<PAGE>
File No: 2-34540;
811-1935.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 36 [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 22
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(Check appropriate box or boxes.)
EAGLE GROWTH SHARES, INC.
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(Exact Name of Registrant as Specified in Charter)
1200 North Federal Highway, Suite 424, Boca Raton, Florida 33432
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code 561-395-2155
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Ronald F. Rohe, Vice President
Eagle Growth Shares, Inc.
1200 North Federal Highway, Suite 424, Boca Raton, Florida 33432
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering April 1, 1997
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on April 1, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] 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.
EXHIBIT INDEX LOCATED ON PAGE 50
<PAGE>
FORM N-1A
CROSS REFERENCE SHEET
(as required by Rule 404)
FORM N-lA PART A ITEM NO. PROSPECTUS LOCATION
- ------------------------- -------------------
Item 1. Cover Page....................... Cover Page
Item 2. Synopsis......................... Expenses of the Fund
Item 3. Condensed Financial Information.. Financial Highlights;
Performance
Item 4. General Description of........... Cover Page; Invest-
Registrant ment Objectives and
Policies; Options
Transactions; Futures
Contracts; Investment
Restrictions
Item 5. Management of the Fund........... Management of the
Fund
Item 6. Capital Stock and Other
Securities....................... Dividends, Capital
Gains Distributions,
and Taxes; Rights of
Ownership
Item 7. Purchase of Securities Being
Offered.......................... Purchase of Shares
Item 8. Redemption or Repurchase......... Repurchase and
Redemption of Shares
Item 9. Pending Legal Proceedings........ Not Applicable
FORM N-1A PART B ITEM NO. LOCATION IN STATEMENT
- ------------------------- OF ADDITIONAL INFORMATION
-------------------------
Item 10. Cover Page....................... Cover Page
Item 11. Table of Contents................ Table of Contents
Item 12. General Information and
History.......................... Not Applicable
Item 13. Investment Objectives and
Policies......................... Investment Objectives
and Policies; Options
Transactions; Futures
Contracts; Investment
Limitations
<PAGE>
FORM N-1A PART B ITEM NO. LOCATION IN STATEMENT
- ------------------------- OF ADDITIONAL INFORMATION
-------------------------
Item 14. Management of the Fund........... Management of the
Fund
Item 15. Control Persons and Principal
Holders of Securities............ Not Applicable
Item 16. Investment Advisory and
Other Services................... Management of the
Fund
Item 17. Brokerage Allocation and Other
Practices........................ Management of the
Fund
Item 18. Capital Stock and Other
Securities....................... Prospectus-Rights
of Ownership
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered .......Letter of Intent;
Right of
Accumulation; Group
Discount Privilege;
Automatic Investment
Plan; Prospectus-
Account Reinstatement
Privilege; Check
Withdrawal Plan;
Further Information
Regarding Sale of
Shares; Redemption
and Repurchase of
Shares
Item 20. Tax Status....................... Prospectus-Dividends,
Capital Gains
Distributions, and
Taxes
Item 21. Underwriters..................... Underwriter
Item 22. Calculations of Performance Data. Calculation of
Performance Data;
Comparisons and
Advertisements
Item 23. Financial Statements............. Financial Statements
<PAGE>
FORM N-1A PART C ITEM NO. LOCATION IN PART C
- ------------------------- ------------------
Item 24. Financial Statements and
Exhibits......................... Financial Statements
and Exhibits
Item 25. Persons Controlled By or Under
Common Control with Registrant... Persons Controlled by
or under Common
Control with
Registrant
Item 26. Number of Holders of Securities.. Number of Holders
of Securities
Item 27. Indemnification.................. Indemnification
Item 28. Business and Other Connections
of Investment Advisor............ Business and Other
Connections of
Investment Advisor
Item 29. Principal Underwriters........... Principal Under-
writers
Item 30. Location of Accounts and Records. Location of
Accounts and
Records
Item 31. Management Services.............. Management Services
Item 32. Undertakings..................... Undertakings
<PAGE>
PART A
EAGLE GROWTH SHARES, INC.
1200 North Federal Highway April 1, 1997
Suite 424
Boca Raton, Florida 33432
561-395-2155
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, 1997) 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
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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.
<PAGE>
TABLE OF CONTENTS
Page
----
Expenses of the Fund.......................................7
Financial Highlights.......................................8
Investment Objectives and Policies.........................8
Options Transactions......................................11
Futures Contracts.........................................13
Investment Restrictions...................................14
Purchase of Shares........................................14
Computation of Net Asset Value............................15
Account Reinstatement Privilege...........................18
Tax Sheltered Plans.......................................19
Repurchase and Redemption of Shares.......................19
Dividends, Capital Gains
Distributions, and Taxes..................................20
Rights of Ownership.......................................21
Management of the Fund....................................21
Performance...............................................23
<PAGE>
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
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Management Fee After Expense Reimbursements.......... .67%
Administrative Fee After Expense Reimbursements...... .22%
Other Expenses....................................... 1.69%
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Total Fund Operating Expenses................... 2.58%
=====
For the 1996 fiscal year, actual "Other Expenses" and "Total Fund
Operating Expenses" incurred were $47,456 (1.69% of average net assets) and
$75,584 (2.69% of average net assets), respectively. However, because of
California regulations that limited the Fund's aggregate operating expenses,
Baxter Financial Corporation reimbursed the Fund $3,016 which reduced the
actual "Other Expenses" paid by the Fund to $72,568 (2.58% of average net
assets) for the fiscal year ended November 30, 1996. For the 1997 fiscal
year, "Other Expenses" are not anticipated to exceed 1.69%. This projection
is based on 1996 expenses and reasonably projected 1997 expenses. Total Fund
Operating Expenses for 1997 are also not expected to exceed 2.69% of average
net assets. The California regulations that limited the Fund's expense ratio
no longer applies for the 1997 fiscal year.
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 $109 $158 $210 $352
<PAGE>
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, 1996 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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<PAGE>
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
<PAGE>
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 ($4,000 for contributions made
in respect to 1997 calendar year income for a Spousal IRA) per
year by certain taxpayers. All taxpayers may make nondeductible IRA
contributions up to $2,000 ($4,000 for contributions made in respect to 1997
calendar year income 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
<PAGE>
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
<PAGE>
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
<PAGE>
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, 1996 the net assets of the Fund were $3,059,978. For
the fiscal year ended November 30, 1996, BFC earned advisory fees of $21,096
and administrative fees of $7,032; however, BFC reimbursed expenses to
the Fund totalling $3,016, 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, 1996 were
2.58% 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.
<PAGE>
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.
<PAGE>
EAGLE
GROWTH
SHARES, INC.
1200 North Federal Highway
Suite 424
Boca Raton, Florida 33432
(561) 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
AUDITORS
Tait, Weller & Baker EAGLE
Two Penn Center Plaza GROWTH
Suite 700 SHARES, INC.
Philadelphia PA 10102-1707
Your Investment Dealer Is: April 1, 1997
<PAGE>
PART B
Eagle Growth Shares, Inc.
Statement of Additional Information
April 1, 1997
This statement is not a prospectus, but should be read in conjunction
with the Fund's current prospectus (dated April 1, 1997). To obtain the
prospectus please write to Eagle Growth Shares, Inc., 1200 North Federal
Highway, Suite 424, Boca Raton, Florida 33432
Or call:
Nationwide 1-800-749-9933
Florida 1-561-395-2155
Table of Contents Page
----------------- ----
Investment Objectives and Policies . . . . . . . . . 26
Options Transactions . . . . . . . . . . . . . . . . 26
Futures Contracts . . . . . . . . . . . . . . . . . 27
Federal Tax Treatment of Futures Contracts . . . . . 29
Investment Limitations . . . . . . . . . . . . . . . 29
Letter of Intent . . . . . . . . . . . . . . . . . . 32
Right of Accumulation . . . . . . . . . . . . . . . 32
Group Discount Privilege . . . . . . . . . . . . . . 33
Automatic Investment Plan . . . . . . . . . . . . . 34
Check Withdrawal Plan . . . . . . . . . . . . . . . 34
Further Information Regarding Sale of Shares . . . . 35
Redemption and Repurchase of Shares. . . . . . . . . 35
Management of the Fund . . . . . . . . . . . . . . . 36
Officers and Directors . . . . . . . . . . . . . . . 36
Brokerage. . . . . . . . . . . . . . . . . . . . . . 37
Additional Information about the Investment Advisor. 38
Underwriters . . . . . . . . . . . . . . . . . . . . 40
Independent Certified Public Accountants . . . . . . 41
Calculation of Performance Data. . . . . . . . . . . 41
Comparisons and Advertisements . . . . . . . . . . . 42
Financial Statements . . . . . . . . . . . . . . . . 43
<PAGE>
The following information supplements the information under "Investment
Goal and Policy," "Options Transactions," "Investment Limitations" and
"Futures Contracts" in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
The Fund may, from time to time, invest in restricted securities and may
be deemed to be a statutory underwriter if it distributes any such restricted
securities. Such investments may generally be made at advantageous prices.
