AMERICAN EAGLE FUNDS, INC.
AMERICAN EAGLE CAPITAL APPRECIATION FUND
AMERICAN EAGLE TWENTY FUND
ANNUAL REPORT
DECEMBER 31, 1999
FINANCIAL STATEMENTS December 31, 1999
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AMERICAN EAGLE AMERICAN EAGLE
CAPITAL APPRECIATION TWENTY
FUND FUND
- --------------------------------------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash $ 100,000 $ 100,000
Receivable from investment adviser 330 330
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Total Assets 100,330 100,330
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LIABILITIES
- --------------------------------------------------------------------------------------------------------------------------
Payable to investment adviser 25,500 25,500
Accrued investment advisory fee 3 3
Accrued administrative fee 61 61
Accrued expenses and other liabilities 280 280
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Total Liabilities 25,844 25,844
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Net assets applicable to outstanding capital stock $ 74,486 $ 74,486
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NET ASSETS CONSIST OF
- --------------------------------------------------------------------------------------------------------------------------
Capital stock
(par value $.01 per share - authorized 10 billion shares;
outstanding; 7,450 and 7,450 shares , respectively) 74,486 74,486
Undistibuted net investment loss - -
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Total net assets $ 74,486 $ 74,486
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Net Asset Value Per Share $ 10.00 $ 10.00
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</TABLE>
FINANCIAL STATEMENTS For the Period December 30, 1999* - December 31, 1999
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
AMERICAN EAGLE AMERICAN EAGLE
CAPITAL APPRECIATION TWENTY
FUND FUND
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment advisor fee $ 3 $ 3
Registration fee 67 67
Administrative fee 61 61
Fund accounting fee 56 56
Audit fees 38 38
Legal fees 27 27
Transfer agent fee 27 27
Transfer agent expense 22 22
Custodian fee 18 18
Reports to shareholders 8 8
Directors' fees 4 4
Other 13 13
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Total expenses before reimbursement 344 344
Reimbursement of expenses (330) (330)
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Expenses after reimbursement 14 14
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Net investment loss $ (14) $ (14)
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</TABLE>
* Commencement of operations
FINANCIAL STATEMENTS For the Period December 30, 1999* - December 31, 1999
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AMERICAN EAGLE AMERICAN EAGLE
CAPITAL APPRECIATION TWENTY
FUND FUND
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment loss $ (14) $ (14)
Net realized gain on investments - -
Net change in unrealized appreciation
(depreciation) on investments - -
----------------- -----------------------
Net increase (decrease) in net assets resulting
from operations (14) (14)
----------------- -----------------------
CAPITAL SHARE TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------------
Net proceeds from shares sold - -
Distributions reinvested - -
Cost of shares redeemed - -
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Net increase (decrease) in net assets resulting
from capital share transactions - -
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NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets $ (14) $ (14)
Net assets at beginning of period 74,500 74,500
----------------- -----------------------
Net assets at end of period $ 74,486 $ 74,486
----------------- -----------------------
</TABLE>
* Commencement of operations
FINANCIAL STATEMENTS For the Period December 30, 1999* - December 31, 1999
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AMERICAN EAGLE AMERICAN EAGLE
CAPITAL APPRECIATION TWENTY
FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Beginning of period $ 10.00 $ 10.00
------------------ ---------------------------
OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------
Net investment loss - -
Net realized and unrealized gains on investments - -
------------------ ---------------------------
Total from operations - -
------------------ ---------------------------
NET ASSET VALUE
- ---------------------------------------------------------------------------------------------------------------------------
End of period $ 10.00 $ 10.00
------------------ ---------------------------
Total return 0.00% 0.00%
Net assets at end of period $ 74,486 $ 74,486
RATIO OF EXPENSES TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
Before expense reimbursement 168.87% 168.87%
After expense reimbursement 6.96% 6.96%
RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
Before expense reimbursement -168.87% -168.87%
After expense reimbursement -6.96% -6.96%
Portfolio turnover rate 0.00% 0.00%
</TABLE>
* Commencement of operations
AMERICAN EAGLE FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
American Eagle Capital Appreciation Fund ("Capital Appreciation Fund") and
American Eagle Twenty Fund ("Twenty Fund") (each, a "Fund" or collectively, the
"Funds") are separate non-diversified investment portfolios and series of
capital stock of American Eagle Funds, Inc. (the "Company"), which is registered
under the Investment Company Act of 1940, as amended (the "Act") as an open-end
management investment company. The Funds commenced operations on December 30,
1999. The Funds had no operations prior to December 30, 1999, except for each
Fund sold 7,450 shares on December 27, 1999 to an officer of Jundt Associates,
Inc. in the amount of $100,000 at which time the Fund incurred $25,500 of
organizational costs. Jundt Associates, Inc. serves as the investment adviser
(the"Adviser") and is responsible for managing the Funds' portfolio of
securities.
