<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30,
1996
SECURITIES ACT FILE NO. 2-14543 INVESTMENT COMPANY ACT FILE NO. 811-825
- ------------------------------------------------------------------------
- -----
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 51
AND/OR
[x]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 21
[x]
(CHECK APPROPRIATE BOX OR BOXES)
--------------------
AMERICAN GROWTH FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
410 17TH Street, Suite 800
Denver, Colorado 80202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (303) 623-6137
Robert Brody
410 17th Street, Suite 800
Denver, CO 80202
(Name and Address of Agent for Service)
Copies to:
Shereff, Friedman, Hoffman & Goodman, LLP
Attn: Joel H. Goldberg, Esq.
919 Third Avenue
New York, New York 10022
-------------------
Approximate Date of Proposed Public Offering: as soon as practicable after
the
effective date of the Registration Statement
-------------------
It is proposed that this filing will become effective (check appropriate
box)
[_] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a) (1)
[x] on (December 1, 1996) 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.
Pursuant to Rule 24f-2(a) (1) under the Investment Company Act of 1940, the
Fund has registered an indefinite number or amount of its securities under
the Securities Act of 1933. The Fund filed its Rule 24f-2 notice for the
fiscal year ended July 31, 1996 on September 26, 1996.
<PAGE>
<PAGE>
AMERICAN GROWTH FUND, INC.
410 17th Street, Suite 800, Denver, Colorado 80202-4418
(303) 623-6137
PROSPECTUS
December 1, 1996
AMERICAN GROWTH FUND, INC. is a professionally managed diversified
investment fund which primarily invests in common stocks and securities
convertible into common stock with the objectives of capital growth and,
secondarily, current income. In pursuing the Fund's objectives, the Fund's
Adviser intends to take a conservative approach to investments, balancing
the preservation of capital against potential gains.
This Fund offers four classes of shares, each with a different
combination of sales charges, distribution and service fees and other
features. This permits an investor to choose the method of purchasing
shares that the investor believes is most beneficial given the amount of
the purchase, the length of time the investor expects to hold the shares
and other relevant circumstances. See 'Purchase of Shares.'
Shares may be purchased directly from American Growth Fund Sponsors,
Inc. (the 'Distributor'), 410 17th Street, Suite 800, Denver, CO 80202,
(303) 623-6137, or from securities dealers which have entered into dealer
agreements with the Distributor.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus sets forth concisely the information about the Fund
that a prospective investor ought to know before making an investment in
the Fund. This Prospectus should be read carefully and retained for future
reference. A statement containing additional information about the Fund
dated December 1, 1996 (the 'Statement of Additional Information'), has
been filed with the Securities and Exchange Commission and is available,
without charge, by calling or by writing the Fund at the above telephone
number or address. The Statement of Additional Information is incorporated
by reference into this Prospectus.
AMERICAN GROWTH FUND SPONSORS, INC.
410 17th Street, Suite 800, Denver, Colorado 80202-4418
303-623-6137
800-525-2406
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
CLASS A CLASS B CLASS C CLASS
D
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price).. 5.75% None None 5.75%
Sales Load Imposed on Dividend Reinvestment None None None None
Deferred Load (as a percentage of original purchase
price or redemption proceeds, whichever is lower) None(b) 5.0% during the first 2 1% for one year None(b)
years,4% for the next 2
years, decreasing 1%
annually thereafter to 0.0%
the seventh year(a)
Exchange Fee........................................... None None None None
ANNUAL FUND OPERATING EXPENSES (AS
A PERCENTAGE OF AVERAGE NET ASSETS)(a):
Investment Advisory Fees............................... 0.82% 0.82% 0.82% 0.82%
12b-1 Fees............................................. 0.25% 0.98% 0.95% None
Other Expenses...................................... 0.99% 1.01% 1.20% 0.81%
Total Fund Operating Expenses.......................... 2.06% 2.81% 2.97% 1.63%
</TABLE>
(a) Class B shares convert to Class A shares automatically approximately seven
years
after initial purchase. See 'Purchase of Shares--Deferred Sales Charge
Alternatives--Class B and Class C Shares'.
(b) Purchases of Class A and Class D shares in amounts of $1,000,000 or more
which are
not subject to an initial sales charge generally will be subject
to a contingent
deferred sales charge of 1.0% of amounts redeemed within the first year
of purchase.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
EXAMPLE:
An investor would pay the following expenses on a $1,000 investment
including the maximum $57.50 initial sales charge (Class A and Class D
shares only) and assuming (1) the Total Fund Operating Expenses for each
class set forth above; (2) a 5% annual return throughout the periods and
(3) redemption at the end of the period:
Class A $77 $118 $162 $283
Class B $78 $127 $178 $314*
Class C $40 $ 92 $156 $329
Class D $73 $106 $141 $240
An investor would pay the following expenses on the same $1,000 investment
assuming no redemption at the end of the period:
Class A $77 $118 $162 $283
Class B $28 $ 87 $148 $314*
Class C $30 $ 92 $156 $329
Class D $73 $106 $141 $240
* Assumes conversion to Class A shares approximately seven years after
purchase.
</TABLE>
The foregoing Fee Table is intended to assist investors in understanding
the costs and expenses that a shareholder in the Fund will bear directly
or indirectly. The example should not be considered a representation of
past or future expenses or annual rate of return, and actual expenses or
annual rates of return may be more or less than those assumed for purposes
of the Example. The Example set forth above assumes reinvestment of all
dividends and distributions and utilizes a 5% annual rate of return as
mandated by Securities and Exchange Commission (the 'Commission')
regulations. Class A, Class B and Class C shareholders who own their
shares for an extended period of time may pay more in total charges than
the economic equivalent of the maximum front-end sales charge permitted
under the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. (the 'NASD'). See 'Purchase of Shares' and 'Redemption of
Shares'.
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables present selected financial information about the
Fund, including per share data and expense ratios and other data based on
the Fund's average net assets. This information, for the year ended July
31, 1996 has been audited by KPMG Peat Marwick LLP, the Fund's independent
auditors, whose report on the Fund's financial statements for the fiscal
year ended July 31, 1996 is included in the Statement of Additional
Information. This information for each of the nine years ended July 31,
1995 has been audited by the Fund's previous Independent Auditors.
<TABLE>
<CAPTION>
Class D
Year Ended July 31,
Per Share Operating Data: 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period...... $ 8.75 $ 9.34 $ 9.39 $ 8.50 $ 8.02 $ 7.59 $ 7.46 $ 6.71 $ 9.62 $ 9.14
Income(loss) from
investment operations:
Net investment income.... .03 .21 .03 .11 .10 .16 .17 .38 .24 .16
Net realized and unrealized
gain (loss)............... .39 .88 1.00 1.51 .94 .53 .26 .71 (1.72) 1.70
Total income (loss) from
Investment Operations..... .42 1.09 1.03 1.62 1.04 .69 .43 1.09 (1.48) 1.86
Dividends and distributions
to shareholders:
Dividends from net
investment income ....... (.12) (.12) (.05) (.08) (.06) (.26) (.30) (.34) (.16) (.29)
Distributions from net
realized gain............ (.20) (1.56) (1.03) (.65) (.50) - - - (1.27) (1.09)
Total dividends and
distributions to
shareholders............. (.32) (1.68) (1.08) (.73) (.56) (.26) (.30) (.34) (1.43) (1.38)
Net Asset Value,
End of Period............ $ 8.85 $ 8.75 $ 9.34 $ 9.39 $ 8.50 $ 8.02 $ 7.59 $ 7.46 $ 6.71 $ 9.62
Total Return*............. 4.8% 15.2% 11.1% 20.2% 13.6% 9.6% 5.7% 17.0% (14.4)% 23.1%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands)........... $100,130 $90,538 $68,209 $62,180 $55,501 $55,710 $58,574 $63,935 $64,248 $81,321
Ratios to average net
assets:
Net investment income
(loss)...................0.47% 1.91% 0.35% 0.59% 1.14% 2.02% 2.01% 5.15% 3.17% 1.99%
Expenses**................1.63% 1.45% 1.34% 1.44% 1.46% 1.33% 1.33% 1.32% 1.29% 1.28%
Portfolio Turnover
Rate***................. 163.1% 173.0% 87.2% 48.8% 39.8% 135.5% 92.3% 60.9% 241.7% 197.0%
Average Brokerage
Commission Rate****..... $0.0561 - - - - - - - - -
</TABLE>
See notes to financial statements.
* Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering) with all
dividends and distributions reinvested in additional shares on the
reinvestment date and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in
total returns. Total returns are not annualized for periods of less than
one full year.
** Beginning of fiscal 1996, the expense ratio reflects the effect of
expenses paid indirectly by the Fund. Prior year expenses have not been
adjusted.
*** The lesser of purchases and sales of portfolio securites for a period,
divided by the monthy average of the market value of securites owned during
the period. Purchases and sales of investment securities, other than U.S.
Government and short-term securities for the period ended July 31, 1996,
aggregated $149,865,511 and $180,516,815, respectively.
**** Total brokerage commissions paid on applicable purchases and sales of
investment securities for the period divided by the total number of related
shares purchased and sold.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Period Ended July 31,
Per Share Operating Data: 1996***** 1996***** 1996*****
Net Asset Value,
Beginning of Period...... $ 9.21 $ 9.21 $ 9.21
Income(loss) from
investment operations:
Net investment income.... -******* (.01) -*******
Net realized and unrealized
gain (loss)............... (.37) (.40) (.40)
Total income (loss) from
Investment Operations..... (.37) (.41) (.40)
Dividends and distributions
to shareholders:
Dividends from net
investment income ....... - - -
Distributions from net
realized gain............ - - -
Total dividends and
distributions to
shareholders............. - - -
Net Asset Value,
End of Period............ $ 8.84 $ 8.80 $ 8.81
Total Return*............. (4.0)% (4.5)% (4.3)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands)........... $3,838 $3,417 $367
Ratios to average net
assets:
Net investment income
(loss)................... 0.13% (0.52)% (0.63)%
Expenses** ............... 2.06%****** 2.81%****** 2.97%******
Portfolio Turnover
Rate***................... 163.1% 163.1% 163.1%
Average Brokerage
Commission Rate****........ $0.0561 $0.0561 $0.0561
/TABLE
<PAGE>
See notes to financial statements.
* Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering) with all
dividends and distributions reinvested in additional shares on the
reinvestment date and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in
total returns. Total returns are not annualized for periods of less than
one full year.
** Beginning in fiscal 1996, the expense ratio reflects the effect of
expenses paid indirectly by the Fund. Prior year expenses have not been
adjusted.
*** The lessor of purchases and sale of portfolio securities for a period,
divided by the monthly average of the market value of securities owned
during the period. Purchases and sale of investment securities, other than
U.S. Government and short-term securities for the period ended July 31,
1996, aggregated $149,865,511 and $180,516,815, respectively.
**** Total brokerage commissions paid on applicable purchases and sales of
investment securities for the period divided by the total number of related
shares purchased and sold.
***** For the period from March 1, 1996 (inception of offering)
to July
31, 1996.
****** Annualized
******* Less than $.005 per share.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
American Growth Fund, Inc., an open-end diversified investment
company, is a Maryland corporation organized July 16, 1958.
The primary investment objective of the Fund is growth of capital.
Income, while a factor in portfolio selection, is secondary to the Fund's
principal objective. These investment objectives can be changed by a vote
of the board of directors without a vote of the Fund's shareholders, which
could cause the Fund to have an investment objective different from that
deemed appropriate by the shareholder at the time of investment. The Fund
will notify shareholders of any change in investment objectives at least
30 days in advance of such change. There can be no assurance that the Fund
will attain its investment objectives.
In attempting to achieve its investment objective, the Fund will under
normal conditions invest at least 65% of its assets in common stocks and
securities convertible into common stocks traded on national securities
exchanges or over-the-counter. Investment Research Corporation, the Fund's
investment adviser (the Adviser') will choose common stocks (or
convertible securities) that the Adviser believes have potential for
capital appreciation because of existing or anticipated economic conditions
or because of other factors, including that the securities are considered
undervalued or out of favor with investors or are expected to increase in
price over the short-term. Convertible debt securities will be rated at
least A by Moody's Investors Service or Standard & Poor's Ratings Services,
a division of the McGraw Hill Companies, Inc. , or, if unrated, will be of
comparable quality in the opinion of the Adviser.
In pursuing the Fund's objectives, the Adviser intends to take a
conservative approach to investment, balancing the preservation of capital
against potential gains. When the Adviser believes the securities the Fund
holds may decline in value, the Fund may sell them and, until such time as
the Adviser believes market conditions warrant otherwise, invest all or
part of the Fund's assets in corporate bonds, debentures or preferred
stocks rated A or above (or, if unrated, of comparable quality in the
opinion of the Adviser), United States Government securities, repurchase
agreements whereby the underlying security is issued by the United States
Government or an agency thereof, or retain funds in cash or cash
equivalents. There are market risks in all investments in securities, and
the value of the Fund's securities, and consequently the Fund's share
price, will fluctuate.
A repurchase agreement is a contract where the seller agrees to
repurchase the securities at a specified price within a specified time
(generally one business day). The Fund's repurchase agreements will at all
times be fully collateralized in an amount at least equal to the repurchase
price, including accrued interest earned on the underlying securities. The
collateral will be held by the Fund's Custodian, either physically or in
a book-entry account.
The Fund will enter into repurchase transactions only with parties who
meet creditworthiness standards approved by the Fund's board of directors.
The Fund's Adviser monitors the creditworthiness of such parties under the
directors' general supervision. In the event of a default or bankruptcy by
a
<PAGE>
seller, the Fund will promptly seek to liquidate the collateral. To the
extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase are less than the repurchase price, the
Fund will suffer a loss. If the financial institution which is party to the
repurchase agreement petitions for bankruptcy or becomes subject to the
United States Bankruptcy code, the law regarding the rights of the Fund is
unsettled. As a result, under these extreme circumstances, there may be a
restriction on the Fund's ability to sell the collateral and the Fund could
suffer a loss. The Fund will not invest more than 10% of its net assets in
repurchase agreements maturing in more than seven days, or securities that
are illiquid by virtue of the absence of a readily available market or
legal or contractual restrictions on resale.
The Statement of Additional Information contains a discussion of
other investment policies and a list of specific investment restrictions
which govern the Fund's investment policies. The Fund cannot borrow money
except from a bank as a temporary measure for extraordinary or emergency
purposes, and then only in an amount not to exceed 10% of its total assets
taken at cost, or mortgage or pledge any of its assets. Accordingly, the
Fund will not borrow for leverage purposes. The Fund cannot issue senior
securities or purchase the securities of another investment company or
investment trust except in the open market where no profit to a sponsor or
dealer, other than the customary broker's commission, results from such
purchase (but the total of such investment shall not exceed 10% of the net
assets of the Fund), or except when such purchase is part of a plan of
merger or consolidation. The Fund cannot invest more than 5% of its assets
in securities of issuers that have been in operation less than three years,
and, in any event, these investments are limited to utility or pipeline
companies. These and the other specific investment restrictions listed in
the Statement of Additional Information can be changed only by approval by
a majority of the outstanding shares as defined by the Investment Company
Act of 1940.
As a 'diversified company' the Fund must meet the following
requirements: At least 75% of the value of its total assets is represented
by cash and cash items (including receivables), Government securities,
securities of other investment companies, and other securities for the
purposes of this calculation limited in respect of any one issuer to an
amount not greater in value than 5% of the value of the total assets of
such management company and to not more than 10% of the outstanding voting
securities of such issuer.
MANAGEMENT OF THE FUND
The daily operations of the Fund are managed by its officers subject
to the overall supervision and control of the board of directors. The Fund
also has a board of advisors which counsels the directors as to general
economic conditions and specific industries.
Since the organization of the Fund in 1958, its investment adviser has
been Investment Research Corporation, 410 17th Street, Suite 800, Denver,
Colorado 80202-4418, a registered investment adviser. Robert Brody, the
sole shareholder, president and a director of the Adviser, is a control
person of
<PAGE> the Adviser. Mr. Brody, as President of the Fund, has primary
responsibility for the selection of the Fund's investments and the
day-to-day management of the Fund's portfolio. Mr. Brody has acted in this
capacity with respect to the Fund since 1958. The Adviser provides
investment advice and recommendations concerning the purchases and sales
of the Fund's portfolio of securities, furnishes such statistical and
analytical information as the Fund may reasonably require, and provides
certain administrative and clerical services.
Pursuant to its agreement with the Adviser, the Fund pays an annual
advisory fee based upon a percentage of the Fund's average net assets,
subject to reduction if the Fund's expenses exceed specified levels. For
the year ended July 31, 1996, this fee amounted to 0.82% of the Fund's
average net assets on each of the four classes. The fees for Class A, Class
B and Class C are annualized. The Advisory fee paid by the Fund is higher
than that paid by most other investment companies. The Fund's aggregate
expenses for the same period amounted to 1.63% of the Fund's average net
assets of the Class D shares, 2.06% for Class A, 2.81% for Class B and
2.97% for Class C. Class A, Class B and Class C expenses are annualized.
BROKERAGE
The Fund does not have any agreement or arrangement to use any particular
broker for portfolio transactions. The Fund is authorized to employ
broker-dealers, including "affiliated" brokers, as that term is defined in
the Investment Company Act of 1940, as may, in its best judgment based on
all relevant factors, implement the policy of the Fund to obtain, at
reasonable expense, the "best execution" (prompt and reliable execution at
the most favorable price obtainable) of such transactions. The Manager need
not seek competitive commission bidding but is expected to minimize the
commissions paid to the extent consistent with the interest and policies
of the fund as established by its Board of Directors. Purchases of
securities from underwriters include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers include a spread
between the bid and asked price. The Fund has a policy of considering sales
of Fund shares in selecting brokers for portfolio transactions provided
that the Fund's experience with such brokers indicates that they are
capable of providing best execution. The Fund's portfolio turnover rate in
fiscal year 1996 was 163.1% and its portfolio turnover rate in fiscal year
1995 was 173.0%. High portfolio turnover (over 100%) may involve
corresponding greater brokerage commissions and other transaction costs
which will be borne directly by the Fund. In addition, high portfolio
turnover may result in increased short-term capital gains which, when
distributed to shareholders, are treated as ordinary income.
PURCHASE OF SHARES
The Fund's underwriter is American Growth Fund Sponsors, Inc., (the
'Distributor'), 410 17th Street, Suite 800, Denver, Colorado 80202-4418.
Robert Brody, president and a director of the Fund, is also president and
a director of the Distributor.
The Fund offers its shares continuously to the public at their net
asset
<PAGE>
values next computed after receipt of the order to purchase plus any
applicable sales charges as described below. Shares can be purchased
through the Distributor or through broker-dealers with whom the Distributor
has sales agreements. Purchase orders received and properly time-stamped
by dealers and received by the Fund's Distributor prior to 2:00 p.m. Denver
time on any business day will be confirmed at the public offering price
effective at the close of the New York Stock Exchange ('NYSE') on that day.
Orders received after such times will be confirmed at the public offering
price determined as of the close of the NYSE on the next business day. A
business day is any day the NYSE is open for trading. All purchases made
by check should be in U.S. dollars and made payable to the American Growth
Fund, or in the case of a retirement account, the custodian or trustee.
Third party checks will not be accepted.
The Fund issues four classes of shares, which permits each investor
to choose the method of purchasing shares that the investor believes is
most beneficial given such investor's individual circumstances. Shares of
Class A and Class D are sold to investors choosing the initial sales charge
alternatives while shares of Class B and Class C are sold to investors
choosing the deferred sales charge alternatives. Investors should determine
whether under their particular circumstances it is more advantageous to
incur an initial sales charge or to have the entire initial purchase price
invested in the Fund, with the investment thereafter being subject to a
CDSC and higher distribution fees.
In selecting a purchase alternative, an investor should consider,
among other things, (1) the length of time you expect to hold your
investment, (2) the amount of any applicable sales charge (whether imposed
at the time of purchase or redemption) and distribution-related fees, as
noted below, (3) whether you qualify for any reduction or waiver of any
applicable sales charge; (4) the fact that Class B shares automatically
convert to Class A shares approximately seven years after purchase (see
'Conversion Feature--Class B shares' below).
The following is provided to assist you in determining which method
of purchase best suits your individual circumstances and is based on
current fees and expenses being charged to the Fund.
If you intend to hold your investment in the Fund for less than 7
years and do not qualify for a reduced sales charge on Class A shares or
qualify to purchase Class D shares, you should consider purchasing Class
C shares over either Class A or Class B shares, since Class A shares are
subject to an initial sales charge of 5.75% and Class B shares are subject
to a CDSC of 5% which declines to zero over a 7-year period.
If you intend to hold your investment for 7 years or more and do not
qualify for a reduced sales charge on Class A shares or qualify to purchase
Class D shares, you should consider purchasing Class A or Class B shares
over Class C shares since Class B shares convert to Class A shares
approximately 7 years after purchase and because all of your money would
be invested initially in the case of Class B shares.
If you qualify for a reduced sales charge on Class A shares but do not
qualify to purchase Class D shares, it may be more advantageous for you to
purchase Class A shares over either Class B or Class C shares regardless
of how long you intend to hold your investment. However, unlike Class B and
<PAGE>
Class C shares, you would not have all of your money invested initially
because the sales charge on Class A shares is deducted at the time of
purchase.
If you qualify to purchase Class D shares, it will be more
advantageous to purchase Class D shares instead of Class A shares (which,
unlike Class D shares, have a .30% 12b-1 fee), and may be more advantageous
for you to purchase Class D shares over either Class B or Class C shares
depending on whether you are eligible for reduced sales charges and how
long you intend to hold your investment.
If you do not qualify for a reduced sales charge on Class A or Class
D shares and you purchase Class B or Class C shares, you would have to hold
your investment for more than 6 years in the case of Class B shares and
more than one year for Class C shares for the higher cumulative annual
distribution-related fee on those shares to exceed the initial sales charge
(plus, for Class A shares, cumulative annual distribution-related fees on
Class A shares). This does not take into account the time value of money,
which further reduces the impact of the higher Class B or Class C
distribution-related fee on the investment, fluctuations in net asset
value, the effect of the return on the investment over this period of time
or redemptions during which the CDSC is applicable.
Investors should understand that the purpose and function of the
initial sales charges with respect to Class A and Class D shares are the
same as those of the deferred sales charges with respect to Class B and
Class C shares in that the sales charges applicable to each class provide
for the financing of the distribution of the shares of the class. The
distribution-related revenues paid with respect to a class will not be used
to finance the distribution expenditures of another class. Sales personnel
may receive different compensation for selling different classes of shares.
Commencing June 20, 1995 and ending __________, the Distributor will
offer a long term sales incentive promotion in which non-cash concessions
in the form of one or more all expenses paid promotional trips to resort
locations will be awarded to participating broker dealers achieving certain
cumulative sales levels in shares of the Fund. Participation in the
incentive programs is entirely optional on the part of the broker dealer.
Copies of the incentive program rules which contain more complete
information about the terms and condition of the programs, including
qualifying levels and specific awards, may be obtained by investment
representatives by contacting the Distributor.
INITIAL SALES CHARGE ALTERNATIVES--CLASS A AND CLASS D SHARES.
Investors choosing the initial sales charge alternatives who are eligible
to purchase Class D shares should purchase Class D shares rather than Class
A shares because there is a Rule 12b-1 fee imposed on Class A shares.
The public offering price of Class A and Class D shares for purchasers
choosing the initial sales charge alternatives is the next determined net
asset value plus varying sales charges (i.e., sales loads), as set forth
below.
<PAGE>
<TABLE>
<CAPTION>
SALES CHARGES PAID
SALES CHARGES AS % TO DEALERS AS % OF SALES CHARGES AS %
AMOUNT INVESTED OF OFFERING PRICE OFFERING PRICE OF AMOUNT INVESTED
<S> <C> <C> <C>
Less than $50,000...............................5.75% 5.00% 6.10%
$50,000 but less than $100,000..................4.50 3.75 4.71
$100,000 but less than $250,000.................3.50 2.75 3.63
$250,000 but less than $500,000.................2.50 2.00 2.56
$500,000 but less than $1,000,000...............2.00 1.60 2.04
$1,000,000 and over............................ 0.00* 0.00 0.00
</TABLE>
* Purchases of Class A and Class D in amounts of $1,000,000 or more, which
are not subject to an initial sales charge generally will be subject to a
CDSC of 1% of amounts reduced within the first year of purchase.
The above scale applies to aggregate purchases by an individual, a
spouse and children under 21, a trustee or fiduciary of a single trust or
fiduciary account, tax exempt organizations enumerated in Section 501(c)(3)
of the Internal Revenue Code, and employees' trusts, profit sharing and
other employee benefit plans qualified under Section 401 of the Internal
Revenue Code and 403(b) Plans, except for 401(k) and 403(b) Plans in which
each 401(k) and 403(b) investor is considered separately for purposes of
computing sales charges. Provided, however, that the term 'any person'
shall not included a group of individuals whose funds are combined directly
or indirectly, for the purchase of shares of the Fund jointly or through
a trustee, agent, custodian or other representative, nor shall it include
a trustee, agent, custodian or other representative of such a group of
individuals.
From time to time the Distributor will pay all of the sales charge to
dealers. In such instances, the dealers may be deemed to be underwriters
as that term is defined in the Securities Act of 1933.
The adviser will make payments to dealers in the amount of 0.25 of
1% per year of the average daily net asset value of outstanding Class D
shares acquired after April 1, 1994 through such dealers (including shares
acquired through reinvestment of dividends and distributions on such
shares). These payments are made by the Adviser and not by the Class D
shareholders of the Fund.
Eligible Class D Investors. Class D shares are offered to a limited
group of investors and also will be issued upon reinvestment of dividends
on outstanding Class D shares. Investors that owned Class D shares in a
shareholder account, including participants in the American Growth Fund
Distribution Plan, as of March 1, 1996, are entitled to purchase additional
Class D shares in that account. Class D shares are also available for sale
to the Fund's, the Adviser's and the Distributor's directors and officers
and their spouses and family members, to certain institutional investors,
including banks, corporations and accounts managed by specified types of
fiduciaries, and to or for retirement plans for their employees or sold to
employees of such dealers (and their spouses or for accounts for their
minor children) that have sales agreements with the underwriter. Such
persons must give written assurance that their purchase is made for
investment purposes and that the securities will not be resold except
through redemption or repurchase by the issuer. The Distributor reserves
the right to ask for adequate documentation to ensure that shareholders are
eligible for the above
<PAGE>
shares.
Reduced Initial Sales Charges. No initial sales charges are imposed
upon Class A and Class D shares issued as a result of the automatic
reinvestment of dividends or capital gains distributions. Class A and Class
D sales charges also may be reduced under a Right of Accumulation and a
Letter of Intention. Class D shares are offered at net asset value only to
certain eligible Class D investors as set forth above under 'Eligible Class
D Investors'.
The sales charge may vary with the amount of investment or the number
of Class A and/or Class D shares owned. The Fund makes available the
following investment plans and options which may involve reduced sales
charges: Right of Accumulation, Letter of Intent, and Retirement Plans. The
Fund also offers and Automatic Cash Withdrawal Plan, and Automatic Monthly
Investment Plan, Individual Retirement Accounts, Simplified Employee
Pension, Money Purchase and Profit Sharing Pension Plans, and Teacher and
Non-Profit Employee Retirement Plans. Additional charges apply for some
services or plans. For more information, including fees and expenses
contact the Distributor or the Fund.
Additional information concerning these reduced sales charges,
including information regarding investments by Employer Sponsored
Retirement or Savings Plans, is set forth in the Statement of Additional
Information.