The Fund may not resell any such securities unless the Federal and any
applicable state registration requirements respecting such securities are
first satisfied, or an exemption from such registration requirements is
available. The restrictions upon the disposition of such securities may
adversely affect their marketability and the Fund generally may not be able to
dispose of such securities at prices for unrestricted securities of the same
class of the same issuer. The Fund will not purchase restricted securities if
immediately after such purchase more than 10% of the value of the Fund's net
assets would be invested in such securities or other assets for which market
quotations are not readily available. If the fair value of restricted
securities or other assets not having readily available market quotations
previously purchased exceeds 80% of the value of the Fund's assets during the
period such securities are held, appropriate steps will be taken in the
management of the balance of the portfolio to achieve adequate marketability.
Restricted securities are valued at fair value calculated by delegated persons
acting in accordance with methods of valuation determined in good faith by the
Board of Directors. The Board will review the appropriateness of such methods
of valuation at proper intervals. If it becomes necessary to register such
securities before resale with the appropriate federal and state authorities,
the Fund may have to bear part or all of the expenses of any such registration
if an agreement has not been reached with the issuer of the securities to bear
part or all of these costs.
OPTIONS TRANSACTIONS
--------------------
The Fund may write (sell) listed call options on its portfolio securities
(covered options). In selling an option, the Fund, effectively, agrees to
deliver, for example, 100 shares of common stock held in its portfolio at a
specified price (the "strike price") prior to the expiration date of the
option if the option is exercised by the purchaser.
If, at or near the expiration date of an option, the market price of the
optioned stock exceeds the strike price of the option, the option will be
exercised. In that event, the purchaser of the option must pay to the Fund
the strike price, and the Fund must
<PAGE>
thereupon deliver the optioned stock to the purchaser. In this event, the
Fund would lose the opportunity to take full advantage of the increase in
market price of the optioned stock. If, by the expiration date of the option,
the market price of the optioned stock fails to exceed the strike price of the
option, the option will expire unexercised. Alternatively, the Fund might
purchase an identical option for delivery to the buyer. In this event, the
cost of such option might exceed the premium for the option sold by the Fund.
The Fund retains the premium paid for the option regardless of whether the
option is exercised. Premiums received by the Fund are treated as short-term
capital gains under the Internal Revenue Code except when the optioned stock
is delivered in connection with the transaction, in which case the total
amount received by the Fund, the premium, and the strike price are added
together, and any gain or loss will be considered long-term or short-term
depending on how long the Fund held the optioned stock.
The Fund may also sell listed options on securities which it does not own
(uncovered options). Its obligation to the buyer of an uncovered option is
the same as when it sells a covered option. If the option is exercised the
Fund must either purchase the underlying securities in the market for delivery
to the seller or it must purchase an identical option for delivery to the
purchaser.
The Fund may also buy and sell listed put options. When the Fund sells a
put option, it receives a premium from the buyer and is obligated to purchase
the optioned securities at the strike price of the option on the expiration
date of the option if the option is exercised. The premium for a put option
is determined in the same manner as the premium on a call option. Similarly,
the purchase of a put option entitles the Fund to sell the optioned securities
to the option seller at the strike price of the option anytime until or on the
option expiration date.
When the Fund sells an uncovered call option or a put option, it will be
required to maintain in a segregated account, which will be "marked to
market," with its custodian bank cash or highly liquid, short-term U.S.
government securities in an amount equal to its obligation under the call or
put option. With respect to a put option this will be an amount equal to the
price of the underlying securities it will be obligated to buy if the option
is exercised. With respect to a call option, it would be the market value of
the underlying securities it is obligated to deliver if the option is
exercised.
FUTURES CONTRACTS
-----------------
The Fund may buy and sell financial futures contracts and options on
futures contracts. Futures contracts provide for the future sale by one party
and purchase by another party of a specified amount of specific securities at
a specified future time and at a specified price. Financial futures contracts
which are
<PAGE>
standardized as to maturity date and the underlying financial instruments are
traded on national futures exchanges, and include futures contracts on equity
securities, debt securities and foreign currencies.
Although index futures contracts by their terms call for settlement in
cash, in most cases the contracts are closed out before the settlement date.
Closing out an open futures position is done by taking an opposite position
("buying") a contract which has previously been "sold" or "selling" a contract
previously purchased in an identical contract to terminate the position.
Brokerage commissions are incurred when a futures contract is bought or sold.
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market for such futures. However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time. Therefore, it might not be possible to close a
futures position. In the event of adverse price movements, the Fund would
continue to be required to make daily cash payments to maintain its required
margin. In such situations, if the Fund has insufficient cash, it may have to
sell portfolio securities to meet daily margin requirements at a time when it
may be disadvantageous to do so. In addition, the Fund may be required to
make delivery of the securities underlying futures contracts it holds.
The Fund will minimize the risk that it will be unable to close out a
futures contract by only entering into futures which are traded on national
futures exchanges and for which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts can be substantial, due to
the low margin deposits required. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss
(as well as gain) to the investor. There is also the risk of loss by the Fund
of margin deposits, in the event of bankruptcy of a broker with whom the Fund
has an open position in the futures contract or related option.
When the Fund has a long position in a futures contract or sells a put
option, it must establish a segregated account with its custodian bank
containing cash or highly liquid, short-term U.S. government securities in an
amount equal to the purchase price of the contract or the strike price of the
put option (less any margin on deposit). When the Fund sells a call option on
a futures contract, it must establish a segregated account with its custodian
bank containing cash or highly liquid, short-term U.S. government securities
in an amount that, when added to the amount of the margin deposit, equals the
market value of the instruments underlying the call option (but are not less
than the strike price of the call option).
<PAGE>
FEDERAL TAX TREATMENT OF FUTURES CONTRACTS
------------------------------------------
Except for transactions the Fund has identified as hedging transactions,
the Fund is required for federal income tax purposes to recognize as income
for each taxable year its net unrealized gains and losses on certain futures
contracts as of the end of the year as well as those actually realized during
the year. In most cases, any gain or loss recognized with respect to a
futures contract is considered to be 60% long-term capital gain or loss and
40% short-term capital gain or loss, without regard to the holding period of
the contract. Furthermore, sales of futures contracts which are intended to
hedge against a change in the value of securities held by the Fund may affect
the holding period of such securities and, consequently, the nature of the
gain or loss on such securities upon disposition.
In order for the Fund to continue to qualify for Federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for its taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, gains from the sale of
securities and other income derived with respect to the Fund's business of
investing in securities. In addition, gains realized on the sale or other
disposition of securities held for less than three months must be limited to
less than 30% of the Fund's annual gross income. It is anticipated that any
net gain realized from the closing out of futures contracts will be considered
gain from the sale of securities and, therefore, constitute qualifying income
for purposes of the 90% requirement. In order to avoid realizing excessive
gains on securities held less than three months, the Fund may be required to
defer closing futures contracts beyond the time when it would otherwise be
advantageous to do so. It is anticipated that unrealized gains on futures
contracts which have been open for less than three months as of the end of the
Fund's fiscal year and which are recognized for tax purposes, will not be
considered gains on sales of securities held less than three months for the
purpose of the 30% test.
The Fund will distribute to shareholders annually any net capital gains
which have been recognized for federal income tax purposes, including
unrealized gains at the end of the Fund's fiscal year on futures transactions.
Such distributions will be combined with distributions of capital gains
realized on the Fund's other investments.
INVESTMENT LIMITATIONS
----------------------
In addition to the Investment Restrictions stated in the Fund's
Prospectus, the Fund may not:
<PAGE>
Purchase commodities or commodity contracts, except the Fund may purchase
and sell financial futures contracts and options thereon;
Purchase interests in real estate, except as may be represented by
securities for which there is an established market;
Purchase securities of another open-end investment company, except in
connection with a plan of merger, consolidation, or acquisition of assets. It
may, however, purchase shares of closed-end investment companies where such
purchase is in the open market and no commission or profit to a sponsor or
dealer results other than a customary broker's commission. The advisory fee
of the Fund will not be reduced for any assets invested in shares of closed
end investment companies.
Make short sales of securities;
Make loans, except through the purchase of debt securities of a type
commonly held by institutional investors;
Issue senior securities; except the Fund may buy and sell options;
Act as an underwriter of the securities of any other issuer, except the
Fund may invest not more than 10% of the value of its net assets at the time
the investment is made in securities which are not readily marketable because
registration under the federal securities laws would be required ("restricted
securities").
The foregoing Investment Limitations, and those set forth in the
Prospectus, may be changed only with the approval of the lesser of: (i) at
least 67% of the voting securities of the Fund present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present or
represented by proxy, or (ii) more than 50% of the outstanding voting
securities of the Fund. The Fund does not consider the sale of uncovered call
options or financial futures contracts to be short sales.
Although changes in the following policies are not subject to shareholder
approval, the Fund will not:
Invest in companies for the purpose of exercising control of management,
except in situations where it is deemed advisable to protect an existing
investment.