The investment objectives of the Funds are as follows:
o Capital Appreciation Fund's objective is capital appreciation. The Fund
will maintain a core portfolio of long positions in 30 to 50 of
primarily American growth companies without regard to their size. The
Fund may employ leverage, sell securities short and buy and sell
futures and options contracts to protect against adverse market price
changes and to generate additional investment returns.
o Twenty Fund's objective is capital appreciation. The Fund will maintain
a more concentrated portfolio of long positions in approximately, but
not less than, 20 stocks of primarily American growth companies without
regard to their size. The Fund may employ leverage, sell securities
short and buy and sell futures and options contracts to protect against
adverse market price changes and to generate additional investment
returns.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as follows:
ORGANIZATION AND PREPAID INITIAL REGISTRATION EXPENSES
Expenses incurred by the Company in connection with the organization and the
initial public offering of shares of the Funds were expensed as incurred. These
expenses were advanced by the Adviser and were subsequently reimbursed by the
Funds. Prepaid initial registration expenses are deferred and amortized over the
period of benefit.
INVESTMENT IN SECURITIES
Investment in securities traded on U.S. securities exchanges or included in a
national market system and open short sales transactions are valued at the last
quoted sales price as of the close of business on the date of valuation or,
lacking any sales, at the mean between the most recently quoted bid and asked
prices. Securities traded in the over-the-counter market are valued at the mean
between the most recently quoted bid and asked prices. Options and futures
contracts are valued at market value or fair value if no market exists, except
that open futures contracts sales are valued using the closing settlement price
or, in the absence of such a price, the most recently quoted asked price. Other
securities for which market quotations are not readily available are valued at
fair value in good faith by or under the direction of the Board of Directors.
Short-term securities with maturities of fewer than 60 days when acquired, are
valued at amortized cost, which approximates market value.
FEDERAL TAXES
The Funds intend to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and also intend to distribute all
of their investment company taxable income to shareholders. Therefore, no income
tax provision is required. In addition, on a calendar year basis, the Funds will
make sufficient distributions of their net investment and realized gains, if
any, to avoid the payment of any federal excise taxes. Generally accepted
accounting principles require that permanent differences between financial
reporting and tax reporting be reclassified between various components of net
assets. As a result of permanent book-to-tax differences, accumulated net
investment loss has been increased by $14 and capital stock has been decreased
by $14 in both the Capital Appreciation Fund and the Twenty Fund.
REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements with member banks of the Federal
Reserve System or primary dealers in U.S. Government securities. Under such
agreements, the bank or primary dealer agrees to repurchase the security (U.S.
Government securities) at a mutually agreed upon time and price. The Funds take
possession of the underlying securities, mark to market such securities daily
and, if necessary, receive additional securities to ensure that the contract is
adequately collateralized.
DERIVATIVE FINANCIAL INSTRUMENTS AND OTHER INVESTMENT STRATEGIES
The Funds may engage in various portfolio strategies to hedge against changes in
net asset value or to attempt to realize a greater current return.
OPTIONS TRANSACTIONS
For hedging purposes, the Funds 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.
The risk associated with purchasing an option is that the Funds pay a premium
whether or not the option is exercised. Additionally, the Funds bear the risk of
loss of premium and change in market value should the counterparty not perform
under the contract. Put and call options purchased are accounted for in the same
manner as portfolio securities. The cost of securities acquired through the
exercise of call options is increased by the premiums paid. The proceeds from
securities sold through the exercise of put options are decreased by the
premiums paid.
When the Funds write an option, the premium received by the Funds is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options that expire unexercised
are recorded by the Funds on the expiration date as realized gains from option
transactions. The difference between the premium received and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium is less than the amount paid
for the closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether the Funds have realized a gain or loss. If a put
option is exercised, the premium reduces the cost basis of the security
purchased by the Funds. In writing an option, the Funds bear the market risk of
an unfavorable change in the price of the security underlying the written
option. Exercise of an option written by the Funds could result in the Funds
selling or buying a security at a price different from the current market price.