Net Asset Value Purchases of Class A Shares. Class A shares of the
Fund may be purchased at net asset value through certain organizations
(which may be broker-dealers, banks or other financial
organizations)('Processing Organizations') which have agreed with the
Distributor to purchase and hold shares for their customers in a single
account for which the Processing Organization is the shareholder of record.
A Processing Organization may require persons purchasing through it to meet
the minimum initial or subsequent investments, which may be higher or lower
than the Fund's minimum investments, and may impose other restrictions,
charges and fees in addition to or different from those applicable to other
purchasers of shares of the Fund. Investors contemplating a purchase of
Fund shares through a Processing Organization should consult the materials
provided by the Processing Organization for further information concerning
purchases, redemptions and transfers of Fund shares as well as applicable
fees and expenses and other procedures and restrictions. Certain Processing
Organizations may receive compensation from the Adviser and the
Distributor.
Class A shares of the Fund may also be purchased at net asset value
by an investment adviser registered with the Securities and Exchange
Commission or appropriate state authorities who clears such Fund
transactions through a broker-dealer, bank or trust company (each of which
may impose transaction fees with respect to such transactions) and who
either purchases shares for its own account or for accounts for which the
investment adviser is authorized to make investment decisions. Such
investment advisers may impose charges and fees on their clients for their
services, which charges and fees may vary from investment adviser to
investment adviser.
Class A shares may be offered at net asset value in connection with
the <PAGE> acquisition of assets of other investment companies. Class A
shares also are offered at net asset value, without sales charge, to an
investor who has a business relationship with a American Growth Fund
Distribution Plan, if certain conditions set forth in the Statement of
Additional Information are met.
The Fund also sells its Class A shares at net asset value in
connection with a qualified rollover of assets held in a previously
existing tax-exempt retirement plan (including an IRA, 401(k) plan or
403(b) plan) through broker-dealers who have entered into an agreement with
the Underwriter relating to such rollovers.
Contingent Deferred Sales Charges--Class A and Class D Shares. Class
A and Class D shares which are sold in amounts of $1,000,000 at net asset
value and are redeemed within one year of purchase may be subject to a 1.0%
CDSC. The charge will be assessed on an amount equal to the lesser of the
proceeds of redemption or the cost of the shares being redeemed.
Accordingly, no Class A or Class D CDSC will be imposed on increases in net
asset value above the initial purchase price. In addition, no Class A or
Class D CDSC will be assessed on shares derived from reinvestment of
dividends or distributions.
DEFERRED SALES CHARGE ALTERNATIVES--CLASS B AND CLASS C SHARES.
Investors choosing the deferred sales charge alternatives should consider
Class B shares if they intend to hold their shares for an extended period
of time and Class C shares if they are uncertain as to the length of time
they intend to hold their assets in the Fund.
The public offering price of Class B and Class C shares for
investors choosing the deferred sales charge alternatives is the next
determined net asset value per share without the imposition of a sales
charge at the time of purchase. As discussed below, Class B shares are
subject to a seven year CDSC, while Class C shares are subject to a one
year 1.0% CDSC. On the other hand, approximately seven years after Class
B shares are issued, such Class B shares, together with shares issued upon
dividend and distribution reinvestment with respect to those shares, are
automatically converted into Class A shares of the Fund and thereafter will
be subject to lower continuing fees. See 'Conversion of Class B Shares to
Class A Shares' below. Both Class B and Class C shares are subject to a
service fee of 0.25% of net assets and a distribution fee of 0.75% of net
assets as discussed below under 'Distribution Plans'.
Class B and Class C shares are sold without an initial sales charge
so that the Fund will receive the full amount of the investor's purchase
payment. The Distributor compensates broker, dealers and other financial
consultants for selling Class B and Class C shares at the time of purchase
from its own funds. See 'Distribution Plans' below.
Proceeds from the CDSC and the ongoing service and distribution fee
are paid to the Distributor and are used in whole or in part by the
Distributor to defray the expenses related to providing distribution
services to the Fund in connection with the sale of the Class B and Class
C shares. The combination of the CDSC and the ongoing distribution fee
facilitates the ability of the Fund to sell the Class B and Class C shares
without a sales
<PAGE>
charge being deducted at the time of purchase. Approximately seven years
after issuance, Class B shares will convert automatically into Class A
shares of the Fund, which are subject to a service fee and a lower
distribution fee. The proceeds from the ongoing service fee are used to
compensate the Distributor or dealers for providing continuing account
maintenance activities.
Imposition of the CDSC and the distribution and service fees on Class
B and Class C shares is limited by the NASD asset-based sales charge rule.
Contingent Deferred Sales Charges--Class B Shares. Class B shares
which are redeemed within seven years of purchase may be subject to a CDSC
at the rates set forth below. The charge will be assessed on an amount
equal to the lesser of the proceeds of redemption or the costs of the
shares being redeemed. Accordingly, no CDSC will be imposed on increases
in net asset value above the initial purchase price. In addition, no CDSC
will be assessed on shares derived from reinvestment of dividends or
distributions.
The following table sets forth the rates of the Class B CDSC:
<TABLE>
<CAPTION>
CLASS B CDSC AS A PERCENTAGE OF
YEAR SINCE PAYMENT MADE OR OTHER DOLLAR
PURCHASE AMOUNT SUBJECT TO CHARGE -
- ---------------------------------- -------------------------------
<S> <C>
0-2............................... 5.00%
3-4............................... 4.00
5............................... 3.00
6............................... 2.00
7............................... 1.00
</TABLE>
In determining whether a CDSC is applicable to a redemption, the
calculation will be determined in the manner that results in the lowest
possible rate being charged. Therefore, it will be assumed that the
redemption is first of shares held for over seven years or shares acquired
pursuant to reinvestment of dividends or distributions and then of shares
held longest during the seven-year period. The charge will not be applied
to dollar amounts representing an increase in the net asset value since the
time of purchase. A transfer of shares from a shareholder's account to
another account will be assumed to be made in the same order as a
redemption.
To provide an example, assume an investor purchased 100 shares at $10
per share (at a cost of $1,000) and in the third year after purchase, the
net asset value per share is $12 and, during such time, the investor has
acquired 10 additional shares through dividend reinvestment. If at such
time the investor makes his or her first redemption of 50 shares (proceeds
of $600), 10 shares will not be subject to a CDSC because of dividend
reinvestment. With respect to the remaining 40 shares, the CDSC is applied
only to the original cost of $10 per share and not to the increase in net
asset value of $2 per share. Therefore, $400 of the $600 redemption
proceeds will be charged at a rate of 4.00% (the applicable rate in the
third year after purchase).
<PAGE>
If a Class B share account is set up on an Automatic Withdrawal
Program, there will be no CDSC on the amounts redeemed pursuant to the
Automatic Withdrawal Program as long as the total annual amount withdrawn
is less than 12% per year of the previous years' value or of the initial
investment, whichever is greater.
Contingent Deferred Sales Charges--Class C Shares. Class C shares
which are redeemed within one year of purchase may be subject to a 1.0%
CDSC. The charge will be assessed on an amount equal to the lesser of the
proceeds of redemption or the cost of the shares being redeemed.
Accordingly, no Class C CDSC will be imposed on increases in net asset
value above the initial purchase price. In addition, no Class C CDSC will
be assessed on shares derived from reinvestment of dividends or
distributions.
In determining whether a Class C CDSC is applicable to a redemption,
the calculation will be determined in the manner that results in the lowest
possible rate being charged. Therefore, it will be assumed that the
redemption is first of shares held for over one year or shares acquired
pursuant to reinvestment of dividends or distributions and then of shares
held longest during the one-year period. The charge will not be applied to
dollar amounts representing an increase in the net asset value since the
time of purchase.
Conversion of Class B Shares to Class A Shares. After approximately
seven years (the 'Conversion Period'), Class B shares will be converted
automatically into Class A shares of the Fund. Class A shares are subject
to an ongoing service fee of 0.25% of net assets and are subject to
distribution fee of 0.05%. Automatic conversion of Class B shares into
Class A shares will occur at least once each month (on the 'Conversion
Date') on the basis of the relative net asset values of the shares of the
two classes on the Conversion Date, without the imposition of any sales
load, fee or other charge. Conversion of Class B shares to Class A shares
will not be deemed a purchase or sale of the shares for Federal income tax
purposes.
In addition, shares purchased through reinvestment of dividends and
distributions on Class B shares also will convert automatically to Class
A shares. The Conversion Date for dividend reinvestment shares will be
calculated taking into account the length of time the shares underlying
such reinvestment shares were outstanding. If at a Conversion Date the
conversion of Class B shares to Class A shares of the Fund in a single
account will result in less than $50 worth of Class B shares being left in
the account, all of the Class B shares of the Fund held in the account on
Conversion Date will be converted to Class A shares of the Fund.
Share certificates for Class B shares of the Fund to be converted must
be delivered to the Transfer Agent at least one week prior to the
Conversion Date applicable to those shares. In the event such certificates
are not received by the Transfer Agent at least one week prior to the
Conversion Date, the related Class B shares will convert to Class A shares
on the next scheduled Conversion Date after such certificates are
delivered.
DISTRIBUTION PLANS
<PAGE>
The Fund has adopted separate distribution plans for the Class A,
Class B and Class C shares pursuant to Rule 12b-1 under the Investment
Company Act (each a 'Distribution Plan') with respect to the service and
distribution fees paid by the Fund to the Distributor with respect to such
classes.
The Distribution Plans for Class A, Class B and Class C shares each
provide that the Fund pays the Distributor a service fee relating to the
shares of the applicable class, accrued daily and paid monthly, at the
annual rate of 0.25% of the average daily net assets of the class in order
to compensate the Distributor (who in turn may compensate broker-dealers
and other financial consultants) in connection with certain services
provided to shareholders of the Class.
The Distribution Plans for Class A, Class B and Class C shares each
provide that the Fund also pays the Distributor a distribution fee relating
to the shares of the applicable class, accrued daily and paid quarterly,
at the annual rate of 0.75% for Class B and Class C shares and 0.05% for
Class A shares respectively of the average daily net assets of the class.
These payments are intended to compensate the Distributor for providing
distribution services, and bearing certain distribution-related expenses
of the Fund, including payments to broker-dealer and other financial
consultants for selling shares of the respective classes of the Fund. The
Distribution Plans relating to Class B and Class C shares are designed to
permit an investor to purchase Class B and Class C without the assessment
of an initial sales charge and at the same time permit the distributor to
compensate broker-dealers and other financial consultants in connection
with the sale of the Class B and Class C shares. In this regard, the
purpose and function of the ongoing distribution fees and the CDSC are the
same as those of the initial sales charge with respect to the Class A and
Class D shares of the Fund in that the deferred sales charges provide for
the financing of the distribution of the Fund's Class B and Class C shares.
The payments under the Distribution Plans are based on a percentage
of average daily net assets attributable to the shares regardless of the
amount of expenses incurred and, accordingly, distribution-related revenues
from the Distribution Plans may be more or less than distribution-related
expenses. Information with respect to the distribution-related revenues and
expenses is presented to the Directors for their consideration in
connection with their deliberations as to the continuance of the
Distribution Plans.
REDEMPTION OF SHARES
The Fund will redeem shares from a shareholder of record, (i) in the
case of Class A and Class D shares without any charge (unless such shares
are subject to the 1% CDSC on purchases of $1 million or more redeemed
within 1 year of purchase), (ii) in the case of Class B and Class C shares,
subject to the applicable CDSC as described above under 'Deferred Sales
Charge Alternative-Class B and Class C Shares'. Payment generally will be
made within seven days after receipt of his written request for redemption
and a stock power with signature guaranteed by an 'eligible guarantor
institution' as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934 (including certain banks, brokers, dealers, credit
unions, securities exchanges and associations, clearing agencies and
savings associations) and
<PAGE>
the deposit of any share certificates. If no certificates have been issued
to the shareholder, redemption may be accomplished by submitting a written
request for redemption with the shareholder's signature guaranteed if
required as set forth below. Fiduciaries, corporations and other entities
may also be required to furnish supporting documents. The Fund will waive
the signature guarantee requirement if all of the following conditions
apply: (1) the redemption is for $5,000 or less; (2) the redemption check
is payable to the shareholder(s) of record; and (3) the redemption check
is mailed to the shareholder(s) at the address of record. The redemption
price will be the net asset value next determined after the receipt of a
request in proper form. Redemption of shares which were recently purchased
may be delayed in order to permit a determination that the purchase check
will be honored. Such determination may be accomplished by the passage of
a reasonable period of time (approximately 15 days) or by written assurance
to the Fund from the bank upon which the purchase check was drawn, which
must be arranged by the shareholder requesting such redemption. An investor
can avoid these potential delays by paying for shares by certified check
or wire transfer. The proceeds from redemption may be more or less than the
cost of the shares.
The Fund will repurchase shares through broker-dealers with whom the
Distributor has a sales agreement. The Fund will normally accept orders to
repurchase shares by wire or telephone from such dealers for their
customers at the net asset value (less any applicable CDSC) next computed
after receipt of the order by the dealer, provided that the request for
repurchase is transmitted promptly to the Distributor by the dealer.
Dealers have the responsibility of submitting such repurchase requests to
the Distributor promptly in order to obtain that day's closing price. These
repurchase arrangements are for the convenience of shareholders and do not
involve a charge by the Fund. Certain securities firms may impose a
transaction charge on the shareholder for transmitting the notice of
repurchase to the Fund. The Fund reserves the right to reject any order for
repurchase, which right of rejection might adversely affect shareholders
seeking redemption through the repurchase procedure. A shareholder whose
order for repurchase is rejected by the Fund, however, may redeem shares
as set forth above.
As a condition to the purchase of shares of the Fund, the purchaser
agrees that the Fund may, but is not required to, involuntarily redeem
after written notice the holdings of a shareholder the aggregate net asset
value of which is less than $250 due to redemptions. The notice will fix
a date not less than 30 days after the date on which it is mailed, and the
shares will be redeemed at net asset value as of the close of business on
that date, unless before then the investor purchases at least sufficient
additional shares to bring aggregate net asset value of his holdings up to
$250. A check for the proceeds of redemption, which may be less or more
than the purchase price of the shares, will be mailed to the investor at
the address of record.
REINSTATEMENT PRIVILEGE--CLASS A AND CLASS D SHARES. Shareholders who
have redeemed their Class A or Class D shares have a one-time privilege to
reinstate their accounts by purchasing Class A or Class D shares, as the
case may be, of the Fund at net asset value without a sales charge up to
the dollar amount redeemed. The reinstatement privilege may be exercised
by sending a notice of exercise along with a check for the amount to be
reinstated to the Transfer Agent within 30 days after the date the request
<PAGE>
for redemption was accepted by the Transfer Agent or the Distributor. The
reinstatement will be made at the net asset value per share next determined
after the notice of reinstatement is received and cannot exceed the amount
of the redemption proceeds. The reinstatement privilege is a one-time
privilege and may be exercised by the Class A or Class D shareholder only
the first time such shareholder makes a redemption.
EXCHANGE PRIVILEGE
The Distributor has arranged for shares of the portfolios of Cash
Account Trust, a no-load diversified open-end money market mutual fund (the
'Money Market Fund'), to be available in exchange for shares of Class A and
Class D of the Fund. Shares of the Money Market fund so acquired, plus any
shares of the Money Market fund acquired through reinvestment of dividends
and distributions, may be re-exchanged for Class A or Class D shares of the
Fund, as applicable, without a sales charge. The Money Market Fund is
separately managed from the Fund and is not affiliated with the Fund. The
Underwriter receives a fee from Kemper Financial Services, the
administrator of the Money Market Fund, of 0.06 of 1% per year of the
average daily net asset value of shares of the Money Market Fund
established under this program. For further information concerning the
exchange privilege, and a copy of the prospectus of the Money Market Fund,
contact the Distributor. The exchange privilege does not constitute an
offering or recommendation by the Fund of the Money Market Fund, which is
managed by an investment adviser that is not affiliated with the Fund's
Adviser. Shareholders should read the prospectus of the Money Market Fund
before entering into the exchange privilege.
DIVIDENDS AND DISTRIBUTIONS
The Fund's policy is to declare income dividends and capital gains
distributions to its shareholders in December and to pay them in January
of each calendar year unless the board of directors of the Fund determines
that it is to the shareholders' benefit to make distributions on a
different basis.
Unless the shareholder at his option on notice to the Fund previously
requests payments in cash, income dividends and capital gains distributions
will be reinvested in Fund shares, of the same class, at their relative net
asset values as of the business day next following the distribution record
date. If no instructions are given on the application form, all income
dividends and capital gains distributions will be reinvested.
AUTOMATED INVESTMENT PLAN
Regular additions of Class A, Class B, Class C or Class D shares may
be made to an investor's Investment Account by prearranged charges to such
investor's regular bank account. Contact the Distributor for further
details concerning this plan.
TAXES
The Fund is qualified and intends to continue to qualify as a
regulated
<PAGE>
investment company under the Internal Revenue Code, as amended ('the
Code'). As long as it is so qualified, the Fund will not be subject to U.S.
federal income tax on the portion of its investment company taxable income
and net capital gain distributed to its shareholders. A distribution will
be treated as paid on December 31 of the calendar year if it is paid during
the calendar year or if declared by the Fund in October, November or
December of such year, payable to shareholders of record on a date in such
month and paid by the Fund during January of the following year. Any such
distributions paid during January of the following year will be taxable to
shareholders as of December 31 rather than the date on which the
distributions are received. In order to qualify as a regulated investment
company for any taxable year, the Fund must, among other things, (i) derive
at least 90% of its gross income from dividends, interest, certain payments
with respect to securities loans and gains from the sale or other
disposition of stock or securities or other income derived with respect to
its business of investing in such stock or securities, and (ii) derive less
than 30% of its gross income from the sales or other disposition of stock,
securities or certain financial instruments held for less than three
months.
For U.S. federal income tax purposes, dividends of net ordinary income
and distributions of any net realized short-term capital gain, whether paid
in cash or reinvested in shares of the Fund, are taxable to shareholders
as ordinary income. The Fund expects to derive a portion of its gross
income (exclusive of capital gains) from dividends of other companies, and,
therefore, a portion of the Fund's dividends or distributions will qualify
for the 70% deduction for dividends-received for corporations.
Distributions of net realized long-term capital gains, whether paid in cash
or reinvested in shares of the Fund, are taxable to shareholders as
long-term capital gains, irrespective of the length of time the shareholder
has held his Fund shares.
A dividend or capital gains distribution with respect to shares of the
Fund held by a tax-deferred or qualified plan, such as an IRA, 403(b)(7)
retirement plan or corporate pension or profit sharing plan, will not be
taxable to the plan. Distributions from such plans will be taxable to
individual participants under applicable tax rules without regard to the
character of the income earned by the qualified plan.
No gain or loss will be recognized by Class B shareholders on the
conversion of their Class B shares into Class A shares. A shareholder's
basis in the Class A shares acquired will be the same as such shareholder's
basis in the Class B shares converted, and the holding period of the
acquired Class A shares will include the holding period for the converted
Class B shares.
A shareholder who holds shares as a capital asset generally will
recognize a capital gain or loss upon the sale of such shares, which will
be a long-term capital gain or loss if such shares were held for more than
one year. However, any loss realized by a shareholder who held shares for
six months or less will be treated as a long-term capital loss to the
extent of any distributions of net capital gains received by the
shareholder with respect to such shares.
A loss realized on a sale or exchange of shares of the Fund will be
<PAGE>
disallowed if other Fund shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning
30 days before and ending 30 days after the date that the shares are
disposed of. In such a case, the basis of the shares acquired will be
adjusted to reflect the disallowed loss.
The Fund is required to backup withhold U.S. federal income tax at the
rate of 31% of all taxable distributions (including redemption payments)
payable to a shareholder who fails to provide the Fund with its correct
taxpayer identification number and certify that such number is correct, or
payable to a shareholder who has been notified by the Internal Revenue
Service that it is subject to backup withholding.
Shareholders will be advised annually as to the tax status of dividends
and capital gains distributions. State laws vary with respect to the
taxation of distributions made by the Fund. Shareholders of the Fund are
urged to consult their tax advisers regarding their own tax situation.
PERFORMANCE DATA
From time to time the Fund may include its average annual total return
for various specified time periods in advertisements or information
furnished to present or prospective shareholders. Average annual total
return is computed separately for Class A, Class B, Class C and Class D
shares in accordance with formulas specified by the Commission.
The average annual total returns are a percentage expressed in terms
of the average annual compounded rate of return of a hypothetical
investment of $10,000 in the Fund over periods of 1, 5, and 10 years. The
return will reflect the deduction for the sales charge imposed upon an
initial investment in the Fund and the deduction of a proportional share
of Fund expenses (on an annual basis) and will assume that all dividends
and distributions are reinvested when paid. If such charges were excluded
from the total return figures, the total return figures would be greater
than depicted.
In addition to the standardized calculation of annual total return, the
Fund may use other methods of calculating its performance. These
calculations may be expressed in terms of the total return as well as the
average annual compounded rate of return of a hypothetical investment in
the Fund over varying periods of time in addition to 1, 5, and 10 years up
to the life of the Fund and may reflect the deduction of the appropriate
sales charge imposed upon an initial investment of more than $10,000 in the
Fund. These performance calculations will reflect the deduction of a
proportional share of Fund expenses (on an annual basis), will assume that
all dividends and distributions are reinvested when paid, may include
periodic investments or withdrawals from the account and may include
deduction for an annual custodian fee. The Fund may calculate its total
return or other performance information prior to the deduction of a sales
charge.
Performance information for the Fund may be compared in reports and
promotional literature to: (i) Standard & Poor's 500 Index (the S & P 500),
Dow Jones Industrial Average or other unmanaged indices so that investors
may compare the Fund's results with those of a group of unmanaged
securities
<PAGE>
widely regarded by investors as representative of the securities markets
in general; (ii) other groups of mutual funds monitored by Lipper
Analytical Services, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and assets or
monitored by other services, companies, publications, or persons who rank
mutual funds on an overall performance or other criteria; and (iii) the
Consumer Price Index (a measure of inflation) to assess the effect of
inflation on the return of an investment. There are no administrative and
management costs, expenses or sales commissions associated with unmanaged
indices, and therefore, such expenses are not reflected in the return;
however, the return does reflect reinvestment of dividends.
Performance information for the Fund reflects only the performance of
a hypothetical investment in the Fund during the particular time period on
which the calculations are based. All performance information is based on
historical results and may not be indicative of future results. Performance
information should be considered in light of the Fund's investment
objectives and policies, characteristics and quality of the portfolio and
the market conditions during the given time period and should not be
considered as a representation of what may be achieved in the future. The
Statement of Additional Information further describes the methods used to
calculate annual total return.
Set forth below is a discussion of the specific factors, including
relevant market conditions and the investment strategies and techniques
pursued by the Adviser, that materially affected the Fund's performance
during the fiscal year ended July 31, 1996. The discussion was provided by
the Adviser.
During this year the Fund's two major industries, Petroleum and
Commercial Bank have increase 12.5% and 11.5%, respectively. While the
Standard & Poors broader index has increase 13.9%. The airline industry
gave the Fund an overall returns of 39.5% to the Shareholders but only
increased 6.5% for the twelve months. Some other stocks in the portfolio
decreased in value during this period of time. These are the major
reasons for the Fund's performance in the last twelve months.
Set forth below is a graph comparing the Fund's performance (Class D
shares) as of the end of the ten most recently completed fiscal years, to
the performance of the S&P 500 and the Consumer Price Index for the same
periods.
Comparison of Change in Value of $10,000 Investment in the Fund for
Class D shares, the S&P 500 and the Consumer Price Index. Cumulative total
return at maximum offering price for the period March 1, 1996 (inception
of offering) to July 31, 1996 is (9.5%), (9.5%) and (5.3%) for Class A,
Class B and Class C, respectively.
<TABLE>
Consumer Price Index American Growth Fund Class D S & P 500
<S> <C> <C> <C>
07/86 10,000 9,423 10,000
07/87 10,393 11,599 13,919
07/88 10,822 9,927 12,281
07/89 11,366 11,613 16,201
07/90 11,914 12,274 17,255
07/91 12,272 13,449 19,455
07/92 12,665 15,272 21,944
07/93 13,019 18,357 23,860
07/94 13,345 20,386 25,091
07/95 13,692 23,481 31,642
07/96 14,089 24,614 36,027
</TABLE>
<TABLE>
<S> <C> <C> <C>
Consumer Price Index American Growth Fund Class A S & P 500
03/96 10,000 9,425 10,000
07/96 10,080 9,048 9,932
</TABLE>
<TABLE>
<S> <C> <C> <C>
Consumer Price Index American Growth Fund Class B S & P 500
03/96 10,000 10,000 10,000
07/96 10,080 9,077 9,932
</TABLE>
<TABLE>
<S> <C> <C> <C>
Consumer Price Index American Growth Fund Class C S & P 500
03/96 10,000 10,000 10,000
07/96 10,080 9,470 9,932
</TABLE>
CHART [Camera Ready Copy to Follow]
CALCULATION OF NET ASSET VALUE; GENERAL INFORMATION
Net asset value is determined as of the close of business on the NYSE
<PAGE>
each day the NYSE is open for trading, and all purchase orders are executed
at the next price that is determined after the order is received. The NYSE
is closed on most customary national business holidays.
The following table sets forth the Fund's average annualized total
return at maximum offering price for the one, five, ten and fifteen year
periods ended July 31, 1996 for the Fund's Class D shares. Returns for the
Fund's Class A, Class B and Class C shares are from March 1, 1996
(inception of offering) to July 31, 1996:
Class D
RELEVANT AVERAGE ANNUALIZED Class A, Class B & Class C
PERIOD TOTAL RETURN Total Return (five months)
- --------- ------------------ --------------------------
1 year (1.1)% Class A (9.5)%
5 year 8.2% Class B (9.5)%
10 year 11.6% Class C (5.3)%
15 year 9.4%
Past performance is not predictive of future performance. See
'Performance Information' in the Statement of Additional Information for
a discussion of the method of calculating total return and for a
description of the S & P 500 and the Consumer Price Index.
In determining net asset value, securities traded on the NYSE or other
stock exchange approved for this purpose by the board of directors will be
calculated on the basis of the closing sale thereof on such stock exchange,
or if such sale is lacking, at the mean between closing bid and asked
prices on such day. If no bid and asked prices are quoted for such day or
are not readily available, the security will be valued by reference to
recognized composite quotations or such other method as the board of
directors in good faith deems will reflect its fair market value.
Securities not traded on any stock exchange but for which market quotations
are readily available are valued on the basis of the mean of the last bid
and asked prices. The board of directors in good faith determines the
manner of ascertaining the fair market value of other securities and
assets.
The per share net asset value of Class D shares generally will be
higher than the per share net asset value of shares of the other classes,
reflecting the daily expense accruals of the account maintenance,
distribution and service and higher transfer agency fees applicable with
respect to Class A, Class B and Class C shares. Moreover, the per share net
asset value of Class A shares generally will be higher than the per share
net asset value of Class
<PAGE>
B and Class C shares, reflecting the daily expense accruals of the account
maintenance, distribution and service, and higher transfer agency fees
applicable with respect to Class B and Class C shares. At the date of this
Prospectus, the shares of the Fund are divided into Class A, Class B, Class
C and Class D shares. Class A, Class B, Class C and Class D shares
represent interests in the same assets of the Fund and are identical in all
respects except that Class A, Class B and Class C shares bear certain
expenses related to the shareholder servicing, bear certain expenses
related to the distribution of such shares, and the Class B shares convert
to Class A shares approximate seven years after purchase. Each class has
exclusive voting rights with respect to matters relating to shareholder
servicing and distribution expenditures, as applicable, except that Class
B shares are entitled to vote on certain matters relating to the Class A
Distribution Plan. See 'Purchase of Shares'. The Directors of the Fund may
classify and reclassify shares of the Fund into additional classes of
shares at a future date.