Purchase securities for which a bona fide market does not exist
(including, but not limited to, "restricted," foreign securities not listed on
a recognized domestic or foreign securities exchange, and other illiquid
securities) if immediately after such purchase more than 10% of the Fund's net
assets will be invested in such securities.
<PAGE>
Pledge, mortgage, or hypothecate its assets to an extent greater than 15%
of the gross assets of the Fund taken at market value.
Purchase, or otherwise acquire, warrants, if immediately after such
acquisition more than 2% of the Fund's assets, taken at cost, would be so
invested. However, warrants acquired upon their initial issuance by the Fund
by reason of its ownership of other securities of the issuer of such warrants
shall not be subject to this restriction, nor shall the value of any such
warrants be added to the value of any other warrants held in determining the
value of warrants held under this investment restriction.
Purchase, or retain in its portfolio, securities of an issuer any of
whose officers, directors or security holders is an officer or director of the
Fund or the investment adviser if after such purchase one or more of the
Fund's officers or directors owns beneficially more than 1/2 of 1% of such
securities and such officers and directors together own beneficially more than
5% of such securities.
Invest in securities of "less-seasoned companies" as defined in the
prospectus, if after such purchase more than 5% of the total assets of the
Fund would be invested in the securities of such a company or companies.
Also, the Fund will not own any participation in oil or mineral leases or
mineral development projects.
The Fund may invest in repurchase agreements. Investments in repurchase
agreements involve certain risks. For example, if the seller of the
underlying securities defaults on its obligation to repurchase the securities
at a time when their value has declined, the Fund may incur a loss upon
disposition. If the seller becomes insolvent and subject to liquidation or
reorganization under the Bankruptcy Code or other laws, a bankruptcy court may
determine that the underlying securities are collateral not within the control
of the Fund and, therefore, subject to sale by the trustee in bankruptcy.
Finally, it is possible that the Fund may not be able to substantiate its
interest in the underlying securities. While management acknowledges these
risks, it believes that they can be controlled through stringent security
selection criteria and careful monitoring procedures.
The following information supplements the information in the prospectus
under "Purchase of Shares" regarding special purchase plans and other
privileges:
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 a Fund underwriter.
<PAGE>
LETTER OF INTENT
----------------
An investor can qualify for a reduced sales charge as set forth in the
prospectus by signing a non-binding Letter of Intent stating his intention to
invest at least $10,000 during a 13 month period. The Letter of Intent is
applicable to the aggregate amount of purchases of shares of the Fund and
combined purchases of shares of the Fund and Philadelphia Fund, Inc. made 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, as well as 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 Code. The Letter must be filed within 90 days after
the first purchase to be included under it. The value of shares of the Fund
and/or Philadelphia Fund Inc., previously purchased, including shares held
under Eagle Growth Shares or Philadelphia Fund Single Payment Investing
Programs and Systematic Investing Programs upon which all scheduled payments
have been made, will be included as a credit toward completion of the Letter
of Intent to the extent that such shares are held during the 13 month period
of the Letter of Intent when the investor so requests. The amount to be
credited will be equal to the offering price of the shares held on the date of
the first purchase under the Letter of Intent. The initial purchase under a
Letter of Intent must be in an amount of at least $1,000 and subsequent
purchases not less than $500.
Five percent of the total dollar amount specified in the Letter of Intent
is held in escrow by Star Bank, N.A. in shares. Any dividends or capital
gains distributions on the escrowed shares are credited to the shareholder.
Upon completion of the total dollar amount specified in the Letter the
escrowed shares are released. If total purchases under the Letter are less
than the amount specified therein the shareholder is required to remit to the
underwriter an amount equal to the difference between the dollar amount of
sales charges actually paid and the amount which would have been paid if the
total purchases made under the Letter were made at one time. If the
shareholder does not pay such difference within twenty days after having
received written request from the underwriter, the Custodian is authorized to
redeem so many of the escrowed shares to realize such difference and release
any remaining full shares and cash for any fractional shares to the
shareholder. There is no obligation upon the investor to purchase or the Fund
to sell the full indicated amount.
RIGHT OF ACCUMULATION
---------------------
The reducing scale of sales charges set forth in the prospectus also
apply to subsequent purchases of the Fund's shares by an individual; an
individual, his spouse and children under the age of 21; or a trustee or other
fiduciary of a single trust estate or single fiduciary account where the
aggregate investments in
<PAGE>
shares of the Fund and/or Philadelphia Fund, Inc., including shares held under
Eagle Growth Shares or Philadelphia Fund Single Payment Investing Programs and
Systematic Investing Programs upon which all scheduled payments have been made
is $10,000 or more. For example, a stockholder who owns shares of the Fund
and/or Philadelphia Fund, Inc. that originally cost him $5,000 on which he
paid an 8.50% sales charge may subsequently purchase an additional $5,000 of
the Fund's shares at a sales charge of 7.75% of such subsequent purchase or an
additional $20,000 of the Fund's shares at a sales charge of 6.25%. To
determine eligibility, the shares currently held by the investor are valued at
the then net asset value or the cost of such shares to the investor, whichever
is greater. The Fund's underwriter, or the Custodian (if the payment is being
made by the investor directly to the Custodian), must be notified when a sale
takes place which would qualify for a reduced sales charge on the basis of
previous purchases, and reduction will be granted when the aggregate holdings
are confirmed through a check of the records of the Fund. The reduced sales
charges described under "Purchase of Shares" in the prospectus will be
applicable to subsequent purchases by an Employee Benefit Plan 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.
GROUP DISCOUNT PRIVILEGE
------------------------
Any purchaser, including his spouse and children under the age of 21, who
is a member of a qualified group, such as a trade association, church group,
union, social or fraternal organization, who wishes to have the advantage of
an individually lower sales charge through either a Letter of Intent or a
Right of Accumulation, may do so if he, in conjunction with other members of
that group, wishes to purchase shares of the Fund so that the entire purchases
by the group will afford a lower sales charge to each individual participant.
Group purchases must be made through a common remitter. The Fund will send
the common remitter, at or before the completion of each purchase of shares
for group members, written notice of receipt of the total amount received by
the Fund on the group's behalf. Also, if in a current calendar quarter, a
payment is not received by the Fund on behalf of a group member on whose
behalf a purchase was made in the preceding calendar quarter, the Fund will
send the investor written notice that a current payment has not been received
in his or her behalf. Further, if the Fund does not receive a payment from
the common remitter on behalf of the group within ten days on the date
specified for delivery of the payment, the Fund will send each group member a
written confirmation of his or her next three succeeding investments promptly
after they are made.
<PAGE>
AUTOMATIC INVESTMENT PLAN
-------------------------
The Automatic Investment Plan enables shareholders to make regular
monthly investments in shares through automatic charges to their bank checking
accounts. With shareholder authorization and bank approval, Star Bank, N.A.
will automatically charge the bank account for the amount specified, which
will be automatically invested in shares at the public offering price on the
date specified by the shareholder. Bank accounts will be charged on the day
or a few days before investments are credited, depending on the bank's
capabilities, and shareholders will receive a quarterly confirmation statement
showing the transactions during the calendar quarter. Participation in the
plan will begin within 30 days after receipt of a completed section 7 of the
Account Application and a voided check from your checking account. If your
bank account cannot be charged due to insufficient funds, a stop-payment
order, or the closing of your bank account, the plan may be terminated and the
related investment reversed. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing to American Data
Services, Inc.
CHECK WITHDRAWAL PLAN
---------------------
An investor with a minimum account balance of $5,000 who is not currently
participating in the Automatic Investment Plan may have sufficient shares
automatically redeemed at regular monthly or quarterly intervals to provide
payments of $25 or more. This minimum amount is not necessarily a recommended
amount. This privilege may be exercised by a written request to American Data
Services, Inc. specifying the amount of the check to be received each month
(or each quarter as desired). Share certificates cannot be issued while the
Plan is in effect. With the Custodian's approval, payment amounts may be
revised at any time by the investor. All shares owned or purchased will be
credited to the Check Withdrawal Plan and a sufficient number of shares will
be sold from the investor's account to meet the requested withdrawal payments.
All income dividends and capital gains distributions on shares held will be
reinvested in additional shares at net asset value on the ex-dividend date.
Since the withdrawal payments represent the proceeds from the sales of shares,
there will be a reduction of invested capital to the extent that withdrawal
payments exceed the income dividends and capital gains distributions paid and
reinvested in shares held in the account. While no charge is contemplated on
each withdrawal payment at present, the right is reserved at any future time
to deduct $1.00 from each withdrawal payment. At present, the expenses
incurred in connection with this privilege are paid by the Fund. This Plan,
upon written notice to the Custodian, may be terminated at any time without
penalty. Any subsequent investments in this Plan must be $1,000 or more.
However, making additional purchases while the Plan is in effect may be
inadvisable due to sales charges and tax liabilities.
<PAGE>
The following information supplements the information in the prospectus
under "Repurchase and Redemption of Shares."
