[logo] EAGLE GROWTH SHARES, INC.
1200 North Federal Highway April 1, 1996
Suite 424
Boca Raton, Florida 33432
407-395-2155
EAGLE GROWTH SHARES, INC. is an open-end, diversified investment company
(a mutual fund) seeking growth of capital.
This goal will be sought by investing in securities which appear to have
potential for capital appreciation. The Fund's portfolio will usually be
comprised of common stocks and securities convertible into common stocks of
seasoned companies whose prospects are believed to be above average. In
addition, the Fund may own securities of newer, less-seasoned companies and
companies representing so-called "special situations." Normally, investments
in fixed income securities will not be made except for defensive purposes, and
to employ temporarily uncommitted cash balances, or where such investments
appear to offer opportunities for capital appreciation.
This prospectus contains information which you should know before you
invest and should be retained for future reference. A Statement of Additional
Information (dated April 1, 1996) about the Fund, which is incorporated in
this prospectus by reference, has been filed with the Securities and Exchange
Commission, and is available from the Fund, without charge, by writing to the
Fund at the address shown above or by calling:
1-800-749-9933
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
[logo] TABLE OF CONTENTS
Page
----
Expenses of the Fund.......................................3
Financial Highlights.......................................3
Investment Objectives and Policies.........................4
Options Transactions...................................... 5
Futures Contracts......................................... 7
Investment Restrictions................................... 8
Purchase of Shares........................................ 8
Computation of Net Asset Value............................ 9
Account Reinstatement Privilege...........................10
Tax Sheltered Plans.......................................11
Repurchase and Redemption of Shares.......................11
Dividends, Capital Gains
Distributions, and Taxes..................................12
Rights of Ownership.......................................12
Management of the Fund....................................12
Performance...............................................13
EXPENSES OF THE FUND
--------------------
The following table has been prepared to assist the investor in
understanding the various expenses that an investor in the Fund will bear
directly or indirectly.
SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------
Maximum Sales Load Imposed on Purchases.............. 8.50%
Maximum Sales Load Imposed on Reinvested Dividends... none
Deferred Sales Load.................................. none
Redemption Fees...................................... none
ANNUAL FUND OPERATING EXPENSES
- ------------------------------
Management Fee After Expense Reimbursements.......... 0%
Administrative Fee After Expense Reimbursements...... 0%
Other Expenses....................................... 3.44%
Total Fund Operating Expenses................... 3.44%
For the 1995 fiscal year, actual "Other Expenses" and "Total Fund
Operating Expenses" incurred were $87,424 (3.44% of average net assets) and
$114,097 (4.44% of average net assets), respectively. However, because of
California regulations that limited the Fund's aggregate operating expenses,
Baxter Financial Corporation reimbursed the Fund $25,674 which reduced the
actual "Other Expenses" paid by the Fund to $87,424 (3.44% of average net
assets) for the fiscal year ended November 30, 1995. For the 1996 fiscal
year, "Other Expenses" are not anticipated to exceed 2.50%. This projection
is based on 1995 expenses and reasonably projected 1996 expenses. Total Fund
Operating Expenses for 1996 are also not expected to exceed 2.50% of average
net assets. Under California regulations, Baxter Financial Corporation is
required to reimburse the Fund to the extent that the total fund operating
expenses exceed 2.50% of average net assets on the first $30,000,000 of
average net assets. However, Baxter Financial Corporation is not obligated to
reimburse the Fund for any amounts in excess of the total management and
administrative fees payable by the Fund for the fiscal year 1996.
The following example illustrates the expenses that you would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period based on the
expenses shown in the table above. As noted in the table above, the Fund
charges no redemption fees of any kind.
1 year 3 years 5 years 10 years
------ ------- ------- --------
Shareholder Expenses $117 $182 $249 $425
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or lesser than those
shown.
FINANCIAL HIGHLIGHTS
--------------------
The data set forth under the caption "Financial Highlights" in the Annual
Report to Stockholders for the fiscal year ended November 30, 1995 is
incorporated herein by reference. Such data is covered by the Independent
Auditor's Report which is contained in the Annual Report to Stockholders.
Further information regarding the Fund's investment performance is contained
in the Annual Report to Stockholders which may be obtained from the Fund upon
request without charge.
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
Eagle Growth Shares, Inc. is an open-end, diversified investment company,
established under Maryland law in 1969, whose investment objective is to
achieve growth of capital. This goal will be sought by investing in
securities which appear to have potential for capital appreciation. The
Fund's portfolio will usually be comprised of common stocks and securities
convertible into common stocks of seasoned companies whose prospects are
believed by Management to be above average. In addition, the Fund may also
own securities of newer, less-seasoned companies, and companies representing
so-called "special situations" (see below).