The Articles of Incorporation of the Fund do not require that the Fund
hold an annual meeting of shareholders. However, the Fund will be required
to call special meetings of shareholders in accordance with the
requirements of the Investment Company Act to seek approval of new
management and advisory arrangements, of a material increase in
distribution fees or of a change in the fundamental policies, objectives
or restrictions of the Fund. The Fund also would be required to hold a
special shareholders' meeting to elect new Directors at such time as less
than a majority of the Directors holding office have been elected by
shareholders. The Declaration provides that a shareholders' meeting may be
called for any reason at the request of 10% of the outstanding shares of
the Fund or by majority of the Directors.
<PAGE>
<PAGE>
ADVISER
Investment Research Corporation
Administrative Offices & Mailing Address:
410 17th Street, Suite 800
Denver, CO 80202
DISTRIBUTOR
American Growth Fund Sponsors, Inc.
Administrative Offices & Mailing Address:
410 17th Street, Suite 800
Denver, CO 80202
TRANSFER AGENT
Boston Financial Data Services, Inc.
Administrative Offices:
Two Heritage Drive
North Quincy, Massachusetts 02172
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
707 17th Street, Suite 2300
Denver, Colorado 80202
CUSTODIAN
State Street Bank and Trust Company
One Heritage Drive
North Quincy, Massachusetts 02171
<PAGE>
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND, THE ADVISER OR DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
------------------------
TABLE OF CONTENTS
PAGE ---- Fee Table
. . . . . . . . . . . . . . . . . . . . . . . . .
. . . .2 Financial Highlights . . . . . . . . . . . . . . . . . . . . . .
. . . . . .3 Investment Objectives and Policies . . . . . . . . . . . . .
. . . . . . . .4 Management of the Fund . . . . . . . . . . . . . . . . .
. . .. . . . . . .6 Brokerage. . . . . . . . . . . . . . . . . . . . . .
. . . . . . .6
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .7 Initial Sales Charge
Alternatives--Class A and Class D Shares. . . . . . . . . . . . . . . .9
Deferred Sales Charge
Alternatives--Class B and Class C Shares. . . . . . . . . . . . . . . 12
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 15 Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . .
. . . 16 Reinstatement Privilege--Class A and Class D Shares.. . . . .
. . . . . . 17 Exchange Privilege . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 17 Dividends and Distributions. . . . . . . . . . . . . .
. . . . . . . . . . 18
Automated Investment Plan. . . . . . . . . . . . . . . . . . . . . . . .
. 18
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 20
Calculation of Net Asset Value; General Information. . . . . . . . . . .
. 21
PROSPECTUS
December 1, 1996
DISTRIBUTOR
AMERICAN GROWTH FUND
SPONSORS, INC.
410 SEVENTEENTH STREET, SUITE
800
DENVER, CO 80202-4418
(800) 525-2406
<PAGE>
<PAGE>
AMERICAN GROWTH FUND, INC.
410 17th Street, Suite 800, Denver, Colorado 80202
303-623-6137
STATEMENT OF
ADDITIONAL INFORMATION
December 1, 1996
This Statement of Additional Information is not a prospectus.
Prospective investors should read this Statement of Additional Information
only in conjunction with the Prospectus of American Growth Fund, Inc. (the
"Fund") dated December 1, 1996. A copy of the Prospectus may be obtained
by writing American Growth Fund Sponsors, Inc. (the "Distributor"), 410
17th Street, Suite 800, Denver, Colorado 80202-4418.
AMERICAN GROWTH FUND SPONSORS, INC.
410 17th Street, Suite 800, Denver, Colorado, 80202-4418
303-623-6137
800-525-2406
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> . . . . . . . . . . . . . . . . . . . . . .
.<C>
ADDITIONAL INVESTMENT
INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . .B-2
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . .B-4
INVESTMENT ADVISORY AGREEMENT. . . . . . . . . . . . . . . . . . . . .B-6
DISTRIBUTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . .B-7
AUTOMATIC CASH WITHDRAWAL PLAN . . . . . . . . . . . . . . . . . . . .B-10
RETIREMENT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . .B-11
DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . .B-12
CUSTODIAN AND INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . .B-12
BROKERAGE . . . . . . . . . . . . . . . .B-13
CALCULATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . .B-14
DIVIDENDS, DISTRIBUTIONS AND
TAXES . . . . . . . . . . . . . . . . . . . . . . . ................. B-14
PERFORMANCE DATA . . . . . . . . . . . . . . . . . . . . . . . . . .. B-17
REPORT OF INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . .. B-22
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . .. B-23
</TABLE>
<PAGE>
<PAGE>
ADDITIONAL INVESTMENT INFORMATION
The following information supplements the information in the Fund's
Prospectus under the heading "Objectives and Investment Policy."
The Fund is subject to certain restrictions on its investment policies,
including the following:
1. No securities may be purchased on margin, the Fund may not sell
securities short, and will not participate in a joint or joint and several
basis with others in any securities trading account.
2. Not more than 5% of the value of the assets of the Fund may be
invested in securities of any one issuer other than securities issued by
the United States government.
3. Not more than 10% of any class of voting securities or other
securities of any one issuer may be held in the portfolio of the Fund.
4. The Fund cannot act as an underwriter of securities of other
issuers.
5. The Fund cannot borrow money except from a bank as a temporary
measure for extraordinary or emergency purposes, and then only in an amount
not to exceed 10% of its total assets taken at cost, or mortgage or pledge
any of its assets.
6. The Fund cannot make or purchase loans to any person including real
estate mortgage loans, other than through the purchase of a portion of
publicly distributed debt securities pursuant to the investment policy of
the Fund.
7. The Fund cannot issue senior securities or purchase the securities
of another investment company or investment trust except in the open market
where no profit to a sponsor or dealer, other than the customary broker's
commission, results from such purchase (but the total of such investment
shall not exceed 10% of the net assets of the Fund), or except when such
purchase is part of a plan of merger or consolidation.
8. The Fund cannot invest in the securities of issuers which have been
in operation for less than three years if such purchase at the time thereof
would cause more than 5% of the net assets of the Fund to be so invested,
and in any event, any such investments must be limited to utility or
pipeline companies.
9. The Fund cannot invest in companies for the purpose of exercising
management or control.
10. The Fund cannot deal in real estate, commodities or commodity
contracts.
11. The Fund will not concentrate its investments in any particular
industry nor will it purchase a security if, as a result of such purchase,
more than 25% of its assets will be invested in a particular industry.
<PAGE>
12. The Fund cannot invest in puts, calls, straddles, spreads or any
combination thereof.
The foregoing policies can be changed only by approval of a majority
of the outstanding shares of the Fund, which means the lesser of (I) 67%
of the shares represented at a meeting at which more than 50% of the
outstanding shares are present in person or by proxy, or (ii) more than 50%
of the outstanding shares.
When the Fund makes temporary investments in U.S. Government
securities, it ordinarily will purchase Treasury Bills, Notes, or Bonds.
The Fund may make temporary investments in repurchase agreements where the
underlying security is issued or guaranteed by the U.S. Government or an
agency thereof. The Fund will not invest more than 10% of its assets in
repurchase agreements maturing in more than seven days, or securities that
are illiquid by virtue of the absence of a readily available market or
legal or contractual restrictions on resale. The Fund will not invest in
real estate limited partnership interests, other than interests in readily
marketable real estate investment trusts. The Fund will not invest in oil,
gas or mineral leases, or invest more than 5% of its net assets in warrants
or rights, valued at the lower of cost or market, nor more than 2% of its
net assets in warrants or rights (valued on the same basis) which are not
listed on the New York or American Stock Exchanges.
MANAGEMENT OF THE FUND
The day-to-day operations of the Fund are managed by its officers subject
to the overall supervision and control of the board of directors. The Fund
also has a board of advisors which counsels the directors as to general
economic conditions and specific industries. The following information
about the directors, officers and advisors of the Fund includes their
principal occupations for the past five years: <TABLE>
<CAPTION> <S> . . . . . . . .<C>. . . . . . . .
.<C>
POSITION(S) HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH FUND DURING PAST 5 YEARS
- ---------------------- ---------------- ---------------------
Robert Brody* (70) President,Director See below for
affiliations
410 17th St., Suite 800
with Adviser and
Denver, Colorado
Distributor
Michael J. Baum, Jr. (78) Director Investor in
securities and
1321 Bannock St. real estate; engaged
in mortgage
Denver, Colorado financing; president
of Baum Securities,
M & N Investment
Company and First
Ave. Corp. all of
which are real estate investment
companies.
Eddie R. Bush (55) Director
Certified Public
Accountant
1400 W. 122nd Ave.
Suite 220
Westminster, Colorado
Don S. Strauss (71) Director Retired President of
Majestic
756 S. Glencoe St. Industries, Inc., a
manufacturer
Denver, Colorado of janitorial
supplies
<PAGE>
Harold Rosen (68) Director Owner of Bi-Rite
Furniture
#1 Middle Road Stores.
Englewood, CO
Timothy E. Taggart (42) Treasurer Principal financial
and
410 17th St., Suite 800 accounting officer.
Employee
Denver, Colorado of Adviser since
1983. See below for
affiliation with
Distributor.
D. Leann Baird (47) Secretary Employee of Adviser
since 1977.
410 17th St., Suite 800 See below for
affiliations with
Denver, CO Adviser and
Distributor
POSITION(S) HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH FUND DURING PAST 5 YEARS
- ---------------------- ---------------- ---------------------
William D. Farr (85) Advisory Board Member President and
Director of Farr
P.O. Box 878 Farms Company,
Chairman of the
Greeley, Colorado Board of Northern
Colorado Water
Conservancy,
Past President
of the National
Cattlemen's
Association, Board
Member of Greeley Water
Board
Frank J. Johns (92) Advisory Board Member Retired President of
Denver Dry
111 Emerson Street Goods
Company Denver, Colorado
</TABLE>
*Robert Brody is an "interested person" of the Fund as defined by the
Investment Company Act of 1940.
Robert Brody is the sole shareholder, president and a director of the
Adviser. He is also president and a director of the Distributor. Timothy
E. Taggart is a director and secretary of the Distributor and director of
the Adviser. D. Leann Baird is secretary and director of the Adviser.
All officers, directors and members of the Fund's advisory board in the
aggregate (a total of 9) received total compensation of $7,300, from the
Fund in fiscal year 1996. Directors of the Fund except Mr. Brody were
compensated at the rate of $400 per meeting attended, ($400 effective
September 1, 1995), Advisory Board members were compensated at the rate of
$200 per meeting attended.
Out-of-town directors are also reimbursed for their travel expenses to
meetings.
During the Fund's most recently completed fiscal year, Messrs. Baum,
Bush, Strauss and Rosen, the only directors other than Mr. Brody serving
during that year, were each paid the following compensation by the Fund:
<TABLE>
<CAPTION>
<C> . . . . . . . .<S>
Aggregate
Compensation Paid by the Fund
Name of Director During the Fiscal Year
Ended July 31, 1996. ----------------
- -------------------------------------------
<PAGE>
Michael J. Baum, Jr. $1,900
Eddie R. Bush $1,900
Don S. Strauss $1,900
Harold Rosen $ 800
</TABLE>
In addition, for the fiscal year ended July 31, 1996,
Messrs. Farr and Johns as advisory board members each received
fees of $800 from the Fund.
None of the above named persons received any retirement benefits or other
form of deferred compensation from the Fund. There are no other funds that
together with the Fund constitute a Fund Complex.
As of September 12, 1996, no person owned more than 5% of the Fund and
all officers and directors as a group (a total of 7) owned directly 251,108
of its shares or 2.0% of shares outstanding. Together, directly and
indirectly, all the officers and directors as a group owned 273,535 shares
or 2.2% of all shares outstanding.
As of September 12, 1996, officers, directors and members of the
advisory board and their relatives owned of record and beneficially Fund
shares with net asset value of approximately $2,773,792 representing
approximately 2.4% of the total net asset value of the Fund.
INVESTMENT ADVISORY AGREEMENT
Since the organization of the Fund in 1958, its investment adviser has
been Investment Research Corporation (the "Adviser"), 410 17th Street,
Denver, Colorado 80202. Robert Brody, the sole shareholder, president and
a director of the Adviser, is a control person of the Adviser.
Under the terms of its advisory agreement with the Fund, the Adviser
is paid an annual fee of one percent of the Fund's average net assets up
to $30,000,000 of such assets and three-fourths of one percent of such
assets above $30,000,000. This fee and all other expenses of the Fund
(subject to the limitations described below) are paid by the Fund. The fee
is computed daily based on the assets and paid on the fifth day of the
ensuing month. For this fee the Adviser manages the portfolio of the Fund
and furnishes such statistical and analytical information as the Fund may
reasonably require.
The advisory agreement requires the Fund to pay its own expenses
subject to the limitations set by the securities laws in effect from time
to time in the states in which the Fund's securities are then registered
for sale or are exempt from registration and offered for sale. The
categories of expenses paid by the Fund are set forth in detail in the
Fund's financial statements. Currently the Fund's securities are either
registered for sale or are exempt from registration and offered for sale
in all fifty states, the District of Columbia and the Commonwealth of
Puerto Rico. Fund management believes that the current limitation on
expenses payable by the Fund which would result from application of the
most restrictive state laws is an amount equal to two and one-half percent
of the first $30 million of the Fund's average net
<PAGE>
assets, two percent of the next $70 million and one and one-half percent
of the remaining average net assets. State laws governing the limitation
on expenses may change from time to time, and management of the Fund will
comply with the most restrictive state law.
Total advisory fees paid by the Fund to the Adviser in fiscal years
1994, 1995 and 1996 were $579,209 in 1994, $627,684 in 1995, and $866,681
in 1996, resulting in management fees of 0.86%, 0.83% and 0.82% of average
net assets. In fiscal years 1994, 1995 and 1996 there were no expense
reimbursements made in connection with the most restrictive state
limitations.
The advisory agreement will continue from year to year so long as such
continuance is specifically approved annually either by the vote of the
entire board of directors of the Fund or by the vote of a majority of the
outstanding shares of the Fund, and in either case by the vote of a
majority of the directors who are not interested persons of the Fund or the
Adviser cast in person at a meeting called for the purpose of voting on
such approval. The advisory agreement may be canceled without penalty by
either party upon 60 days' notice and automatically terminates in the event
of assignment.
DISTRIBUTION OF SHARES
The Fund's distributor is American Growth Fund Sponsors, Inc., 410 17th
Street, Suite 800, Denver, Colorado 80202-4418, which continuously sells
the Fund's shares to dealers and directly to investors. The offering of the
Fund's shares is subject to withdrawal or cancellation at any time. The
Fund and the Distributor reserve the right to reject any order for any
reason.
The Fund offers four classes of shares, par value $.01 per share. The
shares are fully paid and non-assessable when issued. Each Class A, Class
B, Class C and Class D share of the Fund represents an identical interest
in the investment portfolio of the Fund and has the same rights, except
that Class A, Class B and Class C shares bear the expenses of ongoing
service fees and distribution fees, Class B and Class C may bear the
additional incremental transfer agency costs resulting from the deferred
sales charge arrangements, and Class B shares have a conversion feature.
The fees that are imposed on Class A, Class B and Class C shares are
imposed directly against those classes and not against all assets of the
Fund and, accordingly, such charges do not affect the net asset value of
any other class or have any impact on investors choosing another sales
charge option. Dividends paid by the Fund for each class of shares are
calculated in the same manner at the same time and will differ only to the
extent that Rule 12b-1 fees and any incremental transfer agency costs
relating to a particular class are borne exclusively by that class. Class
A, Class B and Class C shares each have exclusive voting rights with
respect to the Rule 12b-1 distribution plan adopted with respect to such
class pursuant to which Rule 12b-1 fees are paid, except that because Class
B shares convert automatically to Class A shares approximately seven years
after issuance, the Rule 12b-1 distribution plan for Class A shares is also
subject to the right of Class B shareholders to vote with respect to it.
<PAGE>
The Fund has entered into separate distribution agreements with the
Distributor in connection with the offering of each class of shares of the
Fund (the "Distribution Agreements"). The Distributor has made no firm
commitment to take any Fund shares from the Fund and is permitted to buy
only sufficient shares to fill unconditional orders placed with it by
investors and selected investment dealers. The Distribution Agreements
obligate the Distributor to pay certain expenses in connection with the
offering of each class of shares of the Fund. After the prospectuses,
statements of additional information and periodic reports have been
prepared, set in type and mailed to shareholders, the Distributor pays for
the printing and distribution of copies thereof used in connection with the
offering to dealers and investors. The Distributor also pays for other
supplementary sales literature and advertising costs.
Fund shares may be purchased at the public offering price through the
Distributor or through broker-dealers who are members of the National
Association of Securities Dealers, Inc. who have sales agreements with the
Distributer. The Prospectus contains information concerning how the public
offering price of the Fund's shares is determined. The Distributor allows
dealers discounts or concessions from the applicable public offering price
on Class A and Class D shares. Concessions are alike for all dealers in the
United States and its territories, but the Distributor may pay additional
compensation for special services. On direct sales to customers through its
own sales representatives, the Distributor pays to them such portion of the
sales commission as it deems appropriate.
Initial Sales Alternatives - Class A and Class D Shares. The gross
sales charges for the sale of Class D shares for the fiscal years ended
July 31, 1994, 1995 and 1996 were $264,975, $953,868 and $1,214,039,
respectively. The gross sales charges for the sale of Class A shares for
the period ended July 31, 1996 was $225,124. For the fiscal years ended
July 31, 1994, 1995 and 1996, for the sale of Class D shares the
Distributor retained $112,733, $267,974, and $245,360 respectively, as its
portion of commissions paid by purchasers of the Fund's shares after
allowing as concessions to other dealers $152,242, $685,894, and $968,679,
respectively. For the period ended July 31, 1996, for the sale of Class A
shares the Distributor retained $194,833 as its portion of commissions paid
by purchases of the Fund's shares after allowing as concession to other
dealers $30,291. During the same periods no commissions were paid to the
Distributor on sales and purchases of portfolio securities.
The following sample calculation of the public offering price of one
Class A and Class D share of the Fund is based on the net asset value of
one Class A and Class D share as of July 31, 1996 and a transaction with
an applicable sales charge at the maximum rate of 5.75%.
<TABLE>
<CAPTION>
<C> . . . . . . . . .<S>. . . .<S>. . . .<S . .<S>
Net asset value per share Class D Class A Class B Class C
(Total net assets/Total shares outstanding) $ 8.85 $ 8.84 $ 8.80 $ 8.81
Add selling commissions (5.75% of offering price) 0.54 0.54 0.00 0.00
------ ------ ------ ------
Maximum offering price per share $ 9.39 $ 9.38 $ 8.80 $ 8.81
====== ====== ====== ======
</TABLE>
<PAGE>
Investment Plans. Investors have flexibility in the purchase of shares
under the Fund's investment plans. They may make single, lump-sum
investments and they may add to their accounts on a regular basis,
including through reinvestment of dividends and capital gains
distributions.
An investor may elect on his application to have all dividends and
capital gains distributions reinvested or take income dividends in cash and
have any capital gains distributions reinvested. An investor may also
retain the option of electing to take any year's capital gains distribution
in cash by notifying the Fund of his choice to do so in writing.
The Internal Revenue Code of 1986 contains limitations and restrictions
upon participation in all forms of qualified plans and for contributions
made to retirement plans for tax years beginning after December 31, 1986.
Consultation with an attorney or a competent tax advisor regarding
retirement plans is recommended. A discussion of the various qualified
plans offered by the Fund is contained elsewhere in this Statement of
Additional Information.
Investor's Right of Accumulation. For Class A and Class D shareholders
the value of all assets held the day an order is received which qualifies
for rights of accumulation may be combined to determine the aggregate
investment of "any person" in ascertaining the sales charge applicable to
each subsequent purchase. For example, for any person who has previously
purchased and still holds Class A or Class D shares, respectively, with a
value (at current offering price) of $20,000 on which he paid a charge of
5.75% and subsequently purchases $80,000 of additional Class A or Class D
shares, respectively, the charge applicable to the trade of $80,000 would
be 3.50%.
The Distributor must be notified by the shareholder when a purchase
takes place if the shareholder wishes to qualify for the reduced charge on
the basis of previous purchases. The reduced sales charge is inapplicable
to income dividends and capital gain distributions which are reinvested at
net asset value. The reduced charge is subject to confirmation of the
investor's holdings through a check of the Fund's records.
Letter of Intent. For Class A and Class D shareholders any person (as
defined under "Calculation of Net Asset Value") may sign a letter of intent
covering purchases to be made within a period of thirteen months (which may
include the preceding 90 days) and thereby become eligible for the reduced
sales charge applicable to the total amount purchased, provided such amount
is not less than $50,000. After a letter of intent is established, each
future purchase will be made at the reduced sales charge applicable to the
intended dollar amount noted on the application. Reinvestment of income
dividends and capital gains distributions is not considered a purchase
hereunder. If, within the 13-month period, ownership of the designated
class of Fund shares does not reach the intended dollar amount, the
difference between what you paid for such shares and the amount which would
have been paid for them must be promptly paid as if the normal sales
commission applicable to such purchases had been charged. The difference
between the sales charge as applied to a regular purchase and the sales
charge as applied on the letter of intent will be held in escrow in the
form of shares (computed to the nearest full share) and can be retained by
the Fund. If during the 13-month period the intended dollar amount is
increased, a new or
<PAGE>
revised letter of intent must be signed and complied with to receive a
further sales charge reduction. This reduction will apply retroactively to
all shares theretofore purchased under this letter.
Automatic Investment Plan. After making an initial investment, a
shareholder may make additional purchases at any time either through the
shareholder's securities dealer, or by mail directly to the transfer agent.
Voluntary accumulation also can be made through a service known as the
Fund's Automatic Investment Plan whereby the Fund is authorized through
pre-authorized checks or automated clearing house debits to charge the
regular bank account of the shareholder on a regular basis to provide
systematic additions to the account of such shareholder.
Deferred Sales Charges. As discussed in the Prospectus while Class B
shares redeemed within seven years of purchase, Class C shares redeemed
within one year or purchase, and certain purchases of Class A and Class D
shares at net asset value and redeemed within one year of purchase, are
each subject to a CDSC under most circumstances, the charge is waived on
redemptions in connection with certain post-retirement withdrawals from an
IRA or other retirement plan or following the death or disability of a
shareholder. Redemptions for which the waiver applies are: (a) any partial
or complete redemption in connection with a distribution following
retirement under a tax-deferred retirement plan or attaining age 59 1/2 in
the case of an IRA or other retirement plan, or part of a series of equal
periodic payments (not less frequently than annually) made for life (or
life expectancy) or any redemption resulting from the tax-free return of
an excess contribution to an IRA; or (b) any partial or complete redemption
following the death or disability (as defined in the Internal Revenue Code)
of a shareholder (including one who owns the shares as joint tenant with
his or her spouse), provided the redemption is requested within one year
of the death or initial determination of disability. The CDSC charge is
waived on redemption of shares in connection with a Systematic Withdrawal
Plan where the total withdrawal is less then 12% of the previous year value
or of the original purchase, whichever is greater.
For the fiscal year ended July 31, 1996, the Distributor received CDSCs
of $264,975, with respect to redemptions of Class B shares, all of which
was paid to the Distributor. For the fiscal year ended July 31, 1996 the
Distributor received no CDSCs with respect to redemptions of Class C shares
all of which was paid to the Distributor.
Additional Information - Sales of Fund Shares.
Commencing June 30, 1995 and ending ___________, the Distributor will offer
a long-term sales incentive promotion in which non-cash concessions in the
form of one or more all expenses paid promotional trips to resort locations
will be awarded to participating broker-dealers achieving certain specified
cumulative sales levels in shares of the fund. Participation in the
incentive programs is entirely optional on the part of broker-dealers.
Copies of the incentive program rules which contain more complete
information about the terms and conditions of the programs, including
qualifying levels and specific awards, may be obtained by investment
representatives by contacting the Distributor.
From time to time, the Distributor sponsors seminars for special
interest groups in which matters of general interest to investors are
discussed. As an inducement to attend such seminars, attendees may receive
modest cash amounts (for example, $25, the opportunity to participate in
a raffle, or both), but there is no obligation to make any investment in
the Fund with any such amount given by the Distributor.
In addition to the dealer discount, the Distributor may pay incentive
compensation to qualifying dealers for their salesmen who sell a specified
amount of Fund shares. Such compensation may take the form of payment of
travel expenses, meals, and lodging for trips in or outside the United
States; however, in no event does such additional compensation when
aggregated with the dealer discount exceed the maximum sales charge.
Dealers who receive bonuses or other incentives could be deemed
"underwriters' under the Securities Act of 1933.
AUTOMATIC CASH WITHDRAWAL PLAN
The Automatic Withdrawal Plan is designed as a convenience for those
shareholders wishing to receive a stated amount of money at regular
intervals
<PAGE>
from their investment in shares of the Fund. A Plan is opened by completing
an application for such Plan and surrendering to the Fund all certificates
issued to the investor for Fund shares. No minimum number of shares or
minimum withdrawal amount is required. Withdrawals are made from investment
income dividends paid on shares held under the Plan and, if these are not
sufficient, from the proceeds from redemption of such number of shares as
may be necessary to make periodic payments. As such redemptions involve the
use of capital, over a period of time they will very likely exhaust the
share balance of an account held under a Plan and may result in capital
gains taxable to the investor. Use of a Plan cannot assure realization of
investment objectives, including capital growth or protection against loss.
Price determinations with respect to share redemptions are generally made
on the 23rd of each month or the next business day thereafter. Proceeds
from such transactions are generally mailed three business days following
such transaction date.
Withdrawals concurrent with purchases of additional shares may be
inadvisable because of duplication of sales charges. Single payment
purchases of shares in amounts less than $5,000 in combination with a
withdrawal plan will not ordinarily be permitted. No withdrawal plan will
be permitted if the investor is also a purchaser under a continuous
investment plan.
Either the owner or the Fund may terminate the Plan at any time, for any
reason, by written notice to the other.
Investment income dividends paid on shares held in a withdrawal plan
account will be credited to such account and reinvested in additional Fund
shares. Any optional capital gains distributions will be taken in shares,
which will be added to the share balance held in the Plan account.
Dividends and distributions paid into the Plan account are taxable for
federal income tax purposes.
RETIREMENT PLANS
The Fund makes available retirement plan services to all classes of its
shares. Investors in the Fund can establish accounts in any one of the
retirement plans offered by the Fund. Each participant in a retirement plan
account is charged a $20 annual service fee to offset expenses incurred in
servicing such accounts. Dividends and capital gains distributions are
automatically reinvested. Under each of the plans, the Fund's retirement
plan custodian or successor custodian provides custodial services required
by the Internal Revenue Code of 1986 (the "Code") including the filing of
reports with the Internal Revenue Service. Consultation with an attorney
or competent tax advisor is recommended before establishing any retirement
plan. Brochures which describe the following retirement plans and contain
IRS model or prototype plan documents may be obtained from the Distributor.
INDIVIDUAL RETIREMENT ACCOUNTS. The Fund makes available a model
Individual Retirement Account ("IRA") under Section 408(a) of the Code on
IRS Form 5305-A. A qualified individual may invest annually in an IRA.
