THE EXAMPLE DOES NOT REFLECT THE POTENTIAL REIMBURSEMENT OF CERTAIN
OPERATING EXPENSES BY THE INVESTMENT ADVISER AS DESCRIBED UNDER EXPENSE
REIMBURSEMENT ABOVE.
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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 long
positions in 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 long
positions in approximately 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.
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 limited product
lines, markets or financial resources and may be dependent on a limited
management group. The securities
6
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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 borrowed security at a future date. If the value of the
borrowed security goes down between the sale date and the scheduled
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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. These minimums may
not apply to certain retirement plans or custodial accounts for the benefit of
minors. 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: American
Eagle Funds, Inc., [______________________ (for regular mail) or
____________________] (for overnight delivery). YOU MAY NOT
PURCHASE SHARES WITH A THIRD PARTY CHECK.
- PURCHASES BY TELEPHONE. Call [1-800_________] 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;
- you have changed your account registration or address within the
last 30 days;
9
<PAGE>
- 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 $25,000, you may redeem by calling the funds at
[1-800-___-____]. 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-_________]
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:
AMERICAN EAGLE FUNDS, [_________________________.]
3) If you wish to invest by telephone, call your investment
dealer/adviser or the funds at 1-800-________. 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: [______________________, ABA
#______________; FOR CREDIT OF: [NAME OF FUND]; ACCOUNT NO.:
____________; 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>
<S> <C>
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.
DIVIDENDS AND
AMOUNT YOU ARE DISTRIBUTIONS
FUND NAME INVESTING REINVESTED IN CASH
/ / American Eagle Capital Appreciation Fund $ / / / /
/ / American Eagle Twenty Fund $ / / / /
- -------------------------------------------------------------------------------------------------------------------
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
INVESTMENT below ($50 minimum) per month in the funds 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.
AMOUNT YOU WANT DIVIDENDS AND
INVESTED EACH DISTRIBUTIONS
FUND NAME MONTH REINVESTED IN CASH
/ / American Eagle Capital Appreciation Fund $ / / / /
/ / American Eagle Twenty Fund $ / / / /
- -------------------------------------------------------------------------------------------------------------------
<PAGE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
E. TELEPHONE SEE TERMS AND CONDITIONS FOR TELEPHONE REDEMPTIONS UNDER "HOW TO
REDEMPTION REDEEM FUND SHARES -- EXPEDITED REDEMPTIONS
PRIVILEGE -- EXPEDITED TELEPHONE REDEMPTION" IN THE PROSPECTUS. Please indicated by checking the box
below if you want 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.
FUND NAME AMOUNT OF MONTHLY
WITHDRAWAL
/ / American Eagle Opportunity Fund $
---------------
/ / American Eagle Twenty Fund $
---------------
- -------------------------------------------------------------------------------------------------------------------
<PAGE>
<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 NOTE: If UGMA/UTMA, provide minor's Social
on the account and that person's Social Security Security or Tax Identification Number
Number or 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
TRANSFER AGENT
CUSTODIAN
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-___-____]; or
- WRITING THE FUNDS at 1550 Utica Avenue South, Suite 950,
Minneapolis, MN 55416.
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
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE FUNDS............................................................
RISK/RETURN SUMMARY..................................................
FEES AND EXPENSES....................................................
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS...........................
MANAGEMENT OF THE FUNDS..............................................
HOW TO BUY FUND SHARES...............................................
HOW TO SELL YOUR FUND SHARES.........................................
DISTRIBUTIONS AND TAXES..............................................
FIRMS THAT PROVIDE SERVICES TO THE FUNDS.............................
ADDITIONAL INFORMATION ABOUT THE FUNDS...............................
</TABLE>
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
_______, 1999 BUT MAY CHANGE WITHOUT NOTICE AFTER SUCH DATE.
Investment Company Act File No. [_____________________].
<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-___-____]
STATEMENT OF ADDITIONAL INFORMATION
DATED _________, 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
_________, 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-___-____] or your investment executive.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Policies............................................................
Investment Restrictions........................................................
Taxes..........................................................................
Advisory, Administrative and Distribution Agreements...........................
Special Purchase Plans.........................................................
Monthly Cash Withdrawal Plan...................................................
Determination of Net Asset Value...............................................
Calculation of Performance Data................................................
Directors and Officers.........................................................
Counsel and Auditors...........................................................
General Information............................................................
Financial and Other Information................................................
</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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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 The Jundt Growth Fund, Inc., Jundt
U.S. Emerging Growth Fund, Jundt Opportunity Fund and Jundt Twenty-Five Fund,
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
[ADMINISTRATOR (the "Administrator"), ADDRESS, an affiliate of
___________________,] 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
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performance of administrative and professional services rendered to the fund by
others, including the fund's custodian and 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 the services rendered to each fund and the facilities furnished,
each fund is obliged to pay the Administrator, [subject to an annual minimum fee
of $___,___, a monthly fee at an annual rate of .__% of the first $___ million
of the fund's average daily net assets and .___% of the fund's average daily net
assets in excess of $___ 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 __ 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 [_____________________.]
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.
SPECIAL PURCHASE PLANS
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND CUSTODIAN[; SUBACCOUNTING AGENTS]
___________________, ______________________, serves as the funds'
transfer agent and dividend disbursing agent. ________________,
____________________________, serves as the funds' custodian. 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.
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.
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<PAGE>
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.
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.
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<PAGE>
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>
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.
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.
B-15
<PAGE>
Floyd Hall Director Chairman, President and Chief Executive Officer of K-Mart
Age: 61 Corporation (retailing) since 1995. Chairman and Chief
3100 West Big Beaver Road Executive Officer of The Museum Company (retailing) from
Troy, MI 48084 1989 to 1998 and Alva Replicas Company (manufacturer of
statuary and sculpture) from 1989 to 1995; from 1984 to
1989, Chairman and Chief Executive Officer of The Grand
Union Company (grocery store chain). Director of American
Eagle Funds, Inc. since 1999, Jundt Growth Fund, Inc. since
1991 and Jundt Funds, Inc. since 1995. Also a director of a
private company.
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.
since 1999.
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 Senior Financial Analyst, Norwest Investment Services, Inc.,
Age: 36 1997 to 1998. Fund Reporting and Control Supervisor,
Suite 950 Voyageur Funds Inc., 1994 to
B-16
<PAGE>
1550 Utica Avenue South 1997. Treasurer of American Eagle Funds, Inc. since 1999 and
Minneapolis, MN 55416 Treasurer of Jundt Growth Fund, Inc and Jundt Funds, Inc.
since 1999.
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 .
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 ________, ____, James R. 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
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<PAGE>
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).
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.
B-18
<PAGE>
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.
B-19
<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
(b) Bylaws
(c) Not applicable
(d)(1) American Eagle Capital Appreciation Fund Investment
Advisory Agreement
(d)(2) American Eagle Twenty Fund Investment Advisory Agreement
(e)(1) American Eagle Capital Appreciation Fund Distribution
Agreement
(e)(2) American Eagle Twenty Fund Distribution Agreement
(f) Not applicable
(g) Custodian Contract
(h)(1) Transfer Agency and Service Agreement
(h)(2) Administration Agreement
(i) Opinion and Consent of Faegre & Benson LLP
(j) Consent of KPMG LLP
(k) Not applicable
(l) Initial Capital Agreement
(m) Not applicable
(n) Not applicable
(o) Code of Ethics
(p) Power of Attorney
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 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
C-1
<PAGE>
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, Minnesota 55416. The names, positions and offices
of the directors and senior officers of U.S. Growth Investments are set forth
below.
C-2
<PAGE>
<TABLE>
<CAPTION>
Name Positions and Offices with Underwriter
- ---- --------------------------------------
<S> <C>
James R. Jundt Chairman of the Board
Marcus E. Jundt President
Jon C. Essen Treasurer
</TABLE>
(c) Not applicable.
ITEM 28 -- LOCATION OF ACCOUNTS AND RECORDS
The custodian of the Registrant is [CUSTODIAN, ADDRESS]. The dividend
disbursing agent and transfer agent of the Registrant is [TRANSFER AGENT,
ADDRESS]. The fund accounting agent of the Registrant is [ACCOUNTING AGENT,
ADDRESS]. 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
Post-Effective Amendment to its 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 ___ day of _________, 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.
<TABLE>
<CAPTION>
Name/Signature Title Date
- -------------- ----- ----
<S> <C> <C>
/s/ James R. Jundt Chairman of the Board, President and
- --------------------- Chief Executive Officer ________, 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 __________, 1999
------------------
James R. Jundt,
Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- ------------
<S> <C> <C>
(a) Articles of Incorporation Filed Electronically
(b) Bylaws Filed Electronically
(c) Not applicable
(d)(1) American Eagle Capital Appreciation Fund
Investment Advisory Agreement Filed Electronically
(d)(2) American Eagle Twenty Fund
Investment Advisory Agreement Filed Electronically
(e)(1) American Eagle Capital Appreciation Fund
Distribution Agreement Filed Electronically
(e)(2) American Eagle Twenty Fund
Distribution Agreement Filed Electronically
(f) Not applicable
(g) Custodian Contract *
(h)(1) Transfer Agency and Service Agreement *
(h)(2) Administration Agreement *
(i) Opinion and Consent of Faegre & Benson LLP Filed Electronically
(j) Consent of KPMG LLP Filed Electronically
(k) Not applicable
(l) Initial Capital Agreement Filed Electronically
(m) Not applicable
(n) Not applicable
(o) Code of Ethics Filed Electronically
(p) Power of Attorney Filed Electronically
- -----------------------------------------------------------------------------------------------------
</TABLE>
* To Be Filed By Amendment
<PAGE>
EXHIBIT (a)
ARTICLES OF INCORPORATION
OF
AMERICAN EAGLE FUNDS, INC.
For the purpose of forming a corporation pursuant to the provisions of
Minnesota Statutes, Chapter 302A, the following Articles of Incorporation are
hereby adopted:
1. The name of the corporation is American Eagle Funds, Inc. (the
"Corporation").
2. The Corporation shall have general business purposes and shall
have unlimited power to engage in and do any lawful act
concerning any and all lawful businesses for which corporations
may be organized under the Minnesota Statutes, Chapter 302A.
Without limiting the generality of the foregoing, the Corporation
shall have specific power:
(a) to conduct, operate and carry on the business of a
so-called "open-end" management investment company pursuant to
applicable state and federal regulatory statutes, and exercise all the
powers necessary and appropriate to the conduct of such operations;
and
(b) to purchase, subscribe for, invest in or otherwise
acquire, and to own, hold, pledge, mortgage, hypothecate, sell,
possess, transfer or otherwise dispose of, or turn to account or
realize upon, and generally deal in, all forms of securities of every
kind, nature, character, type and form, and other financial
instruments which may not be deemed to be securities, including but
not limited to futures contracts and options thereon. Such securities
and other financial instruments may include but are not limited to
shares, stocks, bonds, debentures, notes, scrip, participation
certificates, rights to subscribe, warrants, options, certificates of
deposit, bankers' acceptances, repurchase agreements, commercial
paper, choses in action, evidences of indebtedness, certificates of
indebtedness and certificates of interest of any and every kind and
nature whatsoever, secured and unsecured, issued or to be issued, by
any corporation, company, partnership (limited or general),
association, trust, entity or person, public or private, whether
organized under the laws of the United States, or any state,
commonwealth, territory or possession thereof, or organized under the
laws of any foreign country, or any state, province, territory or
possession thereof, or issued or to be issued by the United States
government or any agency or instrumentality thereof, or any foreign
government or any agency or instrumentality thereof, options on stock
indexes, stock index and interest rate futures contracts and options
thereon, and other futures contracts and options thereon.
In the above provisions of this Article 2, purposes shall also be
construed as powers and powers shall also be construed as purposes, and the
enumeration of specific purposes or powers shall not be construed to limit other
statements of purposes or to limit purposes or powers which the Corporation may
otherwise have under applicable law, all of the same being separate and
cumulative, and all of the same may be carried on, promoted and pursued,
transacted or exercised in any place whatsoever.
3. The Corporation shall have perpetual existence.
4. The location and post office address of the registered office in
Minnesota is 1550 Utica Avenue South, Suite 950, Minneapolis, Minnesota 55416.
<PAGE>
5. The total authorized number of shares of the Corporation is 1
trillion (1,000,000,000,000), all of which shall be common shares of the par
value of $.01 per share (individually, a "Share" and collectively, the
"Shares"). The Corporation may issue and sell any of its Shares in fractional
denominations to the same extent as its whole Shares, and Shares and fractional
denominations shall have, in proportion to the relative fractions represented
thereby, all the rights of whole Shares, including, without limitation, the
right to vote, the right to receive dividends and distributions, and the right
to participate upon liquidation of the Corporation.
(a) Ten billion (10,000,000,000) of the Shares may be issued by the
Corporation in a series designated "Series A Common Shares;" ten billion
(10,000,000,000) of the Shares may be issued by the Corporation in a series
designated "Series B Common Shares;" and the remaining nine hundred ninety
billion (980,000,000,000) Shares authorized by this Article 5 shall initially be
undesignated Shares (the "Undesignated Shares"). Any series of the Shares shall
be referred to herein individually as a "Series" and collectively herein,
together with any further series from time to time created by the Board of
Directors, as "Series." The Undesignated Shares may be issued in such Series
with such designations, preferences and relative, participating, optional or
other special rights, or qualifications, limitations or restrictions thereof, as
shall be stated or expressed in a resolution or resolutions providing for the
issue of any Series as may be adopted from time to time by the Board of
Directors pursuant to the authority hereby vested in the Board of Directors.
Each Series of Shares which the Board of Directors may establish, as provided
herein, may evidence, if the Board of Directors shall so determine by
resolution, an interest in a separate and distinct portion of the Corporation's
assets, which shall take the form of a separate portfolio of investment
securities, cash and other assets. Authority to establish such separate
portfolios is hereby vested in the Board of Directors, and such separate
portfolios may be established by the Board of Directors without the
authorization or approval of the holders of any Series of Shares of the
Corporation. Such investment portfolios in which Shares of the Series represent
interests are also hereinafter referred to as "Series."
(b) The Shares of each Series may be classified by the Board of
Directors in one or more classes (individually, a "Class" and, collectively,
together with any other class or classes within any Series, the "Classes") with
such relative rights and preferences as shall be stated or expressed in a
resolution or resolutions providing for the issue of any such Class or Classes
as may be adopted from time to time by the Board of Directors pursuant to the
authority hereby vested in the Board of Directors and Minnesota Statutes,
Section 302A.401, Subd. 3, or any successor provision. The Shares of each Class
within a Series may be subject to such charges and expenses (including by way of
example, but not by way of limitation, front-end and deferred sales charges,
expenses under Rule 12b-1 plans, administration plans, service plans, or other
plans or arrangements, however designated) adopted from time to time by the
Board of Directors in accordance, to the extent applicable, with the Investment
Company Act of 1940 and the rules and regulations promulgated thereunder, as now
enacted, promulgated or hereafter amended (collectively, the "Investment Company
Act"), which charges and expenses may differ from those applicable to another
Class within such Series, and all of the charges and expenses to which a Class
is subject shall be borne by such Class and shall be appropriately reflected (in
the manner determined by the Board of Directors in the resolution or resolutions
providing for the issue of such Class) in determining the net asset value and
the amounts payable with respect to dividends and distributions on and
redemptions or liquidations of, such Class. Subject to compliance with the
requirements of the Investment Company Act, the Board of Directors shall have
the authority to provide that Shares of any Class shall be convertible
(automatically, optionally or otherwise) into Shares of one or more other
Classes in accordance with such requirements and procedures as may be
established by the Board of Directors.