Normally, investments in fixed income securities will not be made except
for defensive purposes, and to employ temporarily uncommitted cash balances.
In those situations, the Fund will only invest in fixed income securities
rated Aaa, Aa or A by Moody's Investors Service, Inc. or AAA, AA, or A by
Standard & Poor's Corporation.
The Fund may also invest in fixed income securities where such
investments appear to offer opportunities for capital appreciation. When the
Fund invests in fixed income securities for this reason, the Fund may purchase
such securities which are rated B-2 or lower by Moody's or B- or lower by
Standard & Poor's. These fixed income debt securities are deemed to involve a
higher risk level than investment grade debt securities. The Fund may also
invest in unrated securities when Baxter Financial Corporation (the "Advisor")
believes that the terms of such securities and the financial condition of the
issuer are such that the protection afforded limits risks to a level similar
to that of rated securities in which the Fund may invest. Fixed income debt
securities offer a potential for capital appreciation because the value of the
fixed income security generally fluctuates inversely with interest rates.
The investment objective of the Fund may not be changed without a vote of
the holders of a majority of the Fund's outstanding voting securities.
Generally, securities are selected solely on the basis of their growth
potential and current income is not sought in investment decisions.
Management considers many factors in selecting investments such as: expanding
demand for a company's products or services, new product developments,
research capability, increasing operating efficiency, and the possibility that
a disparity exists between the price of a stock and the value of the
underlying assets. The effects of general market, economic, and political
conditions are also taken into account in the selection of investments. The
portfolio of the Fund will be diversified and consist of different companies
in diverse industries. The Fund will not purchase securities of companies in
any single industry if as a result more than 25% of the Fund's total assets
will be invested in companies in such industry. The Fund has authority to
invest up to 20% of its assets in the securities of foreign companies.
Investments in foreign securities involve risks which are in addition to
the usual risks inherent in domestic investments. There may be less publicly
available information about foreign companies comparable to the reports and
ratings published about companies in the United States. Foreign companies are
not generally subject to uniform accounting, auditing, and financial reporting
standards, and auditing practices and requirements may not be comparable to
those applicable to United States companies. Foreign investments may also be
affected by fluctuations in the relative rates of exchange between the
currencies of different nations, by exchange control regulations, and by
indigenous economic and political developments. There is also the possibility
of expropriation, nationalization, or confiscatory taxation, foreign exchange
controls, political or social instability, or diplomatic developments which
could affect investments in securities of issuers in those nations.
The Fund has authority to buy securities of companies organized as real
estate investment trusts ("REITS"). REITS pool investors' funds for
investment primarily in income producing real estate or real estate related
loans or interests.
The Fund is authorized to invest in "restricted securities" (i.e. securities
which may not be sold without registration or an exemption from registration
under the Securities Act of 1933, as amended). Ordinarily, the Fund does not
expect to have more than 5% of the Fund's total net asset value invested in
restricted securities. The Fund will not purchase such securities if
immediately after such purchase more than 10% of the Fund's net assets will be
invested in restricted or other illiquid securities.
Securities offering the potential for capital appreciation may be subject
to greater risk than securities which do not have such potential but also may
afford a greater opportunity for increase in value. Of course, no assurance
can be given that the objective of the Fund will be achieved.
In addition, the Fund may also own securities of new, less-seasoned
companies and companies representing so-called "special situations." There
are no limits on the percentage of total assets that may be invested in
special situations. A special situation would involve owning securities that,
in the opinion of the Advisor, should enjoy considerably better investor
reception in the fairly near future because of an essentially non-recurring
development that is either happening or, in the opinion of the Advisor, is
likely to happen. Such developments could include, among others, (1) a change
in management, (2) discovery of a new or unique product or technological
advance with sizable market potential, (3) an acquisition providing unusual
opportunity for market enlargement or for operating savings, (4) the adoption
of new laws that enhance prospects for an important part of the company's
business, or (5) takeovers, restructurings, leveraged buyouts, and
reorganizations.
Investments in such special situations may pose particular risks. The
market price of such securities may be more volatile to the extent that the
expected benefits from the non-recurring developments do not materialize.
Further, with regard to anticipated corporate restructurings, included among
the non-recurring developments of special situations, securities issued to
finance such restructurings may have special credit risks due to the highly
leveraged conditions of the issuer. In addition, such issuers may lose
experienced management as a result of the restructurings.
The Fund considers "less-seasoned companies" to be those which have a
record of less than three years continuous operations, which period may
include operations of a predecessor company, and also considers smaller
companies to be "less-seasoned" companies.