FURTHER INFORMATION REGARDING SALE OF SHARES
--------------------------------------------
The Fund calculates the offering price and net asset value at the close
of the New York Stock Exchange generally 4:00 p.m., on days when the New York
Stock Exchange is open. On other days, the Fund will generally be closed and
pricing calculations will not be made. The New York Stock Exchange is
scheduled to be open Monday through Friday throughout the year except for New
Year's Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. Orders for redemption and
purchase will not be processed if received when the Fund is closed.
REDEMPTION AND REPURCHASE OF SHARES
-----------------------------------
Payment for shares redeemed may be postponed, or the right of redemption
may be suspended, for any period during which the New York Stock Exchange is
closed other than customary weekend and holiday closings, or periods during
which, by rule of the Securities and Exchange Commission, trading on the New
York Stock Exchange is deemed restricted; or for any period during which an
emergency as determined by order of the Commission exists as a result of
which, disposal by the Fund of securities owned by it is not reasonably
practicable; or it is not reasonably practicable for the Fund fairly to
determine the value of its net assets; or for such other periods as the
Commission may, by order, permit for the protection of security holders of the
Fund.
The Fund has reserved the right to redeem Fund shares in kind, rather
than in cash, should this be necessary. However, by filing an appropriate
election under Rule l8f-1 pursuant to the Investment Company Act of 1940 and
the adoption of such election as a fundamental policy which can be changed
only upon the approval of a majority vote of the outstanding voting securities
of the Fund, the Fund has obligated itself upon a request for redemption to
redeem shares solely for cash up to the lesser of $250,000 or 1% of the net
asset value of the Fund in compliance with a request for redemption by any one
shareholder during any 90 day period.
The following information supplements the information in the prospectus
under "Management of the Fund."
<PAGE>
MANAGEMENT OF THE FUND
----------------------
Officers and Directors
- ----------------------
The names, ages, addresses of the officers and directors of the Fund, and
their principal business occupations for the past five years are listed below.
All officers and directors serve the Fund and Philadelphia Fund, Inc., a
registered investment company, in identical capacities. Each Director who is
an "interested person" of the Fund, as defined in the Investment Company Act
of 1940, is indicated by an asterisk. All of the officers and directors
aggregately own 3.8% of the securities of the Fund. Each director, except
Donald H. Baxter, receives $50 from Eagle Growth Shares for each quarterly
Board of Director's meeting they attend. Donald P. Parson, a director of
the Fund, is a partner of the firm Parson and Brown which handles certain
legal matters for the Fund. In addition, each director receives from the
Philadelphia Fund a $2,000 annual fee and $1,150 for each quarterly Board of
Director's meeting they attend. Donald H. Baxter does not receive any annual
or meeting fees as a director from either fund.
Kenneth W. McArthur, Director (61) 93 Riverwood Parkway, Toronto, Ontario,
Canada M8Y 4E4
Chairman, Shurway Capital Corp. (private investment company); formerly, Vice
President and Director, Nesbitt Investment Management; formerly, President,
Chief Executive Officer and Director, Fahnestock & Co. Inc. (securities
broker); formerly Senior Vice President and Chief Financial Officer, Nesbitt
Thomson Inc. (holding company).
Thomas J. Flaherty, Director (72) 400 Ocean Road, House No. 175, Vero Beach,
FL 32963
Retired. Formerly Executive Vice President, Philadelphia Fund, Inc. and Eagle
Growth Shares, Inc.; formerly, President and Director, Universal Programs,
Inc. and Eagle Advisory Corporation (investment advisors).
Donald P. Parson, Director (55)* c/o Parson & Brown, 666 Third Avenue, New
York, NY 10017
Partner, Parson & Brown, Attorney at Law; Director ITSN, Inc. (interactive
satellite kiosks); formerly Partner, Whitman & Ransom, Attorneys at Law.
Donald H. Baxter, Director and President* (53) 1200 North Federal Highway,
Suite 424, Boca Raton, FL 33432
Director, President, and Treasurer, Baxter Financial Corporation; Director,
Sunol Molecular Corp. (biotechnology); Director, Great Eastern Bank; formerly
Managing Member, Crown Capital Asia Limited Liability Company (private
investment company); formerly Managing Member, Baxter Biotech Ventures Limited
Company (private investment company); formerly Portfolio Manager, Nesbitt
Thomson Asset Management Inc.
<PAGE>
Robert A. Utting, Director (73) c/o The Royal Bank of Canada, 1 Place Ville
Marie, Montreal, Quebec, Canada H3C 3A9
President, R. A. Utting & Associates Inc. (insurance); Chairman and Director,
The Mortgage Insurance Company of Canada; formerly, Vice Chairman, Royal Bank
of Canada.
Robert L. Meyer, Director (56) c/o Ehrlich Meyer Associates, Inc., 25 Griffin
Avenue, Bedford Hills, NY 10507
President, Ehrlich Meyer Associates, Inc.; formerly Principal Officer,
Convergent Capital Corporation (holding company); formerly Director, Vice
President, and Senior Vice President, Fahnestock & Co. Inc.
James Keogh, Director (80) 202 West Lyon Farm Drive, Greenwich, CT 06831
Writer/Editor; Retired. formerly Executive Editor, TIME (newsmagazine);
formerly, Director, United States Information Agency; formerly, Executive
Director, The Business Round Table.
Ronald F. Rohe, Vice President, Secretary, and Treasurer (54) 1200 North
Federal Highway, Suite 424, Boca Raton, FL 33432
Chief Operating Officer and Marketing Director, Baxter Financial Corporation;
formerly Registered Representative, Paine Webber Incorporated.
BROKERAGE
---------
Donald H. Baxter, President of Baxter Financial Corporation, the Fund's
investment advisor, is responsible for the selection of brokers to execute
Fund portfolio transactions. Mr. Baxter seeks to obtain the best price and
execution of Fund portfolio transactions and selects brokers with this goal in
mind. In selecting brokers, Mr. Baxter also considers the commission rate
being paid by the Fund. Commissions on listed securities are based on
competitive rates. Mr. Baxter seeks to assure himself that the commissions
paid by the Fund are reasonable in relation to the rates paid by other similar
institutions which are comparable in size and portfolio characteristics to the
Fund, and commensurate with the services being provided by the broker. To
accomplish this, Mr. Baxter negotiates commission levels with brokers with
whom the Fund does business; compares the quoted commission levels
<PAGE>
received, and applies his knowledge regarding the general levels of
commissions prevailing from time to time. Mr. Baxter also considers the value
of research services provided to the Fund by brokers. Mr. Baxter is
authorized to permit the payment of commissions in excess of those which may
have been charged by another broker if he has determined, in good faith, that
the amount of such commission is reasonable in relation to the brokerage or
research services provided by the broker acting for the Fund. During the
fiscal year ended November 30, 1996, the Fund paid total brokerage commissions
of $6,160 to brokers that provided research services.
Receipt of research information, including statistical and market
analyses, economic and financial studies from securities firms, electronic
quotation services, and on-line electronic analysis software, enables Baxter
Financial Corporation to supplement its own research and analysis activities
by making available the views of other securities firms and is a factor
considered in selecting brokers for the Fund. Allocations of brokerage for
the receipt of research and statistical information are made in the best
judgment of Mr. Baxter and not in accordance with any formula.
Baxter Financial Corporation serves as investment advisor to two
registered investment companies, the Fund and Philadelphia Fund, Inc. and
manages other private investment accounts as well. Receipt of research
information by Baxter Financial Corporation may also be of benefit to
Philadelphia Fund, Inc. and these other private accounts.
During the fiscal years ended November 30, 1996, 1995, and 1994, the
Fund paid total brokerage commissions of $6,160, $13,719, and $14,521,
respectively. The decreased level of commissions incurred by the Fund in 1996
was due to the portfolio manager's strategy of maintaining positions in a
rising market to avoid taxes for Fund shareholders. When a portfolio position
is sold for a profit the shareholder becomes responsible to pay tax on the
capital gain created. In order for existing positions to be replaced, there
must be an obviously superior investment advantage in holding the new
security.
On over-the-counter transactions, the Fund generally deals with the
principal market makers and no commissions are paid to a broker except in
situations where execution through the broker is likely to result in a savings
to the Fund.
ADDITIONAL INFORMATION ABOUT
THE INVESTMENT ADVISOR
----------------------------------
The following information supplements the information in the prospectus
under "Management of the Fund."
The current Investment Advisory Agreement between Baxter Financial
Corporation and the Fund was approved by the Fund's shareholders on March 19,
1991 and became effective on April 1, 1991. The agreement requires Baxter
Financial Corporation to
<PAGE>
provide the Fund with a continuous review of and recommendations regarding
investment of the Fund's assets. The agreement continues in force until March
31, 1998, and may be continued thereafter from year to year if renewed
annually by a majority vote of the Board of Directors of the Fund, or by a
vote of the holders of a majority of the outstanding voting securities of the
Fund, but in either case, in order to effect any such continuance the terms of
the agreement must also be approved by a majority vote, cast in person, of
those Fund Directors who are not parties to the agreement nor interested
persons of any such party, as defined by the Investment Company Act of 1940,
at a meeting called for the purpose of considering the approval of the
agreement. The agreement terminates automatically if it is transferred or
assigned by either party, which would include a change of control of the
Advisor, and may be terminated by either party without penalty on 60 days
written notice.