<PAGE>
6. The shareholders of each Series of Shares (or Class thereof) of
the Corporation:
(a) shall not have the right to cumulate votes for the election of
directors; and
(b) shall have no preemptive right to subscribe to any issue of
Shares of any Series (or Class thereof) of the Corporation now or hereafter
created, designated or classified.
7. A description of the relative rights and preferences of all
Series of Shares (and Classes thereof) is as follows, unless otherwise set forth
in one or more amendments to these Articles of Incorporation or in the
resolution providing for the issue of such Series (and Classes thereof):
(a) On any matter submitted to a vote of shareholders of the
Corporation, all Shares of the Corporation then issued and outstanding and
entitled to vote, irrespective of Series or Class, shall be voted in the
aggregate and not by Series or Class, except: (i) when otherwise required by
Minnesota Statutes, Chapter 302A, in which case Shares will be voted by
individual Series or Class, as applicable; (ii) when otherwise required by the
Investment Company Act, in which case Shares shall be voted by individual Series
or Class, as applicable; and (iii) when the matter does not affect the interests
of a particular Series or Class, in which case only shareholders of the Series
or Class affected shall be entitled to vote thereon and shall vote by individual
Series or Class, as applicable.
(b) All consideration received by the Corporation for the issue or
sale of Shares of any Series, together with all assets, income, earnings,
profits and proceeds derived therefrom (including all proceeds derived from the
sale, exchange or liquidation thereof and, if applicable, any assets derived
from any reinvestment of such proceeds in whatever form the same may be) shall
become part of the assets of the portfolio to which the Shares of that Series
relate, for all purposes, subject only to the rights of creditors, and shall be
so treated upon the books of account of the Corporation. Such assets, income,
earnings, profits and proceeds (including any proceeds derived from the sale,
exchange or liquidation thereof and, if applicable, any assets derived from any
reinvestment of such proceeds in whatever form the same may be) are herein
referred to as "assets belonging to" such Series of Shares of the Corporation.
(c) Assets of the Corporation not belonging to any particular Series
of Shares are referred to herein as "General Assets." General Assets shall be
allocated to each Series of Shares in proportion to the respective net assets
belonging to such Series. The determination of the Board of Directors shall be
conclusive as to the amount of assets, as to the characterization of assets as
those belonging to a Series of Shares or as General Assets, and as to the
allocation of General Assets.
(d) The assets belonging to a particular Series of Shares shall be
charged with the liabilities incurred specifically on behalf of such Series
("Special Liabilities"). Such assets shall also be charged with a share of the
general liabilities of the Corporation ("General Liabilities") in proportion to
the respective net assets belonging to such Series of Shares. The determination
of the Board of Directors shall be conclusive as to the amount of liabilities,
including accrued expenses and reserves, as to the characterization of any
liability as a Special Liability or General Liability, and as to the allocation
of General Liabilities among Series of Shares.
(e) The Board of Directors may, to the extent permitted by Minnesota
Statutes, Chapter 302A or any successor provision thereto, declare and pay
dividends or distributions in Shares, cash or other property on any or all
Series of Shares (or Classes thereof), the amount of such dividends and the
payment thereof being wholly in the discretion of the Board of Directors.
<PAGE>
(f) In the event of the liquidation or dissolution of the
Corporation, holders of the Shares of any Series shall have priority over the
holders of any other Series with respect to, and shall be entitled to receive,
out of the assets of the Corporation available for distribution to holders of
Shares, the assets belonging to such Series of Shares and the General Assets
allocated to such Series, and the assets so distributable to the holders of the
Shares of any Series shall be distributed among such holders in proportion to
the number of Shares of such Series held by each such shareholder and recorded
on the books of the Corporation, except that, in the case of a Series of Shares
with more than one Class of Shares, such distributions shall be adjusted to
appropriately reflect any charges and expenses borne by each individual Class.
(g) With the approval of a majority of the shareholders of each of
the affected Series of Shares present in person or by proxy at a meeting called
for the following purpose (provided that at least 10% of the issued and
outstanding Shares of the affected Series is present at such meeting in person
or by proxy), the Board of Directors may transfer the assets of any Series of
Shares to any other Series. Upon such a transfer, the Corporation shall issue
Shares representing interests in the Series of Shares to which the assets were
transferred in exchange for all Shares representing interests in the Series from
which the assets were transferred. Such Shares shall be exchanged at their
respective net asset values.
8. The following additional provisions, when consistent with law,
are hereby established for the management of the business of the Corporation,
for the conduct of the affairs of the Corporation and for the purpose of
describing certain specific powers of the Corporation and of its directors and
shareholders.
(a) In furtherance and not in limitation of the powers conferred by
statute and pursuant to these Articles of Incorporation, the Board of Directors
is expressly authorized to do the following:
(i) to make, adopt, alter, amend and repeal Bylaws of the
Corporation unless reserved to the shareholders by the Bylaws or by
the laws of the State of Minnesota, subject to the power of the
shareholders to change or repeal such Bylaws;
(ii) to distribute, in its discretion, for any fiscal year (in
the year or in the next fiscal year) as ordinary dividends and as
capital gains distributions, respectively, amounts sufficient to
enable each Series of Shares to qualify under the Internal Revenue
Code as a regulated investment company to avoid any liability for
federal income tax in respect of such year. Any distribution or
dividend paid to shareholders from any capital source shall be
accompanied by a written statement showing the source or sources of
such payment;
(iii) to authorize, subject to such vote, consent, or approval of
shareholders and other conditions, if any, as may be required by any
applicable statute, rule or regulation, the execution and performance
by the Corporation of any agreement or agreements with any person,
corporation, association, company, trust, partnership (limited or
general) or other organization whereby, subject to the supervision and
control of the Board of Directors, any such other person, corporation,
association, company, trust, partnership (limited or general), or
other organization shall render managerial, investment advisory,
distribution, custodial, transfer agent, accounting and/or other
services to the Corporation (including, if deemed advisable, the
management or supervision of the investment portfolios of the
Corporation) upon such terms and conditions as may be provided in such
agreement or agreements;
<PAGE>
(iv) to authorize any agreement of the character described in
subparagraph (iii) of this paragraph (a) with any person, corporation,
association, company, trust, partnership (limited or general) or other
organization, although one or more of the members of the Board of
Directors or officers of the Corporation may be the other party to any
such agreement or an officer, director, employee, shareholder, or
member of such other party, and no such agreement shall be invalidated
or rendered voidable by reason of the existence of any such
relationship;
(v) to allot and authorize the issuance of the authorized but
unissued Shares of any Series, or Class thereof, of the Corporation;
(vi) to accept or reject subscriptions for Shares of any Series,
or Class thereof, made after incorporation;
(vii) to fix the terms, conditions and provisions of and
authorize the issuance of options to purchase or subscribe for Shares
of any Series, or Class thereof, including the option price or prices
at which Shares may be purchased or subscribed for;
(viii) to take any action which might be taken at a meeting of
the Board of Directors, or any duly constituted committee thereof,
without a meeting pursuant to a writing signed by that number of
directors or committee members that would be required to take the same
action at a meeting of the Board of Directors or committee thereof at
which all directors or committee members were present; PROVIDED,
HOWEVER, that, if such action also requires shareholder approval, such
writing must be signed by all of the directors or committee members
entitled to vote on such matter; and
(ix) to determine what constitutes net income, total assets and
the net asset value of the Shares of each Series (or Class thereof) of
the Corporation. Any such determination made in good faith shall be
final and conclusive, and shall be binding upon the Corporation and
all holders (past, present and future) of Shares of each Series and
Class thereof.
(b ) Except as provided in the next sentence of this paragraph (b),
Shares of any Series, or Class thereof, hereafter issued which are redeemed,
exchanged, or otherwise acquired by the Corporation shall return to the status
of authorized and unissued Shares of such Series or Class. Upon the redemption,
exchange, or other acquisition by the Corporation of all outstanding Shares of
any Series (or Class thereof), hereafter issued, such Shares shall return to the
status of authorized and unissued Shares without designation as to series (if no
Shares of the Series remain outstanding) or with the same designation as to
Series, but no designation as to class within such Series (if Shares of such
Series remain outstanding, but no Shares of such Class thereof remain
outstanding), and all provisions of these Articles of Incorporation relating to
such Series, or Class thereof (including, without limitation, any statement
establishing or fixing the rights and preferences of such Series, or Class
thereof), shall cease to be of further effect and shall cease to be a part of
these Articles of Incorporation. Upon the occurrence of such events, the Board
of Directors shall have the power, pursuant to Minnesota Statutes Section
302A.135, Subdivision 5, or any successor provision, and without shareholder
action, to cause restated Articles of Incorporation of the Corporation to be
prepared and filed with the Secretary of State of the State of Minnesota which
reflect such removal from these Articles of Incorporation of all such provisions
relating to such Series, or Class thereof.
(c) The determination as to any of the following matters made by or
pursuant to the direction of the Board of Directors consistent with these
Articles of Incorporation and in the absence of
<PAGE>
willful misfeasance, bad faith, gross negligence or reckless disregard of
duties, shall be final and conclusive and shall be binding upon the Corporation
and every holder of Shares: namely, the amount of the assets, obligations,
liabilities and expenses of each Series of Shares (or Class thereof) of the
Corporation; the amount of the net income of each Series of Shares (or Class
thereof) of the Corporation from dividends and interest for any period and the
amount of assets at any time legally available for the payment of dividends in
each Series of Shares (or Class thereof); the amount of paid-in surplus, other
surplus, annual or other net profits, or net assets in excess of capital,
undivided profits, or excess of profits over losses on sales of securities of
each Series of Shares (or Class thereof); the amount, purpose, time of creation,
increase or decrease, alteration or cancellation of any reserves or charges and
the propriety thereof (whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged);
the market value, or any sale, bid or asked price to be applied in determining
the market value, of any security owned or held by or in each Series of Shares
of the Corporation; the fair value of any other asset owned by or in each Series
of Shares of the Corporation; the number of Shares of each Series (or Class
thereof) of the Corporation issued or issuable; any matter relating to the
acquisition, holding and disposition of securities and other assets by each
Series of Shares of the Corporation; and any question as to whether any
transaction constitutes a purchase of securities on margin, a short sale of
securities, or an underwriting of the sale of, or participation in any
underwriting or selling group in connection with the public distribution of, any
securities.
(d) The Board of Directors or the shareholders of the Corporation may
adopt, amend, affirm or reject investment policies and restrictions upon
investment or the use of assets of each Series of Shares of the Corporation and
may designate some such policies as fundamental and not subject to change other
than by a vote of a majority of the outstanding voting securities, as such
phrase is defined in the Investment Company Act, of the affected Series of
Shares of the Corporation.
9. The Corporation 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, however, that no such indemnification may be
made if it would be in violation of Section 17(h) of the Investment Company Act,
as now enacted or hereafter amended.
10. To the fullest extent permitted by the Minnesota Statutes,
Chapter 302A, as now enacted or hereafter amended (except as prohibited by the
Investment Company Act), a director of the Corporation shall not be liable to
the Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director.
11. The names and addresses of the Company's initial directors, who
shall serve until the first regular meeting of shareholders or until a successor
is elected and qualified, are:
James R. Jundt
1550 Utica Avenue South, Suite 950
Minneapolis, Minnesota 55416.
John E. Clute
807 East Highland View Ct.
Spokane, WA 99223-6210
<PAGE>
Floyd Hall
3100 West Big Beaver Road
Troy, MI 48084
Demetre M. Nicoloff
1492 Hunter Drive
Wayzata, MN 55391
Darrell R. Wells
4350 Brownsboro Road, Suite 310
Louisville, KY 40207
12. The name and address of the incorporator, who is a natural
person of full age, is:
Marklan M. Strefling
2200 Norwest Center, 90 South Seventh Street
Minneapolis, Minnesota 55402
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation on this 3rd of November, 1999.
----------------------------------
Marklan M. Strefling, Incorporator
<PAGE>
EXHIBIT (b)
BYLAWS
OF
AMERICAN EAGLE FUNDS, INC.
ARTICLE I
OFFICES, CORPORATE SEAL
Section 1.01. NAME. The name of the corporation is American Eagle
Funds, Inc. The name of the series represented by the Corporation's Series A
Common Shares shall be "American Eagle Capital Appreciation Fund." The name of
the series represented by the Corporation's Series B Common Shares shall be
"American Eagle Twenty Fund."
Section 1.02. REGISTERED OFFICE. The registered office of the
Corporation in Minnesota shall be that set forth in the Articles of
Incorporation or in the most recent amendment of the Articles of
Incorporation or resolution of the directors filed with the Secretary of
State of Minnesota changing the registered office.
Section 1.03. OTHER OFFICES. The Corporation may have such other
offices, within or without the State of Minnesota, as the directors shall,
from time to time, determine.
Section 1.04. NO CORPORATE SEAL. The Corporation shall have no
corporate seal.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.01. PLACE AND TIME OF MEETING. Except as provided otherwise
by Minnesota Statutes Chapter 302A, meetings of the shareholders may be held at
any place, within or without the State of Minnesota, designated by the directors
and, in the absence of such designation, shall be held at the registered office
of the Corporation in the State of Minnesota. The directors shall designate the
time of day for each meeting and, in the absence of such designation, every
meeting of shareholders shall be held at ten o'clock a.m.
Section 2.02. REGULAR MEETINGS. The Corporation is not required to hold
annual meetings of shareholders. Regular meetings shall be held only with such
frequency and at such times and places as provided in and required by Minnesota
Statutes Section 302A.431.
Section 2.03. SPECIAL MEETINGS. Special meetings of the shareholders
may be held at any time and for any purpose and may be called by the Chairman of
the Board, the President, any two
<PAGE>
directors, or by one or more shareholders holding ten percent (10%) or more
of the shares entitled to vote on the matters to be presented to the meeting.
Section 2.04. QUORUM, ADJOURNED MEETINGS. The holders of ten percent
(10%) of the shares outstanding and entitled to vote shall constitute a
quorum for the transaction of business at any regular or special meeting. In
case a quorum shall not be present at a meeting, those present in person or
by proxy shall adjourn the meeting to such day as they shall, by majority
vote, agree upon without further notice other than by announcement at the
meeting at which such adjournment is taken. If a quorum is present, a meeting
may be adjourned from time to time without notice other than announcement at
the meeting. At adjourned meetings at which a quorum is present, any business
may be transacted which might have been transacted at the meeting as
originally noticed. If a quorum is present, the shareholders may continue to
transact business until adjournment notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Section 2.05. VOTING. At each meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote either in person
or by proxy. Each shareholder, unless the Articles of Incorporation provide
otherwise, shall have one vote for each share having voting power registered in
his name on the books of the Corporation. Except as otherwise specifically
provided by these Bylaws or as required by provisions of the Investment Company
Act of 1940 and the rules and regulations promulgated thereunder, as now
enacted, promulgated or hereafter amended (collectively, the "Investment Company
Act"), or other applicable laws, all questions shall be decided by a majority
vote of the number of shares entitled to vote and represented at the meeting at
the time of the vote. If the matter(s) to be presented at a regular or special
meeting relates only to particular classes or series of the Corporation, then
only the shareholders of such classes or series are entitled to vote on such
matter(s).
Section 2.06. VOTING - PROXIES. The right to vote by proxy shall
exist only if the instrument authorizing such proxy to act shall have been
executed in writing by the shareholder himself or by his attorney thereunto
duly authorized in writing. No proxy shall be voted after eleven months from
its date unless it provides for a longer period.