Persons who are not eligible to make fully deductible contributions will
be able to make non-deductible contributions to their IRAs, subject to
limits specified in the Code, to the extent that deductible contributions
are not allowed. IRA
<PAGE>
earnings on non-deductible, as well as deductible, contributions will
accumulate tax deferred. An IRA account may also be established in a
tax-free "roll-over" transfer within 60 days of receipt of a lump sum
distribution from a qualified pension plan resulting from severance of
employment or termination by the employer of such a plan.
The Code provides for penalties for violation of certain of its
provisions including, but not limited to, contributions in excess of the
stipulated limitations, improper distributions and certain prohibited
transactions. To afford plan holders the right of revocation described in
the IRA disclosure statements, investments made in a newly established IRA
may be canceled within seven days of the date the plan holder signed the
Custodial Agreement by writing the Fund's retirement plan custodian.
SIMPLIFIED EMPLOYEE PENSION PLANS. The Fund makes available model
Simplified Employee Pension Plans ("SEPs") on IRS Form 5305-SEP and Salary
Reduction Simplified Employee Pension Plans ("SARSEPs") on IRS Form
5305A-SEP. By adopting a SEP, employers may contribute to each eligible
employee's own IRA. Commencing with tax years beginning after December 31,
1986, salary reduction contributions may be made to SEPs maintained by
employers meeting certain qualifications specified in the Code.
TEACHER AND NON-PROFIT EMPLOYEE RETIREMENT PLAN. Employees of tax
exempt, charitable, religious and educational organizations described in
Section 501(c)(3) of the Code, and employees of public school systems and
state and local educational institutions, may establish a retirement plan
under Section 403(b) of the Code.
PROTOTYPE MONEY PURCHASE AND PROFIT-SHARING PENSION PLANS. Available
generally to employers, including self-employed individuals, partnerships,
subchapter S corporations and corporations.
DISTRIBUTION PLANS Reference is made to
"Purchase of Shares--Distribution Plans" in the Prospectus for certain
information with respect to separate distribution plans for Class A, Class
B, and Class C shares pursuant to Rule 12b-1 under the Investment Company
Act of the Fund (each a "Distribution Plan") and with respect to the
shareholder service and distribution fees paid by the Fund to the
Distributor with respect to such classes.
Payments of the shareholder service fees and/or distribution fees are
subject to the provisions of Rule 12b-1 under the Investment Company Act.
Among other things, each Distribution Plan provides that the Distributor
shall provide and the Directors shall review quarterly reports of the
disbursement of the service fees and/or distribution fees paid to the
Distributor. In their consideration of each Distribution Plan, the
Directors must consider all factors they deem relevant, including
information as to the benefits of the Distribution Plan to the Fund and its
related class of shareholders. Each Distribution Plan further provides
that, so long as the Distribution Plan remains in effect, the selection and
nomination of Directors who are not "interested persons" of the Fund, as
defined in the Investment Company Act (the "Independent Directors"), shall
be committed to
<PAGE>
the discretion of the Independent Directors then in office. In approving
each Distribution Plan in accordance with Rule 12b-1, the Independent
Directors considered the potential benefits that the Distribution Plans
could provide to the Fund and the respective classes and their
shareholders, and concluded that there is reasonable likelihood that such
Distribution Plan will benefit the Fund and its shareholders. Each
Distribution Plan can be terminated at any time, without penalty, by the
vote of a majority of the Independent Directors or by the vote of the
holders of a majority of the outstanding voting securities of the
applicable class. A Distribution Plan cannot be amended to increase
materially the amount to be spent thereunder without the approval of the
applicable class of shareholders, and all material amendments are required
to be approved by the vote of Directors, including a majority of the
Independent Directors who have no direct or indirect financial interest in
such Distribution Plan, cast in person at a meeting called for that
purpose. Rule 12b-1 further requires that the Fund preserve copies of each
Distribution Plan and any report made pursuant to such plan for a period
of not less than six years from the date of such Distribution Plan or such
report, the first two years in an easily accessible place.
For the fiscal year ended July 31, 1996, the Fund paid the Distributor
$1,997 (based on average net assets relating to the Class A shares of
approximately $3,837,948) pursuant to the Class A Distribution Plan,
$30,291 of which was paid to other Broker-Dealers for providing account
maintenance and distribution-related services in connection with the Class
A shares and $164,542 was retained by the Distributor. For the fiscal
year ended July 31, 1996, the Fund paid the Distributor $7,040 (based on
average net assets relating to the Class B shares of approximately
$3,416,453) pursuant to the Class B Distribution Plan, all of which was
paid to other Broker Dealers for providing account maintenance and
distribution-related services in connection with the Class B shares. For
the fiscal year ended July 31, 1996, the Fund paid the Distributor $324
(based on average net assets relating to the Class C shares of
approximately $367,296) pursuant to the class C Distribution Plan, All of
which was paid to other Broker-Dealers for providing account maintenance
and distribution-related services in connection with the Class C shares.
At July 31, 1996, the net assets of the Fund subject to the Class B
Distribution Plan aggregated approximately 3,416,453. At this net asset
level, the annual fee payable pursuant to the Class B Distribution Plan
would aggregate approximately $8,541. At July 31, 1996, the net assets of
the Fund subject to the Class C Distribution Plan aggregated approximately
$918. At this asset level, the annual fee payable pursuant to the Class C
Distribution Plan would aggregate $324.
CUSTODIAN AND INDEPENDENT ACCOUNTANTS
All securities and cash of the Fund are held by its custodian, State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02210. KPMG Peat Marwick LLP, Certified Public Accountants, 707 17th
Street, Suite 2300 Denver, Colorado 80202, provides auditing and tax
services to the Fund.
BROKERAGE
<PAGE>
Decisions to buy and sell securities for the Fund, assignment of its
portfolio business, and negotiation of its commission rates, where
applicable, are made by the Fund's securities order department. The Fund
does not have any agreement or arrangement to use any particular broker for
its portfolio transactions. The Fund's primary consideration in effecting
a security transaction will be execution at the most favorable price. When
selecting a broker-dealer to execute a particular transaction, the Fund
will take the following into consideration: the best net price available;
the reliability, integrity and financial condition of the broker-dealer;
the size of and difficulty in executing the order; the value of the
expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis; sales of Fund shares; and the value of
brokerage, research and other services provided by the broker-dealer. The
commission charged by a broker may be greater than the amount another firm
might charge if the management of the Fund determines in good faith that
the amount of such commissions is reasonable in relation to the value of
the brokerage and research services provided by such broker.
Portfolio transactions placed through dealers serving as primary market
makers are effected at net prices, without commission as such, but which
include compensation to the dealer in the form of mark up or mark down. In
certain instances the Fund may make purchases of underwritten issues at
prices which include underwriting fees. When making purchases of
underwritten issues with fixed underwriting fees, the Fund may designate
broker-dealers who have agreed to provide the Fund with certain
statistical, research, and other information, or services which are deemed
by the Fund to be beneficial to the Fund's investment program. With respect
to money market instruments, the Fund anticipates the portfolio securities
transactions will be effected with the issuer or with a primary market
maker acting as principal for the securities on a net basis (without
commissions).
Any statistical or research information furnished to the Adviser may be
used in advising its other clients. Generally, no specific value can be
determined for research and statistical services furnished without cost to
the Fund by a broker-dealer. The Fund is of the opinion that the material
is beneficial in supplementing research and analysis provided by the Fund's
Adviser.
The Fund may use "affiliated" brokers, as that term is defined in the
Investment Company Act, , it in the Advisor's best judgement based on all
relevant factors, implement the policy of the Fund to obtain, at reasonable
expense, the "best execution" (prompt and reliable execution at the most
favorable price obtainable) of such transactions. The Advisor need not
seek competitive commission bidding but is expected to minimize the
commissions paid to the extent consistent with the interest and policies
of the Fund as established by its Board of Directors. Purchases of
securities from underwriters include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers include a spread
between the bid and asked price.
The Fund paid total brokerage commissions of $352,272 in fiscal year
1994, $409,352 in fiscal year 1995, and $462,481 in fiscal year 1996. The
Fund did not purchase securities issued by any broker-dealer that executed
<PAGE>
portfolio transactions during such fiscal year. None of these commissions
was paid to any person affiliated with the Fund.
While some stocks considered in the opinion of management to be least
sensitive to business declines will be maintained as long term holdings,
others considered most sensitive to such declines will be sold whenever in
management's judgement economic conditions may be in for a major decline.
Resulting funds may be temporarily invested in United States Government
securities, high-grade bonds and high-grade preferred stocks, until
management believes business and market conditions indicate that
reinvestment in common stocks is desirable. The portfolio turn over of the
Fund for the fiscal years ended July 31, 1994, 1995 and 1996 was 87.2%,
173.0%, and 163.1%, respectively. The turnover rate was greater in fiscal
year 1995 than in 1994 because the Adviser moved the portfolio from cash
or cash equivalents into equities to take advantage of the rising equity
market.
CALCULATION OF NET ASSET VALUE
The Fund offers its shares continuously to the public at their net asset
value next computed after receipt of the order to purchase plus any
applicable sales charge. Net asset value is determined as of the close of
business on the New York Stock Exchange each day the Exchange is open for
trading, and all purchase orders are executed at the next price that is
determined after the order is received. Orders received and properly
time-stamped by dealers and received by the Distributor prior to 2:00 p.m.
Denver time on any business day will be confirmed at the public offering
price effective at the close on that day. Orders received after such time
will be confirmed at the public offering price determined as of the close
of the Exchange on the next business day. It is the responsibility of the
dealers to remit orders promptly to the Distributor. The New York Stock
Exchange is closed on the following holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.
In determining net asset value, securities traded on the New York Stock
Exchange or other stock exchange approved for this purpose by the board of
directors will be valued on the basis of the closing sale thereof on such
stock exchange, or, if such sale is lacking, at the mean between closing
bid and asked prices on such day. If no bid and asked prices are quoted for
such day or information as to New York or other approved exchange
transactions is not readily available, the security will be valued by
reference to recognized composite quotations or such other method as the
board of directors in good faith deems will reflect its fair market value.
Securities not traded on any stock exchange but for which market quotations
are readily available are valued on the basis of the mean of the last bid
and asked prices. Short-term securities are valued at the mean between the
closing bid and asked prices or by such other method as the board of
directors determines to reflect their fair market value. The board of
directors in good faith determines the manner of ascertaining the fair
market value of other securities and assets.
The net asset price of Fund shares will be computed by deducting total
liabilities from total assets. The net asset value per share will be
ascertained by dividing the Fund's net assets by the total number of shares
<PAGE>
outstanding, exclusive of treasury shares and shares tendered for
redemption the redemption price of which has been determined. Adjustment
for fractions will be made to the nearest cent.
The per share net asset value of Class A, Class B and Class C shares
generally will be lower than the per share net asset value of the Class D
shares reflecting the daily expense accruals of the service, distribution
and higher transfer agency fees applicable with respect to the Class A,
Class B and Class C shares. The per share net asset value of the Class B
and Class C shares generally will be lower than the per share net asset
value of Class A shares reflecting the daily expense accruals of the
service and distribution fees and higher transfer agency fees applicable
with respect to Class B and Class C shares of the Fund. It is expected,
however, that the per share net asset value of the classes will tend to
converge (although not necessarily meet) immediately after the payment of
dividends or distributions, which will differ by approximately the amount
of the expense accrual differential between the classes.
DIVIDENDS, DISTRIBUTIONS AND TAXES
As a regulated investment company, the Fund will not be subject to U.S.
federal income tax on its income and gains which it distributes as
dividends or capital gains distributions provided that it distributes to
shareholders at least 90% of its investment company taxable income for the
taxable year. The Fund intends to distribute sufficient income to meet this
qualification requirement.
The per share dividends and distributions on Class A, Class B and Class
C shares will be lower than the per share dividends and distributions on
Class D shares as a result of the account maintenance, distribution and
higher transfer agency fees applicable with respect to the Class A, Class
B and Class C shares; similarly, the per share dividends and distributions
on Class A shares will be higher than the per share dividends and
distributions on Class B and Class C shares as a result of the lower
account maintenance fees applicable with respect to the Class A shares and
a lower distribution fee. See "Calculation of Net Asset Value".
Net capital gains (which consist of the excess of net long-term capital
gains over net short-term capital losses) are not included in the
definition of investment company taxable income. The Board of Directors
will determine at least once a year whether to distribute any net capital
gains. A determination by the Board of Directors to retain net capital
gains will not affect the ability of the Fund to qualify as a regulated
investment company. If the Fund retains for investment its net capital
gains, it will be subject to a tax of 35% of the amount retained. In that
event, the Fund expects to designate the retained amount of undistributed
capital gains in a notice to its shareholders who (I) if subject to U.S.
federal income tax on long-term capital gains, will be required to include
in income for tax purposes as long term-capital gain, their shares of such
undistributed amount, and (ii) will be entitled to credit their
proportionate shares of the 35% tax paid by the Fund against their U.S.
federal income tax liabilities and to claim refunds to the extent the
credit exceeds such liabilities. For U.S. federal income tax purposes, the
tax basis of shares owned by a shareholder of the Fund will
<PAGE>
be increased by an amount equal to 65% of the amount of undistributed
capital gains included in the shareholder's gross income.
Under the Code, amounts not distributed on a timely basis in accordance
with a calendar year distribution requirement are subject to a
nondeductible 4% excise tax. To avoid the tax, the Fund must distribute
during each calendar year (1) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (2)
at least 98% of its capital gains in excess of its capital losses for the
twelve-month period ending on October 31 of the calendar year, and (3) all
ordinary income and net capital gains for previous years that were not
distributed during such years. To avoid application of the excise tax, the
Fund intends to make distributions in accordance with the calendar year
distribution requirement. A distribution will be treated as paid on
December 31 of the calendar year if it is paid during the calendar year or
if declared by the Fund in October, November or December of such year,
payable to shareholders of record on a date in such month and paid by the
Fund during January of the following year. Any such distributions paid
during January of the following year will be taxable to shareholders as of
December 31, rather than the date on which the distributions are received.
Dividends of investment company taxable income (which includes interest
and the excess of net short-term capital gains over net long-term capital
losses) are taxable to a shareholder as ordinary income, whether paid in
cash or shares. A portion of the dividends paid by the Fund may qualify for
the 70% deduction for dividends received by corporations because the Fund's
income will consist, in part, of dividends paid by U.S. corporations.
Distributions of net capital gains (which consists of the excess of
long-term capital gains over net short-term capital losses), if any, are
taxable as long-term capital gains, whether paid in cash or in shares,
regardless of how long the shareholder has held the Fund shares, and are
not eligible for the dividends received deduction.
Upon a sale or exchange of its shares, a shareholder will realize a
taxable gain or loss depending upon its basis in the shares. Such gain or
loss will be treated as capital gain or loss if the shares are capital
assets in the shareholder's hands and such capital gain or loss will be
long-term capital gain or loss if the shares have been held for more than
one year. Any loss realized on a sale or exchange will be disallowed to the
extent the shares disposed of are replaced within a period of 61 days
beginning 30 days before and ending 30 days after the shares are disposed
of. Any loss realized by a shareholder on the sale of shares of the Fund
held by the shareholder for six months or less will be treated for tax
purposes as a long-term capital loss to the extent of any distributions of
net capital gains received by the shareholder with respect to such shares.
Shareholders receiving distributions in the form of newly issued shares
will have a cost basis in each share received equal to the fair market
value of a share of the Fund on the distribution date. Shareholders will
be notified annually as to the U.S. federal income tax status of
distributions and shareholders receiving distributions in the form of newly
issued shares will receive a report as to the fair market value of the
shares received. If the net asset value of shares is reduced below a
shareholder's cost as a
<PAGE>
result of a distribution by the Fund, such distribution will be taxable
even though it represents a return of invested capital. Investors should
be careful to consider the tax implications of buying shares just prior to
a distribution. The price of shares purchased at this time may reflect the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution which will nevertheless be taxable
to them.
Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Income
tax treaties between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine in advance the
effective rate of foreign tax to which the Fund will be subject, since the
amount of the Fund assets to be invested in various countries is not known.
It is not anticipated that shareholders will be entitled to claim foreign
tax credits with respect to their share of foreign taxes paid by the Fund.
The Fund may be required to backup withhold U.S. federal income tax at
the rate of 31% of all taxable distributions (including redemption
proceeds) payable to shareholders who fail to provide the Fund with their
correct taxpayer identification number or fail to make required
certifications, or who have been notified by the Internal Revenue Service
that they are subject to backup withholding. Backup withholding is not an
additional tax. Any amounts withheld may be credited against a
shareholder's U.S. federal income tax liability.
U.S. federal income taxation of a shareholder who, as to the United
States, is a non-resident alien individual, a foreign trust or estate,
foreign corporation, or foreign partnership ("foreign shareholder") depends
on whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by such shareholder. If the income from the
Fund is not "effectively connected" with a U.S. trade or business carried
on by the foreign shareholders, distributions of investment company taxable
income will be subject to a U.S. tax of 30% (or lower treaty rate), which
tax is generally withheld from such distributions. The tax consequences to
a foreign shareholder entitled to claim the benefits of an applicable tax
treaty may be different from those described herein. Foreign shareholders
are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the shares of the
Fund.
Distributions may also be subject to additional state, local and foreign
taxes depending on each shareholder's particular situation. Shareholders
are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the shares
of the Fund.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations presently in effect. For
the complete provisions, reference should be made to the pertinent Code
sections and the Treasury Regulations promulgated thereunder. The Code and
the Treasury Regulations are subject to change by legislative or
administrative action either prospectively or retroactively.
PERFORMANCE DATA <PAGE>
See the discussion of performance information in the Fund's prospectus
under the heading, "Performance Information."
The average annual total returns are calculated pursuant to the following
formula: P(1 + T)n = ERV (where P = a hypothetical initial payment of
$1,000, T = the average annual total return, n = the number of years, and
ERV = the ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the period at the end of the 1, 5 or 10 year periods).
For the periods ended July 31, 1996, the average annual total returns for
the Class D shares of the Fund were (1.1)% for 1 year, 11.6% for 5 years,
9.4% for 10 years and 10.6% for 15 years. For the period March 1, 1996
(inception of offering) to July 31, 1996 the total return for the Fund's
Class A, Class B and Class C shares was (10.5)%, (4.5)% and (4.3)%
respectively.
In addition to the standardized calculation of annual total return, the
Fund may from time to time use other methods of calculating its performance
in order to illustrate the effect of a hypothetical investment in a plan
or the effect of withdrawing funds from an account over a period of time.
Any presentation of non-standardized calculations will be accompanied by
standardized performance measures as well. Calculations of performance may
be expressed in terms of the total return as well as the average annual
compounded rate of return of a hypothetical investment in the Fund over
varying periods of time in addition to the 1, 5, and 10 year periods (up
to the life of the Fund) and may reflect the deduction of the appropriate
sales charge imposed upon an initial investment of more than $1,000 in the
Fund. These performance calculations will reflect the deduction of a
proportional share of Fund expenses (on an annual basis), will assume that
all dividends and distributions are reinvested when paid, may include
periodic investments or withdrawals from the account in varying amounts
and/or percentages and may include deductions for an annual custodian fee.
The Fund may calculate its total return or other performance information
prior to the deduction of a sales charge.
The performance figures described above may also be used to compare the
performance of the Fund's shares against certain widely recognized
standards or indices for stock and bond market performance. The following
are the indices against which the Portfolios may compare performance:
The Standard & Poor's Composite Index of 500 Stocks (the S&P 500 Index)
is a market value-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43.
The S&P 500 index is composed almost entirely of common stocks of companies
listed on the NYSE, although the common stocks of a few companies listed
on the American Stock Exchange or traded OTC are included. The 500
companies represented include 400 industrial, 60 transportation and 50
financial services concerns. The S&P 500 index represents about 80% of the
market value of all issues traded on the NYSE.
The Dow Jones Industrial Average is an unmanaged index composed of 30
blue-chip industrial corporation stocks.
The Lipper Mutual Fund Performance Analysis and Mutual Fund Indices
<PAGE>
measure total return and 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.
The Consumer Price Index (or Cost of Living index), published by the U.S.
Bureau of Labor Statistics, is a statistical measure of periodic change in
the price of goods and services in major expenditure groups.
The following table presents a hypothetical initial investment of $1,000
on August 1, 1958 with subsequent investments of $1,000 made annually
through July 31, 1996. The illustration assumes that the investment was
made in Class D shares, (the only class existing at that time), and a sales
load of 5.75% has been deducted from the initial and subsequent
investments, a $20 annual fee (representing the annual service fee charged
to retirement plan accounts) has been deducted from the account annually,
and that all dividend and capital gain distributions have been reinvested
when paid. While the illustration uses an investment of $1,000 and a 5.75%
sales load, the Fund may select any multiple of $1,000 in order to
illustrate the effect of an investment plan and the sales load will reflect
the appropriate sales load for the initial and subsequent investments as
determined by the Fund's currently effective prospectus. Class A, Class B
and Class C shares are subject to additional distribution charges as
outlines in the prospectus, which would have, if the Class was in effect,
produced a lower rate of return. The sales load may be reduced pursuant
to rights of accumulation and letter of intent.
<TABLE>
<CAPTION>
CUMULATIVE ACCEPTED
COST OF AS SHARES
ACQUIRED CAPITAL PURCHASED TOTAL OF DIVIDENDS BOUGHT WITH
GAINS THROUGH INITIAL FROM WITH TOTAL COST INITIAL
DIS- RE-INVESTMENT AND ANNUAL INVESTMENT INVESTMENT INCLUDING AND ANNUAL BUTIONS OF INCOME
PERIOD INVEST- INCOME OF INCOME REINVESTED INVEST- (CUM- (CUM- ENDED ENDED
MENTS REINVESTED DIVIDENDS DIVIDENDS MENTS ULATIVE) ULATIVE) VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
07/31/59 $ 2,000 $ 25 $ 25 $ 2,025 $ 2,129 $ 0 $ 27 $ 2,156
07/31/60 3,000 41 66 3,066 2,894 11 65 2,970
07/31/61 4,000 85 151 4,151 4,611 80 181 4,872
07/31/62 5,000 97 248 5,248 4,917 91 241 5,249
07/31/63 6,000 123 371 6,371 6,817 275 426 7,518
07/31/64 7,000 125 496 7,496 9,427 464 672 10,563
07/31/65 8,000 147 643 8,643 9,790 1,152 778 11,720
07/31/66 9,000 202 845 9,845 10,740 2,213 977 13,930
07/31/67 10,000 373 1,218 11,218 11,943 3,866 1,421 17,230
07/31/68 11,000 353 1,571 12,571 14,033 4,243 1,934 20,210
07/31/69 12,000 408 1,979 13,979 12,320 5,717 1,910 19,947
07/31/70 13,000 410 2,389 15,659 10,520 5,207 1,822 17,549
07/31/71 14,000 588 2,977 16,977 14,385 6,664 2,970 24,019
07/31/72 15,000 682 3,659 18,659 16,069 7,018 3,841 26,928
07/31/73 16,000 508 4,167 20,167 16,299 7,259 4,162 27,720
07/31/74 17,000 782 4,949 21,949 14,041 6,307 4,034 24,382
07/31/75 18,000 1,405 6,354 24,354 13,704 9,330 5,110 28,144
07/31/76 19,000 1,171 7,525 26,525 16,777 10,796 7,227 34,800
07/31/77 20,000 1,074 8,599 28,599 19,582 12,008 9,204 40,794
07/31/78 21,000 1,017 9,616 30,616 23,726 13,984 11,894 49,604
07/31/79 22,000 2,055 11,671 33,671 27,109 15,429 15,437 57,975
07/31/80 23,000 2,931 14,602 37,602 37,937 22,535 24,562 85,034
07/31/81 24,000 3,766 18,368 42,368 30,526 41,349 22,502 94,377
07/31/82 25,000 4,235 22,603 47,603 27,829 39,477 23,846 91,152
07/31/83 26,000 6,769 29,372 55,372 40,090 55,535 42,431 138,056
07/31/84 27,000 5,657 35,029 62,029 35,136 58,360 41,506 135,002
07/31/85 28,000 4,637 39,666 66,666 37,927 73,322 48,927 160,176
07/31/86 29,000 7,330 46,996 75,996 41,252 77,925 60,054 179,231
07/31/87 30,000 5,993 52,989 82,989 44,358 107,124 70,083 221,565
07/31/88 31,000 3,685 56,674 87,674 31,884 105,874 52,808 190,566
07/31/89 32,000 9,656 66,330 98,330 36,390 117,707 69,793 223,890
07/31/90 33,000 9,004 75,334 108,334 37,969 119,759 79,838 237,566
07/31/91 34,000 8,138 83,472 117,472 41,072 126,543 93,645 261,260
07/31/92 35,000 1,955 85,427 120,397 44,484 151,776 101,369 297,629
07/31/93 36,000 2,801 88,288 124,228 50,094 193,448 115,156 358,698
<PAGE>
07/31/94 37,000 1,910 90,138 127,138 50,782 232,061 116,467 399,310
07/31/95 38,000 5,130 95,268 133,268 48,526 297,125 115,242 460,893
07/31/96 39,000 6,321 101,589 140,589 50,035 311,128 122,923 484,086
</TABLE>
The table below illustrates the effect of an automatic withdrawal program
on an initial hypothetical investment of $10,000 on August 1, 1958 in the
Fund for the life of the Fund. The illustration assumes that a sales load
of 5.75% was deducted from the initial investment, that $800 was withdrawn
annually and withdrawals were made first from income for the year, then
from principal. Withdrawals from principal representing the sale of shares
were assumed to have been in the order shares were acquired. Continued
withdrawals in excess of current income can eventually exhaust principal,
particularly in a period of declining market prices. That portion of the
total amount withdrawn designated "From Investment Income Dividends" should
be regarded as income; the remainder represents a withdrawal of principal.
While this illustration assumes that $800 was withdrawn annually, the Fund
may in other illustrations select any percentage or dollar amount to be
withdrawn.