The Fund pays all of its own operating expenses, including: custodian and
transfer agent fees, insurance premiums, registration fees, cost of Directors'
and stockholders' meetings, distribution expenses, legal and accounting fees,
printing, and postage.
The current Administration Agreement between the Fund and Baxter
Financial Corporation requires Baxter Financial Corporation to supervise and
provide for the administrative operations of the Fund, including the provision
of office space, utilities, equipment, and clerical, secretarial, and
administrative personnel. The fee payable to Baxter Financial Corporation
under the Administrative Agreement is at the annual rate of .25 percent of the
net asset value of the Fund, calculated and payable monthly, at 1/12th the
annual rate. The Administration Agreement is subject to approval by a
majority vote of disinterested directors of the Fund. It may be terminated in
the same manner, without penalty, upon 60 days written notice to Baxter
Financial Corporation, and by Baxter Financial Corporation upon 60 days notice
to the Fund. American Data Services, Inc. provides the Fund with certain
accounting services.
<PAGE>
For the fiscal year ended November 30, 1996, Baxter Financial Corporation
earned investment advisory fees of $21,096, and, as administrator, earned
$7,032 for administrative services rendered. Over the same period,
reimbursable expenses of the Fund amounted to 2.61% of the average net assets
exceeding California regulatory expense limitations in effect at the time.
The excess amount, $3,016 was reimbursed to the Fund by Baxter Financial
Corporation. Expenses of the Fund for fiscal year ended November 30, 1996
were 2.58% of average net assets after reimbursement of expenses.
For the fiscal year ended November 30, 1995, Baxter Financial Corporation
earned investment advisory fees of $19,256, and, as administrator, earned
$6,418 for administrative services rendered. Over the same period,
reimbursable expenses of the Fund amounted to 4.44% of the average net assets
exceeding California regulatory expense limitations in effect at the time.
The investment advisory fees and administrative services fees earned by Baxter
Financial Corporation, $25,674 was reimbursed to the Fund by Baxter Financial
Corporation. Expenses of the Fund for fiscal year ended November 30, 1995
were 3.44% of average net assets after reimbursement of expenses.
For the fiscal year ended November 30, 1994, Baxter Financial Corporation
earned investment advisory fees of $18,503, and, as administrator, earned
$6,167 for administrative services rendered. Over the same period,
reimbursable expenses of the Fund amounted to 4.71% of the average net assets
exceeding California regulatory expense limitations in effect at the time.
The investment advisory fees and administrative services fees earned by Baxter
Financial Corporation, $24,670 was reimbursed to the Fund by Baxter Financial
Corporation. Expenses of the Fund for fiscal year ended November 30, 1994
were 3.71% of average net assets after reimbursement of expenses.
UNDERWRITERS
------------
Baxter Financial Corporation serves as the principal underwriter of the
Fund's shares, which are offered on a continuous and "best efforts" basis.
During the last three fiscal years of the Fund, Baxter Financial
Corporation retained total underwriting and dealer commissions of $127, $278,
and $3,172, in 1996, 1995, and 1994, respectively, after allowing $12, $8,
and $141, respectively, to dealers who sold Fund shares in each of
these years.
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
----------------------------------------
Tait, Weller & Baker, Philadelphia PA, serve as the independent certified
public accountants of the Fund. As such, that firm conducts an audit of the
Fund's annual and semi-annual reports to stockholders and prepares the Fund's
tax returns.
The following information supplements the information in the prospectus
under "Performance".
CALCULATION OF PERFORMANCE DATA
-------------------------------
Following are quotations of the annualized total returns for the
one, five, and ten year periods ended November 30, 1996 using the standardized
method of calculation pursuant to SEC Guidelines:
Average Annual Total Returns
----------------------------
One-Year..................... 4.14%
Five-Year.................... 4.04%
Ten-Year..................... 7.32%
As the following formula indicates, the average annual total return
is determined by multiplying a hypothetical initial purchase order of $1,000
by the average annual compounded rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period, less any recurring fees charged to a shareholder
account. The results are annualized and presented accordingly. The
calculation assumes that the maximum sales load is deducted from the initial
$1,000 purchase order and that all dividends and distributions are reinvested
at the net asset value on the reinvestment dates during the period. The
quotation assumes that the account was completely redeemed at the end of each
one, five, and ten year period, as well as the deduction of all applicable
charges and fees.
The SEC Guidelines provide that "average annual total return" be
computed according to the following formula:
n
P (1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeeming value of a hypothetical
<PAGE>
$1,000 payment made at the beginning of 1, 5,
or 10 year periods at the end of the 1, 5, or
10 year periods or fractional portions thereof.
Non-standardized performance figures may also be presented in
connection with Fund advertisements. Performance figures calculated in this
manner may exclude charges which might otherwise reduce return figures,
including, for example, the sales load or Fund operating expenses, or such
figures may reflect Fund performance over periods of time other than the one,
five, and ten year periods. Non-standardized total return figures, when
furnished, shall be accompanied by standardized total return figures which
shall reflect Fund performance over the following time periods: (1) one-year
to date and May 1, 1987 to date, the latter being the date on which Mr. Donald
H. Baxter assumed exclusive portfolio management responsibilities pertaining
to the Fund, or (2) one, five, and ten year periods as of the most recent
fiscal year end of the Fund. However, notwithstanding the foregoing,
standardized total return figures for one, five, and ten year periods shall
always be presented in the Fund's Statement of Additional Information.
COMPARISONS AND ADVERTISEMENTS
------------------------------
To help investors better evaluate how an investment in the Fund
might satisfy their investment objective, Fund advertisements may discuss
total return as reported by various financial publications, or they may also
compare total return to total return as reported by other investments,
indices, and averages. Without limitation, the following publications,
indices, and averages may be used:
(a) Dow Jones Composite Average or its component averages -- an
unmanaged index presently composed of 30 industrial corporation stocks (Dow
Jones Industrial Average), 15 utility company stocks, and 20 transportation
company stocks. Comparisons of performance assume reinvestment of dividends.
(b) Standard & Poor's 500 Stock Index or its component indices --
an unmanaged index presently composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks, and 20 transportation stocks. Comparisons of
performance assume reinvestment of dividends.
(c) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation, and finance
stocks listed on the New York Stock Exchange.
(d) Lipper -- Mutual Fund Performance Analysis and Lipper Mutual
Fund Indices -- measures total return and
<PAGE>
average current yield for the mutual fund industry. Ranks individual mutual
fund performance over specified time periods assuming reinvestment of all
distributions, exclusive of sales charges.
(e) Financial publications, including Business Week, Changing
Times, Financial World, Forbes, Fortune, Money Magazine, Wall Street Journal,
Barron's, which rate fund performance over various time periods.
FINANCIAL STATEMENTS
--------------------
The financial statements of the Fund for the fiscal year ended November
30, 1996, including the Portfolio of Investments, Statement of Assets and
Liabilities, Sample Price Computation, Statement of Operations, Statement of
Changes in Net Assets, Notes to Financial Statements, Financial Highlights,
and Independent Auditor's Report, as set forth in the Fund's Annual Report to
Stockholders for fiscal year ended November 30, 1996, are incorporated herein
by reference.
<PAGE>
PART C
------
Other Information
- -----------------
Item 24. Financial Statements and Exhibits
(a) Financial statements:
Portfolio of Investments,
November 30, 1996
Statements of Assets and Liabilities,
November 30, 1996
Statement of Operations for the year
ended November 30, 1996
Statement of Changes in Net Assets for
the years ended November 30, 1996 and 1995
Notes to Financial Statements
Independent Auditor's Report
Financial Highlights Ten Years Ended 11/30/96
The financial statements described above are contained in
Registrant's Annual Report to Stockholders for the fiscal year ended
November 30, 1996, which was filed with the Commission on January
27, 1997, and are incorporated herein by reference.
(b) Exhibits:
(1) Certificate of Incorporation.
(2) By-Laws, as amended.
Incorporated herein by reference to Exhibit
24 (b) (2) to Post-Effective Amendment No. 35
to the Registration Statement under the
Securities Act of 1933
(3) Not applicable.
(4) Specimen of Certificate of Common Stock.
(5) Investment Advisory Agreement.
Incorporated herein by reference to Exhibit
24 (b) (5) to Post-Effective Amendment No. 35
to the Registration Statement under the
Securities Act of 1933
<PAGE>
(6a) Underwriting Agreement with Baxter Financial Corporation.
Incorporated herein by reference to Exhibit
24 (b) (6a) to Post-Effective Amendment No. 35
to the Registration Statement under the
Securities Act of 1933
(6b) Dealer Selling Agreement.
Incorporated herein by reference to Exhibit
24 (b) (6b) to Post-Effective Amendment No. 35
to the Registration Statement under the
Securities Act of 1933
(7) Not applicable.
(8) Custody Agreement with Star Bank, N.A.