Section 2.07. CLOSING OF BOOKS. The Board of Directors may fix a
time, not exceeding sixty (60) days preceding the date of any meeting of
shareholders, as a record date for the determination of the shareholders
entitled to notice of, and to vote at, such meeting, notwithstanding any
transfer of shares on the books of the Corporation after any record date so
fixed. The Board of Directors may close the books of the Corporation against
the transfer of shares during the whole or any part of such period. If the
Board of Directors fails to fix a record date for determination of the
shareholders entitled to notice of, and to vote at, any meeting of
shareholders, the record date shall be the thirtieth (30th) day preceding the
date of such meeting.
Section 2.08. NOTICE OF MEETINGS. There shall be mailed to each
shareholder, shown by the books of the Corporation to be a holder of record
of voting shares, at his address as shown by the books of the Corporation, a
notice setting out the date, time and place of each regular meeting and each
special meeting, except where the meeting is an adjourned meeting and the
date, time
-2-
<PAGE>
and place of the meeting were announced at the time of adjournment, which
notice shall be mailed within the period required by law. Every notice of any
special meeting shall state the purpose or purposes for which the meeting has
been called, pursuant to Section 2.03, and the business transacted at all
special meetings shall be confined to the purpose stated in such notice.
Section 2.09. WAIVER OF NOTICE. Notice of any regular or special
meeting may be waived either before, at or after such meeting orally or in a
writing signed by each shareholder or representative thereof entitled to vote
the shares so represented. A shareholder, by his attendance at any meeting of
shareholders, shall be deemed to have waived notice of such meeting, except
where the shareholder objects at the beginning of the meeting to the
transaction of business because the item may not lawfully be considered at
that meeting and does not participate at that meeting in the consideration of
the item at that meeting.
Section 2.10. WRITTEN ACTION. Any action which might be taken at a
meeting of the shareholders may be taken without a meeting if done in writing
and signed by all of the shareholders entitled to vote on that action. If the
action to be taken relates to particular classes or series of the
Corporation, then only shareholders of such classes or series are entitled to
vote on such action.
ARTICLE III
DIRECTORS
Section 3.01. NUMBER, QUALIFICATION AND TERM OF OFFICE. Until the
first meeting of shareholders, the number of directors shall be the number
named in the Articles of Incorporation. Thereafter, the number of directors
shall be established by resolution of the shareholders (subject to the
authority of the Board of Directors to increase or decrease the number of
directors as permitted by law). In the absence of such shareholder
resolution, the number of directors shall be the number last fixed by the
shareholders, the Board of Directors or the Articles of Incorporation.
Directors need not be shareholders. Each of the directors shall hold office
until the regular meeting of shareholders next held after his election and
until his successor shall have been elected and shall qualify, or until the
earlier death, resignation, removal or disqualification of such director.
Section 3.02. ELECTION OF DIRECTORS. Except as otherwise provided in
Sections 3.11 and 3.12 hereof, the directors shall be elected at the regular
shareholders' meeting. In the event that directors are not elected at a regular
shareholders' meeting, then directors may be elected at a special shareholders'
meeting, provided that the notice of such meeting shall contain mention of such
purpose. At each shareholders' meeting for the election of directors, the
directors shall be elected by a plurality of the votes validly cast at such
election. Each holder of shares of each class or series of shares of the
Corporation shall be entitled to vote for directors and shall have equal voting
power for each share of each class or series of the Corporation.
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Section 3.03. GENERAL POWERS.
(a) Except as otherwise permitted by statute, the property, affairs and
business of the Corporation shall be managed by the Board of Directors, which
may exercise all the powers of the Corporation except those powers vested solely
in the shareholders of the Corporation by statute, the Articles of Incorporation
or these Bylaws, as amended.
(b) All acts done by any meeting of the directors or by any person
acting as a director, so long as his successor shall not have been duly elected
or appointed, shall, notwithstanding that it be afterwards discovered that there
was some defect in the election of the directors or such person acting as
aforesaid or that they or any of them were disqualified, be as valid as if the
directors or such other person, as the case may be, had been duly elected and
were or was qualified to be directors or a director of the Corporation.
Section 3.04. POWER TO DECLARE DIVIDENDS.
(a) The Board of Directors, from time to time as they may deem
advisable, may declare and pay dividends in cash or other property of the
Corporation, out of any source available for dividends, to the shareholders
of each class or series of shares of the Corporation according to their
respective rights and interests in the investment portfolio of the
Corporation issuing such class or series of shares.
(b) The Board of Directors shall cause to be accompanied by a written
statement any dividend payment wholly or partly from any source other than:
(i) the accumulated and accrued undistributed net income of
each class or series of shares (determined in accordance with generally
accepted accounting practice and the rules and regulations of the
Securities and Exchange Commission (the "SEC") then in effect) and not
including profits or losses realized upon the sale of securities or
other properties; or
(ii) the net income of each class or series of shares so
determined for the current or preceding fiscal year.
Such statement shall adequately disclose the source or sources of such
payment and the basis of calculation and shall be in such form as the SEC may
prescribe.
(c) Notwithstanding the above provisions of this Section 3.04, the
Board of Directors may at any time declare and distribute pro rata among the
shareholders of each class or series of shares a "stock dividend" out of the
authorized but unissued shares of each class or series, including any shares
previously purchased by a class or series of the Corporation.
Section 3.05. BOARD MEETINGS. Meetings of the Board of Directors may be
held from time to time at such time and place within or without the State of
Minnesota as may be designated in the notice of such meeting.
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Section 3.06. CALLING MEETINGS, NOTICE. A director may call a meeting
of the Board of Directors by giving ten (10) days notice to all directors of the
date, time and place of the meeting; PROVIDED, HOWEVER, that if the day or date,
time and place of a meeting of the Board of Directors have been announced at a
previous meeting of the Board of Directors, no notice is required.
Section 3.07. WAIVER OF NOTICE. Notice of any meeting of the Board of
Directors may be waived by any director either before, at or after such meeting
orally or in a writing signed by such director. A director, by his attendance
and participation in the action taken at any meeting of the Board of Directors,
shall be deemed to have waived notice of such meeting, except where the director
objects at the beginning of the meeting to the transaction of business because
the item may not lawfully be considered at that meeting and does not participate
at that meeting in the consideration of the item at that meeting.
Section 3.08. QUORUM. A majority of the directors holding office
immediately prior to a meeting of the Board of Directors shall constitute a
quorum for the transaction of business at such meeting; PROVIDED, HOWEVER, that
notwithstanding the above, if the Board of Directors is taking action pursuant
to the Investment Company Act, a majority of directors who are not "interested
persons" (as defined by the Investment Company Act) of the Corporation shall
constitute a quorum for taking such action.
Section 3.09. ADVANCE CONSENT OR OPPOSITION. A director may give
advance written consent or opposition to a proposal to be acted on at a meeting
of the Board of Directors. If such director is not present at the meeting,
consent or opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director has consented or objected. This procedure
shall not be used to act on any investment advisory agreement or plan of
distribution adopted under Rule 12b-1 of the Investment Company Act.
Section 3.10. CONFERENCE COMMUNICATIONS. Any or all directors may
participate in any meeting of the Board of Directors, or of any duly
constituted committee thereof, by any means of communication through which
the directors may simultaneously hear each other during such meeting. For the
purposes of establishing a quorum and taking any action at the meeting, such
directors participating pursuant to this Section 3.10 shall be deemed present
in person at the meeting, and the place of the meeting shall be the place of
origination of the conference communication. This procedure shall not be used
to act on any investment advisory agreement or plan of distribution adopted
under Rule 12b-1 of the Investment Company Act.
Section 3.11. VACANCIES; NEWLY CREATED DIRECTORSHIPS. Vacancies in
the Board of Directors of the Corporation occurring by reason of death,
resignation, removal or disqualification shall be filled for the unexpired
term by a majority of the remaining directors, although less than a quorum;
newly created directorships resulting from an increase in the
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authorized number of directors by action of the Board of Directors as
permitted by Section 3.01 may be filled by a two-thirds (2/3) vote of the
directors serving at the time of such increase; and each person so elected
shall be a director until his successor is elected by the shareholders at
their next regular or special meeting; PROVIDED, HOWEVER, that no vacancy can
be filled as provided above if prohibited by the provisions of the Investment
Company Act.
Section 3.12. REMOVAL. The entire Board of Directors or an
individual director may be removed from office, with or without cause, by a
vote of the shareholders holding a majority of the shares entitled to vote at
an election of directors. In the event that the entire Board of Directors or
any one or more directors be so removed, new directors shall be elected at
the same meeting, or the remaining directors may, to the extent vacancies are
not filled at such meeting, fill any vacancy or vacancies created by such
removal. A director named by the Board of Directors to fill a vacancy may be
removed from office at any time, with or without cause, by the affirmative
vote of the remaining directors if the shareholders have not elected
directors in the interim between the time of the appointment to fill such
vacancy and the time of the removal.
Section 3.13. COMMITTEES. A resolution approved by the affirmative vote
of a majority of the Board of Directors may establish committees having the
authority of the Board of Directors in the management of the business of the
Corporation to the extent provided in the resolution. A committee shall consist
of one or more persons, who need not be directors, appointed by affirmative vote
of a majority of the directors present. Committees are subject to the direction
and control of, and vacancies in the membership thereof shall be filled by, the
Board of Directors. A majority of the members of the committee present at a
meeting is a quorum for the transaction of business, unless a larger or smaller
proportion or number is provided in a resolution approved by the affirmative
vote of a majority of the directors present.
Section 3.14. WRITTEN ACTION. Except as provided in the Investment
Company Act, any action which might be taken at a meeting of the Board of
Directors, or any duly constituted committee thereof, may be taken without a
meeting if done in writing and signed by that number of directors or
committee members that would be required to take the same action at a meeting
of the Board of Directors or committee thereof at which all directors or
committee members were present; PROVIDED, HOWEVER, that any action which also
requires shareholder approval may be taken by written action only if such
writing is signed by all of the directors or committee members entitled to
vote on such matter.
Section 3.15. COMPENSATION. Directors shall receive such fixed sum
per meeting attended or such fixed annual sum as shall be determined, from
time to time, by resolution of the Board of Directors. All directors shall
receive their expenses, if any, of attendance at meetings of the Board of
Directors or any committee thereof. Nothing herein contained shall be
construed to preclude any director from serving this Corporation in any other
capacity and receiving proper compensation therefor.
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ARTICLE IV
OFFICERS
Section 4.01. NUMBER. The officers of the Corporation shall consist
of a Chairman of the Board (if one is elected by the Board of Directors), the
President, one or more Vice Presidents (if desired by the Board of
Directors), a Secretary, a Treasurer and such other officers and agents as
may, from time to time, be elected by the Board of Directors. Any number of
offices may be held by the same person.
Section 4.02. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The Board
of Directors shall elect, from within or without their number, the officers
referred to in Section 4.01, each of whom shall have the powers, rights,
duties, responsibilities and terms in office provided for in these Bylaws or
a resolution of the Board of Directors not inconsistent therewith. The
President and all other officers who may be directors shall continue to hold
office until the election and qualification of their successors,
notwithstanding an earlier termination of their directorship.
Section 4.03. RESIGNATION. Any officer may resign his office
at any time by delivering a written resignation to the Corporation.
Unless otherwise specified therein, such resignation shall take effect
upon delivery.
Section 4.04. REMOVAL AND VACANCIES. Any officer may be removed from
his office by a majority of the Board of Directors with or without cause. Such
removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy among the officers of the Corporation
by reason of death, resignation or otherwise, such vacancy shall be filled for
the unexpired term by the Board of Directors.
Section 4.05. CHAIRMAN OF THE BOARD. The Chairman of the Board, if
one is elected, shall preside at all meetings of the shareholders and
directors and shall have such other duties as may be prescribed, from time to
time, by the Board of Directors.
Section 4.06. PRESIDENT. The President shall have general active
management of the business of the Corporation. In the absence of the Chairman
of the Board, he shall preside at all meetings of the shareholders and
directors. He shall be the chief executive officer of the Corporation and
shall see that all orders and resolutions of the Board of Directors are
carried into effect. He shall be ex officio a member of all standing
committees. He may execute and deliver, in the name of the Corporation, any
deeds, mortgages, bonds, contracts or other instruments pertaining to the
business of the Corporation and, in general, shall perform all duties usually
incident to the office of the President. He shall have such other duties as
may, from time to time, be prescribed by the Board of Directors.
Section 4.07. VICE PRESIDENT. Each Vice President shall have such
powers and shall perform such duties as may be specified in these Bylaws or
prescribed by the Board of Directors or by the President. In the event of the
absence or disability of the President, Vice Presidents shall succeed to his
power and duties in the order designated by the Board of Directors.
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Section 4.08. SECRETARY. The Secretary shall be secretary of, and shall
attend, all meetings of the shareholders and Board of Directors and shall record
all proceedings of such meetings in the minute book of the Corporation. He shall
give proper notice of meetings of shareholders and directors. He shall keep the
seal of the Corporation and shall affix the same to any instrument requiring it
and may, when necessary, attest the seal by his signature. He shall perform such
other duties as may, from time to time, be prescribed by the Board of Directors
or by the President.
Section 4.09. TREASURER. The Treasurer shall be the chief financial
officer and shall keep accurate accounts of all money of the Corporation
received or disbursed. He shall deposit all moneys, drafts and checks in the
name of, and to the credit of, the Corporation in such banks and depositories
as a majority of the Board of Directors shall, from time to time, designate.
He shall have power to endorse, for deposit, all notes, checks and drafts
received by the Corporation. He shall disburse the funds of the Corporation,
as ordered by the Board of Directors, making proper vouchers therefor. He
shall render to the President and the directors, whenever required, an
account of all his transactions as Treasurer and of the financial condition
of the Corporation, and shall perform such other duties as may, from time to
time, be prescribed by the Board of Directors or by the President.
Section 4.10. ASSISTANT SECRETARIES. At the request of the
Secretary, or in his absence or disability, any Assistant Secretary shall
have power to perform all the duties of the Secretary, and, when so acting,
shall have all the powers of, and be subject to all restrictions upon, the
Secretary. The Assistant Secretaries shall perform such other duties as from
time to time may be assigned to them by the Board of Directors or by the
President.
Section 4.11. ASSISTANT TREASURERS. At the request of the Treasurer,
or in his absence or disability, any Assistant Treasurer shall have power to
perform all the duties of the Treasurer, and, when so acting, shall have all
the powers of, and be subject to all the restrictions upon, the Treasurer.
The Assistant Treasurers shall perform such other duties as from time to time
may be assigned to them by the Board of Directors or by the President.
Section 4.12. COMPENSATION. The officers of this Corporation
shall receive such compensation for their services as may be determined,
from time to time, by resolution of the Board of Directors.
Section 4.13. SURETY BONDS. The Board of Directors may require any
officer or agent of the Corporation to execute a bond (including, without
limitation, any bond required by the Investment Company Act or the rules and
regulations of the SEC) to the Corporation in such sum and with such surety or
sureties as the Board of Directors may determine, conditioned upon the faithful
performance of his duties to the Corporation, including responsibility for
negligence and for the accounting of any of the Corporation's property, funds or
securities that may come into his hands. In any such case, a new bond of like
character shall be given at least every six years, so that the date of the new
bond shall not be more than six years subsequent to the date of the bond
immediately preceding.
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ARTICLE V
SHARES AND THEIR TRANSFER AND REDEMPTION
Section 5.01. CERTIFICATE FOR SHARES.