<TABLE>
<CAPTION>
WITH- DRAWN
VALUE ACCEPTED WITHDRAWN FROM CUM-
OF AS FROM PRINCIPAL ANNUAL ULATIVE
REMAIN- CAPITAL INVESTMENT AND TOTAL TOTAL
ING GAINS PERIOD INCOME CAPITAL WITH- WITH- ORIGINAL
DISTRI- TOTAL ENDED DIVIDENDS GAINS DRAWN DRAWN
SHARES BUTIONS VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
07/31/59 $ 244 $ 556 $ 800 $ 800 $ 11,453 $ 0
$ 11,453
07/31/60 212 588 800 1,600 10,025 57
10,082
07/31/61 283 517 800 2,400 12,213 294
12,507
07/31/62 243 557 800 3,200 10,085 311
10,396
07/31/63 237 563 800 4,000 11,477 700
12,177
07/31/64 199 601 800 4,800 13,666 1,070
14,737
07/31/65 201 599 800 5,600 12,252 2,004
14,256
07/31/66 241 559 800 6,400 11,739 3,292
15,031
07/31/67 393 407 800 7,200 11,592 5,090
16,682
07/31/68 336 464 800 8,000 12,250 5,588
17,838
07/31/69 355 445 800 8,800 9,546 6,535
16,081
07/31/70 325 475 800 9,600 6,970 5,695
12,665
07/31/71 417 383 800 10,400 8,524 7,289
15,813
07/31/72 441 359 800 11,200 8,625 7,675
16,300
07/31/73 300 500 800 12,000 7,753 7,673
15,426
07/31/74 427 373 800 12,800 5,906 6,432
12,338
07/31/75 696 104 800 13,600 5,210 7,662
12,872
07/31/76 526 274 800 14,400 5,753 8,866
14,619
07/31/77 443 357 800 15,200 6,034 9,861
15,895
07/31/78 391 409 800 16,000 6,585 11,484
18,069
07/31/79 740 60 800 16,800 7,207 12,671
19,878
07/31/80 800 0 800 17,600 10,117 17,800
27,917
07/31/81 800 0 800 18,400 8,175 21,670
29,845
07/31/82 800 0 800 19,200 7,691 20,050
27,741
07/31/83 800 0 800 20,000 12,625 28,206
40,831
07/31/84 800 0 800 20,800 11,585 27,303
38,888
07/31/85 800 0 800 21,600 12,811 32,159
44,970
07/31/86 800 0 800 22,400 15,019 34,178
49,197
07/31/87 800 0 800 23,200 16,776 42,864
59,640
07/31/88 800 0 800 24,000 12,006 38,243
50,249
07/31/89 800 0 800 24,800 15,375 42,517
57,892
07/31/90 800 0 800 25,600 17,109 43,258
60,367
07/31/91 800 0 800 26,400 19,569 45,709
65,278
07/31/92 486 314 800 27,200 20,438 52,839
73,277
07/31/93 687 113 800 28,000 22,514 64,695
87,209
07/31/94 463 337 800 28,800 22,086 73,961
96,046
07/31/95 800 0 800 29,600 21,316 88,412
109,278
07/31/96 800 0 800 30,400 22,293 91,941
114,235
TOTAL $ 20,486 $ 9,914 $ 29,600
</TABLE>
Performance information for the Fund reflects only the performance
of a hypothetical investment in the Fund during the particular time period
on which the calculations are based. Performance information should be
considered in light of the Fund's investment objectives and policies,
characteristics and quality of the portfolio and the market conditions
during the given time period and should not be considered as a
representation of
<PAGE>
what may be achieved in the future.
<PAGE>
Independent Auditors' Report
To The Board of Directors and Shareholders
of American Growth Fund, Inc.:
We have audited the accompanying statements of investments and assets and
liabilities of American Growth Fund, Inc. as of July 31, 1996, and the
related statement of operations, the statement of changes in net assets and
the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of
changes in net assets for the year ended July 31, 1995 and the financial
highlights for the four years then ended were audited by other auditors
whose report dated August 18, 1995 expressed an unqualified opinion on
those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1996, by correspondence with the custodian
and brokers; and where confirmations were not received from brokers, we
performed alternative procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of American Growth Fund, Inc. as of July 31, 1996, and the results of its
operations, the changes in its net assets and the financial highlights for
the year then ended, in conformity with generally accepted accounting
principles.
Denver, Colorado
KPMG Peat
Marwick LLP
August 30, 1996
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS
How American Growth Fund Has Its Shareowners' Money Invested
July 31, 1996
<TABLE>
<CAPTION>
Market
Description of Security Shares Value
COMMON STOCKS
Petroleum Industry 14.1%
<S>. . . . . . . . . . . . . . . . . . . . . . <C> <C>
Texaco Inc.. . . . . . . . . . . . . . . . . . . . . . . 70,000 $
5,950,000
(A major integrated international oil company.)
British Petroleum Company P.L.C. . . . . . . . . . . . . 45,000
4,944,375
(One of the largest integrated oil enterprises in the world.)
Repsol S.A.. . . . . . . . . . . . . . . . . . . . . . . 66,000
2,202,750
(Explores/produces oil/gas in Spain, N. Sea, Africa, Latin America,
Indonesia and the Middle East.)
Ultramar Corporation . . . . . . . . . . . . . . . . . . 80,000
2,110,000
(Leading independent refiner/marketer of petroleum products in California
and Eastern Canada.)
15,207,125
Commercial Bank Industry 11.7%
PNC Bank Corp. . . . . . . . . . . . . . . . . . . . . . 145,000
4,223,125 (The nation's thirteenth largest bank holding company.)
City National Corp.. . . . . . . . . . . . . . . . . . . 200,000
3,100,000 (Owns City National Bank, sixth largest bank in California.)
SouthTrust Corp. . . . . . . . . . . . . . . . . . . . . 90,000
2,503,125
(The 33rd largest bank in the U.S.)
First Union Corp.. . . . . . . . . . . . . . . . . . . . 28,800 1,828,800
(The nation's sixth largest bank holding company.)
Boatmen's Bancshares, Inc. . . . . . . . . . . . . . . . 25,000
1,000,000
(Largest bank holding company based in Missouri.)
12,655,050
Thrift Industry 8.7%
Golden West Financial Corp.. . . . . . . . . . . . . . . 60,000
3,330,000
(Holding company for World S&L, third-largest thrift.)
Standard Federal Bancorp . . . . . . . . . . . . . . . . 80,000
3,120,000
(Holding company for Standard Federal Bank, 7th largest thrift in the U.S.)
Washington Mutual, Inc.. . . . . . . . . . . . . . . . . 80,000
2,905,000
(Largest thrift in Washington and the fourth largest banking
company in the nation.)
9,355,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market
Description of Security Shares Value
<S>. . . . . . . . . . . . . . . . . . . . . . . . . . . <C> <C>
Aerospace/Defense Industry 5.1%
Boeing Company (The) . . . . . . . . . . . . . . . . . . 62,000 $
5,487,000
(The leading manufacturer of commercial jet aircraft.)
Insurance Industry 3.5%
American International Group, Inc. . . . . . . . . . . . 28,125
2,647,266 (Ranked fourth in the U.S. based on premiums written in domestic
property & casualty insurance.)
Equitable Companies Inc. (The) . . . . . . . . . . . . . 50,000
1,150,000
(Parent holding company of The Equitable Life Assurance Society of the
U.S.)
3,797,266
Chemical Industry 3.5%
Union Carbide Corp.. . . . . . . . . . . . . . . . . . .90,000
3,780,000 (Producer of ethylene glycol, polyethylene, ethylene oxide,
solvents, coatings, specialty chemicals, surfactants.)
Retail Store Industry 2.1%
Woolworth Corp.. . . . . . . . . . . . . . . . . . . 120,000
2,310,000
(One of the largest U.S.-based retail store chains.)
Financial Services Industry 1.2%
Travelers Group Inc. . . . . . . . . . . . . . . . . . .30,000
1,267,500
(A diversified financial services company.)
Building Materials Industry 1.0%
Ameron International Inc.. . . . . . . . . . . . . . . .30,000
1,050,000
(Multinational manufacturer of protective coatings for petroleum,
marine and industrial markets.)
Apparel Industry 1.0%
Jones Apparel Group Inc.*. . . . . . . . . . . . . . . .20,000
1,030,000
(Designs/markets a broad range of women's sportswear, suits and
dresses.)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Market
Description of Security Shares Value
<S>. . . . . . . . . . . . . . . . . . . . . . . . . . . <C> <C>
Machinery Industry 0.7%
Deere & Company. . . . . . . . . . . . . . . . . . . . . 20,000 $
715,000 (Largest manufacturer of farm equipment in the world.)
Total Common Stocks (cost $47,213,124) . . . . . . . . . 52.6%
56,653,941
SHORT-TERM INVESTMENT
U.S. Treasury Bill, 5.125% due 10/24/96, principal amount $25,000,000
(amortized cost $24,701,042) . . . . . . . . . . . . . 22.9%
24,696,500
Total Investment Securities, at Value (cost $71,914,166) .75.5%
81,350,441
Cash and Receivables, Less Liabilities . . . . . . . . . 24.5%
26,401,661
Net Assets . . . . . . . . . . . . . . . . . . . . . . . 100.0%
$107,752,102
</TABLE>
<PAGE>
<PAGE>
Financial Statements
<TABLE>
<CAPTION> AMERICAN GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES, JULY 31, 1996 ASSETS:
<S>. . . . . . . . . . . . . . . . . . . . . . . . . . . <C>
Investments at value (cost $71,914,166)-see accompanying statement. $ 81,350,441
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,382,693
Receivables:
Investments sold . . . . . . . . . 17,438,447
Shares of beneficial interest sold . . . . . . . . . . 535,327
Dividends. . . . . . . . 100,220
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,281
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . 107,816,409
LIABILITIES:
Shares of beneficial interest purchased . . . . . . . . . . . . 64,307
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . 64,307
NET ASSETS . . . . . . . . . . . . . . . . .. . . . . . . . . . $ 107,752,102
COMPOSITION OF NET ASSETS:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $ 93,087,660
Undistributed net investment income . . . . . . . . . . . . . . 86,817
Accumulated net realized gain from investment transactions. . . . . . . . 5,141,350
Net unrealized appreciation of investments. . . . . . . . . . . 9,436,275
Net assets. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 107,752,102
NET ASSET VALUE PER SHARE:
Class A Shares:*
Net asset value and redemption price per share (based on net assets
of $3,837,948 and 433,973 shares of beneficial interest outstanding) . . . .
$ 8.84
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price.). . . . . . . . . . . . . . . . . . . . . . . . $
9.38
Class B Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $3,416,453 and 388,056 shares of beneficial interest outstanding)
$ 8.80
Class C Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $367,296 and 41,705 shares of beneficial interest outstanding). . $
8.81
Class D Shares:*
Net asset value and redemption price and offering price per share (based on
net assets of $100,130,405 and 11,314,711 shares of beneficial interest outstanding)$
8.85
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 9.39
/TABLE
<PAGE>
<PAGE>
Financial Statements
<TABLE>
<CAPTION> AMERICAN GROWTH FUND, INC.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JULY 31, 1996
<S>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <C>
INVESTMENT INCOME:
Dividends. . . . . . . . $ 1,664,695
Interest . . . . . 256,036
Total income. . . . . . . . . . . . . . . . . . . . . .. 1,920,731
EXPENSES:
Investment
advisory fees (Note 5). . . . . . . . . . . 866,681
Administration
expenses (Note 5) . . . . . . . . . . . 415,479
Transfer agent,
shareholder servicing and data
processing fees
(Note 4). . . . . . . 179,849
Custodian fees (Note 4). . . . . . 91,622
Professional fees. . . . . . . . . 56,583
Registration and
filing fees:
Class A. . . . . . 120
Class B. . . . . . 90
Class C. . . . . . 3
Class D. . . . . . 21,350
Shareholder reports. . . . . . . . 15,112
Distribution fees:
Class A. . . . . . 1,997
Class B. . . . . . 7,040
Class C. . . . . . 324
Class D. . . . . . -
Directors fees . . . . . . . . . . 6,500
Other expenses .. . . . . . . . . 66,510
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . 1,729,260
Less expenses paid indirectly (Note 4) . . . . . . . . (292,244)
Net expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 1,437,016
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . 483,715
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments . . . . . . . . . . . 7,083,415
Net change in unrealized appreciation or depreciation on investments (3,074,255)
Net realized and unrealized gain . . . . . . . . . . . 4,009,160
Net Increase in Net Assets Resulting From Operations . . . . . . $ 4,492,875
</TABLE> <PAGE>
<PAGE>
Financial Statements
<TABLE>
<CAPTION> AMERICAN GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 1996 AND 1995
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . $ 483,715 $ 1,444,321
Net realized gain . . . . . . . . . . . . . 7,083,415 325,639
Net change in unrealized appreciation or depreciation . . (3,074,255) 9,773,542
Net increase in net assets resulting from operations. . 4,492,875
11,543,502
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment
income:
Class D . . . . . . . . . . . . . . . . . . . . . (1,387,812) (938,292)
Distributions from net realized gain:
Class D . . . . . . . . . . . . . . . . . . . . . (2,312,575) (12,215,279)
BENEFICIAL INTEREST
TRANSACTIONS:
Net increase in net assets resulting from beneficial
interest transactions:
Class A . . . . . . . . . . . . . . . . . . . . . 4,048,441 -
Class B . . . . . . . . . . . . . . . . . . . . . 3,603,382 -
Class C . . . . . . . . . . . . . . . . . . . . . 383,952 -
Class D . . . . . . . . . . . . . . . . . . . . . 8,385,535 23,939,198
NET ASSETS:
Total increase. . . . . . . . . . . . . . . . . . 17,213,798 22,329,129
Beginning of period . . . . . . . . . . . . . . . 90,538,304 68,209,175
End of period (including undistributed net investment income of $86,817 and $990,914
respectively). . . .. . . . $ 107,752,102 $ 90,538,304
</TABLE>
<PAGE>
<PAGE>
Financial Highlights
<TABLE>
Class D
<CAPTION>
Year Ended July 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net Asset Value,
Beginning of Period. . . . . . . . . $ 8.75 $ 9.34 $ 9.39 $ 8.50 $ 8.02
Income (loss) from investment
operations:
Net investment income. . . . . . . . . .03 .21 .03 .11 .10
Net realized and unrealized gain (loss) .39 .88 1.00 1.51 .94
Total income (loss) from investment
operations . . . . . .42 1.09 1.03 1.62 1.04
Dividends and distributions to
shareholders:
Dividends from net investment
income . . . . . . . (.12) (.12) (.05) (.08)
(.06)
Distributions from net realized gain (.20) (1.56) (1.03) (.65)
(.50)
Total dividends and distributions to shareholders
. . . . . . . . . . . . (.32) (1.68) (1.08) (.73)
(.56)
Net Asset Value, End of Period . . . . $ 8.85 $ 8.75 $ 9.34 $ 9.39 $ 8.50
Total Return at Net Asset Value1 . . . 4.8% 15.2% 11.1% 20.2% 13.6%
Ratios/Supplemental Data: Net assets, end of period (in thousands) . . . . . . . .
$100,130 $90,538 $68,209 $62,180
$55,501
Ratios to average net assets:
Net investment income (loss) . . . . 0.47% 1.91% 0.35% 0.59%
1.14%
Expenses2. . . . . . . . . . . . . . . 1.63% 1.45% 1.34% 1.44%
1.46%
Portfolio Turnover Rate3 . . . . . . 163.1% 173.0% 87.2% 48.8%
39.8%
Average Brokerage Commission Rate4 $0.0561 - - - -
/TABLE
<PAGE>
<PAGE>
Financial Highlights
<TABLE>
<CAPTION> Class A Class B Class C
Period Ended July 31,
1996* 1996* 1996*
<S> <C> <C> <C>
Per Share Operating Data:
Net Asset Value,
Beginning of Period. . . . . . . . . . $ 9.21 $ 9.21 $ 9.21
Income (loss) from investment
operations:
Net Investment income(loss). . . . . . -7 (.01) -7
Net realized and unrealized gain (loss). . . . . . (.37) (.40)
(.40)
Total income (loss) from investment operations .(.37) (.41) (.40)
Dividends and distributions to
shareholders:
Dividends from net investment income . . . . . - - -
Distributions from net realized gain . . . . . . . - -
-
Total dividends and distributions
to shareholders. . . . . . . . . . . . - - -
Net Asset Value, End of Period . . . . . . . $ 8.84 $ 8.80 $ 8.81
Total Return at Net Asset Value2 . . . . . (4.0)% (4.5)% (4.3)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) . $3,838 $3,417 $367
Ratio to average net assets:
Net investment income. . . . . . . . . 0.13%3 (0.52)%3 (0.63)%3
Expenses . . . . . . . . . . . . . . . 2.06%3 2.81% 3 2.97% 3
Portfolio Turnover Rate. . . . . . . . 163.1% 163.1% 163.1%
Average Brokerage Commission Rate. . . . $0.0561 $0.0561 $0.0561
/TABLE
<PAGE>
<PAGE>
Notes to Financial Statements
1. Summary of Significant Accounting Policies
American Growth Fund, Inc. ("Fund") is registered under the Investment
Company Act
of 1940, as amended, as a diversified, open-end management investment company.
The Fund's
primary investment objective is to seek capital appreciation. The Fund offers
Class A,
Class B, Class C and Class D shares. Class D shares are available to
shareholders in
existence prior to 03/01/96. Class A and Class D shares are sold with a
front-end sales
charge. Class B and Class C shares may be subject to a contingent deferred sales
charge.
All classes of shares have identical rights to earnings, assets and voting
privileges,
except that each class has its own distribution and/or service plan and
expenses
directly attributable to a particular class and exclusive voting rights with
respect to
matters affecting a single class. Class B shares will automatically convert
to Class A
shares seven years after date of purchase. The following is a summary of
significant
accounting policies consistently followed by the Fund.
Investment Valuation - Investment securities are valued at the closing
asked price
as reported by the principal securities exchange on which the security
is traded.
If no sale is reported, or if the security is not traded on an exchange, value
is based
on the average of the latest bid and asked prices. Short-term debt
securities
having a remaining maturity of 60 days or less are valued at amortized cost,
which
approximates market value.
Allocation of Income, Expenses, and Gains and Losses - Income, expenses
(other than
those attributable to a specific class) and gains and losses are allocated
daily to
each class of shares based upon the relative proportion of net assets
represented by such
class. Operating expenses directly attributable to a specific class are
charged
against the operations of that class.
Federal Income Taxes - No provision for federal income or excise taxes has
been made
because it is the Fund's policy to comply with provisions of the Internal
Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable
income to shareholders.
Classification of Distributions to Shareholders - The character of
distributions
made during the year from net investment income or net realized gains may
differ
from its ultimate characterization for federal income tax purposes.
Other - Investment transactions are accounted for on the date the
investments are
purchased or sold (trade date). Dividend income and distributions to
shareholders
are recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
Realized gains and losses from investment transactions and unrealized
appreciation
and depreciation of investments are reported on an identified cost basis
which is
the same basis used for federal income tax purposes.
Use of estimates - The preparation of financial statements in
conformity with
generally accepted accounting principles requires management to make
estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure
of contingent assets and liabilities at the date of the financial
statements
and the reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ from those
estimates.
<PAGE>
<PAGE>
Notes to Financial Statements
2. Shares of Beneficial Interest - The Fund has authorized an unlimited
number of no
par value shares of beneficial interest of each class. Transactions in
shares of
beneficial interest were as follows:
<TABLE>
<CAPTION> Year Ended July 31, 19961 Year Ended July 31,
1995
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Class A:
Sold 437,138 $4,077,847 - $ -
Dividends and distributions reinvested - -
- -
Redeemed (3,165) (29,406) - -
Net increase 433,973 4,048,441 - -
Class B:
Sold 388,712 3,609,425 - -
Dividends and distributions reinvested - - -
- - Redeemed (656) (6,042) - -
Net increase 388,056 3,603,383 - -
Class C:
Sold 41,705 383,954 - -
Dividends and distributions reinvested -
- - Redeemed - -3 - -
Net Increase 41,705 383,951 - -
Class D:
Sold 2,553,651 23,031,338 2,352,448 19,867,517
Dividends and
distributions reinvested 375,550 3,300,334 1,701,369 12,454,018
Redeemed (1,956,583) (17,946,137) (1,017,480) (8,382,337)
Net increase 972,618 $ 8,385,535 3,036,337 $ 23,939,198
</TABLE>
1. For the period from March 1, 1996 (inception of offering) to July 31,
1996 for
Class A, Class B and Class C shares.
3. Unrealized Gains and Losses on Investments
At July 31, 1996, net unrealized appreciation on investments of
$9,436,275 was
comprised of gross appreciation of $9,728,691 and gross depreciation of
$292,416.
4. Fund Expenses Paid Indirectly
Fund expenses totaling $99,405 relating to certain operating expenses were
paid by
broker dealers under terms of brokerage/service arrangements. Fees for
transfer
agent and data processing services and custodian services totaling $107,376 and
$85,463,
respectively, were offset by earnings on cash balances maintained by the
Fund at the
custodian financial institution. The Fund could have invested the assets
maintained
at the institution in income-producing assets if it had not agreed to a
reduction in fees.
5. Underwriting, Investment Advisory Contracts and Service Fees
Under the investment advisory contract with Investment Research
Corporation ("IRC"),
the advisor receives annual compensation for investment advice, computed
and paid
monthly, equal to 1% of the first $30 million of average annual net assets of
the Fund
<PAGE>
Notes to Financial Statements
and 0.75% of such assets above $30 million. The Fund pays its own
operating
expenses. The advisor has agreed to reimburse the Fund if total expenses
exceed the
most restrictive limitation prescribed by any state in which the shares of the
Fund are
sold.
Class B and Class C shares are subject to service and distribution fees of
0.25% and
0.75% of average daily net assets, respectively.
Class A shares are subject to service and distribution fees of 0.25% and
0.05% of
average daily net assets, respectively.
For the year ended July 31, 1996 commissions and sales charges paid by
investors on
the purchase of Fund shares totaled $1,439,562 of which $275,651 was
retained by
American Growth Fund Sponsors, Inc. ("Sponsors"), an affiliated broker/dealer
which serves
as the underwriter and distributor of the Fund. Sales charges advanced
to
broker/dealers by Sponsors on sales of the Fund's Class B and C shares
totaled $
142,171.
Certain officers of the Fund are also officers of Sponsors and IRC. For
the year
ended July 31, 1996 the Fund paid directors' fees and
expenses of $6,500.
For the year ended July 31, 1996, under an agreement with IRC, the Fund
was charged
$354,309 for the costs and expenses related to employees of IRC who
provided
administrative, clerical and accounting services to the Fund. In addition,
the Fund was
charged $ 61,170 by an affiliated company of IRC for the cost of
office space.
6. Federal Income Tax Matters
On December 22, 1995, distributions of $0.12 and $0.20 aggregating
$1,387,812 and
$2,312,575 were declared from net investment income and realized gains,
respectively. The dividends were paid December 29, 1995. For the Fund's
fiscal year ended
July 31, 1996, all ordinary income dividends have been determined to
qualify for the
dividend received deduction for corporate shareholders.
For federal income tax purposes, the Fund realized net capital
gains of
$7,083,415 during the fiscal year ended July 31, 1996. <PAGE>
<PAGE>
Independent Auditors' Report
To The Board of Directors and Shareholders
of American Growth Fund, Inc.:
We have audited the accompanying statements of investments and assets and
liabilities of
American Growth Fund, Inc. as of July 31, 1996, and the related statement of
operations,
the statement of changes in net assets and the financial highlights for the
year then
ended. These financial statements and financial highlights are the
responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial
statements and financial highlights based on our audit. The statement of
changes in net
assets for the year ended July 31, 1995 and the financial highlights for the
four years
then ended were audited by other auditors whose report dated August 18, 1995
expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about
whether the financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the
amounts and disclosures in the financial statements. Our procedures included
confirmation
of securities owned as of July 31, 1996, by correspondence with the
custodian and brokers;
and where confirmations were not received from brokers, we performed alternative
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial
statement presentation. We believe that our audit provides a reasonable basis
for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above
present fairly, in all material respects, the financial position of American
Growth Fund,
Inc. as of July 31, 1996, and the results of its operations, the changes in its
net assets
and the financial highlights for the year then ended, in conformity with
generally
accepted accounting principles.
Denver, Colorado
KPMG Peat
Marwick LLP
August 30, 1996
<PAGE>
<PAGE> <PAGE>
AMERICAN GROWTH FUND, INC.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements
Included in Prospectus:
Financial Highlights
Included in Statement of Additional Information:
Report of Independent Accountants
Statement of assets and liabilities - July 31, 1996
Statement of operations - year ended July 31, 1996
Statement of changes in net assets - years ended July 31, 1996 and
1995
Notes to financial statements Portfolio of investments
(Schedule I - Investments in securities of unaffiliated issuers) -
July 31, 1996
(b) Exhibits
1. (a) Articles of Amendment and Restatement
(b) Articles Supplementary
2. Registrant's By-laws, as amended. (2)
3. Not applicable
4. Instruments defining rights of shareholders:
See Article 4, 6 & 8 of Incorporation and Article 1, 4 & 7 of the
Bylaws, filed as exhibits to this Registration Statement.
5. Investment advisory contract between Investment Research
corporation and registrant.
a. Distribution Agreement for Class A Shares
b. Distribution Agreement for Class B Shares
c. Distribution Agreement for Class C Shares
d. Distribution Agreement for Class D Shares
e. Selling group agreement between American Growth fund Sponsors,
Inc. And dealers as amended.
6. Not applicable
7. Custodian agreement between state Street Bank and Trust Company and
registrant. (1)
8. Transfer agent agreement between State Street Bank & Trust Company
and Registrant. (1)
9. Not applicable.
10. a. Consent of KPMG Peat Marwick LLP.
b. Consent of Smith, Brock & Gwinn
11. Not applicable
12. Not applicable
13. Not applicable
14. a. Registrant's Self-Employed Retirement Plan. (2)
b. Registrant's Simplified Employee Pension Plan Application and
Agreement.(1)
c. Registrant's Salary Reduction Simplified Employee Pension Plan
<PAGE>
Application and Agreement. (4)
d. Registrant's Individual Retirement Account Plan and Agreement.
e. Registrant's 403(b) Retirement Plan and Custody Agreement. (3)
f. Registrant's Prototype Paired Defined Contribution Plans. (4)
g. Registrant's Prototype Profit Sharing/401(k) Plan.(4)
15. a. Distribution Plan for Class A Shares
b. Distribution Plan for Class B Shares
c. Distribution Plan for Class C Shares
16. Schedule for computation of each performance quotation.
17. Financial Data Schedules filed as Exhibit 27 for electronic
purposes.
18. Rule 18f-3 Plan.
(1) Incorporation by reference to identically numbered exhibit in
Post Effective Amendment No. 42 to the Registration Statement under the
securities Act of 1933 on Form NA (File No. 2-14543) of Registrant filed
on December 1, 1988.
(2) Incorporated by reference to identically numbered exhibit in
Post-Effective Amendment No. 41 to the Registration Statement under the
Securities Act of 1933 on Form N-1A (File No. 2-14543) of Registrant filed
on December 1, 1987.
(3) Incorporated by reference to identically numbered exhibit in
Post-Effective Amendment No. 39 to the Registration Statement under the
Securities Act of 1933 on Form N-1A (File No. 2-14543) of Registrant filed
on October 1, 1985.
(4) Incorporated by reference to identically numbered exhibit in
Post-Effective Amendment No. 44 to the Registration Statement under the
Securities Act of 1933 on Form N-1A (File No. 2-14543) of Registrant filed
on December 1, 1990.
(5) Incorporated by reference to identically numbered exhibit in
Post-Effective Amendment No. 46 to the Registration Statement under the
Securities Act of 1933 on Form N-1A (File No. 2-14543) of Registrant filed
on December 1, 1992.
Item 25. Person Controlled by or Under Common Control
None
Item 26. Number of Holders of Securities. The following table set forth
the approximate number of record holders of the one cent par value common
stock of the Registrant as of September 30, 1996.
(1) (2)
Title of Class Number of Record Holders
One Cent Par Value Common Stock 6,676
Item 27. Indemnification. Reference is made to Article IX of the
registrant's By-Laws (Exhibit 2 to this registration Statement) and Article
7(c) of the registrant's Articles of Incorporation
(Exhibit 1 to this
<PAGE>
Registration Statement).
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in connection with the
successful defense of any action, suite or proceeding) is asserted against
the Registrant by such director, officer or controlling person in
connection with the shares being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws in a manner consistent with Release No. 11330 of
the Securities and Exchange Commission under the Investment Company Act of
1940 as long as the interpretation of Section 17(h) and 17(i) of such Act
expressed in that Release remain in effect.
Item 28. Business and Other Connections of Investment Adviser. The
following table set forth the principal business of each director and
officer of the Investment Adviser of the Registrant for the two fiscal
years ended July 31, 1996.