Incorporated herein by reference to Exhibit
24 (b) (8) to Post-Effective Amendment No. 35
to the Registration Statement under the
Securities Act of 1933
(9) Administration Agreement and Amendment to Administration
Agreement.
Incorporated herein by reference to Exhibit
24 (b) (9) to Post-Effective Amendment No. 35
to the Registration Statement under the
Securities Act of 1933
(9a) Transfer Agency and Service Agreement with American Data
Services, Inc.
Incorporated herein by reference to Exhibit
24 (b) (9a) to Post-Effective Amendment No. 35
to the Registration Statement under the
Securities Act of 1933
(9b) Fund Accounting Service Agreement with American Data
Services, Inc.
Incorporated herein by reference to Exhibit
24 (b) (9b) to Post-Effective Amendment No. 35
to the Registration Statement under the
Securities Act of 1933
(10) Opinion of Counsel
(11) Consent of Tait, Weller & Baker Independent Certified
Public Accountants.
(12) None.
(13) None.
<PAGE>
(14) Model retirement plans.
(a) Prototype Profit Sharing/Money Purchase Pension
Retirement Plan *
(b) Amendment to the Profit Sharing/Money Purchase
Pension Retirement Plan *
(c) Custodian Agreement with Application/Adoption
Agreements *
(d) Individual Retirement Custodial Account under
Sections 408(a) of the Internal Revenue Code. *
* Incorporated herein by reference to Exhibit
24 (b) (14) to Post-Effective Amendment No. 35
to the Registration Statement under the
Securities Act of 1933
(15) None.
(16) Schedule for Computation of Performance Quotations
Item 25. Persons Controlled by or Under Common Control with Registrant
- -------- -------------------------------------------------------------
Not applicable; no person either directly or indirectly is
controlled by or under common control with the registrant.
Item 26. Number of Holders of Securities.
- -------- --------------------------------
As of December 31, 1996:
(1) (2)
Number of Record
Title of Class Holders
-------------- ----------------
Common Stock; 1623
$0.10 par value
Item 27. Indemnification.
- -------- ----------------
Section 56 of the Registrant's By-Laws provides for indemnification,
as set forth below.
With respect to the indemnification of the Officers and Directors of the
Corporation:
(a) The Corporation shall indemnify each Officer and Director made
party to a proceeding, by reason of service in such capacity, to the fullest
extent, and in the manner provided, under section 2-418 of the Maryland
General Corporation law: (i) unless it is proved that the person seeking
indemnification did not meet the standard of conduct set forth in subsection
<PAGE>
(b)(1) of such section; and (ii) provided, that the Corporation shall not
indemnify any Officer or Director for any liability to the Corporation or its
security holders arising from the willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
such person's office.
(b) The provisions of clause (i) of paragraph (a) herein
notwithstanding, the Corporation shall indemnify each Officer and Director
against reasonable expenses incurred in connection with the successful defense
of any proceeding to which such Officer or Director is a party by reason of
service in such capacity.
(c) The Corporation, in the manner and to the extent provided by
applicable law, shall advance to each Officer and Director who is made party
to a proceeding by reason of service in such capacity the reasonable expenses
incurred by such person in connection therewith.
Item 28. Business and Other Connection of Investment Advisor.
- -------- ----------------------------------------------------
Baxter Financial Corporation is investment advisor to the Fund, to
Philadelphia Fund, Inc., and to other institutional and individual investment
accounts; and acts as underwriter of shares of the Fund and Philadelphia Fund,
Inc.
DONALD H. BAXTER - Director, President, and Treasurer, Baxter Financial
Corporation; President and Director, Philadelphia Fund, Inc. and Eagle Growth
Shares, Inc.; Director, Sunol Molecular Corp. (biotechnology); Director, Great
Eastern Bank; formerly Managing Member, Crown Capital Asia Limited Liability
Company; formerly Managing Member, Baxter Biotech Ventures Limited Company.
RONALD F. ROHE - Chief Operating Officer, Baxter Financial Corporation; Vice
President, Philadelphia Fund, Inc. and Eagle Growth Shares, Inc.; formerly
Registered Representative, Paine Webber Inc.
The address of Baxter Financial Corporation, Philadelphia Fund, Inc. and
Eagle Growth Shares, Inc, is 1200 North Federal Highway, Suite 424, Boca
Raton, FL 33432.
Item 29. Principal Underwriters.
- -------- -----------------------
(a) Baxter Financial Corporation, 1200 North Federal Highway, Suite
424, Boca Raton, Florida 33432 serves as principal underwriter of the Fund.
Baxter Financial Corporation also serves as investment advisor to the Fund and
Philadelphia Fund, Inc., and to other private accounts.
(b) See Item 28.
(c) Not applicable
<PAGE>
Item 30. Location for Accounts and Records.
- -------- ----------------------------------
All books and records of the Registrant are maintained and are in
the possession of The Fund at 1200 North Federal Highway, Suite 424,
Boca Raton, FL 33432, except those which are kept by Star Bank,
N.A., the Fund's custodian, and American Data Services, Inc., the
Fund's transfer agent, and dividend disbursing agent.
Item 31. Management Services.
- -------- --------------------
NONE
Item 32. Undertakings.
- -------- -------------
Registrant hereby undertakes to furnish to each person to whom a
prospectus is delivered a copy of the registrant's latest Annual
Report to Stockholders upon request and without charge.
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Eagle Growth Shares, Inc.,
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933, and has duly caused this Post-Effective Amendment to its Registration
Statement (Commission File Nos. 2-34540 and 811-1935) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca
Raton, and the State of Florida on the 10th day of March 1997.
Eagle Growth Shares, Inc.
(Registrant)
By:/s/Donald H. Baxter
------------------------
Donald H. Baxter, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement (File No. 2-34540) has been signed below by the
following persons in the capacity and on the date indicated.
Signature Title Date
- --------- ----- ----
President, Principal
/s/Donald H. Baxter Executive Officer and March 10, 1997
- ----------------------- Director
Donald H. Baxter
/s/Ronald F. Rohe Treasurer, Principal March 10, 1997
- ----------------------- Financial Officer
Ronald F. Rohe
/s/Kenneth W. McArthur Director March 10, 1997
- -----------------------
Kenneth W. McArthur
/s/Donald P. Parson Director March 10, 1997
- -----------------------
Donald P. Parson
/s/Robert A. Utting Director March 10, 1997
- -----------------------
Robert A. Utting
/s/Robert L. Meyer Director March 10, 1997
- -----------------------
Robert L. Meyer
/s/James Keogh Director March 10, 1997
- -----------------------
James Keogh
/s/Thomas J. Flaherty Director March 10, 1997
- -----------------------
Thomas J. Flaherty
<PAGE>
EXHIBIT INDEX
-------------
PAGE
----
24(b)(1) Certificate of Incorporation 51
24(b)(4) Specimen of Cerficate of Common Stock 58
24(b)(10) Opinion of Counsel 60
24(b)(11) Consent of Tait, Weller & Baker 62
24(b)(16) Schedule for Computation of
Performance Quotations 63
<PAGE>
ARTICLES OF INCORPORATION
OF
EAGLE GROWTH SHARES, INC.
FIRST: WE, THE UNDERSIGNED, Stephen W. Kline, Esquire, whose post-office
address is 1300 Girard Trust Building, Philadelphia, Pennsylvania 19102, and
John D. Molloy, whose post-office address is 1300 Girard Trust Building,
Philadelphia, Pennsylvania 19102, being at least twenty-one years of age, do,
under and by virtue of the General Laws of the State of Maryland authorizing
the formations of corporations, associate ourselves as incorporators
with the intention of forming a corporation.
SECOND: The name of the corporation is EAGLE GROWTH SHARES, INC.
THIRD: The purposes for which the corporation is formed are:
To engage generally in the business of an incorporated investment company
of the management type, investing and reinvesting as more specifically set
forth herein, subject to limitations as set forth in the By-Laws of the
Corporation, its assets in all forms of securities and other personal
property, of every kind and description; to consolidate or merge with, to
acquire and take over the assets of, and to assume the liabilities of, any
other corporation or trust with similar powers; to make contracts; and,
generally to do any or all acts and things necessary or desirable in
furtherance of any of the corporate purposes or designed to protect, preserve,
or enhance
<PAGE>
the value of the corporate assets, or to the extent permitted to business
corporations authorized under the State of Maryland as now or may in the
future be enforced; and to do any or all of the things in furtherance of the
above purposes as natural persons might do.