The Fund does not regard the frequency of portfolio transactions as a
limiting factor in its investment decisions. Therefore, its rate of portfolio
turnover (the annual rate at which portfolio securities are replaced) may
exceed that of most in vestment companies with a similar investment objective.
If, for example, all of the portfolio securities were replaced in one year,
the portfolio turnover rate would be 100%. Increased portfolio turnover
usually results in correspondingly heavier brokerage costs which the Fund must
pay. Of course, it is impossible to accurately predict the annual portfolio
turnover rate of the Fund (or any investment company).
Portfolio securities may be sold without regard to the length of time
held when management believes that such securities have reached their maximum
performance level, and when the Fund's assets can be more profitably utilized
in other investments. To the extent that short-term capital gains are
realized, such gains will be taxed to the shareholder as ordinary income.
OPTIONS TRANSACTIONS
--------------------
The Fund may sell covered call options (options on securities owned by
the Fund) and uncovered call options (options on securities not owned by the
Fund) which are issued by the Options Clearing Corporation and listed on
national securities exchanges from time to time. This practice may enable the
Fund to increase its income because the buyer of the option pays the Fund a
sum of cash (a premium) for the option whether or not the buyer ultimately
exercises the option. The amount of the premium is determined on the exchange
upon which the option is traded, and will depend on various factors, such as
the market price and volatility of the underlying securities and the
expiration date and exercise price of the option.
Ordinarily, call options would be sold on stocks whose market value is
not expected to appreciate above the option exercise price by the expiration
date of the option, or when the premium received plus the exercise price of
the option exceeds the price at which the Advisor expects the underlying
securities to be trading by the expiration date of the option. When the Fund
sells an option it is obligated to deliver the underlying securities until the
expiration date of the option (which may be one, two, three, six or nine
months from the date the option is issued) if the option is exercised. If the
option is exercised, the Fund would deliver the underlying securities to the
buyer if the option was a covered option or buy the underlying securities to
deliver to the purchaser of the option if the option was uncovered.
The sale of covered call options should enable the Fund to increase its
income through the receipt of premium income on the call options it sells.
However, the Fund risks limiting potential gains the Fund would otherwise
realize if the market value of the underlying securities of a covered call
option appreciates above the exercise price of the option because the
purchaser will then exercise the option. In the case of uncovered call
options, the Fund risks a loss upon closing its option position if the market
price of the optioned securities at the time the option is exercised exceeds
the exercise price plus the premium received by the Fund.
The Fund may purchase call options when the Advisor believes that the
market price of the underlying securities will exceed the strike price of the
option, plus the premium the Fund must pay for the option, by the option
expiration date. If the market price of the underlying securities appreciates
after the option is purchased, the price of the option also will appreciate,
thereby affording the Fund the opportunity to resell the option at a profit
or, as an alternative, to purchase the underlying securities at the option
exercise price anytime until or on the expiration date and retain or resell
the underlying securities at their appreciated value. Purchasing call
options, however, entails the risk that the market price of the underlying
securities may decrease and the market value of the call option will also
decrease and, in these circumstances, while the Fund may sell the option, the
transaction is likely to result in a loss.
The Fund may also buy and sell put options. For the sale of a put option
the Fund receives a premium, which is determined on the exchange on which the
put is traded. The amount of the premium is influenced by the same factors as
influence the market price of call options.
The sale of a put option obligates the seller to purchase the underlying
securities at the option exercise price anytime until or on the expiration
date if the option is exercised. Alternatively, the seller may satisfy its
obligation by purchasing an identical put option for delivery to the purchaser
of the put option.
The option will be exercised if the market price of the underlying
securities is less than the strike price of the option on the expiration date
of the option. The Fund may sell put options to obtain premium income on
underlying securities whose market price the Advisor expects to increase or
remain relatively constant for the duration of the option. They may also be
sold when the Advisor believes the underlying securities are an attractive
long-term investment, despite a possible short term decline in their market
value. In these circumstances, the Fund would purchase the underlying
securities pursuant to the option rather than buy an identical put option to
close the transaction, if the option is exercised by the buyer.
The Fund also may buy put options to protect against a decline in the
market value of underlying securities that are held in the Fund's investment
portfolio. In return for paying a premium to the seller of the put option,
the Fund acquires the right to sell the underlying securities to the seller of
the option at the exercise price, thereby protecting itself against a decline
in the market price of the underlying securities. If, however, at the
expiration date of the option, the market value of the underlying securities
has not declined below the option exercise price, the Fund will not exercise
its put option.