Name & Position With
Principal Business
Investment Adviser
Robert Brody
President, Treasurer and
Director
Timothy E. Taggart
Vice President, Director
D. Leann Baird,
Secretary, Director
<PAGE>
Mr. Brody is also President and a
director of American Growth Fund,
Inc., the Registrant; Treasurer and a director
of American Growth Fund Sponsors, Inc.,
the Registrant's underwriter; and
President, Treasurer and a director of
American Growth Financial Services, Inc.,
410 17th Street, Denver, Colorado
Mr. Taggart is also Vice President,
secretary and a director of American
Growth Fund Sponsors, Inc., the
Registrant's underwriter, 410 17th
Street, Denver, Colorado; and Vice
President and Director of American Growth
Financial Services, Inc., 410 17th
Street, Denver, Colorado.
Mrs. Baird is also secretary of American
Growth Fund, Inc., the Registrant; and
secretary of American Growth Financial <PAGE>
<PAGE>
Services, Inc., 410 17th
Street, Denver, Colorado.<PAGE>
<PAGE>
Item 29. Principal Underwriters.
(a) None.
(b)
(1) Name and Principal (2) Position and Offices
(3) Position and Offices
Business Address With Underwriter
With Registrant
Robert Brody President, Treasurer President,
Director
410 17th Street Director
Suite 800
Denver, CO 80202
Timothy E. Taggart Vice President Treasurer
410 17th Street Secretary, Director
Suite 800
Denver, CO 80202
Otis R. Cutright Director
410 17th Street
Suite 800
Denver, CO 80202
None
Item 30. Location of Accounts and Records. All accounts and records
required to be maintained by Section 31(a) of the Investment Company Act,
and the rules and regulations promulgated thereunder, are located at the
offices of the Registrant, 410 17th Street, suite 800, Denver, Colorado
80202, and at the offices of its custodian and transfer agent, State Street
Bank & Trust Company, 2 Heritage Drive, N. Quincy, MA 02171, and are under
the general custody and control of its Secretary D. Leann Baird.
Item 31. Management Services.
None
Item 32. Undertakings.
None
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act
of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it has duly caused this
amendment to the registration statement to be signed on its behalf by the
undersigned, thereto duly authorized, and its seal to be hereunto affixed
and attested all in the City of Denver, State of Colorado on the 30th day
of September, 1996.
American Growth Fund, Inc.
By: /s/
Robert Brody
- ------------------------------ Robert
Brody, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the registration statement has been signed by the
following persons in the capacities indicated and as of the date stated.
(a) Principal Executive Officer: Title Date
/s/ Robert Brody President
- ---------------------------------- and Director 09/30/96
Robert Brody
(b) Principal Financial and Accounting Officer:
/s/ Timothy E. Taggart Treasurer 09/30/96
- ----------------------------------
Timothy E. Taggart
(c) Majority of the Directors:
/s/ Michael J. Baum, Jr. 09/30/96
- ----------------------------------
Michael J. Baum, Jr.
/s/ Eddie R. Bush 09/30/96
- ----------------------------------
Eddie R. Bush
/s/ Don S. Strauss 09/30/96
- ----------------------------------
Don S. Strauss
/s/ Harold Rosen 09/30/96
- ----------------------------------
Harold Rosen
<PAGE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
EX-99.1(a) Form of Articles of Amendment and Restatement
EX-99.1(b) Form of Distribution Agreement for Class A
Shares
EX-99.5 Form of Investment Advisory Contract
EX-99.5(a) Form of Distribution Agreement for Class A
Shares
EX-99.5(b) Form of Distribution Agreement for Class B
Shares
EX-99.5(c) Form of Distribution Agreement for Class C
Shares
EX-99.5(d) Form of Distribution Agreement for Class D
Shares
EX-99.5(e) Selling Group Amendment as amended
EX-99.10(a) Consent of KPMG Peat Marwick LLP
EX-99.10(b) Consent of Smith Brock & Gwinn
EX-99.14(d) Form of Individual Retirement Account Plan
EX-99.15(a) Form of Distribution Plan for Class A shares
EX-99.15(b) Form of Distribution Plan for Class B shares
EX-99.15(c) Form of Distribution Plan for Class C shares
EX-99.17 Financial Data Schedule
EX-99.18 Form of Rule 18f-3
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
AMERICAN GROWTH FUND, INC.
AMERICAN GROWTH FUND, INC., a Maryland corporation (the Corporation"),
HEREBY CERTIFIES:
1. The name of the Corporation is AMERICAN GROWTH FUND, INC. The
Corporation desires to amend and restate its charter (the "Charter") as
currently in effect. The original Articles of Incorporation were approved
and received by the State Tax Commission of Maryland on July 16, 1958.
2. Pursuant to Section 2-609 of the Maryland Corporations and
Associations Code, these Articles of Amendment and Restatement restate and
integrate and further amend the provisions of the Articles of Incorporation
of the Corporation.
3. The text of the Charter of the Corporation as heretofore amended
or supplemented is hereby restated and further amended to read in its
entirety as follows:
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
AMERICAN GROWTH FUND, INC.
ARTICLE FIRST
The name of the corporation (hereinafter called the Corporation)
is American Growth Fund, Inc.
ARTICLE SECOND
The purpose or purposes for which the Corporation is formed and
the business or objects to be transacted, carried on and promoted by it,
are as follows:
(1) To hold, invest and reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to purchase
or otherwise acquire, hold for investment or otherwise, sell, assign,
negotiate, transfer, exchange or otherwise dispose of or turn to
account or realize upon, securities (which term "securities" shall for the
purposes of this Article, without limitation of the generality
thereof, be deemed to include any stocks,
<PAGE
shares, bonds, debentures, notes, mortgages or other obligations, and
any certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same, or evidencing
or representing any other rights or interests therein, or in any
property or assets) created or issued by any persons, firms, associations,
corporations, syndicates, combinations, organizations, governments, or
subdivisions thereof; and to exercise, as owner or holder of any
securities, all rights, powers and privileges in respect thereof; and
to do any and all acts and things for the preservation, protection,
improvement and enhancement in value of any and all such securities.
(2) To issue and sell shares of its own capital stock in such
amounts and on such terms and conditions, for such purposes and for
such amount or kind of consideration (including, without limitation
thereto, securities) now or hereafter permitted by the laws of
Maryland and by these Articles of Incorporation, as its Board of Directors
may determine; provided, however, that the consideration per share to
be received by the Corporation upon the sale of any shares of its
capital stock shall not be less than the net asset value per share of
such capital stock outstanding at the time as of which the computation of
such net asset value shall be made.
(3) To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any
manner and to the extent now or hereafter permitted by the laws of
Maryland and by these Articles of Incorporation.
(4) To conduct its business in all of its branches at one or
more offices in Maryland and elsewhere in any part of the world,
without restriction or limit as to extent.
(5) To carry out all or any of the foregoing objects and
purposes as principal or agent, and alone or with associates or, to
the extent now or hereafter permitted by the laws of Maryland, as a
member of, or as the owner or holder of any stock of, or shares of
interest in, any firm, association, corporation, trust or syndicate; and
in connection therewith to make or enter into such deeds or contracts
with any persons, firms, associations, corporations, syndicates,
governments or subdivisions thereof, and to do such acts and things
and to exercise such powers, as a natural person could lawfully make,
enter into, do or exercise.
(6) To do any and all such further acts and things and to
exercise any and all such further powers as may be necessary,
incidental, relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of all or any of the foregoing
purposes or objects.
The foregoing objects and purposes shall, except as otherwise
expressly provided, be in no way limited or restricted by reference to, or
inference from, the terms of any other clause of this or any other Article
of these Articles of Incorporation, and shall each be regarded as
independent, and construed as powers as well as objects and purposes, and
the enumeration of specific purposes, objects and powers shall not be
construed to limit or restrict in any manner the
<PAGE>
meaning of general terms or the general powers of the Corporation now or
hereafter conferred by the laws of the State of Maryland, nor shall the
expression of one thing be deemed to exclude another, though it be of like
nature, not expressed; provided, however, that the Corporation shall not
have the power to carry on within the State of Maryland any business
whatsoever the carrying on to which would preclude it from being classified
as an ordinary business corporation under the laws of said State; nor shall
it carry on any business, or exercise any powers, in any other state,
territory, district or country except to the extent that the same may
lawfully be carried on or exercised under the laws thereof.
ARTICLE THIRD
The post office address of the place at which the principal
office of the Corporation in the State of Maryland will be located is 32
South Street, Baltimore, Maryland 21202.
The Corporation's resident agent is The Corporation Trust
Incorporated, whose post office address is 32 South Street, Baltimore,
Maryland 21202. Said resident agent is a corporation of the State of
Maryland.
ARTICLE FOURTH
(1) The total number of shares which the Corporation has
authority to issue is fifty million (50,000,000) shares of capital stock
of the par value of one cent ($0.01) each, having an aggregate par value
of five hundred thousand dollars ($500,000). Until its name may be changed
pursuant to Paragraph 3 of this Article Fourth or any of such shares are
reclassified pursuant to Paragraph 2 hereof, all such shares shall be of
one series which shall bear the same name as that of the Fund. Until the
Board of Directors may reclassify any of such shares pursuant to Paragraph
2 of this Article Fourth, all shares of the Corporation's common stock
shall be of one class, designated "Class D Common Stock."
(2) The Board of Directors may classify and reclassify any
unissued shares of capital stock (whether or not such shares have been
previously classified) into one or more additional or other classes or
series as may be established from time to time by setting or changing in
any one or more respects the designations, preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of or rights to require redemption
of such shares of capital stock and pursuant to such classification or
reclassification to increase or decrease the number of authorized shares
of any existing class or series.
(3) The Board of Directors may change the name or other
designation
of any series or class of shares of capital stock whether or not shares of
such series or class are issued and outstanding, provided that such change
in name or other designation does not change the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of such shares of
stock.
<PAGE>
(4) Each series of stock of the Corporation shall relate
to a separate portfolio of investments. All shares of stock within each
series shall be identical except that there may be variations among the
different series, including, without limitation, as to the purchase price,
determination of net asset value, designations, preferences, conversion or
other rights, voting powers, restrictions, allocations of expenses, special
and relative rights and limitations as to dividends and on liquidation,
qualifications or terms or conditions of or rights to require redemption
of such shares of stock.
(a) Except as the Board of Directors otherwise may
provide when classifying or reclassifying any shares of stock into
separate series, all consideration received by the Corporation for the
issue or sale of shares of stock of a particular series, together with
all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds received thereon, including
any proceeds derived from the sale, exchange or liquidation of such
assets, any funds or payments derived from any reinvestment of such
proceeds, and any assets, income, earnings, profits, and proceeds
thereof, funds or payments that are not readily identifiable as belonging
to any particular series ("General Assets") allocated to a series,
shall constitute assets of that series, in contrast to other series
(subject only to the rights of creditors) and are herein referred to
as assets "belonging to" that series. Except as herein expressly provided,
any General Assets shall be allocated by or under the supervision of
the Board of Directors to and among any one or more of the series
established and designated from time to time, in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair
and equitable. Such decisions by the Board of Directors shall be
final and conclusive.
(b) The assets belonging to each series of stock shall
be charged with the liabilities of the Corporation in respect of that
series and with all expenses, costs, charges, and reserves
attributable to that series. Such liabilities, expenses, costs, charges,
and reserves, together with any liabilities, expenses, costs, charges,
or reserves of the Corporation that are not readily identifiable as
belonging to any particular series ("General Liabilities") allocated
to that series, shall constitute the liabilities of that series, in
contrast to other series, and are herein referred to as "belonging to"
that series. Except as herein expressly provided, any General
Liabilities shall be allocated by or under the supervision of the
Board of Directors to and among any one or more of the series established
and designated from time to time, in such manner and on such basis as
the Board of Directors, in its sole discretion, deems fair and
equitable. Such decisions by the Board of Directors shall be final
and conclusive.
(5) Expenses related to the distribution of, and other
identified
expenses that should properly be allocated to, the shares of a particular
class or series of capital stock may be charged to and borne solely by such
class or series and the bearing of expenses solely by a class or series of
capital stock may be appropriately reflected (in a manner determined by the
Board of Directors) and cause differences in the net asset value
attributable to, and the dividend, redemption and liquidation rights of,
the shares of each class or series of capital stock.
(6) Unless otherwise expressly provided in the charter of
the
<PAGE>
Corporation, including any Articles Supplementary thereto, the holders of
each class or series of capital stock shall be entitled to dividends and
distributions in such amounts and at such times as may be determined by the
Board of Directors, and the dividends and distributions paid with respect
to the various classes or series of capital stock may vary among such
classes and series. Dividends and distributions with respect to a series
may be declared or paid only out of the net assets belonging to that
series. Dividends on a class or series may be declared or paid only out
of the net assets of that class or series.
(7) Unless otherwise expressly provided in the charter of
the
Corporation, including any Articles Supplementary thereto, on each matter
submitted to a vote of stockholders, each holder of a share of capital
stock of the Corporation shall be entitled to one vote for each share
standing in such holder's name on the books of the Corporation,
irrespective of the class or series thereof, and all shares of all classes
and series shall vote together as a single class; provided, however, that
(a) as to any matter with respect to which a separate vote of any class or
series is required by the Investment Company Act of 1940, or any rules,
regulations or orders issued thereunder, or by the Maryland General
Corporation Law, such requirements as to a separate vote by that class or
series shall apply in lieu of a general vote of all classes and series as
described above, (b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or more classes or
series, then, subject to clause (c) below, the shares of all other classes
and series not entitled to a separate class vote as a single class, and (c)
as to any matter which does not affect the interests of a particular class
or series, such class or series shall not be entitled to any vote and only
the holders of shares of the affected classes or series, if any, shall be
entitled to vote.
(8) The presence in person or by proxy of the holders of
a majority of the shares of capital stock of the Corporation outstanding
and entitled to vote thereat shall constitute a quorum at any meeting of
the shareholders. If at any meeting of the shareholders there shall be
less than a quorum present, the shareholders present at such meeting may,
without further notice, adjourn the same from time to time until a quorum
shall attend, but no business shall be transacted at any such adjourned
meeting except such as might have been lawfully transacted had the meeting
not been adjourned. Cumulative voting shall not be allowed at any meeting
of the stockholders of this Corporation.
(9) Unless otherwise expressly provided in the charter of
the Corporation, including any Articles Supplementary thereto, subject to
compliance with the requirements of the Investment Company Act, the Board
of Directors shall have the authority to provide that holders of shares of
any class or series shall have the right to convert or exchange said shares
into shares of one or more other classes or series of shares in accordance
with such requirements and procedures as may be established by the Board
of Directors.
(10) Notwithstanding any provisions of the Maryland General
Corporation Law requiring a greater proportion than a majority of the votes
of all classes or series of capital stock of the Corporation (or any class
or series entitled to vote thereon as a separate class or series) to take
or authorize any action, the Corporation is hereby authorized (subject to
the requirements of the Investment Company Act of 1940, or any rules,
regulations and orders
<PAGE>
issued thereunder) to take such action upon the concurrence of a majority
of the aggregate number of shares of capital stock of the Corporation
entitled to vote thereon (or a majority of the aggregate number of shares
of a class or series entitled to vote thereon as a separate class or
series).
(11) Unless otherwise expressly provided in the charter of
the
Corporation, including any Articles Supplementary creating any class or
series of capital stock, in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
holders of all classes and series of capital stock of the Corporation shall
be entitled, after payment or provision for payment of the debts and other
liabilities of the Corporation, to share ratably in the remaining net
assets of the Corporation; provided, however, that in the event the capital
stock of the Corporation shall be classified or reclassified into series,
holders of any shares of capital stock within such series shall be entitled
to share ratably (after taking into account are expenses attributable to
any separate clauses of such series) out of the assets belonging to such
series.
(12) No holder of stock of the Corporation shall, as such
holder, have any right to purchase or subscribe for any shares of the
capital stock of the Corporation of any class which it may issue or sell
(whether out of the number of shares authorized by these Articles of
Incorporation, or out of any shares of the capital stock of the Corporation
acquired by it after the issue thereof, or otherwise) other than such
right, if any, as the Board of Directors, in its discretion, may determine.
(13) Any fractional share shall carry proportionately all
the rights of a whole share, including the right to vote and the right to
receive dividends.
(14) All persons who shall acquire stock in the Corporation
shall acquire the same subject to the provisions of these Articles of
Incorporation.
(15) Any reference to "shares," "stock" or "shares of stock"
in these Articles of Incorporation shall be deemed to refer, unless the
context otherwise requires, to the shares of each separate class and/or
series. As used in the charter of the Corporation, the terms "charter" and
"Articles of Incorporation" shall mean and include these Articles of
Incorporation as amended, supplemented and restated from time to time
whether by Articles of Amendment, Articles Supplementary, Articles of
Restatement or otherwise.
ARTICLE FIFTH
The number of Directors of the Corporation shall be five, and the
names of those who shall act as such until their successors are duly chosen
and qualified are as follows:
Robert D. Brody
Michael J. Baum, Jr.
Eddie R. Bush
Don S. Strauss
Harold Rosen
<PAGE>
However, the By-Laws of the Corporation may fix the number of
Directors at a number greater or less than that named in these Articles of
Incorporation, provided that in no case shall the number of Directors be
less than three, and may authorize the Board of Directors, by the vote of
a majority of the entire Board of Directors, to increase or decrease the
number of Directors fixed by these Articles of Incorporation or by the
By-Laws within a limit specified in the By-Laws and to fill the vacancies
created by any such increase in the number of Directors. Unless otherwise
provided by the By-Laws of the Corporation, the Directors of the
Corporation need not be stockholders therein.
ARTICLE SIXTH
The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
Directors and stockholders.
(1) The By-Laws of the Corporation may divide the Directors
of the Corporation into classes and prescribe the tenure of office of the
several classes, but no class shall be elected for a period shorter than
that from the time of the election following the division into classes
until the next annual meeting and thereafter for a period shorter than the
interval between annual meetings or for a longer period than five years,
and the term of office of at least one class shall expire each year.
Notwithstanding the foregoing, no such division into classes shall be made
prior to the first annual meeting of stockholders of the Corporation.
(2) The holders of shares of the capital stock of the
Corporation shall have the right to inspect the records, documents,
accounts and books of the Corporation, subject to reasonable regulations
of the Board of Directors, not contrary to Maryland law, as to whether and
to what extent, and at what times and places, and under what conditions and
regulations, such right shall be exercised.
(3) Any Director, or any officer elected or appointed by
the Board of Directors or by any committee of said Board or by the
stockholders or otherwise, may be removed at any time, with or without
cause, in such lawful manner as may be provided in the By-Laws of the
Corporation.
(4) If the By-Laws so provide, the Board of Directors of
the Corporation shall have the power to hold their meetings, to have an
office or offices and, subject to the provisions of the laws of Maryland,
to keep the books of the Corporation outside of said State at such places
as may from to time be designated by them.
(5) In addition to the powers and authority hereinbefore
or by statute expressly conferred upon them, the Board of Directors may
exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the express
provisions of the laws of Maryland, of these Articles of Incorporation and
of the By-Laws of the Corporation.
(6) Shares of stock in other corporations shall be voted
by the President or
<PAGE>
a Vice-President, or such officer or officers of the Corporation as the
Board of Directors shall designate for the purpose, or by a proxy or
proxies thereunto duly authorized by the Board of Directors, except as
otherwise ordered by vote of the holders of a majority of the shares of the
capital stock of the Corporation outstanding and entitled to vote in
respect thereto.
(7) Liability and Indemnification.
(a) A director and an officer, agent or employee of
the Corporation shall be indemnified by the Corporation to the fullest
extent allowed by the Maryland General Corporation Law (the "Maryland
Law") as it now exists and to such increased or expanded
indemnification as may be allowed, required or permitted by any future
amendment to the Maryland Law; and each director and officer, agent or
employee shall also be entitled to the fullest indemnification which
is now or hereafter permitted under any applicable law, rule,
regulation, contract, bylaw or otherwise; and such rights to
indemnification shall, except as otherwise provided in the Maryland law,
not be deemed exclusive of any other rights to which each director,
officer, agent or employee may be entitled apart from Maryland Law.
The bylaws may also limit or restrict the indemnification to which any
director, officer, agent or employee may be entitled.
(b) Subject to any limitation imposed by the
Investment
Company Act, to the maximum extent permitted by the General Laws of
the State of Maryland from time to time in effect, no director or
officer of the Corporation shall be liable to the Corporation or its
stockholders for money damages.
(c) Neither the amendment of these Articles of
Incorporation nor the repeal of any provision hereof, shall limit or
eliminate the benefits provided to directors and officers under the
foregoing provisions in connection with any act or omission that
occurred prior to such amendment or repeal.
(d) Nothing in these Articles of Incorporation shall
be construed to protect any director or officer of the Corporation
against any liability to the Corporation or its shareholders to which
such director or officer would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
(8) The Board of Directors of the Corporation is hereby
empowered to authorize, without shareholder approval, the issuance and sale
from time to time of shares of stock of the Corporation of any class or
series, whether now or hereafter authorized, in each case upon such terms
and conditions and for such consideration as such Board of Directors may
deem advisable, subject to such limitations as are contained in these
Articles of Incorporation, the by-laws of the Corporation, the laws of the
State of Maryland, and the Investment Company Act and the rules thereunder.
(9) Redemptions.
<PAGE>
(a) Each holder of shares of stock of the Corporation
shall be entitled to require the Corporation to redeem all or any
part of the shares of stock of the Corporation standing in the
name of such holder on the books of the Corporation, and all
shares of stock issued by the Corporation shall be subject to
redemption by the Corporation, at the redemption price of such shares as
in effect from time to time as may be determined by the Board of
Directors of the Corporation in accordance with the provisions
hereof, subject to the right of the Board of Directors of the
Corporation to suspend the right of redemption of shares of stock
of the Corporation or postpone the date of payment of such redemption
price in accordance with the provisions of applicable law.
(b) All shares of stock of the Corporation shall be
redeemable at the option of the Corporation. The Board of
Directors may by resolution from time to time authorize the
Corporation to require the redemption of all or any part of the
outstanding shares of any class or series upon such terms and conditions
as the Board of Directors, in its discretion, shall deem
advisable, and upon the sending of written notice thereof to each
holder whose shares are to be redeemed.
(c) The redemption price of shares of stock of the
Corporation shall be the net asset value thereof as determined
by the Board of Directors of the Corporation or under its
direction from time to time in accordance with the provisions of
applicable law, less such redemption or other charge, if any, as may
be fixed by the Board of Directors of the Corporation. Payment of the
redemption price shall be made by the Corporation at such time
and in such manner as may be determined from time to time by the
Board of Directors of the Corporation in accordance with the
provisions of applicable law.
(10) Any determination made in good faith and, so far as
accounting
matters are involved, in accordance with accepted accounting practice by
or pursuant to the direction of the Board of Directors, as to the amount
of the assets, debts, obligations or liabilities of the Corporation (or of
any class or series thereof), as to the amount of net income from dividends
and interest for any period or amounts at any time legally available for
the payment of dividends, as to the amount of any reserves or charges set
up and the propriety thereof, as to the time of or purpose for creating
such reserves or charges, as to the use, alteration or cancellation of any
reserves or charges (whether or not any obligation or liability for which
such reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or
discharged), as to the price of any security or other asset owned or held
by the Corporation (or any series thereof), as to the number of shares of
the Corporation (or any class or series thereof) outstanding, as to the
estimated expense to the Corporation (or any class or series thereof) in
connection with purchases of its shares, as to the ability to liquidate
securities in an orderly fashion, or as to any other matters, including,
but not limited to those relating to the issue, sale, purchase and/or other
acquisition or disposition of securities or shares of the Corporation (or
any class or series thereof) shall be final and conclusive, and shall be
binding upon the Corporation and all holders of its shares, past, present
and future, and shares of the Corporation (and any class or series thereof)
are issued and sold on the condition and
<PAGE>
understanding, evidenced by acceptance of certificates for such shares by,
or confirmation of such shares being held for the account of, any
shareholder, that any and all determinations shall be binding as aforesaid.
ARTICLE SEVENTH
The term of existence of this Corporation shall be perpetual.
ARTICLE EIGHTH
From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed (including amendments
altering contract rights and any amendment which changes the terms of any
of the outstanding stock by classification, reclassification or otherwise),
upon the vote of the holders of a majority of the shares of capital stock
of the Corporation at the time outstanding and entitled to vote, and other
provisions which might under the statutes of the State of Maryland at the
time in force be lawfully contained in articles of incorporation, may be
added or inserted upon the vote of the holders of a majority of the shares
of capital stock of the Corporation at the time outstanding and entitled
to vote, and all rights at any time conferred upon the stockholders of the
Corporation by these Articles of Incorporation are granted subject to the
provisions of this Article EIGHTH. The Corporation shall notify the
stockholders in its next subsequent regular report to the stockholders of
any amendment to these Articles of Incorporation.
1. The foregoing Articles of Amendment and Restatement have been
effected in the manner and by the vote required by the Corporation's
Charter and the laws of the State of Maryland. Pursuant to Section 2-604
of the Maryland Corporations and Associations Code, these Articles of
Amendment and Restatement were advised and approved by a majority of the
entire Board of Directors of the Corporation and approved by the
stockholders.
2. The current address of the principal office of the Corporation
and the name and address of the Corporation's current resident agent are
as set forth in Article THIRD of the Corporation's Charter as amended and
restated by these Articles of Amendment and Restatement.
3. The number of directors of the Corporation and the names of those
currently in office are as set forth in Article FIFTH of the Corporation's
Charter as amended and restated by the Articles of Amendment and
Restatement.
The undersigned President acknowledges these Articles of Amendment and
Restatement to be the corporate act of the Corporation and as to all
matters or facts required to be verified under oath, the undersigned
President acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that
this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles to be
signed in its name and on its behalf by its President and attested to by
its Secretary on this 22 day of February,
<PAGE>
1996.
ATTEST: AMERICAN GROWTH FUND, INC.
/s/ D. Leann Baird By: Robert Brody
D. Leann Baird Robert Brody
Secretary President
<PAGE>
AMERICAN GROWTH FUND, INC.
ARTICLES SUPPLEMENTARY TO ARTICLES OF INCORPORATION
CREATING THREE ADDITIONAL CLASSES OF COMMON STOCK
AMERICAN GROWTH FUND, INC., a Maryland corporation having its
principal Maryland office c/o The Corporate Trust Incorporated, 32 South
Street, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The Corporation is registered as an open-end company
under the Investment Company Act of 1940, as amended, with authority to
issue FIFTY MILLION (50,000,000) shares of Class D Common Stock of one
series bearing the same name as that of the Corporation. All shares of the
Corporation's capital stock have a par value of one cent ($0.01) per share
and an aggregate par value of FIVE HUNDRED THOUSAND DOLLARS ($500,000).
SECOND: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by its charter, the Board of Directors has
reclassified TEN MILLION ($10,000,000) authorized and unissued shares of
the Class D Common Stock of the Corporation as Class A Common Stock with
par value of one cent ($0.01) per share and an aggregate par value of ONE
HUNDRED THOUSAND DOLLARS ($100,000).
THIRD: The preferences, designations, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of Class A Common Stock
are as follows:
The Class A Common Stock of the Corporation shall represent the
same interest in the Corporation and have identical preferences,
designations, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption as the Class D Common Stock as of the date of these Articles
Supplementary, except as otherwise set forth in the Corporation's charter
and further except that:
(i) Expenses related to the distribution of the Class A Common
Stock shall be borne solely by such class and such class shall have
exclusive voting rights with respect to matters relating to the expenses
being borne solely by such class; and
(ii) Such distribution expenses borne solely by Class A Common
Stock shall be appropriately reflected (in the manner determined by the
Board of Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of such class.