(a) The Corporation may have certificated or uncertificated shares,
or both, as designated by resolution of the Board of Directors. Every owner
of certificated shares of the Corporation shall be entitled to a certificate,
to be in such form as shall be prescribed by the Board of Directors,
certifying the number of shares of the Corporation owned by him. Within a
reasonable time after the issuance or transfer of uncertificated shares, the
Corporation shall send to the new shareholder the information required to be
stated on certificates. Certificated shares shall be numbered in the order in
which they shall be issued and shall be signed, in the name of the
Corporation, by the President or a Vice President and by the Secretary or an
Assistant Secretary or by such officers as the Board of Directors may
designate. Such signatures may be by facsimile if authorized by the Board of
Directors. Every certificate surrendered to the Corporation for exchange or
transfer shall be canceled, and no new certificate or certificates shall be
issued in exchange for any existing certificate until such existing
certificate shall have been so canceled, except in cases provided for in
Section 5.08.
(b) In case any officer, transfer agent or registrar who shall have
signed any such certificate, or whose facsimile signature has been placed
thereon, shall cease to be such an officer (because of death, resignation or
otherwise) before such certificate is issued, such certificate may be issued
and delivered by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
Section 5.02. ISSUANCE OF SHARES. The Board of Directors is
authorized to cause to be issued shares of the Corporation up to the full
amount authorized by the Articles of Incorporation in such classes or series
and in such amounts as may be determined by the Board of Directors and as may
be permitted by law. No shares shall be allotted except in consideration of
cash or other property, tangible or intangible, received or to be received by
the Corporation under a written agreement, of services rendered or to be
rendered to the Corporation under a written agreement, or of an amount
transferred from surplus to stated capital upon a share dividend. At the time
of such allotment of shares, the Board of Directors making such allotments
shall state, by resolution, their determination of the fair value to the
Corporation in monetary terms of any consideration other than cash for which
shares are allotted. No shares issued by the Corporation shall be issued,
sold or exchanged by or on behalf of the Corporation for any amount less than
the net asset value per share of the shares outstanding as determined
pursuant to Article X hereunder.
Section 5.03. REDEMPTION OF SHARES. Upon the demand of any
shareholder, this Corporation shall redeem any share issued by it held and
owned by such shareholder at the net asset value thereof as determined
pursuant to Article X hereunder. The Board of Directors may suspend the right
of redemption or postpone the date of payment during any period when: (a)
trading on the New York Stock Exchange is restricted or such Exchange is
closed for other
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than weekends or holidays; (b) the SEC has by order permitted such
suspension; or (c) an emergency as defined by rules of the SEC exists, making
disposal of portfolio securities or valuation of net assets of the
Corporation not reasonably practicable.
If following a redemption request by any shareholder of the
Corporation, the value of such shareholder's interest in the Corporation
falls below the required minimum investment, as may be set from time to time
by the Board of Directors, the Corporation's officers are authorized, in
their discretion and on behalf of the Corporation, to redeem such
shareholder's entire interest and remit such amount, provided that such a
redemption will only be effected by the Corporation following: (a) a
redemption by a shareholder, which causes the value of such shareholder's
interest in the Corporation to fall below the required minimum investment;
(b) the mailing by the Corporation to such shareholder of a "notice of
intention to redeem"; and (c) the passage of at least sixty (60) days from
the date of such mailing, during which time the shareholder will have the
opportunity to make an additional investment in the Corporation to increase
the value of such shareholder's account to at least the required minimum
investment.
Section 5.04. TRANSFER OF SHARES. Transfer of shares on the books of
the Corporation may be authorized only by the shareholder named in the
certificate, or the shareholder's legal representative, or the shareholder's
duly authorized attorney-in-fact, and upon surrender of the certificate or
the certificates for such shares or a duly executed assignment covering
shares held in uncertificated form. The Corporation may treat, as the
absolute owner of shares of the Corporation, the person or persons in whose
name shares are registered on the books of the Corporation.
Section 5.05. REGISTERED SHAREHOLDERS. The Corporation shall be
entitled to treat the holder of record of any share or shares as the holder
in fact thereof and accordingly shall not be bound to recognize any equitable
or other claim to or interest in such share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by the laws of the State of Minnesota.
Section 5.06. TRANSFER AGENTS AND REGISTRARS. The Board of Directors
may from time to time appoint or remove transfer agents and/or registrars of
transfers of shares of the Corporation, and it may appoint the same person as
both transfer agent and registrar. Upon any such appointment being made all
certificates representing shares thereafter issued shall be countersigned by
one of such transfer agents or by one of such registrars of transfers or by
both and shall not be valid unless so countersigned. If the same person shall
be both transfer agent and registrar, only one countersignature by such
person shall be required.
Section 5.07. TRANSFER REGULATIONS. The shares of the Corporation
may be freely transferred, and the Board of Directors may from time to time
adopt rules and regulations with reference to the method of transfer of
shares of the Corporation.
Section 5.08. LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES.
The holder of any shares of the Corporation shall immediately notify the
Corporation of any loss, theft, destruction or mutilation of any certificate
therefor, and the Board of Directors may, in its discretion, cause
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to be issued to him a new share certificate or certificates, upon the
surrender of the mutilated certificate or, in case of loss, theft or
destruction of the certificate, upon satisfactory proof of such loss, theft
or destruction. A new share certificate or certificates will be issued to the
owner of the lost, stolen or destroyed certificate only after such owner, or
his legal representatives, gives to the Corporation and to such registrar or
transfer agent as may be authorized or required to countersign such new
certificate or certificates a bond, in such sum as they may direct, and with
such surety or sureties as they may direct, as indemnity against any claim
that may be made against them or any of them on account of or in connection
with the alleged loss, theft or destruction of any such certificate.
ARTICLE VI
DIVIDENDS
Section 6.01. PAYMENT OF DIVIDENDS. The net investment income of
each class or series of shares of the Corporation will be determined, and its
dividends shall be declared and made payable at such time(s), as the Board of
Directors shall determine; dividends shall be payable to shareholders of
record as of the date of declaration.
Section 6.02. REGULATED INVESTMENT COMPANY QUALIFICATION AND
ELECTION. It shall be the policy of each class or series of shares of the
Corporation to qualify for and elect the tax treatment applicable to
regulated investment companies under the Internal Revenue Code, so that such
class or series will not be subjected to federal income tax on such part of
its income or capital gains as it distributes to shareholders.
ARTICLE VII
BOOKS AND RECORDS, AUDIT, FISCAL YEAR
Section 7.01. SHARE REGISTER. The Board of Directors of the Corporation
shall cause to be kept at its principal executive office, or at another place or
places within the United States determined by the Board of Directors:
(1) a share register not more than one year old, containing
the names and addresses of the shareholders and the number and classes
or series of shares held by each shareholder; and
(2) a record of the dates on which certificates or transaction
statements representing shares were issued.
Section 7.02. OTHER BOOKS AND RECORDS. The Board of Directors shall
cause to be kept at the Corporation's principal executive office, or, if its
principal executive office is not in the State of Minnesota, shall make
available at its registered office within ten days after receipt by an officer
of the Corporation of a written demand for them made by a shareholder or other
person authorized by Minnesota Statutes Section 302A.461, originals or copies
of:
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(1) records of all proceedings of shareholders for the
last three years;
(2) records of all proceedings of the Board of Directors for
the last three years;
(3) its Articles of Incorporation and all amendments
currently in effect;
(4) its Bylaws and all amendments currently in effect;
(5) financial statements required by Minnesota Statutes
Section 302A.463 and the financial statement for the most recent
interim period prepared in the course of the operation of the
Corporation for distribution to the shareholders or to a governmental
agency as a matter of public record;
(6) reports made to shareholders generally within the last
three years;
(7) a statement of the names and usual business addresses of
its directors and principal officers;
(8) any shareholder voting or control agreements of which the
Corporation is aware; and
(9) such other records and books of account as shall be
required by law or necessary and appropriate to the conduct of the
corporate business.
Section 7.03. AUDIT; ACCOUNTANT.
(a) The Board of Directors shall cause the records and books of
account of the Corporation to be audited at least once in each fiscal year
and at such other times as it may deem necessary or appropriate.
(b) The Corporation shall employ an independent public accountant or
firm of independent public accountants to examine the accounts of the
Corporation and to sign and certify financial statements filed by the
Corporation. The independent accountant's certificates and reports shall be
addressed both to the Board of Directors and to the shareholders.
Section 7.04. FISCAL YEAR. The fiscal year of the Corporation
shall be determined by the Board of Directors.
ARTICLE VIII
INDEMNIFICATION OF CERTAIN PERSONS
Section 8.01. The Corporation shall indemnify such persons, for such
expenses and liabilities, in such manner, under such circumstances, and to such
extent as permitted by Section
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302A.521 of the Minnesota Statutes, as now enacted or hereafter amended;
PROVIDED, HOWEVER, that no such indemnification may be made if it would be in
violation of Section 17(h) of the Investment Company Act.
ARTICLE IX
VOTING OF STOCK HELD
Section 9.01. Unless otherwise provided by resolution of the Board
of Directors, the President, any Vice President, the Secretary or the
Treasurer, may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation, to
cast the votes which the Corporation may be entitled to cast as a shareholder
or otherwise in any other corporation or association, any of whose shares or
securities may be held by the Corporation, at meetings of the holders of the
shares or other securities of any such other corporation or association, or
to consent in writing to any action by any such other corporation or
association, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause
to be executed on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, consents, waivers or other instruments as it
may deem necessary or proper; or any of such officers may themselves attend
any meeting of the holders of shares or other securities of any such
corporation or association and thereat vote or exercise any or all other
rights of the Corporation as the holder of such shares or other securities of
such other corporation or association, or consent in writing to any action by
any such other corporation or association.
ARTICLE X
VALUATION OF NET ASSET VALUE
10.01. The net asset value per share of each class or series of
shares of the Corporation shall be determined in good faith by or under
supervision of the officers of the Corporation as authorized by the Board of
Directors as often and on such days and at such time(s) as the Board of
Directors shall determine, or as otherwise may be required by law, rule,
regulation or order of the SEC.
ARTICLE XI
CUSTODY OF ASSETS
Section 11.01. All securities and cash owned by the Corporation
shall, as hereinafter provided, be held by or deposited with a bank or trust
company having (according to its last published report) not less than two
million dollars ($2,000,000) aggregate capital, surplus and undivided profits
(the "Custodian").
The Corporation shall enter into a written contract with the Custodian
regarding the powers, duties and compensation of the Custodian with respect to
the cash and securities of the
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Corporation held by the Custodian. Such contract and all amendments thereto
shall be approved by the Board of Directors of the Corporation. In the event
of the Custodian's resignation or termination, the Corporation shall use its
best efforts promptly to obtain a successor Custodian and shall require that
the cash and securities owned by the Corporation held by the Custodian be
delivered directly to such successor Custodian.
ARTICLE XII
AMENDMENTS
Section 12.01. These Bylaws may be amended or altered by a vote of
the majority of the Board of Directors at any meeting provided that notice of
such proposed amendment shall have been given in the notice given to the
directors of such meeting. Such authority in the Board of Directors is
subject to the power of the shareholders to change or repeal such Bylaws by a
majority vote of the shareholders present or represented at any regular or
special meeting of shareholders called for such purpose, and the Board of
Directors shall not make or alter any Bylaws fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or filling
vacancies in the Board of Directors, or fixing the number of directors or
their classifications, qualifications or terms of office, except that the
Board of Directors may adopt or amend any Bylaw to increase or decrease their
number.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. INTERPRETATION. When the context in which words are
used in these Bylaws indicates that such is the intent, singular words will
include the plural and vice versa, and masculine words will include the
feminine and neuter genders and vice versa.
Section 13.02. ARTICLE AND SECTION TITLES. The titles of Sections
and Articles in these Bylaws are for descriptive purposes only and will not
control or alter the meaning of any of these Bylaws as set forth in the text.
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EXHIBIT (d)(1)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, is made and entered into this ____th day of _________,
1999, by and between American Eagle Capital Appreciation Fund (the "Fund"), a
separately managed series of American Eagle Funds, Inc., a Minnesota corporation
(the "Company"), and Jundt Associates, Inc., a Minnesota corporation (the
"Adviser").
1. INVESTMENT ADVISORY SERVICES
The Company, for and on behalf of the Fund, hereby engages the
Adviser, and the Adviser hereby agrees to act as investment adviser for, and to
manage the affairs, business and the investment of the assets of the Fund.
The investment of the assets of the Fund shall at all times be subject
to the applicable provisions of the Company's Articles of Incorporation, By-Laws
and Registration Statement on Form N-1A and any representations contained in the
Prospectus and Statement of Additional Information of the Fund and shall conform
to the policies and purposes of the Fund as set forth in such Registration
Statement and Prospectus and Statement of Additional Information and (i) as
interpreted from time to time by the Board of Directors of the Company and (ii)
as may be amended from time to time by the Board of Directors of the Company
and/or the shareholders of the Fund as permitted by the Investment Company Act
of 1940 and the rules and regulations promulgated thereunder, as now enacted,
promulgated or hereafter amended (collectively, the "Investment Company Act").
Within the framework of the investment policies of the Fund, the Adviser shall
have the sole and exclusive responsibility for the management of the Fund's
assets and making and execution of all investment decisions for the Fund. The
Adviser shall report to the Board of Directors of the Company regularly at such
times and in such detail as the Board may from time to time determine to be
appropriate, in order to permit the Board to determine the adherence of the
Adviser to the investment policies of the Fund.
The Adviser shall, at its own expense, furnish the Fund with suitable
office space, and all necessary office facilities, equipment and personnel for
servicing the investments of the Fund. The Adviser shall arrange, if requested
by the Fund, for officers, employees or other Affiliated Persons (as defined in
Section 2(a)(3) of the Investment Company Act) of the Adviser to serve without
compensation from the Fund as directors, officers, or employees of the Company
if duly elected to such positions by the shareholders or directors of the
Company.
The Adviser hereby acknowledges that all records necessary in the
operation of the Fund, including records pertaining to its shareholders and
investments, are the property of the Fund, and in the event that a transfer of
management or investment advisory services to someone other than the Adviser
should ever occur, the Adviser will promptly, and at its own cost, take all
steps necessary to segregate such records and deliver them to the Fund.
2. COMPENSATION FOR SERVICES
In payment for all services, facilities, equipment and personnel, and
for other costs of the Adviser hereunder, the Fund shall pay to the Adviser a
monthly investment advisory fee determined by applying the annual rate of 1.30%
to the Fund's average daily net assets.
For purposes of the calculation of such fee, the Fund's net assets
shall be computed at the times and in the manner specified in the Company's
Registration Statement on Form N-1A. Such fee shall be
<PAGE>
payable on the fifth day of each calendar month for service performed hereunder
during the preceding month. The fee applicable during the first and last months
that this Agreement is in effect shall be prorated according to the proportion
which such portion of the month bears to the full month.
3. ALLOCATION OF EXPENSES
In addition to the fees described in Section 2 hereof, the Fund shall
pay all its expenses which are not assumed by the Adviser in its capacity as the
Fund's investment adviser. These Fund expenses include, by way of example, but
not by way of limitation, (a) brokerage and commission expenses; (b) interest
charges on borrowings; (c) fees and expenses of legal counsel and independent
auditors; (d) the Fund's organizational and offering expenses, whether or not
advanced by the Adviser; (e) federal, state, local and foreign taxes, including
issue and transfer taxes incurred by or levied on the Fund; (f) cost of
certificates representing common shares of the Fund and any other expenses
(including clerical expenses) of issuance, sale or repurchase of the common
shares of the Fund; (g) association membership dues; (h) fees and expenses of
registering and making notice filings with respect to the Fund's shares under
the appropriate federal and state securities laws; (i) expenses of printing and
distributing reports, notices and proxy materials to shareholders; (j) costs of
annual and special shareholders' meetings; (k) expenses of filing reports and
other documents with governmental agencies; (l) charges and expenses of the
Fund's administrator, custodian, registrar, transfer agent and dividend
disbursing agent; (m) expenses of disbursing dividends and distributions; (n)
compensation of the Fund's officers, directors and employees that are not
Affiliated Persons or Interested Persons (as defined in Section 2(a) of the
Investment Company Act) of the Adviser; (o) the cost of other personnel
providing services to the Fund; (p) travel expenses for attendance of Board of
Directors meetings by all members of the Board of Directors of the Fund; (q)
insurance expenses; (r) costs of stationery and supplies; and (s) any
extraordinary expenses of a nonrecurring nature.