Puts and calls also may be used in combination, to hedge investments in
underlying securities. For example, if the Fund has bought a call that
entitles it to purchase underlying securities at a specified strike price, it
may also buy a put, which enables it to sell the same securities at a
specified strike price. Put options, as well as call options, are frequently
available on identical underlying securities with identical expiration dates,
but at different strike prices. In this type of hedging transaction, the Fund
might seek to buy a put option whose strike price is higher than the strike
price of an otherwise identical call option on the same underlying securities,
thereby obtaining the right to buy the underlying securities at a lower price
than the price at which it would have the right to sell the securities.
The success of options transactions depends largely on the ability of the
Advisor to predict future stock and option movements. Further, an option
position may be closed out only on an exchange which provides a secondary
market for an option of the same series. Although the Fund will generally
purchase or sell only those options for which the Advisor believes there is an
active secondary market, there is no assurance that a liquid secondary market
on an exchange will exist for any particular option. The inability to close-
out an option position could result in a loss to the Fund.
FUTURES CONTRACTS
-----------------
The Fund may buy and sell financial futures contracts and options on such
contracts. Financial futures contracts provide for the future sale by one
party and purchase by another party of a specified amount of specific
securities or currencies at a specified future time and at a specified price.
Futures contracts which are standardized as to maturity date and the
underlying financial instruments are traded on national futures exchanges.
The Fund may use financial futures and options thereon to implement a
number of hedging strategies. For example, because the purchase of a
financial futures contract requires only a relatively small initial margin
deposit, the Fund could remain exposed to the market activity of a broad-based
number of stocks contained in the futures index, while maintaining liquidity
to meet redemptions. Also, the Fund might temporarily invest available cash
in stock index futures contracts or options pending investments in securities.
These investments entail the risk that an imperfect correlation may exist
between changes in the market price of an index futures contract and the value
of the securities that comprise the index.
There are also limited risk strategies that involve combinations of
options and futures positions. For example, the Fund might purchase a futures
contract in anticipation of higher prices while simultaneously buying an
option on a futures contract to protect against the risk of lower prices.
Further, inasmuch as the Fund may purchase foreign securities which are
denominated in foreign currencies, the Fund may purchase foreign currency
futures contracts in order to hedge against fluctuations in foreign currency
exchange rates.
The Fund will be required to make a good faith margin deposit in cash or
government securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract if it is not terminated prior to the specified
settlement date. Minimum initial margin requirements are established by the
futures exchange and may be changed. Brokers may establish deposit
requirements which are higher than the exchange minimums.
After a futures contract position is opened, the value of the contract is
marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
"variation" (additional) margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the Fund. Variation margin payments are made to and from the
futures broker for as long as the contract remains open. The Fund expects to
earn income on its margin deposits. The Fund will not enter into futures
contract transactions to the extent that, immediately thereafter, the sum of
its initial and variation margin deposits on open contracts exceeds 5% of the
market value of the Fund's total assets.
INVESTMENT RESTRICTIONS
-----------------------
The Fund has adopted the following restrictions which are designed to
reduce certain risks inherent in securities investment and which may be
changed only by a vote of the holders of the majority of the voting securities
of the Fund. The Fund may not:
Borrow money, except from banks for emergency purposes, and then not in
excess of 5% of the value of its total assets.
Invest more than 25% of the value of its assets in companies in any one
industry.
Purchase securities on margin.
Make any purchase resulting in more than 5% of the value of its assets
being invested in the securities of any one company, except U.S. Government
securities.
Purchase more than 10% of any class of securities of any company. For
this purpose, all debt securities of an issuer and all series of non-voting
preferred stock of an issuer are each considered as one class of securities.
PURCHASE OF SHARES
------------------
Shares of the Fund are continuously offered at the public offering price,
which is equal to the net asset value of the shares plus the applicable sales
charge (see below). Shares may be purchased by completing the Fund Account
Application Form which should be remitted together with payment for the shares
to Star Bank, N.A., P.O. Box 640115, Cincinnati, OH 45264-0115. Investors who
are interested in purchasing shares may also contact the Fund at
1-800-749-9933. Purchases can also be made through investment dealers who
have sales agreements with Baxter Financial Corporation, the Fund's
underwriter. Purchases of shares will be made in full and fractional shares
calculated to three decimal places. In the interests of economy and
convenience, certificates for shares of stock will not be issued except upon
written request of the shareholder. Certificates for fractional shares,
however, will not be issued.
Once an account is established, subsequent investments should be sent to
Star Bank, N.A., P.O. Box 640115, Cincinnati, OH 45264-0115. A confirmation
will be mailed to the investor showing the shares purchased, the exact price
paid for the shares, and the total number of shares that are owned.
The minimum initial investment and minimum account balance for the Fund
is $500 and there is no minimum investment amount for subsequent purchases.
The Fund retains the right to waive the minimum initial investment at its
discretion.