FOURTH: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by its charter, the Board of Directors has
reclassified TEN MILLION (10,000,000)
<PAGE>
authorized and unissued shares of the Class D Common Stock of the
Corporation as Class B Common Stock with par value of one cent ($0.01) per
share and an aggregate par value of ONE HUNDRED THOUSAND ($100,000).
FIFTH: The preferences, designations, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of Class B Common Stock
are as follows:
The Class B Common Stock of the Corporation shall represent the
same interest in the Corporation and have identical preferences,
designations, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption as the Class D Common Stock as of the date of these Articles
Supplementary, except
as otherwise set forth in the Corporation's charter and further except
that:
(i) Expenses related to the distribution of the Class B Common
Stock shall be borne solely by such class and such class shall have
exclusive voting rights with respect to matters relating to the expenses
being borne solely by such class;
(ii) Such distribution expenses borne solely by Class B Common
Stock shall be appropriately reflected (in the manner determined by the
Board of Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of such class;
.(iii) Shares of Class B Common Stock shall convert to an
equivalent number (based upon their respective net asset values) of shares
of Class A Common Stock upon the terms and in the manner and at the time
or times as described in the Corporation's prospectus and statement of
additional information contained in its registration statement current and
effective at the time of the sale of the particular shares of Class B
Common Stock; and
.(iv) Shares of Class B Common Stock shall be subject to such
redemption fees and/or deferred or contingent deferred sales charges upon
the terms and in the manner and at the time or times as described in the
Corporation's prospectus and statement of additional information contained
in its registration statement current and effective at the time of the sale
of the particular
shares of Class B Common Stock.
SIXTH: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by its charter, the Board of Directors has
reclassified TEN MILLION ($10,000,000) authorized and unissued shares of
the Class D Common Stock of the Corporation as Class C Common Stock with
par value of one cent ($0.01) per share and an aggregate par value of ONE
HUNDRED THOUSAND DOLLARS ($100,000).
<PAGE>
<PAGE>
SEVENTH: The preferences, designations, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of Class C Common Stock
are as follows:
The Class C Common Stock of the Corporation shall represent the
same interest in the Corporation and have identical preferences,
designations, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption as the Class D Common Stock as of the date of these Articles
Supplementary, except as otherwise set forth in the Corporation's charter
and further except that:
(i) Expenses related to the distribution of the Class C Common
Stock shall be borne solely by such class and such class shall have
exclusive voting rights with respect to matters relating to the expenses
being borne solely by such class;
(ii) Such distribution expenses borne solely by Class C Common
Stock shall be appropriately reflected (in the manner determined by the
Board of Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of such class; and
.(iii) Shares of Class C Common Stock shall be subject to such
redemption fees and/or deferred or contingent deferred sales charges upon
the terms and in the manner and at the time or times as described in the
Corporation's prospectus and statement of additional information contained
in its registration statement current and effective at the time of the sale
of the particular
shares of Class C Common Stock.<PAGE>
<PAGE>
IN WITNESS WHEREOF, American Growth Fund, Inc. has caused these
Articles
Supplementary to be signed in its name and on its behalf by its President
and attested by its
Secretary on February 22, 1996.
AMERICAN GROWTH FUND, INC.
BY: /s/ Robert Brody
Robert Brody
President
Attest:
/s/ D. Leann Baird
D. Leann Baird
Secretary
THE UNDERSIGNED, President of AMERICAN GROWTH FUND, INC., who
executed on behalf of said Corporation the foregoing Articles
Supplementary, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Articles Supplementary to be the corporate act of said Corporation and
further certifies that, to the best of his knowledge, information and
belief, the matters and facts set forth therein with respect to the
authorization and approval thereof are true in all material respects, and
that this statement is made under the penalties for perjury.
/s/ Robert Brody
Robert Brody
President
<PAGE>
INVESTMENT ADVISER AGREEMENT
THIS AGREEMENT dated this 22nd day of January, 1988, is between
AMERICAN GROWTH FUND, INC., a Maryland corporation, (the Fund), and
INVESTMENT RESEARCH CORPORATION, a Colorado corporation, (the Adviser).
The Fund is a registered investment company, subject to the
Investment Company Act of 1940, which owns and manages a portfolio of
investments. In managing its portfolio of securities, as well as in the
conduct of certain of its affairs, it wishes to have the benefit of the
investment advisory services of the Adviser and of its assistance in
performing certain managerial functions. The Adviser desires to furnish
such services and to perform the functions assigned to it under this
agreement for the considerations provided, and accordingly the parties have
agreed as follows:
1. Duties of the Adviser. The Adviser shall act as the investment
adviser of the Fund. In this capacity the Adviser shall:
(a) Furnish continuous advice and recommendations to the Fund as to
the acquisition, holding or disposition of any or all of the
securities or other assets which it may own or contemplate acquiring from
time to time.
(b) Keep the board of directors and appropriate officers of the Fund
fully informed as to the condition of the investment portfolio of the
Fund and as to the investment considerations which have given rise to the
recommendations made by the Adviser.
Furnish such statistical and analytical information and reports
as may be reasonably required by the Fund from time to time.
(d) Perform such additional administrative or clerical functions,
subject to the policy determinations of the board of directors of the
Fund, as may be assigned to it by the Fund under this agreement, so long
as such functions are reasonably related to the management of the
portfolio of the Fund.
2. Compensation of the Adviser. As compensation for its services
the Fund will pay the Adviser an annual fee of approximately (a) 1% of the
Funds average net assets up to $30,000,000 of such assets and (b) .75 of
1% of such assets above $30,000,000. Such fee is hereafter called the
Advisers Fee. The Advisers Fee shall be computed monthly on the last
business day of each month and shall be paid on the fifth day of the
ensuing month.
3. Payment of Expenses.
(a) The Fund shall pay or make reimbursement for all expenses
relating to its operations, including without
limitation:
<PAGE>
(I) Compensation and related expenses of officers and
employees of the Fund.
(ii) Rental of reasonable office space for the use by the Fund;
and expenses in the operation thereof, expressly excluding, however,
any such rental and expenses attributable to the Advisers operations under
this agreement.
(iii) The Advisers Fee.
(iv) Fees and expenses payable under federal and state law to
register or qualify the Funds shares for sale.
(v) Fees and expenses of members of the Funds board of
directors and board of advisers (and committees thereof).
(vi) Compensation and expense of the Funds custodian, transfer
agent, dividend disbursing agent and the like.
(vii) Expenses of computing the Funds per share net asset
value.
(viii)Legal, accounting and printing expenses, including those
relating to the Funds prospectus and stock certificates.
(ix) Expenses of shareholders and directors meetings and of
preparing, printing and distributing proxy statements and reports to
shareholders.
(x) Brokerage commissions, interest, federal, state and local
taxes (including stamp, excise, income and franchise taxes).
(xi) All other expenses of the Fund not expressly assumed by
the Adviser under paragraph 1.
(b) For the month during which this agreement becomes effective and
the month during which it terminates, there shall be an appropriate
proration of the Advisers Fee (or reimbursement) payable hereunder for
such month based on the number of calendar days of such month during which
this agreement is effective.
4. Affiliated Persons. A person who is a director, officer or
employee of the Adviser and who receives compensation for so acting, shall
be eligible at the same time to receive compensation from the Fund for his
services in acting as a director, officer or employee of the Fund. Any such
person may also be compensated for services rendered and reimbursed for
expenses incurred in other capacities.
5. Termination.
(a) This agreement may be terminated at any time without penalty by
the board of directors of the Fund or by the shareholders of the fund
acting by vote of at least a majority of its outstanding voting securities,
provided in either case that 60 days written notice of termination
be given to the Adviser at its principal place of business.
<PAGE>
(b) This agreement may be terminated by the Adviser at any time by
giving 60 days written notice of termination to the Fund at its
principal place of business.
6. Nonassignability.This agreement shall not be assignable. In the
event of its assignment, as such term is defined in the Investment Company
Act of 1940, it shall automatically be terminated unless such automatic
termination shall be prevented by an order of the Securities and Exchange
Commission.
7. Term. The term of this agreement shall be for two years from its
date. It shall continue from year to year only so long as such continuance
is specifically approved annually either by the vote of the entire board
of directors of the Fund or by the vote of a majority of the outstanding
securities of the Fund, and in either case by the vote of a majority of the
directors who are not interested persons of the Fund or the Adviser cast
in person at a meeting called for the purpose of voting on such approval.
In connection with any such continuance it shall be the duty of the
directors to request and evaluate, and the duty of the Adviser to furnish,
such information as may reasonably be necessary to evaluate the terms of
this agreement. This agreement shall supersede and replace any investment
adviser agreement entered into by the parties hereto prior to the effective
date hereof.
IN WITNESS WHEREOF the parties have executed this agreement on the
date first above written.
INVESTMENT RESEARCH CORPORATION AMERICAN GROWTH FUND, INC.
BY____________________________________ BY___________________________
<PAGE>
DISTRIBUTION AGREEMENT
(Class A Shares)
AGREEMENT (the Agreement), dated as of February 29, 1996, between
AMERICAN GROWTH FUND, INC., a
Maryland corporation, (the Fund) and AMERICAN GROWTH FUND SPONSORS, INC.,
a Colorado corporation,
(the Distributor).
RECITALS
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as a diversified, open-end management
investment company;
WHEREAS, the Fund intends to offer its Class A shares to the public
on a continuous basis;
WHEREAS, the Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the 1934 Act), and is in the
business of selling shares of the Fund and other registered investment
companies to the public, either directly or through other broker-dealers;
WHEREAS, the Fund and the Distributor wish to enter into this
Agreement with respect to the continuous offering of the Funds Class A
shares from and after the date hereof in order to promote the growth of the
Fund and facilitate the distribution of its Class A shares; and
WHEREAS, the Fund has adopted a distribution and service plan
pursuant to Rule 12b-1 under the 1940 Act (the Plan) authorizing payments
by the Fund to the Distributor with respect to the distribution of Class
A shares of the Fund and the provision of services with respect to Class
A shareholder accounts.
NOW, THEREFORE, the parties agree as follows:
1. The Distributor shall be the distributor for the Class A shares of
the capital stock of the Fund as may from time to time be effectively
registered under the Securities Act of 1933, as amended (hereinafter
referred to as the 1933
Act).
2. The Fund agrees to sell and deliver from time to time, upon the terms
hereinafter described, such number of its fully paid and nonassessable
Class A shares of capital stock as the Distributor shall order, but only
to the extent that the Distributor shall have received purchase orders
therefor. All orders from the Distributor hereunder shall be subject to
confirmation by the Fund.
3. The Distributor may sell and distribute any shares so purchased by
it through dealers or otherwise in such manner not inconsistent with the
provisions hereof as it may determine from time to time, and it agrees to
use its best
<PAGE>
efforts to effect such sale and distribution. The Distributor shall not
make any short sales of Fund shares. The Distributor shall in addition,
in so far as they concern it, comply with all applicable laws, rules and
regulations including, without limiting the generality of the foregoing,
all rules or regulations made or adopted pursuant to Section 22 of the 1940
Act by the Securities and Exchange Commission or any securities association
registered under the 1934
Act.
4. Subject to the provisions of paragraph 5 hereof, all shares offered
for sale and sold by the Distributor shall be offered for sale and sold by
it at a price per share equal to the offering price per share (hereinafter
called the offering price) rounded to the nearest one cent and equal to (a)
the net asset value per share (determined as authorized from time to time
under the direction of the Board of Directors of the Fund in conformity
with the 1940 Act) plus (b) a sales charge or premium, if any, based upon
the schedule of such charges (including all exceptions therefrom) and
related terms and conditions as may be set forth from time to time in the
then current Prospectus or Statement of Additional Information of the Fund
pertaining to its Class A shares. The Fund shall determine and promptly
thereupon furnish to the Distributor a statement of the Funds net asset
value and offering price as often and at such times as its Board of
Directors shall by resolution determine provided, however, that subject to
the provisions hereinafter contained in this paragraph 4, the Fund shall
determine and furnish such offering price at least once on each business
day on which the New York Stock Exchange is open for trading. Each such
offering price shall become effective at such time, and shall remain in
effect during such period, as may be stated in the statement thereof
furnished to the Distributor as above provided. Every statement of the
offering price furnished to the Distributor as above provided shall show
the basis of its computation. The Fund shall also accept and confirm at
the offering price in effect before a price change such orders as are
entered by the Distributor to fill orders placed with it prior to such time
of price change, but only if such orders are received by the Fund within
a time deemed by the Fund to be reasonable after the time of receipt
thereof by the Distributor and if such orders are time-stamped or bear
other evidence to show that they were filed for transmission at the point
of origin prior to the time of such price change. Anything to the contrary
herein notwithstanding, however, whenever in its judgment such action is
warranted by market, economic or political conditions or by abnormal
circumstances of any kind, Fund officers may suspend the sale of Fund
shares, without incurring any liability under any of the provisions of this
Agreement, and decline to accept or confirm any orders for or make any
sales of any shares to the Distributor under this agreement until such time
as the Fund shall deem it advisable to accept and confirm such orders and
to make such sales, and during any such period, the Fund shall be under no
obligation to confirm or accept any such orders or make any such sales at
any price.
5. At or prior to the time of delivery by the Fund to the Distributor,
for its accounts, of any shares of the Fund's stock, the Distributor will
pay or cause to be paid to the Fund or its order an amount equal to the
offering price of such shares at which the Distributors order has been
confirmed by the Fund, less the applicable sales charge or premium, if any,
which charge or premium shall constitute the Distributors concession for
selling and distributing such shares and may be deducted by it from the
offering price in making payment to the Fund hereunder. The Distributor
may in its discretion allow a concession or other accounting to dealers or
other persons out of such concession to it.
6. The Distributor shall receive and may retain any contingent deferred
sales charges which are imposed with respect to repurchases and redemptions
of Class A shares as set forth from time to time in the Funds Prospectus
and Statement of Additional Information current upon the date of sale of
any such shares. Payment of such amounts is not contingent upon the
adoption or continuation of the Plan.
<PAGE>
7. (a) The Fund shall pay to the Distributor as compensation for
services under the Plan and under this agreement, a fee of up to 0.30% of
average daily net assets attributable to Class A shares of the Fund. Of
such fee, (i) up to 0.25% of such average daily net assets may be used to
pay for shareholder servicing related to distribution of shares of the
class (the service fee) and (ii) the balance may be used to pay for
certain distribution-related activities (the distribution fee); provided,
that the sum of any service fee and distribution fee shall not exceed 0.30%
of such average daily net assets. Amounts payable under the Plan shall be
accrued daily and payable quarterly or at such other intervals as the Board
of Directors shall determine. No fee shall be payable hereunder if it
would cause the Fund to fail to comply with the requirements of Article
III,
<PAGE>
Section 26 of the Rules of Fair Practice of the National Association of
Securities Dealers, Inc.
(b) So long as the Plan or any amendment thereto is in effect, the
Distributor shall inform the Board of Directors of the distribution and
service fees to be paid by the Distributor to Securities Firms and at the
request of the Fund will provide such information as may reasonably be
requested concerning the activities of the Distributor hereunder and the
costs incurred in connection therewith.
(c) The distribution fee under paragraph (a) shall be used to
compensate the Distributor and/or broker-dealers and financial institutions
("Securities Firms") having agreements with the Distributor for providing
distribution assistance to customers and to pay for the preparation,
printing and distribution of prospectuses, statements of additional
information and periodic financial reports to persons other than current
shareholders of the Fund, as well as to pay for the preparation and
distribution of sales literature and pay for other promotional and
distribution activities.
(d) The service fee payable under paragraph (a) above shall be used
to compensate the Distributor and/or Securities Firms for providing
personal services such as shareholder liaison services (responding to
customer inquiries and providing information on their investment) to Fund
shareholders and/or maintaining shareholder accounts.
(e) Payments to Securities Firms hereunder may take the form of
sales commissions or trailer commissions.
8. Delivery of certificates for shares of the Fund's capital stock, when
and if requested (subject to any determination by the Fund not to issue
certificates for shares), shall be made as soon as practicable after
confirmation by it or the Distributors order therefor and against payment
therefor by the Distributor. The certificates for such shares shall be
registered in such names and amounts as the Distributor may specify to the
Fund in writing.
9. The Fund agrees to pay all costs and expenses in connection with
future registrations of its capital stock under the 1933 Act, and all
expenses in connection with maintaining facilities for the issue and
transfer of its shares, and for supplying information, prices and other
data to be furnished by it hereunder.
The Fund agrees to execute any and all documents and to furnish any
and all information which may be reasonable necessary, in the discretion
of its Board of Directors, in connection with the qualification of its
shares for sale in such states as the Distributor may designate to it. The
<PAGE> Distributor will pay all expenses connected with its own
qualification as a dealer or broker under State or federal laws.
10. The Fund shall furnish the Distributor from time to time, for use in
connection with the sale of its shares, such information with respect to
the Fund and its shares as the Distributor may reasonably request, all of
which, if so
requested, shall be signed by one or more of its duly authorized officers,
warranting that the statements contained in any such information, when so
signed by its officers, shall be true and correct. The Fund shall also
furnish the Distributor with annual audits of its books and accounts made
by independent public accountants, who may also be the independent public
accountants regularly retained by it, with semi-annual earnings statements
prepared by its accountants, with balance sheets at least on a semi-annual
basis, and from time to time with such additional information regarding its
financial condition as the Distributor may reasonably request.
11. As used in this agreement, the term registration statement shall
mean and include the registration statement with respect to shares of Fund
capital stock which became effective under the 1933 Act on April 28, 1959,
and also any other registration statement filed by it under the 1933 Act
which shall become effective, in each case including any amendment thereto
filed after the effective date thereof which amendment shall become
effective. The Fund represents that its registration statement under the
1933 Act, its Prospectus and Statement of Additional Information, have been
or will be, as the case may be, prepared substantially in conformity with
the requirements of said 1933 Act and the rules and regulations of the
Securities and Exchange Commission thereunder. The Fund further represents
and warrants that its registration statement, Prospectus and Statement of
Additional Information contain or will contain all statements required to
be stated therein in accordance with the 1933 Act and the rules and
regulations of said Commission, and that all statements of fact contained
or to be contained therein are or will be true and correct; that none of
its registration statement when it shall become effective, or its
Prospectus or its Statement of Additional Information when used, will
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of its shares. The Fund may but
shall not be obligated to propose from time to time such amendments to its
registration statement, or amendments or supplements to its Prospectus and
Statement of Additional Information, as, in the light of future
developments, may, in its opinion or the opinion of its counsel, be
necessary in order to have such
<PAGE>
documents at all times contain all material facts required to be stated
therein or necessary to make any statements therein not misleading to a
purchaser of its shares, but, if it shall not propose such amendment or
amendments within fifteen days after receipt by it of a written request
from the Distributor to do so, the Distributor may, at its option,
terminate this agreement immediately. The Fund shall not file any amendment
to its registration statement, or amendment or supplement to its Prospectus
or Statement of Additional Information, without giving the Distributor
reasonable notice thereof in advance; provided, however, that nothing
contained in this agreement shall in any way limit the Fund's right to file
at any time such amendments to its registration statement, and/or
amendments or supplements to its Prospectus and Statement of Additional
Information, of whatever character, as it may deem advisable, such right
being in all respects absolute and unconditional. The Fund represents and
warrants to the Distributor that any such amendments or supplements
hereafter filed by it will, when it becomes effective, contain all
statements required to be stated therein in accordance with the 1933 Act
and the rules and regulations of said Commission, that all statements of
fact contained therein will, when the same shall become effective, be true
and correct and that no such amendment, when it becomes effective, will
include an untrue statement of a material fact or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of its shares.
12. The Fund agrees to prepare and furnish the Distributor from time to
time copies of its Prospectus and Statement of Additional Information in
the forms as then most recently filed with the Securities and Exchange
Commission, and authorizes the Distributor and dealers to use such
Prospectus and Statement of Additional Information, in the forms furnished,
from time to time, in connection with the sale of its shares. The Fund
agrees to indemnify, defend and hold the Distributor, its several officers
and directors, and any person who controls it within the meaning of Section
15 of
<PAGE>
the 1933 Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which the Distributor, its officers or directors,
or any such controlling person may incur, under the 1933 Act, or under
common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in its registration statement, or
its Prospectus or Statement of Additional Information, or arising out of
or based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that Fund's agreement to indemnify the Distributor, its
officers or directors, and any such controlling person shall not be deemed
to cover any claims, demands, liabilities or expenses arising out of any
statements or representations made by the Distributor or by its
representatives or agents other than such statements and representations
as are contained in Fund's Prospectus or Statement of Additional
Information and in such financial and other statements as are furnished the
Distributor pursuant to this paragraph 12 or paragraphs 10 and 11 hereof;
and further provided, that in no event shall anything herein contained be
so construed as to protect the Distributor against any liability to the
Fund or its security holders to which the Distributor would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence,
in the performance of its duties, or by reason of its reckless disregard
of its obligations and duties under this agreement. The agreement to
indemnify the Distributor, its officers and directors, and any such
controlling person as aforesaid, is expressly conditioned upon the Fund
being notified of any action brought against the Distributor, its officers
or directors, or any such controlling person, such notification to be given
by letter or by telegram addressed to the Fund at its principal office in
Denver, Colorado, and sent by the person against whom such action is
brought, within ten days after the summons or other first legal process
shall have been served. The failure so to notify the Fund of any such
action shall not relieve it from any liability which it may have to the
person against whom such action is brought by reason of any such alleged
untrue statement or omission otherwise than on account of the indemnity
agreement contained in this paragraph 12. The Fund will be entitled to
assume the defense of any suit brought to enforce any such claim, demand
or liability, but, in such case, such defense shall be conducted by counsel
of good standing chosen by it and approved by the Distributor. In the
event the Fund does elect to assume the defense of any such suit and retain
counsel of good standing approved by the Distributor, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case it does not elect to assume
the defense of any such suit, or in case the Distributor does not approve
the counsel chosen by it, the Fund will reimburse the Distributor, its
officers and directors, or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses of any
counsel retained by it or them. The Funds indemnification agreement
contained in this paragraph 12 and its representations and warranties in
this agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Distributor,
its officers and directors, or any controlling person, and shall survive
the delivery of any shares of its capital stock hereunder. This agreement
of indemnity will inure exclusively to the Distributors benefit, and its
successors, and to the benefit of its officers and directors, and their
respective estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of any of its
capital stock.
13. The Distributor agrees to indemnify, defend and hold the Fund, its
several officers and directors, and any person who controls it within the
meaning of Section 15 of the 1933 Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers
or directors, or any such controlling person may incur under the Act or
under common law or otherwise; but only to the extent that such liability
<PAGE>
or expense incurred by the Fund, its officers or directors, or such
controlling person, resulting from such claims or demands shall arise out
of or be based upon any alleged untrue statement of a material fact
contained in information furnished in writing by the Distributor to the
Fund for use in its registration statement, Prospectus or Statement of
Additional Information or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information
required to be stated therein or necessary to make such information not
misleading. The Distributors agreement to indemnify the Fund, its
officers and directors, and any such controlling person as aforesaid
is expressly conditioned upon the Distributor being notified of any action
brought against the Fund, its officers or directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to the Distributor at its principal office in Denver, Colorado,
and sent by the person against whom such action is brought, within ten days
after the summons or other first legal process shall have been served. The
Distributor shall have a right to control the defense of such action, with
counsel of its own choosing, satisfactory to the Fund, if such action is
based solely upon such alleged misstatement or omission on Distributors
part and in any other event, the Distributor or such controlling person
shall each have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify the Distributor
of any such action shall not relieve it from any liability which it may
have to the Fund, its officers or directors, or to such controlling person
by reason by any such untrue statement or omission on its part otherwise
than on account of its indemnity agreement contained in this paragraph 13.
14. No shares of the Fund's capital stock shall be bought or sold by
either the Distributor or the Fund under any of the provision of this
agreement and no orders for the purchase or sale of such stock hereunder
shall be confirmed or accepted by the Fund if and so long as the
effectiveness of its registration statement, or any necessary amendments
thereto, covering such stock, shall be suspended under any of the
provisions of the 1933 Act; provided, however, that nothing in this
paragraph 14 contained shall in any way restrict or limit or have any
application to or bearing upon the Fund's obligation to repurchase shares
of its capital stock from any stockholder.
15. The Fund agrees to advise the Distributor immediately:
(a) of any request by the Securities and Exchange Commission for
amendments to the Funds registration statement, Prospectus or
Statement of Additional Information or for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of its
registration statement or the initiation of any proceedings for that
purpose;
(c) of the happening of any event which makes untrue any statement
made in its registration statement, Prospectus or Statement of
Additional Information or which requires the making of a change therein in
order
to make the statements therein not misleading; and
(d) of all action of the Securities and Exchange Commission with
respect to any amendments to its registration statement which may
from time to time be filed with the Securities and Exchange Commission
under
the 1933 Act.
16. The Distributor is authorized, as agent, to accept offers for resale
to the Fund and to repurchase shares of its capital stock upon such terms
and conditions as the Fund's Board of Directors by resolution shall
determine. At least
once on each business day on which the New York Stock Exchange is open for
trading, the Fund shall determine and
<PAGE>
promptly thereupon furnish to the Distributor a statement of the price at
which such repurchases may be made during
the period or periods specified in such statement and, upon request, it
shall advise the Distributor of the price at which such repurchase may be
made at other times. In so far as they concern the Fund it agrees to
comply with all applicable laws, rules and regulations, including without
limiting the generality of the foregoing, all rules or regulations made or
adopted pursuant to Section 22 of the 1940 Act by the Securities and
Exchange Commission or any securities
association registered under the 1934 Act.
17. (a) Subject to the provisions of paragraph 11 hereof, this agreement
shall continue in effect for a period more than two years from the date
hereof only so long as such continuance is specifically approved at least
annually (x) by the Fund's Board of Directors or by a vote of a majority
of its outstanding voting securities (as defined in the 1940 Act) and (y)
by the Directors who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or
in this or any other agreement relating hereto (the "Independent
Directors"), cast in person at a meeting called for the purpose of voting
on such approval.
(b) This agreement may be terminated at any time, without payment
of any penalty, by the Board of Directors of the Fund, by vote of a
majority of the Independent Directors, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of Class A
shares of the Fund, on not more than 60 days' written notice to the other
party to the agreement. This agreement shall automatically terminate in
the event of its assignment.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be
executed as of the day and year first
written above.
AMERICAN GROWTH FUND, INC.
By
Name:
Title: President
AMERICAN GROWTH FUND SPONSORS, INC.
By
Name:
Title: Executive Vice President
<PAGE> DISTRIBUTION AGREEMENT
(Class B Shares)
AGREEMENT (the Agreement), dated as of February 29, 1996, between
AMERICAN GROWTH FUND, INC., a Maryland corporation, (the Fund) and
AMERICAN GROWTH FUND SPONSORS, INC., a Colorado corporation, (the
Distributor).
RECITALS
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as a diversified, open-end management
investment company;
WHEREAS, the Fund intends to offer its Class B shares to the public
on a continuous basis;
WHEREAS, the Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the 1934 Act), and is in the
business of selling shares of the Fund and other registered investment
companies to the public, either directly or through other broker-dealers;
WHEREAS, the Fund and the Distributor wish to enter into this
Agreement with respect to the continuous offering of the Funds Class B
shares from and after the date hereof in order to promote the growth of the
Fund and
facilitate the distribution of its Class B shares; and
WHEREAS, the Fund has adopted a distribution and service plan
pursuant to Rule 12b-1 under the 1940 Act (the Plan) authorizing payments
by the Fund to the Distributor with respect to the distribution of Class
B shares of the Fund and the provision of services in respect of Class B
shareholder accounts.