To invest and reinvest its capital and any surplus and any reserves it
may have, and to acquire by exchange, purchase, subscription, contract or
otherwise, and to receive, own, hold, guarantee, sell, assign, exchange,
transfer, mortgage, pledge, hypothecate, or otherwise dispose of and generally
deal in and with all forms of securities and investments of every kind and
description, including, but not by way of limitation, shares of stock
(preferred, common, and debentures) notes, bonds, debentures, script,
warrants, options to purchase and options to sell securities, participation
certificates, mortgages, commercial papers, choses in action, evidences of
indebtedness and other obligations of every kind and disposition; (a) of any
private, public, quasi-public, municipal, corporation, syndicate, association,
common law trust, firm or individual existing or carrying on business in the
United States or elsewhere throughout the world; (b) of any government, United
States or foreign, or subdivision thereof, whether state, county, municipality
or other political or government division or subdivision;
And also, all trust, partnership or other certificates of rights,
evidencing interest in any such securities or instruments, both within and
without the State of Maryland; and while the owners of any such securities or
investments to exercise all the rights, powers, privileges of ownership or
interest in respect to the same,
-2-
<PAGE>
including the right to vote, to subscribe for additional stock, and to
purchase or exercise "rights" in connection therewith; to do any or all acts
and things for the preservation, protection, improvement, management, and
enhancement in value thereof, or designated to accomplish any such purpose,
all to such extent as permitted under the laws of the State of Maryland and
not otherwise;
To conduct researches, investigations, and analyses of enterprises of
every kind and description in the United States and elsewhere throughout the
world.
To acquire or become interested in any such securities or evidences of
interest therein as aforesaid by original subscription, or otherwise, and to
make payment thereon as called for, and to subscribe for the same
conditionally or otherwise.
Subject to the limitations as set forth in the By-Laws of the Corporation
and other governing laws and regulations, to acquire, and pay for in cash,
stock, or evidence of indebtedness of this Corporation or otherwise, the
assets and property, and to undertake or assume the whole or any part of the
obligations or liabilities of any person, firm, association or corporation
which is in the nature of a private investment portfolio or company or
personal holding company.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating
to or useful in connection with the
-3-
<PAGE>
business of this Corporation as an investment company.
To enter into, make and perform contracts of every kind and description
with any person, firm, association, corporation, municipality, county, state,
body politic or government or colony or dependency thereof relating to or
useful in connection with the business of this Corporation as an investment
company. Subject to limitations as set forth in the By-Laws of the
Corporation and other governing law and regulations, to borrow or raise moneys
for any of the purposes of the Corporation and, from time to time without
limit as to amount, to draw, make, accept, endorse, execute and issue
promissory notes, drafts, bills of exchange, warrants, bonds, debentures and
other negotiable or non-negotiable instruments and evidence of indebtedness,
and to secure the payment of any thereof and of the interest thereon by
pledge, conveyance or assignment in trust of the whole or any part of property
of the Corporation whether at the time owned or thereafter acquired, and to
sell, pledge, or otherwise dispose of such bonds or other obligations of the
Corporation for its purposes.
To have one or more offices in any or all states, territories, and
districts of the United States and foreign countries, to carry on all or any
of its operations and business and without restriction or limit as to amount
but subject to the restrictions as set forth in the By-Laws of the
Corporation, to purchase or otherwise acquire, hold, own, mortgage, sell,
convey or otherwise dispose of, personal property of every class and
description but subject to the limitations as set forth in the By-Laws of the
Corporation, in any of
-4-
<PAGE>
the states, districts, territories or colonies of the United States, and in
any and all foreign countries subject to the laws of such state, district,
territory, colony or country.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations of a
similar character by the General Laws of the State of Maryland now or
hereafter in force, and the enumeration of the foregoing powers shall not be
deemed to exclude any powers, rights or privileges so granted or conferred.
Subject to the restrictions contained in the By-Laws of the Corporation,
the objects and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in nowise limited or restricted by reference to,
or inference from, the terms of any other clauses in these Articles of
Incorporation, but the objects and purposes specified in each of the foregoing
clauses of this Article shall be regarded as independent objects and purposes.
FOURTH: The post-office address of the principal office of the
Corporation in this State is c/o The Corporation Trust Incorporated, First
National Bank Building, Light and Redwood Streets, Baltimore, Maryland 21202.
The name of the resident agent of the Corporation in this State is The
Corporation Trust Incorporated, a corporation of this State, and the post-
office address of the resident agent is First National Bank Building,
Light and Redwood Streets, Baltimore, Maryland 21202.
-5-
<PAGE>
FIFTH: The total number of shares of stock which the Corporation shall
have authority to issue is Ten Million (10,000,000) shares, all of one class,
of the par value of .10 Dollar ($0.10) each and of the aggregate par value of
One Million Dollars ($1,000,000).
SIXTH: The number of directors of the corporation shall be nine, which
number may be increased or decreased pursuant to the By-Laws of the
corporation and shall never be less than three (3). The names of the
directors who shall act until the first annual meeting or until their
successors are duly chosen and qualify are:
Thomas J. Flaherty, Jr. Charles E. Laroche
Philip H. Didriksen, Jr. John S. Williams
George F. Scanlon, Jr. William H. Bauer
Thomas W. Grant Robert A. Bristol
John B. Boucher
SEVENTH: The Corporation shall redeem or purchase from its stockholders
shares of its own stock as provided in the By-Laws of the corporation;
provided that the corporation shall not pay for such shares of stock an amount
greater than the proportionate interest in the Corporation represented by such
shares of stock.
EIGHTH: Notwithstanding any provision of law requiring a greater
proportion than a majority of the votes of all classes or of any class of
stock entitled to be cast, to take or authorize any action, the corporation
may take or authorize such action upon the concurrence of a majority of the
aggregate number of the votes entitled to be cast thereon.
-6-
<PAGE>
NINTH: No holder of shares of stock of any class shall be entitled as a
matter of right to subscribe for or purchase or receive any part of any new or
additional issue of shares of stock of any class or of securities convertible
into shares of stock of any class, whether now or hereafter authorized or
whether issued for money, or for a consideration other than money.
TENTH: The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, the undersigned incorporators of Eagle Growth Shares,
Inc. who executed the foregoing Articles of Incorporation hereby acknowledge
the same to be their act and further acknowledge that, to the best of their
knowledge the matters and facts set forth therein are true in all material
respects under the penalties of perjury.
Dated the twentieth day of August, 1969
/s/Stephen W. Kline
-------------------------
Stephen W. Kline
/s/John D. Molloy
-------------------------
John D. Molloy
<PAGE>
****************************SPECIMEN*****************************
NUMBER SHARES
/----------/ /----------/
/ / [logo] / /
/----------/ /----------/
EAGLE GROWTH SHARES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THIS CERTIFIES that is the owner of
*SEE REVERSE SIDE FOR CERTAIN DEFINITITIONS
------------------------------------------
/ CUSIP 717588 10 7 /
------------------------------------------
FULLY-PAID AND NON-ASSESSABLE SHARES OF CAPITAL STOCK OF THE PAR VALUE OF
ONE DOLLAR PER SHARE OF
Eagle Growth Shares, Inc. transferable only on the books of the
Corporation by the holder hereof in person or duly authorized Attorney upon
surrender of this Certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held subject to all of the
restrictions, conditions and provisions of the Articles of Incorporation and
By-laws of the Corporation and all amendments and supplements thereto copies
of which are on file at the office of the Transfer Agent and the holder
hereof, by acceptance of this certificate, consents to and agrees to be bound
by all of the said provisions, a copy of which provisions will be furnished to
any holder hereof upon request and without charge.
This certificate is not valid unless countersigned by the Transfer Agent.
In Witness Whereof, the Corporation has caused this certificate to be
signed by its duly authorized officers and its Corporation seal to be hereto
affixed.
Dated:
EAGLE GROWTH SHARES, INC.
CORPORATE
/s/Ronald F. Rohe SEAL /s/Donald H. Baxter
TREASURER 1984 PRESIDENT
*MARYLAND*
COUNTERSIGNED:AMERICAN DATA SERVICES, INC.
TRANSFER AGENT (HUNTINGTON, NY)
BY
-------------------------------------------
AUTHORIZED SIGNATURE
<PAGE>
[BACK OF CERTIFICATE]
The following abbreviations when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws and regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -_____Custodian_____
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts
of survivorship and not as to Minors Act_______
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
For value received,_____________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
/ /
- --------------------------------------
___________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
___________________________________________________________
___________________________________________________________
____________________________________________________ shares
of the capital stock represented by the within Certificate,
and do hereby irrevocably constitute and appoint
____________________________________________________ Attorney
to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.
Dated___________________
X________________________________________
THE SIGNATURES TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAMES AS WRITTEN
NOTICE: UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
LAW OFFICES
STRADLEY, RONON, STEVENS & YOUNG 1300 TWO GIRARD PLAZA
BROAD STREET & SOUTH PENN SQUARE
PHILADELPHIA, PA 19102
-----
[LIST OF ASSOCIATED ATTORNEYS] 215 LOcust 9-3800
-----
CABLE ADDRESS:"LEXMEN"
-----
TELEX: 83-4699
MARCH 2, 1971
Eagle Growth Shares, Inc.
110 Wall Street
New York, New York 10005
Gentlemen:
At your request, we have reviewed the Articles of Incorporation of Eagle
Growth Shares, Inc. and other corporate records relative to the proposed
issuance and sale by Eagle Growth Shares, Inc. of 2,000,000 shares of its
authorized Common Stock of a par value of $.10 per share.