FINANCIAL FUTURES CONTRACTS
The Funds 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. 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.
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.
SHORT SALE TRANSACTIONS
The Funds may seek to hedge investments or realize additional gains through
short sales. Short selling obligates the Fund to replace the security borrowed
by purchasing the security at current market value. The Fund will incur a loss
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 realizes a
gain if the price of the security declines between those dates. Until the Fund
replaces the borrowed security, it will maintain daily, a segregated account
with a broker and /or custodian, of cash and/or other liquid securities
sufficient to cover its short position.
DISTRIBUTION TO SHAREHOLDERS
Distributions are recorded as of the close of business on the ex-dividend date.
Such distributions are payable in cash or reinvested in additional shares of
each Fund.
EXPENSES
Expenses directly attributable to each Fund are charged to that Fund's
operations; expenses that are applicable to both Funds are allocated between the
Funds on a pro rata basis.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual results could
differ from those estimates.
3. INVESTMENT SECURITY TRANSACTIONS
The Funds had no investment security transactions during the period from
December 30, 1999 to December 31, 1999.
4. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
Jundt Associates, Inc. is the investment adviser for the Funds. The Adviser is
responsible for the management of each Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of each Fund. For its services, the investment adviser
receives from each Fund a monthly fee at an annual rate of 1.3% of each Fund's
average daily net assets.
Firstar Mutual Fund Services, LLC serves as transfer agent, administrator and
accounting services agent for the Fund. Firstar Bank, N.A. serves as custodian
for the Fund.
The Funds have entered into distribution agreements with U.S. Growth
Investments, Inc. (the "Distributor"), an affiliate of the Adviser. The
Distributor serves as the principal underwriter of each Fund's shares.
Legal fees incurred will be paid to a law firm of which the secretary of the
Funds is a partner.
Independent Auditors' Report
The Shareholders and Board of Directors of
American Eagle Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of
American Eagle Capital Appreciation Fund and American Eagle Twenty Fund (funds
within American Eagle Funds, Inc.) as of December 31, 1999 and the statements of
operations, the statements of changes in net assets and the financial highlights
for the period from December 30, 1999 (commencement of operations) to December
31, 1999. These financial statements are the responsibility of fund management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of cash owned with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Eagle Capital
Appreciation Fund and American Eagle Twenty Fund as of December 31, 1999 and the
result of their operations, changes in their net assets and the financial
highlights for the period stated in the first paragraph above, in conformity
with generally accepted principles.
KPMG LLP
Minneapolis, Minnesota
February 18, 2000
INVESTMENT ADVISER
Jundt Associates, Inc.
1550 Utica Avenue South
Suite 950
Minneapolis, MN 55416
DISTRIBUTOR
U.S. Growth Investments, Inc.
1550 Utica Avenue South
Suite 935
Minneapolis, MN 55416
ADMINISTRATOR
Firstar Mutual Fund Services, LLC
615 E. Michigan Street, 3rd Floor
Milwaukee, WI 53202
TRANSFER AGENT
Firstar Mutual Fund Services, LLC
615 E. Michigan Street, 3rd Floor
Milwaukee, WI 53202
CUSTODIAN
Firstar Bank, N.A.
625 Walnut Street
Cincinnati, OH 45202
INDEPENDENT AUDITORS KPMG LLP 4200 Norwest Center 90 South Seventh Street
Minneapolis, MN 55402
LEGAL COUNSEL
Faegre & Benson LLP
2200 Norwest Center
Minneapolis, MN 55402
FOR MORE INFORMATION CONCERNING EACH FUND (INCLUDING FEE, EXPENSES AND RISKS
ASSOCIATED WITH AN INVESTMENT IN EACH FUND), CONTACT THE FUND AT 1-800-335-0333
OR YOUR INVESTMENT PROFESSIONAL FOR THE FUND'S CURRENT PROSPECTUS. PLEASE READ
IT CAREFULLY BEFORE INVESTING. PAST PERFORMANCE SHOWN IN THIS REPORT SHOULD NOT
BE CONSIDERED A REPRESENTATION OF FUTURE PERFORMANCE. INVESTMENT RETURN AND
PRINCIPAL VALUE OF SHARES WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY THE FUND'S CURRENT PROSPECTUS.