The Fund reserves the right, after sending shareholders at least sixty (60)
days prior written notice, to redeem the shares held by any shareholder if the
shareholder's account has been inactive for a period of six (6) months
preceding the notice of redemption and the total value of the holder's shares
does not exceed the Fund's $500 minimum account balance as of the proposed
redemption date. An account will be considered inactive if no new purchases
have been made (excluding shares purchased through the reinvestment of
dividends and capital gains) within the specified time period. Shareholders
who receive notice of redemption for the first time may purchase shares of the
Fund at net asset value without paying any sales charge, in the amount
necessary to bring the account balance up to the minimum within the required
time period. Any redemptions by the Fund pursuant to this procedure will be
at the net asset value of the shares calculated as of the close of the New
York Stock Exchange on the stated redemption date and a check for the
redemption proceeds will be sent to the shareholder not more than seven (7)
days later.
Fund investors who purchase or redeem shares under any of the following fund
plans: the Group Discount Privilege, the Automatic Investment Plan or the
Check Withdrawal Plan will receive confirmations of purchases and redemptions
of Fund shares on a calendar quarter basis, not later than five business days
after the end of each calendar quarter in which a transaction takes place. The
confirmation will show the date of each transaction during the period, number
and price paid or received for shares purchased or redeemed, including
dividends and distributions, and total number of shares owned by the investor
as of the end of the period.
COMPUTATION OF NET ASSET VALUE
------------------------------
The net asset value per share is the value of the Fund's securities
investments plus cash and other assets minus its liabilities divided by the
number of outstanding shares (adjusted to the nearest cent). Portfolio
securities traded on a securities exchange or the NASDAQ National Market
System are valued at the closing sales price on the market on which they are
principally traded. Securities traded over-the-counter, except those that are
quoted on the NASDAQ National Market System, are valued at the prevailing
quoted bid prices. Other assets (including restricted securities) and
securities for which no quotations are readily available are valued at fair
value as determined in good faith by the Board of Directors or a delegated
person acting pursuant to the directions of the Board. The method of valuing
assets and securities for which no quotations are available, including
restricted securities, will be reviewed at appropriate intervals by the Board.
Initial valuations of such assets will be made in good faith by the Board of
Directors. Net asset value is calculated as of the close of the New York
Stock Exchange, generally 4:00 p.m., New York City time, on each day the New
York Stock Exchange is open.
Purchases of shares are made at the public offering price, which is equal
to the net asset value next to be determined after receipt of a purchase order
in proper form plus applicable sales charge as shown in the table below.
Purchases of $100,000 or more may be made at net asset value, without the
imposition of a sales charge. The public offering price is computed as of the
close of the New York Stock Exchange and becomes effective once daily on each
day the New York Stock Exchange is open. Orders for shares of the Fund
received by dealers prior to the close of the New York Stock Exchange are
confirmed at the offering price effective at that time, provided the order is
received by the underwriter prior to that time. (It is the responsibility of
the dealers to transmit such orders so that they will be received by the
underwriter prior to the close of the New York Stock Exchange). Orders
received by dealers subsequent to that time will be confirmed at the offering
price effective at the close of the New York Stock Exchange on the next
business day. The following table shows the sales charges applicable to
purchases of Fund shares.
Percentage
Sales Charge as Reallowed to
a % of the: Dealers
--------------------- ------------
Amount Offering
Purchases of Invested Price
- -----------------------------------------------------
$ 9,999 or less..................9.29% 8.50% 8.25%
$ 10,000-$24,999, inclusive.......8.40 7.75 7.50
$ 25,000-$49,999, inclusive.......6.66 6.25 6.00
$ 50,000-$99,999, inclusive.......4.17 4.00 3.85
$ 100,000 or more..................0.00 0.00 0.00
The above scale is applicable to purchases of Fund shares and combined
purchases of shares of the Fund and Philadelphia Fund, Inc. made at one time
by an individual; an individual, his spouse and children under the age of 21;
and a trustee or other fiduciary of a single trust estate or single fiduciary
account. Employee benefit plans qualified under Section 401 of the Internal
Revenue Code, and organizations exempt from taxation under Sections 501(c)(3)
or (13) of the Internal Revenue Code, may purchase shares at one-half the
sales charges listed above.
In addition, lower sales charges may be achieved by using any of the
following special purchase plans:
* Letter of Intent
* Right of Accumulation
* Group Discount Privilege
Also available from the Fund are the following privileges you may wish to
utilize:
* Automatic Investment Plan
This plan enables shareholders to make regular
monthly investments in shares through automatic
charges to their bank checking accounts.
* Check Withdrawal Plan
A convenient method whereby a monthly or a
quarterly check will be mailed to you at no
charge.