4. FREEDOM TO DEAL WITH THIRD PARTIES
The Adviser shall be free to render services to others similar to
those rendered under this Agreement or of a different nature except as such
services may conflict with the services to be rendered or the duties to be
assumed hereunder.
5. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective as of the day and date first
above written (the "Effective Date"). Wherever referred to in this Agreement,
the vote or approval of the holders of a majority of the outstanding shares of
the Fund shall mean the vote of 67% or more of such shares if the holders of
more than 50% of such shares are present in person or by proxy or the vote of
more than 50% of such shares, whichever is less.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect through November 4, 2001, and thereafter shall continue in
effect for successive periods of 12 months thereafter, provided that each
continuance is specifically approved annually by (a) the vote of a majority of
the Company's Board of Directors who are not parties to the Agreement or
interested persons (as defined in the Investment Company Act) of the Company or
the Adviser, cast in person at a meeting called for the purpose of voting on
approval and (b) either (i) the vote of a majority of the outstanding voting
securities of the Fund or (ii) the vote of a majority of the Company's Board of
Directors.
-2-
<PAGE>
This Agreement may be terminated at any time without the payment of
any penalty by the vote of the Board of Directors of the Company or by the vote
of the holders of a majority of the outstanding shares of the Fund, upon sixty
(60) days written notice to the Adviser. The Adviser may terminate this
Agreement without penalty on ninety (90) days written notice to the Company.
This Agreement shall automatically terminate in the event of its assignment as
defined in the Investment Company Act. This Agreement shall automatically
terminate upon completion of the dissolution, liquidation and winding up of the
Fund.
6. LIMITATION OF LIABILITY
The Adviser will not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund or its shareholders in connection with
the performance of its duties under this Agreement, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its duties under
this Agreement.
7. AMENDMENTS TO AGREEMENT
No material amendment to this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding shares of the
Fund.
8. NOTICES
Any notice under this Agreement shall be in writing, addressed,
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate in writing for receipt of such notice.
9. NAME
The Fund may use "American Eagle" as part of its name for so long as
the Adviser serves as investment adviser to the Fund. The Adviser may at any
time permit others, including companies registered under the Investment Company
Act to use the name "American Eagle".
-3-
<PAGE>
IN WITNESS WHEREOF, the Company and the Adviser have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
AMERICAN EAGLE FUNDS, INC.
By:
------------------------------
Its:
----------------------------
JUNDT ASSOCIATES, INC.
By:
------------------------------
Its:
----------------------------
<PAGE>
EXHIBIT (d)(2)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, is made and entered into this ____th day of ______,
1999, by and between American Eagle Twenty Fund (the "Fund"), a separately
managed series of American Eagle Funds, Inc., a Minnesota corporation (the
"Company"), and Jundt Associates, Inc., a Minnesota corporation (the
"Adviser").
1. INVESTMENT ADVISORY SERVICES
The Company, for and on behalf of the Fund, hereby engages the
Adviser, and the Adviser hereby agrees to act as investment adviser for, and
to manage the affairs, business and the investment of the assets of the Fund.
The investment of the assets of the Fund shall at all times be
subject to the applicable provisions of the Company's Articles of
Incorporation, By-Laws and Registration Statement on Form N-1A and any
representations contained in the Prospectus and Statement of Additional
Information of the Fund and shall conform to the policies and purposes of the
Fund as set forth in such Registration Statement and Prospectus and Statement
of Additional Information and (i) as interpreted from time to time by the
Board of Directors of the Company and (ii) as may be amended from time to
time by the Board of Directors of the Company and/or the shareholders of the
Fund as permitted by the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder, as now enacted, promulgated or hereafter
amended (collectively, the "Investment Company Act"). Within the framework of
the investment policies of the Fund, the Adviser shall have the sole and
exclusive responsibility for the management of the Fund's assets and making
and execution of all investment decisions for the Fund. The Adviser shall
report to the Board of Directors of the Company regularly at such times and
in such detail as the Board may from time to time determine to be
appropriate, in order to permit the Board to determine the adherence of the
Adviser to the investment policies of the Fund.
The Adviser shall, at its own expense, furnish the Fund with suitable
office space, and all necessary office facilities, equipment and personnel for
servicing the investments of the Fund. The Adviser shall arrange, if requested
by the Fund, for officers, employees or other Affiliated Persons (as defined in
Section 2(a)(3) of the Investment Company Act) of the Adviser to serve without
compensation from the Fund as directors, officers, or employees of the Company
if duly elected to such positions by the shareholders or directors of the
Company.
The Adviser hereby acknowledges that all records necessary in the
operation of the Fund, including records pertaining to its shareholders and
investments, are the property of the Fund, and in the event that a transfer of
management or investment advisory services to someone other than the Adviser
should ever occur, the Adviser will promptly, and at its own cost, take all
steps necessary to segregate such records and deliver them to the Fund.
2. COMPENSATION FOR SERVICES
In payment for all services, facilities, equipment and personnel, and
for other costs of the Adviser hereunder, the Fund shall pay to the Adviser a
monthly investment advisory fee determined by applying the annual rate of 1.30%
to the Fund's average daily net assets.
For purposes of the calculation of such fee, the Fund's net assets
shall be computed at the times and in the manner specified in the Company's
Registration Statement on Form N-1A. Such fee shall be
<PAGE>
payable on the fifth day of each calendar month for service performed
hereunder during the preceding month. The fee applicable during the first and
last months that this Agreement is in effect shall be prorated according to
the proportion which such portion of the month bears to the full month.
3. ALLOCATION OF EXPENSES
In addition to the fees described in Section 2 hereof, the Fund
shall pay all its expenses which are not assumed by the Adviser in its
capacity as the Fund's investment adviser. These Fund expenses include, by
way of example, but not by way of limitation, (a) brokerage and commission
expenses; (b) interest charges on borrowings; (c) fees and expenses of legal
counsel and independent auditors; (d) the Fund's organizational and offering
expenses, whether or not advanced by the Adviser; (e) federal, state, local
and foreign taxes, including issue and transfer taxes incurred by or levied
on the Fund; (f) cost of certificates representing common shares of the Fund
and any other expenses (including clerical expenses) of issuance, sale or
repurchase of the common shares of the Fund; (g) association membership dues;
(h) fees and expenses of registering and making notice filings with respect
to the Fund's shares under the appropriate federal and state securities laws;
(i) expenses of printing and distributing reports, notices and proxy
materials to shareholders; (j) costs of annual and special shareholders'
meetings; (k) expenses of filing reports and other documents with
governmental agencies; (l) charges and expenses of the Fund's administrator,
custodian, registrar, transfer agent and dividend disbursing agent; (m)
expenses of disbursing dividends and distributions; (n) compensation of the
Fund's officers, directors and employees that are not Affiliated Persons or
Interested Persons (as defined in Section 2(a) of the Investment Company Act)
of the Adviser; (o) the cost of other personnel providing services to the
Fund; (p) travel expenses for attendance of Board of Directors meetings by
all members of the Board of Directors of the Fund; (q) insurance expenses;
(r) costs of stationery and supplies; and (s) any extraordinary expenses of a
nonrecurring nature.
4. FREEDOM TO DEAL WITH THIRD PARTIES
The Adviser shall be free to render services to others similar to
those rendered under this Agreement or of a different nature except as such
services may conflict with the services to be rendered or the duties to be
assumed hereunder.
5. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective as of the day and date first
above written (the "Effective Date"). Wherever referred to in this Agreement,
the vote or approval of the holders of a majority of the outstanding shares
of the Fund shall mean the vote of 67% or more of such shares if the holders
of more than 50% of such shares are present in person or by proxy or the vote
of more than 50% of such shares, whichever is less.
Unless sooner terminated as hereinafter provided, this Agreement
shall continue in effect through November 4, 2001, and thereafter shall
continue in effect for successive periods of 12 months thereafter, provided
that each continuance is specifically approved annually by (a) the vote of a
majority of the Company's Board of Directors who are not parties to the
Agreement or interested persons (as defined in the Investment Company Act) of
the Company or the Adviser, cast in person at a meeting called for the
purpose of voting on approval and (b) either (i) the vote of a majority of
the outstanding voting securities of the Fund or (ii) the vote of a majority
of the Company's Board of Directors.
-2-
<PAGE>
This Agreement may be terminated at any time without the payment of any
penalty by the vote of the Board of Directors of the Company or by the vote of
the holders of a majority of the outstanding shares of the Fund, upon sixty (60)
days written notice to the Adviser. The Adviser may terminate this Agreement
without penalty on ninety (90) days written notice to the Company. This
Agreement shall automatically terminate in the event of its assignment as
defined in the Investment Company Act. This Agreement shall automatically
terminate upon completion of the dissolution, liquidation and winding up of the
Fund.
6. LIMITATION OF LIABILITY
The Adviser will not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund or its shareholders in connection with
the performance of its duties under this Agreement, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its duties under
this Agreement.
7. AMENDMENTS TO AGREEMENT
No material amendment to this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding shares of the
Fund.
8. NOTICES
Any notice under this Agreement shall be in writing, addressed,
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate in writing for receipt of such notice.
9. NAME
The Fund may use "American Eagle" as part of its name for so long as
the Adviser serves as investment adviser to the Fund. The Adviser may at any
time permit others, including companies registered under the Investment Company
Act to use the name "American Eagle".
-3-
<PAGE>
IN WITNESS WHEREOF, the Company and the Adviser have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
AMERICAN EAGLE FUNDS, INC.
By: ________________________
Its: _______________________
JUNDT ASSOCIATES, INC.
By: ________________________
Its: _______________________
<PAGE>
EXHIBIT (e)(1)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into this __th day of ________, 1999
by and between American Eagle Capital Appreciation Fund (the "Fund"), a
separately managed series of American Eagle Funds, Inc., a Minnesota corporation
(the "Company"), and U.S. Growth Investments, Inc., a Minnesota corporation (the
"Distributor"), which is an affiliate of Jundt Associates, Inc., the investment
adviser to the Fund.
W I T N E S S E T H:
1. DISTRIBUTION SERVICES. The Company, on behalf of the Fund, hereby
engages the Distributor, and the Distributor hereby agrees to act, as principal
underwriter for the Fund in the sale and distribution to the public of the
Fund's shares of common stock, $.01 par value (the "Shares"), either through
dealers or otherwise. The Distributor agrees to offer such Shares for sale at
all times when such Shares are available for sale and may lawfully be offered
for sale and sold.
2. SALE OF FUND SHARES. Such Shares are to be sold only on the
following terms:
(a) All subscriptions, offers or sales shall be subject to
acceptance or rejection by the Fund. Any offer or sale shall be
conclusively presumed to have been accepted by the Fund if the Fund
shall fail to notify the Distributor of the rejection of such offer or
sale prior to the computation of the net asset value of the Shares next
following receipt by the Fund of notice of such offer and sale.
(b) No Share shall be sold by the Fund for any consideration
other than cash or for any amount less than the net asset value of such
Share, computed as provided in the currently effective prospectus of
the Fund (the "Net Asset Value"). All Shares sold by the Distributor
shall be sold at the public offering price, as hereinafter defined.
(c) The public offering price of the Shares shall be the Net
Asset Value thereof next determined following receipt of an order by
the Distributor.
3. INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. The Fund may extend to
its shareholders the right to purchase Shares at the Net Asset Value thereof
with the proceeds of any dividend or capital gain distribution paid or payable
with respect to such Shares.
4. REGISTRATION OF SHARES. The Fund agrees to make prompt and
reasonable efforts to effect and keep in effect, at its own expense, the
registration of or notice filings with respect to its Shares so as to permit
their sale in such jurisdictions as the Fund may designate.
5. INFORMATION TO BE FURNISHED TO DISTRIBUTOR. The Fund agrees that it
will furnish the Distributor with such information with respect to the affairs
and accounts of the Fund as the Distributor may from time to time reasonably
require, and further agrees that the Distributor, at all reasonable times, shall
be permitted to inspect the books and records of the Fund.
6. ALLOCATION OF EXPENSES. During the period of this Agreement, the
Fund shall pay or cause to be paid all expenses, costs and fees incurred by the
Fund which are not assumed by the Distributor or Jundt Associates, Inc. (the
"Adviser"). The Distributor shall pay all costs of distributing the Shares,
including, but not limited to, (a) any compensation paid to broker-dealers,
including the
<PAGE>
Distributor and its registered representatives, for their sales of Shares,
including the payment of trailer commissions and the implementation of various
incentive programs with respect to broker-dealers, banks and other financial
institutions; (b) compensation paid to banks and other institutions for
providing administrative and accounting services with respect to the Fund's
shareholders; and(c) other advertising and promotional expenses in connection
with the distribution of Shares; PROVIDED, HOWEVER, that the Adviser, rather
than the Distributor, may bear the expenses referred to in this sentence, but
the Distributor shall be primarily liable for such expenses until paid.
7. LIMITATION OF DISTRIBUTOR'S AUTHORITY. The Distributor shall be
deemed to be an authorized independent contractor and, except as specifically
provided or authorized herein, shall have no authority to act for or represent
the Fund.
8. SUBSCRIPTION FOR SHARES; REFUND FOR CANCELED ORDERS. The
Distributor shall subscribe for the Shares of the Fund only for the purpose of
covering purchase orders already received by it or for the purpose of investment
for its own account. In the event that an order for the purchase of Shares is
placed with the Distributor by a customer or dealer and subsequently canceled,
the Distributor shall forthwith cancel the subscription for such Shares entered
on the books of the Fund and, if the Distributor has paid the Fund for such
Shares, shall be entitled to receive from the Fund in refund of such payment the
lesser of:
(a) the consideration received by the Fund for such Shares; or
(b) the Net Asset Value of such Shares at the time of cancellation
by the Distributor.
9. INDEMNIFICATION OF FUND. The Distributor agrees to indemnify the
Company and the Fund against any and all litigation and other legal proceedings
of any kind or nature and against any liability, judgment, cost or penalty
imposed as a result of such litigation or proceedings in any way arising out of
or in connection with the sale or distribution of the Shares of the Fund by the
Distributor. In the event of the threat or institution of any such litigation or
legal proceedings against the Company or the Fund, the Distributor shall defend
such action on behalf of the Company and the Fund at its own expense, and shall
pay any such liability, judgment, cost or penalty resulting therefrom, whether
imposed by legal authority or agreed upon by way of compromise and settlement;
PROVIDED, HOWEVER, that the Distributor shall not be required to pay or
reimburse the Company or the Fund for any liability, judgment, cost or penalty
incurred as a result of an omission to supply information by the Company or the
Fund to the Distributor, or to the Distributor by a director, officer or
employee of the Company who is not an Interested Person of the Distributor (as
defined in Section 2(a)(19) of the Investment Company Act), unless the
information so supplied or omitted was available to the Distributor or the
Fund's investment adviser without recourse to the Company or the Fund or any
such Interested Person of the Company or the Fund.
10. FREEDOM TO DEAL WITH THIRD PARTIES. The Distributor shall be free
to render to others services of a nature either similar to or different from
those rendered under this Agreement, except such as may impair its performance
of the services and duties to be rendered by it hereunder.
11. EFFECTIVE DATE. This Agreement shall become effective upon the
initial effective date of the Company's Registration Statement on Form N-1A.