It is our opinion that Eagle Growth Shares, Inc. is a validly organized
and subsisting corporation under the laws of the State of Maryland, that it is
legally authorized to issue up to 10,000,000 shares of its Common Stock, par
value $.10 per share, at a price calculated in accordance with the
requirements of the By-Laws of the corporation when such shares are properly
registered under applicable Federal and State Securities Laws. We also have
reviewed the Management Contract with Fahnestock Advisory Corporation, the
Research and Administrative Services Agreement between Fahnestock Advisory
Corporation and Fahnestock & Co., which was approved by the corporation, the
Purchase Contract between the corporation and Universal Programs, Inc., the
Custodian Agreement with The Bank of New York, the Notification of
Registration on Form N-8A, as amended to date, and the Registration Statement
on Form N-8b-1, as amended to date, under the Investment Company Act of 1940,
as amended, and the Registration Statement on Form S-5, as amended to date,
filed under the Securities Act of 1933, as amended.
<PAGE>
Eagle Growth Shares, Inc.
Page Two
March 2, 1971
We are of the opinion that, upon the filing and effectiveness of the
registration statements referred to above relating respectively to Eagle
Growth Shares, Inc. and to 2,000,000 authorized shares of Eagle Growth Shares,
Inc., Eagle Growth Shares, Inc. may lawfully solicit or cause to be solicited
in those jurisdictions where such sale has been authorized by proper
registration, purchase orders for the issue of such 2,000,000 shares for a
cash consideration as described in the prospectus which is filed as Part I of
the Registration Statement, as amended, under the Securities Act of 1933, as
amended, and in the By-laws of the corporation. It is further our opinion
that the said 2,000,000 shares will be lawfully issued, full paid, and non-
assessable shares of Eagle Growth Shares, Inc. in accordance with the
conditions set forth in the said prospectus.
We consent to the inclusion of this opinion as an exhibit to the
amendment to the Registration Statement to be filed concurrently herewith with
the United States Securities and Exchange Commission under the Securities Act
of 1933, and to the applications and registration statements filed in
accordance with the various Securities Laws of several states in which the
shares of Eagle Growth Shares, Inc. are to be offered for sale, and we further
consent to the reference in the prospectus of Eagle Growth Shares, Inc. to the
fact that this opinion concerning the legality of the issue has been rendered
by us.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG
By /s/ Martin V. Miller
------------------------------
/mms
<PAGE>
TAIT, WELLER & BAKER
Certified Public Accountants
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information (Part B) of this amended Registration Statement on Form
N-1A of our report dated December 16, 1996 (except for Note 5 as to which the
date is December 24, 1996 relating to financial statements of Eagle Growth
Shares, Inc. for the year ended November 30, 1996. We also consent to the
reference to our report under the heading "Financial Highlights" in such
amended Registration Statement.
/s/Tait, Weller & Baker
Tait, Weller & Baker
Philadelphia, Pennsylvania
March 5, 1997
<PAGE>
EAGLE GROWTH SHARES
10 YEAR PERFORMANCE FIGURES
8.50% LOAD
FOR THE PERIOD ENDING 11/30/96
<TABLE>
<CAPTION>
TOTAL COST VALUE SHARE
DIV+CAP DOLLARS DOLLARS SHARES NAV PERFORMANCE
<S> <C> <C> <C> <C> <C> <C>
BALANCE 11/30/86 1000.00 915.00 129.603 7.06
DIVIDEND 12/11/86 $0.090 11.66 11.66 1.698 6.87 -256.83
BALANCE 11/30/87 1011.66 743.17 131.301 5.66 - 28.07%
DIVIDEND 1987 $0.000 0.00 0.00 0.000 0.00 237.66
BALANCE 11/30/88 1011.66 980.82 131.301 7.47 31.98%
DIVIDEND 1988 $0.000 0.00 0.00 0.000 0.00 657.82
BALANCE 11/30/89 1011.66 1638.64 131.301 12.48 67.07%
DIVIDEND 12/12/89 $0.030 3.94 3.94 0.317 12.41 -408.01
BALANCE 11/30/90 1015.60 1230.63 131.619 9.35 - 24.90%
DIVIDEND 12/26/90 $0.220 28.96 28.96 3.077 9.41 348.00
BALANCE 11/30/91 1044.56 1578.64 134.696 11.72 28.28%
DIVIDEND 12/30/91 $0.015 2.02 2.02 0.167 12.07 229.88
BALANCE 11/30/92 1046.58 1808.52 134.863 13.41 14.56%
DIVIDEND 12/28/92 $0.555 74.85 74.85 5.758 13.00 32.21
BALANCE 11/30/93 1121.43 1840.73 140.621 13.09 1.78%
DIVIDEND 12/28/93 $0.240 33.75 33.75 2.606 12.95 -275.26
BALANCE 11/30/94 1155.18 1565.47 143.227 10.93 - 14.95%
DIVIDEND 12/28/94 $0.048 6.87 6.87 0.626 10.99 274.40
BALANCE 11/30/95 1162.05 1839.87 143.853 12.79 17.53%
DIVIDEND 12/27/95 $0.875 125.87 125.87 10.463 12.03 254.19
BALANCE 11/30/96 1287.92 2094.06 154.316 13.57 13.82%
</TABLE>
- ------------------------------------------------------------------------------
TOTAL 10 YEAR RETURN 102.68%
AVERAGE ANNUAL TOTAL RETURN 7.32%
==============================================================================
<PAGE>
EAGLE GROWTH SHARES
5 YEAR PERFORMANCE FIGURES
8.50% LOAD
FOR THE PERIOD ENDING 11/30/96
<TABLE>
<CAPTION>
TOTAL COST VALUE SHARE
DIV+CAP DOLLARS DOLLARS SHARES NAV PERFORMANCE
<S> <C> <C> <C> <C> <C> <C>
BALANCE 11/30/91 1000.00 915.00 78.072 11.72
DIVIDEND 12/30/91 $0.015 1.17 1.17 0.097 12.07 48.24
BALANCE 11/30/92 1001.17 1048.24 78.169 13.41 5.27%
DIVIDEND 12/28/92 $0.555 43.38 43.38 3.337 13.00 18.67
BALANCE 11/30/93 1044.55 1066.91 81.506 13.09 1.78%
DIVIDEND 12/28/93 $0.240 19.56 19.56 1.511 12.95 -159.54
BALANCE 11/30/94 1064.12 907.37 83.016 10.93 - 14.95%
DIVIDEND 12/28/94 $0.048 3.98 3.98 0.363 10.99 159.05
BALANCE 11/30/95 1068.10 1066.42 83.379 12.79 17.53%
DIVIDEND 12/27/95 $0.875 72.96 72.96 6.065 12.03 147.33
BALANCE 11/30/96 1141.06 1213.75 89.444 13.57 13.82%
</TABLE>
- ------------------------------------------------------------------------------
TOTAL 5 YEAR RETURN 21.89%
AVERAGE ANNUAL TOTAL RETURN 4.04%
==============================================================================
<PAGE>
EAGLE GROWTH SHARES
1 YEAR PERFORMANCE FIGURE
8.50% LOAD
FOR THE PERIOD ENDING 11/30/96
<TABLE>
<CAPTION>
TOTAL COST VALUE SHARE
DIV+CAP DOLLARS DOLLARS SHARES NAV PERFORMANCE
<S> <C> <C> <C> <C> <C> <C>
INPUT 11/30/95 1000.00 915.00 71.540 12.79
DIVIDEND 12/27/95 $0.875 62.60 62.60 5.203 12.03 41.41
BALANCE 11/30/96 1062.60 1041.41 76.744 13.57 4.14%
</TABLE>
- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN 4.14%
==============================================================================
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000030912
<NAME> EAGLE GROWTH SHARES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 2,107,005
<INVESTMENTS-AT-VALUE> 3,060,325
<RECEIVABLES> 2,345
<ASSETS-OTHER> 25,345
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,088,015
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,037
<TOTAL-LIABILITIES> 28,037
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,997,704
<SHARES-COMMON-STOCK> 225,550
<SHARES-COMMON-PRIOR> 219,178
<ACCUMULATED-NII-CURRENT> (12,127)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 121,081
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 953,320
<NET-ASSETS> 3,059,978
<DIVIDEND-INCOME> 30,320
<INTEREST-INCOME> 27,874
<OTHER-INCOME> 0
<EXPENSES-NET> 70,321
<NET-INVESTMENT-INCOME> (12,127)
<REALIZED-GAINS-CURRENT> 121,199
<APPREC-INCREASE-CURRENT> 264,031
<NET-CHANGE-FROM-OPS> 373,103
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 193,972
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41,397
<NUMBER-OF-SHARES-REDEEMED> 49,591
<SHARES-REINVESTED> 14,566
<NET-CHANGE-IN-ASSETS> 255,621
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 193,854
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 21,096
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 75,584
<AVERAGE-NET-ASSETS> 2,812,201
<PER-SHARE-NAV-BEGIN> 12.79
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 1.71
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .875
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.57
<EXPENSE-RATIO> 2.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