Complete details regarding these special purchase plans and privileges
may be obtained by writing or calling the Fund, or by obtaining a copy of the
Statement of Additional Information.
Purchases may be made at net asset value by officers, directors, and
employees of the Fund, as well as by employees of broker-dealer firms which
maintain effective selling dealer agreements with the Fund's underwriter.
From time to time the Fund may offer its shares at net asset value to certain
classes of potential investors which have been identified by management and
ratified by the Board of Directors. Prior to such offering, the Fund, in
compliance with applicable federal securities laws, will supplement or revise
this section of the prospectus to identify the class. Baxter Financial
Corporation, the principal underwriter of the Fund, participates in the offer
and sale of Fund shares on a best efforts basis and makes a continuous
offering of the shares.
Shares of the Fund may also be purchased at net asset value, without
sales charge, by persons who are members of a group which is not organized for
the sole purpose of purchasing shares of the Fund and which meets the
following criteria:
1. Group investments must be sent directly to the fund's
custodian at the address shown under "Purchases of Shares" by
a common remitter which is bonded as well as licensed and
regulated by a state regulatory agency;
2. The group must include at least 750 members or participants;
3. Remittances on behalf of the group must be made at least once
per month; and
4. The common remitter must have a written agreement with each
participant or member of the group governing the remittance
of the investor's funds.
Investments in the Fund on behalf of group participants will be made at
the net asset value of the shares of the Fund calculated next after receipt by
the Fund's custodian of the investors' funds sent by the common remitter.
The Fund's $500 minimum initial investment and minimum account balance
shall be waived for shareholders who are active participants in a group
purchase plan approved by the Fund, since shareholders participating in such
plans generally make smaller investments on a regular basis.
Shareholders with inactive accounts below the $500 minimum account
balance who receive notice of redemption for the first time from the Fund may
purchase shares without the imposition of a sales charge in an amount
sufficient to meet the minimum account balance.
The Fund reserves the right to terminate the privileges to invest in Fund
shares at net asset value without sales charge at any time after 60 days
written notice to the investors affected thereby. The Fund reserves the
right to terminate the policy to waive the Fund's minimum initial investment
and minimum account balance at any time after 60 days written notice to the
investors affected thereby.
ACCOUNT REINSTATEMENT PRIVILEGE
-------------------------------
A stockholder may, after he has liquidated any of his shares of the Fund
on written request to the Fund, reinstate his account without payment of any
additional sales charge, at net asset value next calculated after receipt of
the reinstatement request, provided that he meets the qualifications listed
below. The Account Reinstatement Privilege may be exercised only once except
with respect to shares held under an Eagle Growth Shares Investing Program,
and the amount reinvested may not exceed the amount of the redemption proceeds
received on the liquidation of such shares. In addition, the reinstatement
must be completed within thirty days after the liquidation.
A liquidation of Fund shares is considered a sale under the Internal
Revenue Code and the "wash sale" provisions of Section 1091 of the Code will
be applicable to an account reinstatement if the cost of the liquidated shares
exceeds the proceeds of liquidation.
TAX SHELTERED PLANS
-------------------
For self-employed individuals, partnerships, and corporations, there is
available through the Fund a prototype Profit Sharing/Money Purchase Pension
Plan which has been approved by the Internal Revenue Service. The Profit
Sharing Plan permits an employer to make tax deductible investments in the
Fund on behalf of each participant up to the lesser of 15% of each
participant's earned income (or compensation), or $30,000. The Money Purchase
Pension Plan permits an employer to make tax deductible contributions on
behalf of each participant up to the lesser of 25% of earned income (or
compensation), or $30,000. If an employer adopts both the Profit Sharing Plan
and the Money Purchase Pension Plan, deductible contributions to both plans in
the aggregate may be made on behalf of each participant up to the lesser of
25% of earned income (or compensation), or $30,000. Also, the Fund makes
available an Individual Retirement Account (IRA) which permits annual tax
deductible investments in the Fund up to $2,000 ($2,250 for a Spousal IRA) per
year by certain taxpayers. All taxpayers may make nondeductible IRA
contributions up to $2,000 ($2,250 for a Spousal IRA) whether or not they are
eligible for a deductible contribution. Dividends and capital gains
distributions paid on Fund shares held in a retirement plan or an IRA will be
reinvested at net asset value and accumulate free from tax until withdrawn.
Forms to establish an IRA or a Profit Sharing/Money Purchase Pension Plan
are available from Baxter Financial Corporation or your investment dealer.