Wherever referred to in this Agreement, the vote or approval of the holders of a
majority of the outstanding Shares of the Fund shall mean the vote of 67% or
more of such Shares if the holders of more than 50% of such Shares are present
in person or by proxy or the vote of more than 50% of such Shares, whichever is
less.
-2-
<PAGE>
12. DURATION. Unless sooner terminated as hereinafter provided, this
Agreement shall continue in effect from year to year but only so long as such
continuance is specifically approved at least annually either (a) by the Board
of Directors of the Company, including the specific approval of a majority of
the directors who are not Interested Persons of the Company or of the
Distributor, cast in person at a meeting called for the purpose of voting on
such approval; or (b) by the vote of the holders of a majority of the
outstanding Shares of the Fund.
13. TERMINATION. This Agreement may be terminated at any time without
the payment of any penalty by the vote of a majority of the members of the Board
of Directors of the Company who are not Interested Persons of the Company, or by
the Distributor, upon not more than 60 days' written notice to the other party.
This Agreement may be terminated without the payment of any penalty by the vote
of the holders of a majority of the outstanding Shares of the Fund, upon 60
days' written notice to the Distributor. This Agreement shall automatically
terminate in the event of its assignment.
14. AMENDMENTS TO AGREEMENT. No material amendment to this Agreement
shall be effective until approved by the Distributor and by the vote of a
majority of the Board of Directors of the Company who are not Interested Persons
of the Distributor.
15. NOTICES. Any notices under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for the receipt of such
notice.
IN WITNESS WHEREOF, the Fund and the Distributor have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
AMERICAN EAGLE FUNDS, INC.
By
-------------------------------------
Its
-----------------------------------
U.S. GROWTH INVESTMENTS, INC.
By
-------------------------------------
Its
-----------------------------------
-3-
<PAGE>
EXHIBIT (e)(2)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into this __th day of ________, 1999
by and between American Eagle Twenty Fund (the "Fund"), a separately managed
series of American Eagle Funds, Inc., a Minnesota corporation (the "Company"),
and U.S. Growth Investments, Inc., a Minnesota corporation (the "Distributor"),
which is an affiliate of Jundt Associates, Inc., the investment adviser to the
Fund.
W I T N E S S E T H:
1. DISTRIBUTION SERVICES. The Company, on behalf of the Fund, hereby
engages the Distributor, and the Distributor hereby agrees to act, as principal
underwriter for the Fund in the sale and distribution to the public of the
Fund's shares of common stock, $.01 par value (the "Shares"), either through
dealers or otherwise. The Distributor agrees to offer such Shares for sale at
all times when such Shares are available for sale and may lawfully be offered
for sale and sold.
2. SALE OF FUND SHARES. Such Shares are to be sold only on the
following terms:
(a) All subscriptions, offers or sales shall be subject to
acceptance or rejection by the Fund. Any offer or sale shall be
conclusively presumed to have been accepted by the Fund if the Fund
shall fail to notify the Distributor of the rejection of such offer or
sale prior to the computation of the net asset value of the Shares next
following receipt by the Fund of notice of such offer and sale.
(b) No Share shall be sold by the Fund for any consideration
other than cash or for any amount less than the net asset value of such
Share, computed as provided in the currently effective prospectus of
the Fund (the "Net Asset Value"). All Shares sold by the Distributor
shall be sold at the public offering price, as hereinafter defined.
(c) The public offering price of the Shares shall be the Net
Asset Value thereof next determined following receipt of an order by
the Distributor.
3. INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. The Fund may extend to
its shareholders the right to purchase Shares at the Net Asset Value thereof
with the proceeds of any dividend or capital gain distribution paid or payable
with respect to such Shares.
4. REGISTRATION OF SHARES. The Fund agrees to make prompt and
reasonable efforts to effect and keep in effect, at its own expense, the
registration of or notice filings with respect to its Shares so as to permit
their sale in such jurisdictions as the Fund may designate.
5. INFORMATION TO BE FURNISHED TO DISTRIBUTOR. The Fund agrees that it
will furnish the Distributor with such information with respect to the affairs
and accounts of the Fund as the Distributor may from time to time reasonably
require, and further agrees that the Distributor, at all reasonable times, shall
be permitted to inspect the books and records of the Fund.
6. ALLOCATION OF EXPENSES. During the period of this Agreement, the
Fund shall pay or cause to be paid all expenses, costs and fees incurred by the
Fund which are not assumed by the Distributor or Jundt Associates, Inc. (the
"Adviser"). The Distributor shall pay all costs of distributing the Shares,
including, but not limited to, (a) any compensation paid to broker-dealers,
including the Distributor and its registered representatives, for their sales of
Shares, including the payment of trailer
<PAGE>
commissions and the implementation of various incentive programs with respect
to broker-dealers, banks and other financial institutions; (b) compensation
paid to banks and other institutions for providing administrative and
accounting services with respect to the Fund's shareholders; and(c) other
advertising and promotional expenses in connection with the distribution of
Shares; PROVIDED, HOWEVER, that the Adviser, rather than the Distributor, may
bear the expenses referred to in this sentence, but the Distributor shall be
primarily liable for such expenses until paid.
7. LIMITATION OF DISTRIBUTOR'S AUTHORITY. The Distributor shall be
deemed to be an authorized independent contractor and, except as specifically
provided or authorized herein, shall have no authority to act for or represent
the Fund.
8. SUBSCRIPTION FOR SHARES; REFUND FOR CANCELED ORDERS. The Distributor
shall subscribe for the Shares of the Fund only for the purpose of covering
purchase orders already received by it or for the purpose of investment for its
own account. In the event that an order for the purchase of Shares is placed
with the Distributor by a customer or dealer and subsequently canceled, the
Distributor shall forthwith cancel the subscription for such Shares entered on
the books of the Fund and, if the Distributor has paid the Fund for such Shares,
shall be entitled to receive from the Fund in refund of such payment the lesser
of:
(a) the consideration received by the Fund for such Shares; or
(b) the Net Asset Value of such Shares at the time of
cancellation by the Distributor.
9. INDEMNIFICATION OF FUND. The Distributor agrees to indemnify the
Company and the Fund against any and all litigation and other legal proceedings
of any kind or nature and against any liability, judgment, cost or penalty
imposed as a result of such litigation or proceedings in any way arising out of
or in connection with the sale or distribution of the Shares of the Fund by the
Distributor. In the event of the threat or institution of any such litigation or
legal proceedings against the Company or the Fund, the Distributor shall defend
such action on behalf of the Company and the Fund at its own expense, and shall
pay any such liability, judgment, cost or penalty resulting therefrom, whether
imposed by legal authority or agreed upon by way of compromise and settlement;
PROVIDED, HOWEVER, that the Distributor shall not be required to pay or
reimburse the Company or the Fund for any liability, judgment, cost or penalty
incurred as a result of an omission to supply information by the Company or the
Fund to the Distributor, or to the Distributor by a director, officer or
employee of the Company who is not an Interested Person of the Distributor (as
defined in Section 2(a)(19) of the Investment Company Act), unless the
information so supplied or omitted was available to the Distributor or the
Fund's investment adviser without recourse to the Company or the Fund or any
such Interested Person of the Company or the Fund.
10. FREEDOM TO DEAL WITH THIRD PARTIES. The Distributor shall be free
to render to others services of a nature either similar to or different from
those rendered under this Agreement, except such as may impair its performance
of the services and duties to be rendered by it hereunder.
11. EFFECTIVE DATE. This Agreement shall become effective upon the
initial effective date of the Company's Registration Statement on Form N-1A.
Wherever referred to in this Agreement, the vote or approval of the holders of a
majority of the outstanding Shares of the Fund shall mean the vote of 67% or
more of such Shares if the holders of more than 50% of such Shares are present
in person or by proxy or the vote of more than 50% of such Shares, whichever is
less.
-2-
<PAGE>
12. DURATION. Unless sooner terminated as hereinafter provided, this
Agreement shall continue in effect from year to year but only so long as such
continuance is specifically approved at least annually either (a) by the Board
of Directors of the Company, including the specific approval of a majority of
the directors who are not Interested Persons of the Company or of the
Distributor, cast in person at a meeting called for the purpose of voting on
such approval; or (b) by the vote of the holders of a majority of the
outstanding Shares of the Fund.
13. TERMINATION. This Agreement may be terminated at any time without
the payment of any penalty by the vote of a majority of the members of the Board
of Directors of the Company who are not Interested Persons of the Company, or by
the Distributor, upon not more than 60 days' written notice to the other party.
This Agreement may be terminated without the payment of any penalty by the vote
of the holders of a majority of the outstanding Shares of the Fund, upon 60
days' written notice to the Distributor. This Agreement shall automatically
terminate in the event of its assignment.
14. AMENDMENTS TO AGREEMENT. No material amendment to this Agreement
shall be effective until approved by the Distributor and by the vote of a
majority of the Board of Directors of the Company who are not Interested Persons
of the Distributor.
15. NOTICES. Any notices under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for the receipt of such
notice.
IN WITNESS WHEREOF, the Fund and the Distributor have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
AMERICAN EAGLE FUNDS, INC.
By
-------------------------
Its
---------------------
U.S. GROWTH INVESTMENTS, INC.
By
-------------------------
Its
---------------------
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<PAGE>
EXHIBIT (i)
FAEGRE & BENSON LLP
2200 NORWEST CENTER
90 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
American Eagle Funds, Inc.
1550 Utica Avenue South, Suite 950
Minneapolis, Minnesota 55416
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form N-1A (File
Nos: ______ and ______) (the "Registration Statement") which you have filed with
the Securities and Exchange Commission for the purposes of registering American
Eagle Funds, Inc. (the "Company") as an open-end management investment company
pursuant to the Investment Company Act of 1940, as amended, and of registering
for sale by the Company an indefinite number of the Company's common shares, par
value $.01 per share, pursuant to the Securities Act of 1933, as amended. This
opinion relates solely to the Company's Series A common shares and Series B
common shares (collectively, the "Shares").
We are familiar with the proceedings to date with respect to the
proposed sale by the Company of the Shares, and have examined such records,
documents and matters of law, and have satisfied ourselves as to such matters of
fact, as we consider relevant for the purposes of this opinion.
We are of the opinion that:
(a) The Company is a legally organized corporation under
Minnesota law; and
(b) The Shares to be sold by the Company will be
legally issued, fully paid and nonassessable, if
and when issued and sold upon the terms and in the
manner set forth in the Registration Statement.
We consent to the reference to this firm under the caption "Counsel
and Auditors" in the Statement of Additional Information contained in the
Registration Statement and to the use of this opinion as an exhibit to the
Registration Statement.
Dated: __________, 1999
Very truly yours,
/s/ Faegre & Benson LLP
Faegre & Benson LLP
<PAGE>
EXHIBIT (j)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
American Eagle Funds, Inc.
We consent to the use of our reports 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
________, 1999
<PAGE>
EXHIBIT (l)
INITIAL CAPITAL AGREEMENT
_________, 1999
Dear Sir or Madam:
In connection with the purchase by James R. Jundt (the "Purchaser") of
10,000 initial Series A Common Shares at a price of $10 per share and 10,000
initial Series B Common Shares at a price of $10 per share of American Eagle
Funds, Inc. (the "Company"), relating to the American Eagle Capital Appreciation
Fund and the American Eagle Twenty Fund, respectively (individually a "Fund"
and, collectively, the "Funds"), the Purchaser hereby represents that it is
acquiring such stock for investment with no intention of selling or otherwise
disposing or transferring it or any interest in it. The Purchaser hereby further
agrees that any transfer of any such stock or any interest in it shall be
subject to the following conditions:
1. The Purchaser shall furnish the Funds and counsel satisfactory to the Funds
prior to the time of transfer, a written description of the proposed
transfer specifying its nature and consequence and giving the name of the
proposed transferee.
2. The Funds shall have obtained from its counsel a written opinion stating
whether in the opinion of such counsel the proposed transfer may be
effected without registration under the Securities Act of 1933. If such
opinion states that such transfer may be so effected, the Purchaser shall
then be entitled to transfer such stock in accordance with the terms
specified in its description of the transaction to the Funds. If such
opinion states that the proposed transfer may not be so effected, the
Purchaser will not be entitled to transfer its stock unless such transfer
is registered.
3. The Purchaser understands that the Funds expect to incur organizational
expenses in connection with the start-up and initial registration of the
Funds. These costs will be amortized over 60 months on a straight-line
basis beginning on the date such Fund first offers capital stock to the
public (commencement of operations). If the Purchaser redeems any or all of
the stock representing initial capital in a Fund prior to the end of the
60-month amortization period, the redemption proceeds will be reduced by
their pro rata portion of the unamortized organizational costs. Such
proration shall be calculated by dividing the number of shares of stock to
be redeemed by the number of shares of stock representing initial capital.
4. The Purchaser further agrees that all certificates, if any,
representing such stock shall contain on the face of such
certificate the following legend: "American Eagle Capital
Appreciation Fund" or "American Eagle Twenty Fund," as the case may
be, and on the
<PAGE>
reverse of such certificate "The shares represented by this
certificate may not be transferred without (i) the opinion of
counsel satisfactory to American Eagle Funds, Inc. that the
transfer may be legally made without registration under the federal
Securities Act of 1933; or (ii) such registration." The Purchaser
hereby authorizes the Company to take such action as it shall
reasonably deem appropriate to prevent any violation of the
Securities Act of 1933 in connection with the transfer of stock,
including the imposition of a requirement that any transferee of
the stock sign a letter agreement similar to this one.
Very truly yours,
James R. Jundt
<PAGE>
EXHIBIT (o)
CODE OF ETHICS
FOR
JUNDT ASSOCIATES, INC.
AND AFFILIATES
I. PURPOSE AND CONSTRUCTION
This Code of Ethics (the "Code") is adopted by Jundt Associates, Inc.
("Jundt"), U.S. Growth Investments, Inc. ("USG") and the Funds in an effort to
prevent violations of Section 17 of the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder. The focus of the Code is the
prevention of investment activities by persons with access to certain
information that might be harmful to the interests of a Client or a Fund, or
that might enable such persons to illicitly profit from their relationship with
a Client, Jundt, USG or the Funds.
II. DEFINITIONS
(a) "ACCESS PERSON" means any director, officer or Advisory
Person of Jundt or a Fund or, with respect to USG, any director or officer
who in the ordinary course of his or her business makes, participates in or
obtains information regarding the purchase or sale of Securities for a Client
or aFund or whose functions or duties as part of the ordinary course of his
or her business relate to the making of any recommendation to a Client or a
Fund regarding the purchase or sale of Securities.
(b) "ADVISORY PERSON" means:
(1) any employee of Jundt or a Fund (or of any company in a
control relationship to Jundt or a Fund) who, in connection with his or
her regular functions or duties, makes, participates in or obtains
information regarding the purchase or sale of a security by a Client or
a Fund, or whose functions or duties relate to the making of any
recommendations with respect to such purchases or sales (including, but
not limited to, Portfolio Managers and all Jundt employees who provide
information and advice to Portfolio Managers or who help execute the
Portfolio Managers' decisions, such as securities analysts and
traders); or
(2) any natural person in a control relationship to Jundt or a
Fund and who obtains information concerning recommendations made to a
Client or a Fund with regard to the purchase or sale of a Security.
(c) "AFFILIATED PERSON" of another person means:
(1) any person directly or indirectly owning, controlling or
holding with power to vote five percent (5%) or more of the outstanding
voting securities of such other person;
(2) any person five percent (5%) or more of whose outstanding
voting securities are directly or indirectly owned, controlled or held
with power to vote by such other person;
(3) any person directly or indirectly controlling, controlled
by or under common control with such other person;
(4) any officer, director, partner, co-partner or employee of
such other person;
<PAGE>
(5) if such other person is an investment company, any
investment adviser thereof or any member of an advisory board thereof;
and
(6) if such other person is an unincorporated investment
company not having a board of directors, the depositor thereof.
(d) "BENEFICIAL OWNERSHIP" for purposes of the Code, shall be
determined in accordance with the definition of "beneficial owner" set forth
in Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, I.E., a person
must have a "direct or indirect pecuniary interest" to have "beneficial
ownership." Although the following list is not meant to be exhaustive, under
the rule a person would generally be regarded to be the beneficial owner of
the following Securities:
(1) Securities held in the person's own name;
(2) Securities held with another in joint tenancy, community
property or other joint ownership;
(3) Securities held by a bank or broker as nominee or
custodian on such person's behalf or pledged as collateral for a loan;
(4) Securities held by members of the person's immediate
family sharing the same household;
(5) Securities held by a relative not residing in the person's
home if the person is a custodian, guardian or otherwise has
controlling influence over the purchase, sale or voting of such
Securities;
(6) Securities held by a trust in which the person is a
beneficiary and has or shares the power to make purchase or sale
decisions;
(7) Securities held by a trust for which the person serves as
a trustee and in which the person has a pecuniary interest (including
pecuniary interests by virtue of performance fees and by virtue of
holdings by the person's immediate family);
(8) Securities held by a general partnership or limited
partnership in which the person is a general partner;
(9) Securities owned by a corporation in which the person has
a control position or in which the person has or shares investment
control over the portfolio Securities (other than a registered
investment company);
(10) Securities in a portfolio giving the person certain
performance-related fees; and
(11) Securities held by another person or entity pursuant to
any agreement, understanding, relationship or other arrangement giving
the person any direct or indirect pecuniary interest.
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<PAGE>
(e) "CONTROL" shall have the same meaning as that set forth in
Section 2(a)(9) of the 1940 Act.
(f) "CLIENT" means any person, other than a Fund, for whom or
which Jundt serves as an "investment adviser" within the meaning of Section
202(a)(11) of the Investment Advisers Act of 1940, as amended, and the rules
and regulations thereunder.
(f) "DIRECTOR OF COMPLIANCE" means the person designated by
Jundt from time to time to fulfill the role of Compliance Director under this
Code of Ethics.
(f) "DISINTERESTED DIRECTOR" means directors or trustees of a
Fund who are not "interested persons," as defined in the 1940 Act, of a Fund,
Jundt or USG.
(g) "FUND" means any investment company registered under the
1940 Act for which Jundt acts as an investment adviser.
(h) "MEMBER OF IMMEDIATE FAMILY" of a person includes such
person's spouse, children under the age of twenty-five (25) years residing
with such person, and any trust or estate in which such person or any other
member of his or her immediate family has a substantial beneficial interest,
unless neither such person nor any other member of his or her immediate
family is able to control or participate in the investment decisions of such
trust or estate.
(i) "OUTSIDE FUND OFFICER" means any officer of a Fund who is
not otherwise an "interested person," as defined in the 1940 Act, of a Fund,
Jundt or USG.
(j) "PERSONAL SECURITIES TRANSACTION" means a transaction in a
Security in which a person has or thereby acquires Beneficial Ownership. A
person shall be considered to be "engaging in" or "effecting" a Personal
Securities Transaction if the person, directly or indirectly, directs,
participates in or receives advance notification or advice of or regarding
such transaction. A person shall not be considered to be "engaging in" or
"effecting" a Personal Securities Transaction if such transaction is effected
on the person's behalf by an independent fiduciary or broker with investment
discretion, provided the person did not, directly or indirectly, direct,
participate in or receive advance notification or advice of or regarding such
transaction.
(k) "PORTFOLIO MANAGER" means a Jundt employee entrusted with
the direct responsibility and authority to make investment decisions
affecting a Client or a Fund.
(l) "PURCHASE OR SALE OF A SECURITY" includes, among other
things, the writing of an option to purchase or sell a Security.
(m) "SECURITY" shall have the meaning set forth in Section
2(a)(36) of the 1940 Act.
(n) "SECURITY HELD OR TO BE ACQUIRED" by a registered
investment company means any Security which, within the most recent fifteen
(15) days, (i) is or has been held by such company, or (ii) is being or has
been considered by such company or its investment adviser for purchase by
such company.
(o) "1940 ACT" means the Investment Company Act of 1940, 15
U.S.C.ss.ss. 80a-1 to 80a-52, as amended.
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<PAGE>
III. RESTRICTIONS
(a) NONDISCLOSURE OF INFORMATION. An Access Person shall not
divulge to any person contemplated or completed Securities transactions of a
Client or a Fund, except in the performance of his or her duties, unless such
information previously has become a matter of public knowledge.
(b) SECTION 17(d) LIMITATIONS. Neither USG, an Affiliated
Person of a Fund or any Affiliated Person of USG or of such Affiliated Person
of a Fund, acting as principal, shall effect any transaction in which a Fund,
or a company controlled by a Fund, is a joint or a joint and several
participant with such person, USG or Affiliated Person, in contravention of
such rules and regulations as the Securities and Exchange Commission may
prescribe under Section 17(d) of the 1940 Act for the purpose of limiting or
preventing participation by a Fund or controlled companies on a basis
different from or less advantageous than that of such other participant.
(c) PROSCRIBED ACTIVITIES UNDER RULE 17j-1(a). Rule 17j-1(a)
under the 1940 Act provides:
It shall be unlawful for any affiliated person of or principal
underwriter for a registered investment company, or any affiliated
person of an investment adviser of or principal underwriter for a
registered investment company in connection with the purchase or sale,
directly or indirectly, by such person of a security held or to be
acquired, as defined in this section, by such registered investment
company:
(1) To employ any device, scheme or artifice to
defraud such registered investment company;
(2) To make to such registered investment company any
untrue statement of a material fact or omit to state to such
registered investment company a material fact necessary in
order to make the statements made, in light of the
circumstances under which they were made, not misleading;
(3) To engage in any act, practice or course of
business which operates or would operate as a fraud or deceit
upon any such registered investment company; or
(4) To engage in any manipulative practice with
respect to such registered investment company.
Any violation of Rule 17j-1(a) shall be deemed to be a violation of the
Code.
(d) COVENANT TO EXERCISE BEST JUDGMENT. An Advisory Person
shall act on his or her best judgment in effecting, or failing to effect, any
transaction by a Client or a Fund, and such Advisory Person shall not take
into consideration his or her personal financial situation in connection with
decisions regarding investment advisory recommendations or portfolio
transactions by a Client or a Fund.
(e) GENERAL PRINCIPLES OF PERSONAL INVESTING. No Access Person
shall engage in any Personal Securities Transaction that such Access Person
has reason to know will be detrimental to the best interest of any Client or
Fund. When engaging in a Personal Securities Transaction, an Access Person
shall:
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<PAGE>
(1) place the interests of Clients and Funds first;
(2) conduct such transaction in a manner consistent with the
Code and in such a manner as to avoid any actual or potential conflict
of interest or abuse of any such person's position of trust and
responsibility as an Access Person; and
(3) not take inappropriate advantage of such person's position
in relationship to Clients or Funds.
(f) LIMITATION ON PERSONAL SECURITIES TRANSACTIONS.
(1) PROHIBITION ON PERSONAL SECURITIES TRANSACTIONS BY CERTAIN
ACCESS PERSONS. No Access Person (other than Disinterested Directors
and Outside Fund Officers) shall engage in or effect any Personal
Securities Transaction involving the purchase of any Security that a
Fund, pursuant to its investment objectives and policies, or a Client
is permitted to own; PROVIDED, HOWEVER, that the foregoing prohibition
shall not apply to any Security described in Section III(g)(2), (3) or
(9); PROVIDED, FURTHER, that such prohibition shall not apply to any
Security described in Section III(g)(5) through (8) or to any
transaction effected pursuant to a systematic dividend reinvestment or
withdrawal plan, if in each case the purchase of the underlying
security was effected in compliance with the Code.
(2) LIMITATIONS RELATED TO TIMING OF TRANSACTIONS. The timing
of Personal Securities Transactions not prohibited under paragraph
III(f)(1)--including, but not limited to, any proposed sale by an
Access Person (other than a Disinterested Director or an Outside Fund
Officer) of a Security that a Client or a Fund is permitted to
own--shall be limited as follows:
(A) No Access Person shall engage in a Personal
Securities Transaction on a day during which a Client or Fund
has a pending "buy" or "sell" order for the same Security
until that order is executed or withdrawn. For purposes of
this paragraph (A), Access Person shall not include any
Disinterested Director or Outside Fund Officer unless such
Disinterested Director or Outside Fund Officer has actual
knowledge that a Fund has a pending "buy" or "sell" order for
the same Security.
(B) No Portfolio Manager shall engage in a Personal
Securities Transaction within a seven (7) day period before or
after a Client or a Fund that he or she manages trades in the
same Security.
(C) Advisory Persons shall not profit from the
purchase and sale, or sale and purchase, of the same (or
equivalent) Securities within sixty calendar days. For
purposes of this paragraph (C), "Securities" shall not be
deemed to include any securities which may not be purchased by
any Client or Fund because of investment limitations which, in
the case of the Funds', must be set forth in Registration
Statements filed with the Securities and Exchange Commission.
The Director of Compliance, or the Vice Chairman in the event
that such Advisory Person is also the Director of Compliance,
may grant an exception to this provision in cases of personal
hardship or other appropriate circumstances.
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<PAGE>
(3) INITIAL PUBLIC OFFERING LIMITATIONS. Advisory Persons
shall not engage in any Personal Securities Transaction that involves
the purchase of Securities in an initial public offering.
(4) PRIVATE PLACEMENT LIMITATIONS. Investments in privately
placed Securities shall be limited as follows:
(A) Advisory Persons shall not engage in any Personal
Securities Transaction that involves a private placement of
Securities (other than investments in Southways Partners, LP,
Southways Fund, Ltd., and other private investment companies
as Jundt may establish as the investment adviser) without the
express prior approval of the Director of Compliance, or the
Vice Chairman in the event that such Advisory Person is also
the Director of Compliance. In reviewing any such approval
request, the Director of Compliance or the Vice Chairman shall
consider, among other factors, whether the investment
opportunity should be reserved for a Client or a Fund and its
shareholders, and whether the opportunity is being offered to
the requesting individual by virtue of his or her position
with the Funds and Jundt.
(B) Advisory Persons who have a Beneficial Ownership
interest in any Securities obtained through a private
placement shall disclose such interest to the Director of
Compliance, or the Vice Chairman in the event that such
Advisory Person is also the Director of Compliance, if and
when they should become involved in any subsequent
consideration of an investment in the same issuer for any
Client or Fund. In such case, the decision to invest in the
Securities of such an issuer on behalf of a Client or Fund
shall be subject to the review and approval of an individual
categorized as an Advisory Person who has no personal interest
in such issuer, which individual shall be appointed by the
Director of Compliance or the Vice Chairman.
(5) REPORTS. The Director of Compliance and the Vice Chairman
shall maintain and make available written records of all actions taken
under this Section III(f) in the manner required by Rule 17j-1(d) under
the 1940 Act.
(g) PRIOR CLEARANCE OF PERSONAL SECURITIES TRANSACTIONS. Prior
to effecting a Personal Securities Transaction, an Access Person (other than
a Disinterested Director or an Outside Fund Officer) shall notify the
Director of Compliance of the proposed transaction, including the amount of
the transaction and the Security involved. If the Access Person proposing the
Personal Securities Transaction is also the Director of Compliance, the
Access Person shall notify the Vice Chairman of the proposed transaction. The
Director of Compliance or Vice Chairman, after investigation, shall determine
whether such transaction is consistent with the Code and shall promptly
communicate such determination to the Access Person making the request.
Transaction clearances must be obtained no more than two days prior to making
a purchase or sale of a Security. If the trade is not made within two days of
the date of clearance, a new clearance must be obtained. Absent extraordinary
circumstances, no Access Person shall be deemed to have violated the Code for
effecting a Personal Securities Transaction if such Access Person has been
advised by the Director of Compliance or Vice Chairman that the transaction
would be consistent with the Code. The Director of Compliance and the Vice
Chairman shall maintain and make available written records of all actions
taken under this Section III(g) in the manner required by Rule 17j-1(d) under
the 1940 Act. This provision does not apply to transactions:
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<PAGE>
(1) effected for any account over which such person does not
have any direct or indirect influence or control (including, but not
limited to, accounts managed by an independent and unaffiliated person
with investment discretion) provided the Access Person does not,
directly or indirectly, direct, participate in or receive advance
notification or advice of or regarding such transaction;
(2) involving United States Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper and shares
of registered open-end investment companies (mutual funds);
(3) subject to Section III(f), in Securities that no Clients
are permitted to purchase or sell in accordance with their investment
policies or restrictions;
(4) effected pursuant to a systematic dividend reinvestment,
cash purchase or withdrawal plan;
(5) effected in connection with the exercise of rights to
purchase additional securities from an issuer and granted by such
issuer pro rata to all holders of a class of the issuer's securities;
(6) which are effected in connection with the call by
the issuer of a preferred stock or bond;
(7) which are effected in connection with the exercise by
a second party of a put or call option;
(8) which are effected in connection with the approaching
expiration of a put or call option as a closing transaction no more
than five business days prior to such expiration; or
(9) in any Security traded on a national securities exchange
or over-the-counter market where the market value of such Security is
tied to a broad-based market index.
(h) COPIES OF BROKERAGE REPORTS. When an Access Person (other
than a Disinterested Director or an Outside Fund Officer) engages in a
Personal Securities Transaction, the Access Person shall direct that the
executing broker send a duplicate copy of the confirmation to the Director of
Compliance at the same time as it is provided to such Access Person. Such
Access Person shall also direct such broker to provide duplicate copies of
any periodic statements on any account maintained by such person (or any
other account in which such Access Person has a Beneficial Ownership
interest) to the Director of Compliance. In the event that such Access Person
is also the Director of Compliance, the Access person shall direct that the
executing broker send a duplicate copies of confirmations and periodic
statements to the Vice Chairman.
-7-
<PAGE>
IV. REPORTING REQUIREMENTS
(a) INITIAL AND ANNUAL REPORTS BY ADVISORY PERSONS. All
Advisory Persons shall submit to the Director of Compliance, and the Director
of Compliance shall submit to the Vice Chairman, a report of all Securities
owned by them (or in which they otherwise have a Beneficial Ownership
interest) at the time that they commence employment with Jundt and shall also
submit such a report to the Director of Compliance or the Vice Chairman at
the end of each calendar year thereafter.
(b) QUARTERLY REPORT. No later than ten (10) days after the end
of each calendar quarter, each Access Person shall submit a report to the
Director of Compliance, and the Director of Compliance shall submit a report
to the Vice Chairman, which shall specify the following information with
respect to transactions during the then ended calendar quarter in any
Security in which such person has, or by reason of such transaction acquired,
any direct or indirect Beneficial Ownership:
(1) the date of the transaction, the title and the
number of shares, and the principal amount of each Security involved;
(2) the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(3) the price at which the transaction was effected; and
(4) the name of the broker, dealer or bank with or through
whom the transaction was effected.
If no transactions have occurred during the period, the report shall so
indicate. Any report required to be made pursuant to this Section IV(b) may
contain a statement that the report shall not be construed as an admission by
the person making the report that he or she has any direct or indirect
Beneficial Ownership in the Security to which the report relates.