REPURCHASE AND REDEMPTION OF SHARES
-----------------------------------
Shares may be resold to the Fund or presented for redemption. Shares for
which certificates have been issued will be repurchased by Baxter Financial
Corporation, the Fund's underwriter, if they are properly tendered (see below)
through an authorized dealer. The repurchase price received by the investor
will be the net asset value of such shares next calculated after receipt by
Baxter Financial Corporation of the repurchase order. If the order for
repurchase of Fund shares is received by the dealer prior to the close of the
New York Stock Exchange and received by Baxter Financial Corporation prior to
that time, the shares will be repurchased at the price calculated as of the
close of the New York Stock Exchange on that day. Where certificates are
tendered for repurchase through a dealer, neither the Fund nor Baxter
Financial Corporation charges any fee on the transaction; however, the dealer
may charge the shareholder a reasonable fee for executing the order.
Shares of the Fund for which no certificates have been issued (those held
by American Data Services, Inc.("ADS")) and shares for which certificates have
been issued may be redeemed by mailing a written request for redemption to
American Data Services, Inc., 24 West Carver Street, Location #00150,
Huntington, NY 11743. Where certificates have been issued they must accompany
the investor's written redemption request. The value of shares tendered for
redemption shall be equal to the net asset value of such shares next
calculated after receipt by ADS of a proper written redemption request.
Shares for which certificates have been issued which are presented for
redemption or repurchase must be duly endorsed by the registered owner(s) with
signatures guaranteed by a member firm of the New York Stock Exchange or a
regional stock exchange, by a trust company, by a commercial bank, by an
overseas bank with a New York City correspondent, by certain credit unions, or
by certain savings associations. Also, written requests for redemption of
shares for which certificates have not been issued must be signed and have
signatures guaranteed in the same manner. Any questions regarding which
institutions may guarantee signatures should be directed to American Data
Services, Inc. at 1-800-525-6201.
The redemption or repurchase price will depend on the prevailing market
prices of the portfolio securities owned by the Fund (at the time the
applicable redemption proceeds are calculated) and, therefore, may be more or
less than the purchase price. The Fund's policy is to pay promptly when
shares are presented for redemption. Payment will be made within seven days
after the date of tender except when exchanges are closed or an emergency
exists. The Fund has reserved the right to redeem Fund shares in kind rather
than in cash should this be necessary in accordance with the applicable rules
of the Securities and Exchange Commission.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, AND TAXES
-------------------------------------------------
The Fund intends to continue to qualify for tax treatment under
Subchapter M of the Internal Revenue Code (the "Code") and, therefore, will
not be liable for Federal income taxes to the extent its earnings are
distributed. The Fund's policy is to pay all of its earnings out to
shareholders annually on approximately December 31 each year as dividends and
capital gain distributions.
Dividends, together with distributions of any short-term capital gains,
are taxable as ordinary income. Shareholders who are taxpayers pay Federal
income taxes at capital gains rates on realized long-term capital gains which
are distributed to them, whether or not reinvested in the Fund and regardless
of the period of time the Fund's shares have been owned by the shareholders.
Advice as to the tax status of each year's dividends and distributions
will be mailed to shareholders annually. Dividends and capital gains
distributed in January ordinarily will be included in the shareholder's income
for the previous year. Shareholders may elect to receive income dividends and
capital gains distributions in additional shares of the Fund at net asset
value, or to take cash.
Among other requirements, in order to maintain its favorable tax
treatment as a "regulated investment company" under the Internal Revenue Code
of 1986, capital gains from the sale of securities held for less than three
months must constitute less than 30% of the Fund's gross income for its fiscal
year. Premium income from the sale of options that are not exercised and net
premium income on option closing transactions are treated as capital gains.
Therefore, in order to continue to qualify for federal tax treatment as a
"regulated investment company," the Fund's gross income from the sale of
options and financial futures contracts held for less than three months and
the sale of other securities held for less than three months, in the
aggregate, must constitute less than 30% of the Fund's gross income on a
fiscal year basis.
RIGHTS OF OWNERSHIP
-------------------
Each share of common stock of the Fund has an equal interest in the
Fund's assets, net investment income, any net capital gains, and is entitled
to one vote. The shares are non-assessable, fully transferable, and
redeemable at the option of the holder. They may be sold only for cash except
in connection with mergers, stock distributions and similar transactions.
They have no conversion, pre-emptive or other subscription rights.
Shareholders having questions about the Fund or their accounts may contact the
Fund at the address or telephone number shown on the cover page of this
prospectus.
Ordinarily, the Fund does not intend to hold an annual meeting of
shareholders in any year except when required under the Investment Company Act
of 1940.
MANAGEMENT OF THE FUND
----------------------
Baxter Financial Corporation ("BFC" or the "Advisor") is employed by the
Fund to furnish investment advisory services to the Fund, subject to the
supervision of the Board of Directors of the Fund who, under Maryland law, are
responsible for overall Fund policy and for overseeing the management of the
Fund. Donald H. Baxter, who is President, Treasurer, Director, and sole
stockholder of the Advisor, is also responsible for selecting brokers and
executing Fund portfolio transactions; and may effect securities transactions
with brokers who have sold shares of the Fund. Mr. Baxter is primarily
responsible for the day to day management of the Fund's portfolio. He has
been the Fund's portfolio manager since May, 1987. Mr. Baxter is also
President and Director of the Fund and of Philadelphia Fund, Inc., a
registered investment company. BFC also serves as investment advisor to
institutional and individual investors, including Philadelphia Fund, Inc.
As compensation for the rendering of advisory services, the Advisor
receives an annual fee, payable monthly, equal to .75 percent of the net
assets of the Fund not exceeding $200,000,000. The rate of this annual fee is
reduced to .625 percent on net assets in excess of $200,000,000 but less than
$400,000,000, and to .50 percent of net assets in excess of $400,000,000. The
fee is based on the month-end net asset value of the Fund, and is payable
monthly at 1/12th of the annual fee rate.
As of November 30, 1995 the net assets of the Fund were $2,804,357. For
the fiscal year ended November 30, 1995, BFC earned advisory fees of $19,256
and administrative fees of $6,418; however, BFC reimbursed these expenses to
the Fund totalling $25,674, as described under "Expenses of the Fund."
The Advisor is also responsible for providing the Fund with
administrative services, such as office space, clerical and secretarial
personnel, and facilities, necessary to the administrative operation of the
Fund, pursuant to an Administration Agreement between the Fund and the
Advisor. Under the Administration Agreement, the Fund compensates the Advisor
at an annual rate of .25 percent of the net asset value of the Fund. All
services provided by the Advisor are subject to approval by, and overall
supervision of, the Fund's Board of Directors.
Total Fund expenses for the fiscal year ended November 30, 1995 were
3.44% of average net assets after giving effect to a reimbursement of expenses
by BFC, as described under "Expenses of the Fund."
Star Bank, N.A. acts as the Fund's custodian. American Data Services,
Inc. acts as transfer agent, and dividend disbursing agent, and also provides
the Fund with certain accounting services.
Baxter Financial Corporation is authorized to allocate brokerage
transactions to dealers that have sold Fund shares. Such transactions are
subject to the requirement to seek to obtain the best price and execution.
PERFORMANCE
-----------
Total return data may from time to time be included in advertisements
pertaining to the Fund. Standardized "total return" of the Fund refers to the
average annual compounded rates of return over certain periods of time that
would equate the initial amount invested at the beginning of a stated period,
from which the maximum sales load is deducted, to the ending redeemable value
of the investment. Standardized total return also includes reinvestment of
dividends and distributions over the period for which performance is shown.
The Fund may advertise total return figures which shall represent Fund
performance over one or more time periods, including (1) one-year to date, and
(2) May 1, 1987 to date, the latter being the date on which Mr. Donald H.
Baxter assumed exclusive portfolio management responsibilities for the Fund.
Non-standardized total return quotations may also be presented. Such
quotations may reflect investment at reduced sales charge levels or at
net asset value without the imposition of a sales load. Any quotation of
total return not reflecting the maximum sales charge, or which reflects any
voluntary expense reimbursements, would be reduced if the maximum sales charge
were used or Fund expenses were not voluntarily limited.
The Fund may also advertise its investment performance by comparison to
market indices such as the S&P Index and to mutual fund indices such as those
reported by Lipper Analytical Services, Inc. Such indices may group funds by
investment objective (in the Fund's case, typically in the "Growth Funds"
Category) or may involve a more general ranking reflecting the Fund's overall
performance as compared to any number or variety of funds, regardless of
investment objective.
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EAGLE
GROWTH
SHARES, INC.
1200 North Federal Highway
Suite 424
Boca Raton, Florida 33432
(407) 395-2155
SHAREHOLDER SERVICES
(800) 525-6201
INVESTMENT ADVISOR, ADMINISTRATOR, AND UNDERWRITER
Baxter Financial Corporation
1200 North Federal Highway
Suite 424
Boca Raton, Florida 33432
CUSTODIAN
Star Bank, N.A.
P.O. Box 640115
Cincinnati, OH 45264-0115.
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
American Data Services, Inc.
24 West Carver Street
Location #00150
Huntington, NY 11743
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young PROSPECTUS
Great Valley Corporate Center
30 Valley Stream Parkway
Malvern, PA 19355 [logo]
AUDITORS All ABOUT
Tait, Weller & Baker EAGLE
Two Penn Center Plaza GROWTH
Suite 700 SHARES, INC.
Philadelphia PA 10102-1707
Your Investment Dealer Is: April 1, 1996