(c) LIMITATIONS ON REPORTING REQUIREMENTS. Notwithstanding the
provisions of Section IV(b), no Access Person shall be required to make a
report:
(1) with respect to transactions effected for any account over
which neither such person nor any other Access Person has any direct or
indirect influence or control or transactions in securities which are
direct obligations of the United States;
(2) if such a person is a Disinterested Director or an Outside
Fund Officer, except where such Disinterested Director or Outside Fund
Officer knew or, in the ordinary course of fulfilling his or her
official duties as a Disinterested Director or Outside Fund Officer,
should have known that during the 15-day period immediately preceding
or after the date of the transactions in a Security by the
Disinterested Director or Outside Fund Officer, such Security is or was
purchased or sold by a Fund or such purchase or sale by a Fund is or
was considered by a Fund or Jundt; or
(3) where a report made to Jundt would duplicate information
recorded pursuant to Rules 204-2(a)(12) or 204-2(a)(13) under the
Investment Advisers Act of 1940.
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<PAGE>
(d) DUTY TO REPORT VIOLATIONS. Any person subject to the Code
who discovers a violation or apparent violation of the Code by any other
person shall bring the matter to the attention of the Director of Compliance.
If the purported violation of the Code is based upon transactions effected by
the Director of Compliance, such person shall bring the matter to the
attention of the Vice Chairman.
(e) FILING OF REPORTS. All reports prepared pursuant to this
Article IV shall be filed with the Director of Compliance, except that
reports prepared by the Director of Compliance shall be filed with the Chief
Executive Officer of Jundt.
(f) REPORTS TO THE FUNDS' BOARDS OF DIRECTORS. At each
quarterly meeting of the Funds' Boards of Directors, Jundt shall report to
the Board any violations of the Code, if any, that occurred since Jundt's
most recent prior report to the Boards of Directors.
In addition, Jundt shall prepare an annual report to the Funds'
Board(s) of Directors containing the following:
(1) a summary of existing procedures concerning personal
investing and any changes in the procedures made during the past year;
(2) a list of any violations requiring significant remedial
action during the past year, including details of such violations and
the action taken; and
(3) any recommended changes in existing restrictions or
procedures based upon experience under the Code, evolving industry
practices or developments in applicable laws or regulations.
(h) CERTIFICATION OF COMPLIANCE. All Access Persons must
certify annually in writing to the Director of Compliance, and the Director
of Compliance must certify to the Vice Chairman, that (1) they have read and
understand the Code and recognize that they are subject to the Code, (2) they
have disclosed or reported all Personal Securities Transactions required to
be disclosed or reported pursuant to the Code, and (3) they have complied
with all requirements of the Code. The Director of Compliance and the Vice
Chairman shall maintain and make available copies of such written
certifications in the manner required by Rule 17j-1(d) under the 1940 Act.
V. ENFORCEMENT AND SANCTIONS
(a) GENERAL. The Director of Compliance and the Vice Chairman
shall bring all violations or apparent violations of the Code to the attention
of the Chairman of Jundt. The Chairman of Jundt shall have the primary
responsibility for enforcing the Code and determining appropriate sanctions with
respect to such company's directors, officers and employees. If the alleged
violator is the Chairman of Jundt, the Director of Compliance shall bring such
alleged violation to the attention of the [Funds'] Board of Directors, who shall
have the primary responsibility for enforcing the Code and determining
appropriate sanctions with respect to such alleged violation. If the alleged
violator is a Disinterested Director or is otherwise not a director, officer or
employee of Jundt or USG, the Board of Directors of the affected Fund or Funds
shall have the primary responsibility for enforcing the Code and determining
appropriate sanctions. In addition to the sanctions prescribed by Section V(b),
any person who is found to have violated the Code may be permanently dismissed,
reduced in salary or position, temporarily suspended from employment or
sanctioned in such other manner as may be determined in the discretion of the
applicable person or persons responsible for enforcing the Code. In determining
appropriate
-9-
<PAGE>
sanctions to be imposed for violations of the Code, the person or
persons charged with enforcing the Code may consider any factors
they deem relevant, including, without limitation:
(1) the degree of willfulness' of the violation;
(2) the severity of the violation;
(3) the extent, if any, to which the violator profited or
benefited from the violation;
(4) the adverse effect, if any, of the violation on the
involved Client or Fund;
(5) the market value and liquidity of the class of Securities
involved in the violation;
(6) the prior violations of the Code, if any, by the violator;
(7) the circumstances of discovery of the violation; and
(8) if the violation involved the purchase or sale of
Securities in violation of the Code, (A) the price at which the
purchase or sale was made, and (B) the violator's justification for
making the purchase or sale, including the violator's tax situation,
the extent of the appreciation or depreciation of the Securities
involved, and the period the Securities have been held.
(b) VIOLATIONS OF SECTION III(f). In addition to any sanction
imposed under Section V(a) of the Code, any profits realized on Personal
Securities Transactions effected in violation of Section III(f) of the Code
must be disgorged and contributed to the appropriate Client or Fund. Each
Personal Securities Transaction will be considered individually, and there
will be no netting of profits and losses incurred in the case of multiple
Personal Securities Transactions effected in violation of the Code. In the
event of a violation involving more than one Client or Fund, profits shall be
allocated among the affected Clients and Funds in proportion to the relative
net asset values of the Funds and Client accounts as of the date of the
violation. Should the violation not involve any Clients or Funds, profits
shall be paid to a charitable organization chosen in the discretion of the
Disinterested Directors of the [Funds].
(c) RIGHTS OF ALLEGED VIOLATOR. A person charged with a
violation of the Code shall have the opportunity to appear before the person
or persons as may have authority to impose sanctions pursuant to the Code, at
which time such person shall have the opportunity, orally or in writing, to
respond to any and all charges.
(d) NOTIFICATION TO FUND GENERAL COUNSEL. The applicable Fund's
General Counsel shall be advised promptly of the initiation and outcome of
any enforcement actions hereunder.
(e) NON-EXCLUSIVITY OF SANCTIONS. The imposition of sanctions
under this Section V shall not preclude the imposition of additional
sanctions by the Board(s) of Directors of the Funds and shall not be deemed a
waiver of any rights by any Fund.
-10-
<PAGE>
VI. GIFTS AND DIRECTORSHIPS
(a) GIFTS. Advisory Persons shall not accept any gift or other
thing of more than DE MINIMIS value from any securities broker, dealer,
underwriter or placement agent that does business with or on behalf of any
Client or Fund.
(b) SERVICE AS A DIRECTOR. Advisory Persons may not serve as
directors of publicly traded companies without the prior written
authorization of the Director of Compliance, or the Vice Chairman in the
event that such Advisory Person is also the Director of Compliance. The
Director of Compliance, or the Vice Chairman, shall not provide such
authorization unless he or she finds that such board service would be
consistent with the interests of Clients, the Funds and their shareholders.
Should any person receive such authorization, any investments by Clients or
the Funds in the securities of any such publicly traded company while such
person is serving as a director will be required to be approved in advance,
in writing, by the Director of Compliance or the Vice Chairman.
VII. MISCELLANEOUS PROVISIONS
(a) IDENTIFICATION OF ACCESS PERSONS, ADVISORY PERSONS AND
PORTFOLIO MANAGERS. Jundt shall, on behalf of itself, the Funds and USG,
identify all Access Persons who are under a duty to make reports under
Article IV and shall inform such persons of such duty. Jundt shall likewise
identify all individuals who are classified as Advisory Persons and Portfolio
Managers hereunder and inform such persons of such classifications.
(b) MAINTENANCE OF RECORDS. Jundt shall, on behalf of the Funds
and USG, maintain and make available records as required by Rule 17j-l(d).
-11-
<PAGE>
QUARTERLY REPORT OF ACCESS PERSONS
PURSUANT TO SECTION IV(b)
OF THE CODE OF ETHICS FOR
JUNDT ASSOCIATES, INC. AND AFFILIATES
INSTRUCTIONS:
(1) Not later than ten (10) days after the end of each calendar
quarter, each Access Person shall submit this Report, as provided by the Code of
Ethics (the "Code"). The Code should be reviewed before completing the Report;
terms defined in the Code have the same meanings in this Report.
(2) No transactions set forth in Section IV(c) of the Code need be
included in this Report.
(3) If no reportable transactions have occurred during the period, put
an "X" in the following box / /, and you may skip to the signature line.
(4) This Report may contain a statement that it shall not be construed
as an admission by the person making the Report that he has any direct or
indirect Beneficial Ownership in the Security to which the Report relates.
(5) If you must file this Report and transactions have occurred during
the period, set forth the following information with respect to transactions
during the most recently ended calendar quarter in any Security in which you
have, or by reason of such transaction acquired, any direct or indirect
beneficial ownership in the Security:
<TABLE>
<CAPTION>
Broker,
Date and Nature Price Dealer or
Title and of Transaction Transaction Bank Through
Name of Number of (i.e., purchase, was Whom Transfer
Issuer Shares or Units sale or other) Effected Effected
------ --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
</TABLE>
(If you need additional space, please attach additional pages.)
(7) Questions regarding the completion of this Report may be directed
to James E. Nicholson at (612) 336-3203 or to Matthew L. Thompson at (612)
336-3359.
The answers to the foregoing are true and correct to the best of my
information and belief.
Dated:
------------------ --------------------------------
Signature of Person Filing Report
-12-
<PAGE>
ANNUAL REPORT OF ADVISORY PERSONS
PURSUANT TO SECTIONS IV(a) AND (g)
OF THE CODE OF ETHICS FOR
JUNDT ASSOCIATES, INC. AND AFFILIATES
THE CODE OF ETHICS FOR JUNDT ASSOCIATES, INC. AND AFFILIATES (THE
"CODE") SHOULD BE REVIEWED PRIOR TO COMPLETING THIS REPORT, AND TERMS DEFINED IN
THE CODE HAVE THE SAME MEANINGS IN THIS REPORT. NOT LATER THAN TEN (10) DAYS
FOLLOWING THE END OF EACH CALENDAR YEAR, EACH ADVISORY PERSON SHALL SUBMIT THIS
REPORT TO THE DIRECTOR OF COMPLIANCE.
I, THE UNDERSIGNED, HEREBY REPRESENT AND CERTIFY AS FOLLOWS:
-- That I have read and understand the Code and recognize that I am
subject to the Code.
-- That I have disclosed or reported all Personal Securities
Transactions required to be disclosed or reported pursuant to the
Code.
-- That I have complied with all requirements of the Code.
-- That:
/ / As of December 31, ___, I Beneficially Owned
no Securities.
OR
/ / Attached to this report is a true, correct and complete
listing of all Securities in which I had any direct or indirect
Beneficial Ownership as of December 31, ___ .
QUESTIONS REGARDING THE COMPLETION OF THIS REPORT MAY BE
DIRECTED TO JAMES E. NICHOLSON AT (612) 336-3203 OR TO MATTHEW L. THOMPSON
AT (612) 336-3359.
The answers to the foregoing questions (and any attached listing of
Securities) are true, correct and complete to the best of my information and
belief.
Dated: January ___, ___
----------------------------------
Signature of Person Filing Report
-13-
<PAGE>
ANNUAL REPORT OF ACCESS PERSONS
(OTHER THAN ADVISORY PERSONS)
PURSUANT TO SECTION IV(g)
OF THE CODE OF ETHICS FOR
JUNDT ASSOCIATES, INC. AND AFFILIATES
THE CODE OF ETHICS FOR JUNDT ASSOCIATES, INC. AND AFFILIATES (THE
"CODE") SHOULD BE REVIEWED PRIOR TO COMPLETING THIS REPORT, AND TERMS DEFINED IN
THE CODE HAVE THE SAME MEANINGS IN THIS REPORT. NOT LATER THAN TEN (10) DAYS
FOLLOWING THE END OF EACH CALENDAR YEAR, EACH ACCESS PERSON (OTHER THAN ADVISORY
PERSONS) SHALL SUBMIT THIS REPORT TO THE DIRECTOR OF COMPLIANCE.
I, THE UNDERSIGNED, HEREBY REPRESENT AND CERTIFY AS FOLLOWS:
-- I have read and understand the Code and understand that I am subject
to the Code.
-- I have disclosed or reported all Personal Securities Transactions
required to be disclosed or reported pursuant to the Code.
-- I have complied with all requirements of the Code.
QUESTIONS REGARDING THE COMPLETION OF THIS REPORT MAY BE DIRECTED TO
JAMES E. NICHOLSON AT (612) 336-3203 OR TO MATTHEW L. THOMPSON AT
(612) 336-3359.
The answers to the foregoing questions are true, correct and complete
to the best of my information and belief.
Dated: January ___, _____
--------------------------------------
Signature of Person Filing Report
-14-
<PAGE>
JUNDT ASSOCIATES, INC.
REQUEST BY ACCESS PERSON
TO ENGAGE IN PERSONAL SECURITIES TRANSACTION
I hereby request permission to effect a Personal Securities
Transaction, as indicated below, for my own account or other account in which I
have a Beneficial Ownership interest. (IF NECESSARY, USE APPROXIMATE DATES AND
AMOUNTS OF PROPOSED PERSONAL SECURITIES TRANSACTION.)
Record Owner of Account:
---------------------------------------------------
Relationship to Advisory Representative:
-----------------------------------
Proposed Date of Transaction:
------------------------------,---------------
PROPOSED TRANSACTION
<TABLE>
<CAPTION>
Number of Nature of
Name of Issuer/ Shares or Transaction
Title or Description Principal (purchase, Unit Total Broker,
of Security Amount sale or other) Price Price Dealer or Bank
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
---------------------------------
Name of Access Person
Dated:
---------------------,----- ----------------------------------
Signature of Access Person
- -------------------------------------------------------------------------------
/ / PERMISSION GRANTED / / PERMISSION DENIED
Dated:
---------------------,----- ----------------------------------
Signature of Compliance Director
-15-
<PAGE>
EXHIBIT (p)
AMERICAN EAGLE FUNDS, INC.
POWER OF ATTORNEY
TO SIGN REGISTRATION STATEMENT
AND AMENDMENTS THERETO
The undersigned, duly elected directors of American Eagle Funds, Inc.
(the "Company"), hereby appoint James R. Jundt, Marcus E. Jundt, and Jon C.
Essen, and each of them individually, as attorney-in-fact and agent to do any
and all acts and things, and execute in their names any and all instruments,
which said attorneys and agents my deem necessary or advisable to enable the
Company to comply with the Investment Company Act of 1940, the Securities Act of
1933, any requirements of the Securities and Exchange Commission in respect
thereof and any state securities laws, in connection with the registration under
said Acts of the Company and the shares of the Company and the offerings of
shares of the Company including specifically power and authority to sign their
names to any and all Notifications of Registration and Registration Statements
to be filed with the Securities and Exchange Commission under either of said
Acts in respect to the Company and such shares of the Company, and any
amendments (including pre-effective and post-effective amendments) or
applications for amendment or supplements of or to such Notifications of
Registration and Registration Statements, and to file the same with the
Securities and Exchange Commission; and the undersigned do hereby ratify and
confirm all that said attorneys and agents, and each of them, shall do or cause
to be done by virtue hereof. Any one of said agents and attorneys shall have,
and may exercise, without the others, all the powers conferred hereby.
IN WITNESS WHEREOF, the undersigned have signed their names
hereto as of the ___ day of ___________, ______.
/s/ James R. Jundt /s/ Demetre M. Nicoloff
- -------------------------------- ----------------------------------
James R. Jundt Demetre M. Nicoloff
Director and Chairman of the Board Director
/s/ John E. Clute /s/ Darrell R. Wells
- -------------------------------- ----------------------------------
John E. Clute Darrell R. Wells
Director Director
/s/ Floyd Hall /s/ Clark W. Jernigan
- -------------------------------- ----------------------------------
Floyd Hall Clark W. Jernigan
Director Director