NOW, THEREFORE, the parties agree as follows:
1. The Distributor shall be the distributor for the Class B shares of
the capital stock of the Fund as may from time to time be effectively
registered under the Securities Act of 1933, as amended (hereinafter
referred to as the 1933
Act).
2. The Fund agrees to sell and deliver from time to time, upon the terms
hereinafter described, such number of its fully paid and nonassessable
Class B shares of capital stock as the Distributor shall order, but only
to the extent that the Distributor shall have received purchase orders
therefor. All orders from the Distributor hereunder shall be subject to
confirmation by the Fund.
3. The Distributor may sell and distribute any shares so purchased by
it through dealers or otherwise in such manner not inconsistent with the
provisions hereof as it may determine from time to time, and it agrees to
use its best
<PAGE>
4.efforts to effect such sale and distribution. The Distributor shall
not make any short sales of Fund shares. The Distributor shall in
addition, in so far as they concern it, comply with all applicable laws,
rules and regulations including, without limiting the generality of the
foregoing, all rules or regulations made or adopted pursuant to Section 22
of the 1940 Act by the Securities and Exchange Commission or any securities
association registered under the 1934
Act.
7. Subject to the provisions of paragraph 5 hereof, all shares offered
for sale and sold by the Distributor shall be offered for sale and sold by
it at a price per share equal to the offering price per share (hereinafter
called the offering price) rounded to the nearest one cent and equal to (a)
the net asset value per share (determined as authorized from time to time
under the direction of the Board of Directors of the Fund in conformity
with the 1940 Act) plus (b) a sales charge or premium, if any, based upon
the schedule of such charges (including all exceptions therefrom) and
related terms and conditions as may be set forth from time to time in the
then current Prospectus or Statement of Additional Information of the Fund
pertaining to its Class B shares. The Fund shall determine and promptly
thereupon furnish to the Distributor a statement of the Funds net asset
value and offering price as often and at such times as its Board of
Directors shall by resolution determine provided, however, that subject to
the provisions hereinafter contained in this paragraph 4, the Fund shall
determine and furnish such offering price at least once on each business
day on which the New York Stock Exchange is open for trading. Each such
offering price shall become effective at such time, and shall remain in
effect during such period, as may be stated in the statement thereof
furnished to the Distributor as above provided. Every statement of the
offering price furnished to the Distributor as above provided shall show
the basis of its computation. The Fund shall also accept and confirm at
the offering price in effect before a price change such orders as are
entered by the Distributor to fill orders placed with it prior to such time
of price change, but only if such orders are received by the Fund within
a time deemed by the Fund to be reasonable after the time of receipt
thereof by the Distributor and if such orders are time-stamped or bear
other evidence to show that they were filed for transmission at the point
of origin prior to the time of such price change. Anything to the contrary
herein notwithstanding, however, whenever in its judgment such action is
warranted by market, economic or political conditions or by abnormal
circumstances of any kind, Fund officers may suspend the sale of Fund
shares, without incurring any liability under any of the provisions of this
Agreement, and decline to accept or confirm any orders for or make any
sales of any shares to the Distributor under this agreement until such time
as the Fund shall deem it advisable to accept and confirm such orders and
to make such sales, and during any such period, the Fund shall be under no
obligation to confirm or accept any such orders or make any such sales at
any price.
8. At or prior to the time of delivery by the Fund to the Distributor,
for its accounts, of any shares of the Fund's stock, the Distributor will
pay or cause to be paid to the Fund or its order an amount equal to the
offering price of such shares at which the Distributors order has been
confirmed by the Fund, less the applicable sales charge or premium, if any,
which charge or premium shall constitute the Distributors concession for
selling and distributing such shares and may be deducted by it from the
offering price in making payment to the Fund hereunder. The Distributor
may in its discretion allow a concession or other accounting to dealers or
other persons out of such concession to it.
9. The Distributor shall receive and may retain any contingent deferred
sales charges which are imposed with respect to repurchases and redemptions
of Class B shares as set forth from time to time in the Funds Prospectus
and Statement of Additional Information current upon the date of sale of
any such shares. Payment of such amounts is not contingent upon the
adoption or continuation of the Plan.
<PAGE>
10.11.12.a.13. (a) The Fund shall pay to the Distributor as
compensation for services under the Plan and under this Agreement, (i) a
fee at the annual rate of up to 0.75% of average daily net assets
attributable to Class B shares of the Fund to pay for certain
distribution-related activities (a distribution fee), and (ii) a fee at
the annual rate of up to 0.25% of such average daily net assets to pay for
shareholder servicing related to distribution of such shares (a service
fee). Amounts payable under the Plan shall be accrued daily and payable
quarterly or at such other intervals as the Board of Directors shall
determine. No fee shall be payable hereunder if it would cause the Fund
to fail to comply with the requirements of Article III, Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers,
Inc.
(b) So long as the Plan or any amendment thereto is in effect, the
Distributor shall inform the Board of Directors of the distribution and
service fees to be paid by the Distributor to Securities Firms and at the
request of the Fund will provide such information as may reasonably be
requested concerning the activities of the Distributor hereunder and the
costs incurred in performing such services.
(c) The distribution fee under paragraph (a) shall be used to
compensate the Distributor and/or broker-dealers and financial institutions
("Securities Firms") having agreements with the Distributor for providing
distribution assistance to customers and to pay for the preparation,
printing and distribution of prospectuses, statements of additional
information and periodic financial reports to persons other than current
shareholders of the Fund, as well as to pay for the preparation and
distribution of sales literature and pay for other promotional and
distribution activities.
(d) The service fee payable under paragraph (a) above shall be used
to compensate the Distributor and/or Securities Firms for providing
personal services such as shareholder liaison services (responding to
customer inquiries and providing information on their investment) to Fund
shareholders and/or maintaining shareholder accounts.
(e) Payments to Securities Firms hereunder may take the form of
sales commissions or trailer commissions.
14. Delivery of certificates for shares of the Fund's capital stock, when
and if requested (subject to any determination by the Fund not to issue
certificates for shares), shall be made as soon as practicable after
confirmation by it or the Distributors order therefor and against payment
therefor by the Distributor. The certificates for such shares shall be
registered in such names and amounts as the Distributor may specify to the
Fund in writing.
15. The Fund agrees to pay all costs and expenses in connection with
future registrations of its capital stock under the 1933 Act, and all
expenses in connection with maintaining facilities for the issue and
transfer of its shares, and for supplying information, prices and other
data to be furnished by it hereunder.
The Fund agrees to execute any and all documents and to furnish any
and all information which may be reasonable necessary, in the discretion
of its Board of Directors, in connection with the qualification of its
shares for sale in such states as the Distributor may designate to it. The
Distributor will pay all expenses connected with its own qualification as
a dealer or broker under State or federal laws.
16. The Fund shall furnish the Distributor from time to time, for use in
connection with the sale of its shares, such information with respect to
the Fund and its shares as the Distributor may reasonably request, all of
which, if so requested, shall be signed by one or more of its duly
authorized officers, warranting that the statements contained in
<PAGE>
17.18.any such information, when so signed by its officers, shall be true
and correct. The Fund shall also furnish the Distributor with annual
audits of its books and accounts made by independent public accountants,
who may also be the independent public accountants regularly retained by
it, with semi-annual earnings statements prepared by its accountants, with
balance sheets at least on a semi-annual basis, and from time to time with
such additional information regarding its financial condition as the
Distributor may reasonably request.
19. As used in this agreement, the term registration statement shall
mean and include the registration statement with respect to shares of Fund
capital stock which became effective under the 1933 Act on April 28, 1959,
and also any other registration statement filed by it under the 1933 Act
which shall become effective, in each case including any amendment thereto
filed after the effective date thereof which amendment shall become
effective. The Fund represents that its registration statement under the
1933 Act, its Prospectus and Statement of Additional Information, have been
or will be, as the case may be, prepared substantially in conformity with
the requirements of said 1933 Act and the rules and regulations of the
Securities and Exchange Commission thereunder. The Fund further represents
and warrants that its registration statement, Prospectus and Statement of
Additional Information contain or will contain all statements required to
be stated therein in accordance with the 1933 Act and the rules and
regulations of said Commission, and that all statements of fact contained
or to be contained therein are or will be true and correct; that none of
its registration statement when it shall become effective, or its
Prospectus or its Statement of Additional Information when used, will
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of its shares. The Fund may but
shall not be obligated to propose from time to time such amendments to its
registration statement, or amendments or supplements to its Prospectus and
Statement of Additional Information, as, in the light of future
developments, may, in its opinion or the opinion of its counsel, be
necessary in order to have such documents at all times contain all material
facts required to be stated therein or necessary to make any statements
therein not misleading to a purchaser of its shares, but, if it shall not
propose such amendment or amendments within fifteen days after receipt by
it of a written request from the Distributor to do so, the Distributor may,
at its option, terminate this agreement immediately. The Fund shall not
file any amendment to its registration statement, or amendment or
supplement to its Prospectus or Statement of Additional Information,
without giving the Distributor reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement shall in any
way limit the Fund's right to file at any time such amendments to its
registration statement, and/or amendments or supplements to its Prospectus
and Statement of Additional Information, of whatever character, as it may
deem advisable, such right being in all respects absolute and
unconditional. The Fund represents and warrants to the Distributor that
any such amendments or supplements hereafter filed by it will, when it
becomes effective, contain all statements required to be stated therein in
accordance with the 1933 Act and the rules and regulations of said
Commission, that all statements of fact contained therein will, when the
same shall become effective, be true and correct and that no such
amendment, when it becomes effective, will include an untrue statement of
a material fact or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of its shares.
20. The Fund agrees to prepare and furnish the Distributor from time to
time copies of its Prospectus and Statement of Additional Information in
the forms as then most recently filed with the Securities and Exchange
Commission, and authorizes the Distributor and dealers to use such
Prospectus and Statement of Additional Information, in the forms furnished,
from time to time, in connection with the sale of its shares. The Fund
agrees to indemnify, defend and hold the Distributor, its several officers
and directors, and any person who controls it within the meaning of Section
15 of the 1933 Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the
<PAGE>
21.22.cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
the Distributor, its officers or directors, or any such controlling person
may incur, under the 1933 Act, or under common law or otherwise, arising
out of or based upon any alleged untrue statement of a material fact
contained in its registration statement, or Prospectus or Statement of
Additional Information, or arising out of or based upon any alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that Fund's agreement to indemnify the Distributor, its officers or
directors, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of any statements or
representations made by the Distributor or by its representatives or agents
other than such statements and representations as are contained in Fund's
Prospectus or Statement of Additional Information and in such financial and
other statements as are furnished the Distributor pursuant to this
paragraph 12 or paragraphs 10 and 11 hereof; and further provided, that in
no event shall anything herein contained be so construed as to protect the
Distributor against any liability to the Fund or its security holders to
which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of its
duties, or by reason of its reckless disregard of its obligations and
duties under this agreement. The agreement to indemnify the Distributor,
its officers and directors, and any such controlling person as aforesaid,
is expressly conditioned upon the Fund being notified of any action brought
against the Distributor, its officers or directors, or any such controlling
person, such notification to be given by letter or by telegram addressed
to the Fund at its principal office in Denver, Colorado, and sent by the
person against whom such action is brought, within ten days after the
summons or other first legal process shall have been served. The failure
so to notify the Fund of any such action shall not relieve it from any
liability which it may have to the person against whom such action is
brought by reason of any such alleged untrue statement or omission
otherwise than on account of the indemnity agreement contained in this
paragraph 12. The Fund will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing chosen by it
and approved by the Distributor. In the event the Fund does elect to
assume the defense of any such suit and retain counsel of good standing
approved by the Distributor, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of
them; but in case it does not elect to assume the defense of any such suit,
or in case the Distributor does not approve the counsel chosen by it, the
Fund will reimburse the Distributor, its officers and directors, or the
controlling person or persons named as defendant or defendants in such
suit, for the fees and expenses of any counsel retained by it or them. The
Funds indemnification agreement contained in this paragraph 12 and its
representations and warranties in this agreement shall remain operative and
in full force and effect regardless of any investigation made by or on
behalf of the Distributor, its officers and directors, or any controlling
person, and shall survive the delivery of any shares of its capital stock
hereunder. This agreement of indemnity will inure exclusively to the
Distributors benefit, and its successors, and to the benefit of its
officers and directors, and their respective estates, and to the benefit
of any controlling persons and their successors. The Fund agrees promptly
to notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection
with the issue and sale of any of its capital stock.
23. The Distributor agrees to indemnify, defend and hold the Fund, its
several officers and directors, and any person who controls it within the
meaning of Section 15 of the 1933 Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers
or directors, or any such controlling person may incur under the 1933 Act
or under common law or otherwise; but only to the extent that such
liability or expense incurred by the Fund, its officers or directors, or
such controlling person, resulting from such claims
<PAGE> 24.or demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in
information furnished in writing by the Distributor to the Fund for use in
its registration statement, Prospectus or Statement of Additional
Information or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information required to be
stated therein or necessary to make such information not misleading. The
Distributors agreement to indemnify the Fund, its officers and directors,
and any such controlling person as aforesaid is expressly conditioned upon
the Distributor being notified of any action brought against the Fund, its
officers or directors, or any such controlling person, such notification
to be given by letter or telegram addressed to the Distributor at its
principal office in Denver, Colorado, and sent by the person against whom
such action is brought, within ten days after the summons or other first
legal process shall have been served. The Distributor shall have a right
to control the defense of such action, with counsel of its own choosing,
satisfactory to the Fund, if such action is based solely upon such alleged
misstatement or omission on Distributors part and in any other event, the
Distributor or such controlling person shall each have the right to
participate in the defense or preparation of the defense of any such
action.
The failure so to notify the Distributor of any such action shall not
relieve it from any liability which it may have to the Fund, its officers
or directors, or to such controlling person by reason by any such untrue
statement or omission on its part otherwise than on account of its
indemnity agreement contained in this paragraph 13.
25. No shares of the Fund's capital stock shall be bought or sold by
either the Distributor or the Fund under any of the provision of this
agreement and no orders for the purchase or sale of such stock hereunder
shall be confirmed or accepted by the Fund if and so long as the
effectiveness of its registration statement, or any necessary amendments
thereto, covering such stock, shall be suspended under any of the
provisions of the 1933 Act; provided, however, that nothing in this
paragraph 14 contained shall in any way restrict or limit or have any
application to or bearing upon the Fund's obligation to repurchase shares
of its capital stock from any stockholder.
26. The Fund agrees to advise the Distributor immediately:
(a) of any request by the Securities and Exchange Commission for
amendments to the Funds registration statement, Prospectus or
Statement of Additional Information or for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of its
registration statement or the initiation of any proceedings for that
purpose;
(c) of the happening of any event which makes untrue any statement
made in its registration statement, Prospectus or Statement of
Additional Information or which requires the making of a change therein in
order
to make the statements therein not misleading; and
(d) of all action of the Securities and Exchange Commission with
respect to any amendments to its registration statement which may
from time to time be filed with the Securities and Exchange Commission
under the 1933 Act.
27. The Distributor is authorized, as agent, to accept offers for resale
to the Fund and to repurchase shares of its capital stock upon such terms
and conditions as the Fund's Board of Directors by resolution shall
determine. At least once on each business day on which the New York Stock
Exchange is open for trading, the Fund shall determine and promptly
thereupon furnish to the Distributor a statement of the price at which such
repurchases may be made during
<PAGE>
28.29.the period or periods specified in such statement and, upon request,
it shall advise the Distributor of the price at which such repurchase may
be made at other times. In so far as they concern the Fund it agrees to
comply with all applicable laws, rules and regulations, including without
limiting the generality of the foregoing, all rules or regulations made or
adopted pursuant to Section 22 of the 1940 Act by the Securities and
Exchange Commission or any securities association registered under the 1934
Act.
30. (a) Subject to the provisions of paragraph 11 hereof, this agreement
shall continue in effect for a period more than two years from the date
hereof only so long as such continuance is specifically approved at least
annually (x) by
the Fund's Board of Directors or by a vote of a majority of its outstanding
voting securities (as defined in the 1940 Act) and (y) by the Directors who
are not interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in this or any other
agreement relating to the Plan (the "Independent Directors"), cast in
person at a meeting called for the purpose of voting on such approval.
(b) This agreement may be terminated at any time, without payment
of any penalty, by the Board of Directors of the Fund, by vote of a
majority of the Independent Directors, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of Class B
shares of the Fund, on not more than 60 days' written notice to the other
party to the agreement. This agreement shall automatically terminate in
the event of its assignment.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be
executed as of the day and year first
written above.
AMERICAN GROWTH FUND, INC.
By
Name:
Title: President
AMERICAN GROWTH FUND SPONSORS, INC.
By
Name:
Title: Executive Vice President
<PAGE>
DISTRIBUTION AGREEMENT
(Class C Shares)
AGREEMENT (the Agreement), dated as of February 29, 1996, between
AMERICAN GROWTH FUND, INC., a Maryland corporation, (the Fund) and
AMERICAN GROWTH FUND SPONSORS, INC., a Colorado corporation,
(the Distributor).
RECITALS
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as a diversified, open-end management
investment company;
WHEREAS, the Fund intends to offer its Class C shares to the public
on a continuous basis;
WHEREAS, the Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the 1934 Act), and is in the
business of selling shares of the Fund and other registered investment
companies to the public, either directly or through other broker-dealers;
WHEREAS, the Fund and the Distributor wish to enter into this
Agreement with respect to the continuous offering of the Funds Class C
shares from and after the date hereof in order to promote the growth of the
Fund and facilitate the distribution of its Class C shares; and
WHEREAS, the Fund has adopted a distribution and service plan
pursuant to Rule 12b-1 under the 1940 Act (the Plan) authorizing payments
by the Fund to the Distributor with respect to the distribution of Class
C shares of the Fund and the provision of services in respect of Class C
shareholder accounts.
NOW, THEREFORE, the parties agree as follows:
31. The Distributor shall be the distributor for the Class C shares of
the capital stock of the Fund as may from time to time be effectively
registered under the Securities Act of 1933, as amended (hereinafter
referred to as the 1933
Act).
32. The Fund agrees to sell and deliver from time to time, upon the terms
hereinafter described, such number of its fully paid and nonassessable
Class C shares of capital stock as the Distributor shall order, but only
to the extent that the Distributor shall have received purchase orders
therefor. All orders from the Distributor hereunder shall be subject to
confirmation by the Fund.
33. The Distributor may sell and distribute any shares so purchased by
it through dealers or otherwise in such
<PAGE>
34.35.manner not inconsistent with the provisions hereof as it may
determine from time to time, and it agrees to use its best efforts to
effect such sale and distribution. The Distributor shall not make any
short sales of Fund shares. The Distributor shall in addition, in so far
as they concern it, comply with all applicable laws, rules and regulations
including, without limiting the generality of the foregoing, all rules or
regulations made or adopted pursuant to Section 22 of the 1940 Act by the
Securities and Exchange Commission or any securities association registered
under the 1934
Act.
36. Subject to the provisions of paragraph 5 hereof, all shares offered
for sale and sold by the Distributor shall be offered for sale and sold by
it at a price per share equal to the offering price per share (hereinafter
called the offering price) rounded to the nearest one cent and equal to (a)
the net asset value per share (determined as authorized from time to time
under the direction of the Board of Directors of the Fund in conformity
with the 1940 Act) plus (b) a sales charge or premium, if any, based upon
the schedule of such charges (including all exceptions therefrom) and
related terms and conditions as may be set forth from time to time in the
then current Prospectus or Statement of Additional Information of the Fund
pertaining to its Class C shares. The Fund shall determine and promptly
thereupon furnish to the Distributor a statement of the Funds net asset
value and offering price as often and at such times as its Board of
Directors shall by resolution determine provided, however, that subject to
the provisions hereinafter contained in this paragraph 4, the Fund shall
determine and furnish such offering price at least once on each business
day on which the New York Stock Exchange is open for trading. Each such
offering price shall become effective at such time, and shall remain in
effect during such period, as may be stated in the statement thereof
furnished to the Distributor as above provided. Every statement of the
offering price furnished to the Distributor as above provided shall show
the basis of its computation. The Fund shall also accept and confirm at
the offering price in effect before a price change such orders as are
entered by the Distributor to fill orders placed with it prior to such time
of price change, but only if such orders are received by the Fund within
a time deemed by the Fund to be reasonable after the time of receipt
thereof by the Distributor and if such orders are time-stamped or bear
other evidence to show that they were filed for transmission at the point
of origin prior to the time of such price change. Anything to the contrary
herein notwithstanding, however, whenever in its judgment such action is
warranted by market, economic or political conditions or by abnormal
circumstances of any kind, Fund officers may suspend the sale of Fund
shares, without incurring any liability under any of the provisions of this
Agreement, and decline to accept or confirm any orders for or make any
sales of any shares to the Distributor under this agreement until such time
as the Fund shall deem it advisable to accept and confirm such orders and
to make such sales, and during any such period, the Fund shall be under no
obligation to confirm or accept any such orders or make any such sales at
any price.
37. At or prior to the time of delivery by the Fund to the Distributor,
for its accounts, of any shares of the Fund's stock, the Distributor will
pay or cause to be paid to the Fund or its order an amount equal to the
offering price of such shares at which the Distributors order has been
confirmed by the Fund, less the applicable sales charge or premium, if any,
which charge or premium shall constitute the Distributors concession for
selling and distributing such shares and may be deducted by it from the
offering price in making payment to the Fund hereunder. The Distributor
may in its discretion allow a concession or other accounting to dealers or
other persons out of such concession to it.
38. The Distributor shall receive and may retain any contingent deferred
sales charges which are imposed with respect to repurchases and redemptions
of Class C shares as set forth from time to time in the Funds Prospectus
and Statement of Additional Information current upon the date of sale of
any such shares. Payment of such amounts is not contingent upon the
adoption or continuation of the Plan.
<PAGE>
39. (a) The Fund shall pay to the Distributor as compensation for
services under the Plan and under this Agreement, (i) a fee at the annual
rate of up to 0.75% of average daily net assets attributable to Class C
shares of the Fund to pay for certain distribution-related activities (a
distribution fee), and (ii) a fee at the annual rate of up to 0.25% of
such average daily net assets to pay for shareholder servicing related to
distribution of such shares (a service fee). Amounts payable under the
Plan shall be accrued daily and payable quarterly or at such other
intervals as the Board of Directors shall determine. No fee shall be
payable hereunder if it would cause the Fund to fail to comply with the
requirements of Article III, Section 26 of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc.
(b) So long as the Plan or any amendment thereto is in effect, the
Distributor shall inform the Board of Directors of the distribution and
service fees to be paid by the Distributor to Securities Firms and at the
request of the Fund will provide such information as may reasonably be
requested concerning the activities of the Distributor hereunder and the
costs incurred in performing such services.
(c) The distribution fee under paragraph (a) shall be used to
compensate the Distributor and/or broker-dealers and financial institutions
("Securities Firms") having agreements with the Distributor for providing
distribution assistance to customers and to pay for the preparation,
printing and distribution of prospectuses, statements of additional
information and periodic financial reports to persons other than current
shareholders of the Fund, as well as to pay for the preparation and
distribution of sales literature and pay for other promotional and
distribution activities.
(d) The service fee payable under paragraph (a) above shall be used
to compensate the Distributor and/or Securities Firms for providing
personal services such as shareholder liaison services (responding to
customer inquiries and providing information on their investment) to Fund
shareholders and/or maintaining shareholder accounts.
(e) Payments to Securities Firms hereunder may take the form of
sales commissions or trailer commissions.
40. Delivery of certificates for shares of the Fund's capital stock, when
and if requested (subject to any determination by the Fund not to issue
certificates for shares), shall be made as soon as practicable after
confirmation by it or the Distributors order therefor and against payment
therefor by the Distributor. The certificates for such shares shall be
registered in such names and amounts as the Distributor may specify to the
Fund in writing.
41. The Fund agrees to pay all costs and expenses in connection with
future registrations of its capital stock under the 1933 Act, and all
expenses in connection with maintaining facilities for the issue and
transfer of its shares, and for supplying information, prices and other
data to be furnished by it hereunder.
The Fund agrees to execute any and all documents and to furnish any
and all information which may be reasonable necessary, in the discretion
of its Board of Directors, in connection with the qualification of its
shares for sale in such states as the Distributor may designate to it. The
Distributor will pay all expenses connected with its own qualification as
a dealer or broker under State or federal laws.
42. The Fund shall furnish the Distributor from time to time, for use in
connection with the sale of its shares, such information with respect to
the Fund and its shares as the Distributor may reasonably request, all of
which, if so requested, shall be signed by one or more of its duly
authorized officers, warranting that the statements contained in
<PAGE>
43.44.any such information, when so signed by its officers, shall be true
and correct. The Fund shall also furnish the Distributor with annual
audits of its books and accounts made by independent public accountants,
who may also be the independent public accountants regularly retained by
it, with semi-annual earnings statements prepared by its accountants, with
balance sheets at least on a semi-annual basis, and from time to time with
such additional information regarding its financial condition as the
Distributor may reasonably request.
45. As used in this agreement, the term registration statement shall
mean and include the registration statement with respect to shares of Fund
capital stock which became effective under the 1933 Act on April 28, 1959,
and also any other registration statement filed by it under the 1933 Act
which shall become effective, in each case including any amendment thereto
filed after the effective date thereof which amendment shall become
effective. The Fund represents that its registration statement under the
1933 Act, its Prospectus and Statement of Additional Information, have been
or will be, as the case may be, prepared substantially in conformity with
the requirements of said 1933 Act and the rules and regulations of the
Securities and Exchange Commission thereunder. The Fund further represents
and warrants that its registration statement, Prospectus and Statement of
Additional Information contain or will contain all statements required to
be stated therein in accordance with the 1933 Act and the rules and
regulations of said Commission, and that all statements of fact contained
or to be contained therein are or will be true and correct; that none of
its registration statement when it shall become effective, or its
Prospectus or its Statement of Additional Information when used, will
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of its shares. The Fund may but
shall not be obligated to propose from time to time such amendments to its
registration statement, or amendments or supplements to its Prospectus and
Statement of Additional Information, as, in the light of future
developments, may, in its opinion or the opinion of its counsel, be
necessary in order to have such documents at all times contain all material
facts required to be stated therein or necessary to make any statements
therein not misleading to a purchaser of its shares, but, if it shall not
propose such amendment or amendments within fifteen days after receipt by
it of a written request from the Distributor to do so, the Distributor may,
at its option, terminate this agreement immediately. The Fund shall not
file any amendment to its registration statement, or amendment or
supplement to its Prospectus or Statement of Additional Information,
without giving the Distributor reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement shall in any
way limit the Fund's right to file at any time such amendments to its
registration statement, and/or amendments or supplements to its Prospectus
and Statement of Additional Information, of whatever character, as it may
deem advisable, such right being in all respects absolute and
unconditional. The Fund represents and warrants to the Distributor that
any such amendments or supplements hereafter filed by it will, when it
becomes effective, contain all statements required to be stated therein in
accordance with the 1933 Act and the rules and regulations of said
Commission, that all statements of fact contained therein will, when the
same shall become effective, be true and correct and that no such
amendment, when it becomes effective, will include an untrue statement of
a material fact or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of its shares.
46. The Fund agrees to prepare and furnish the Distributor from time to
time copies of its Prospectus and Statement of Additional Information in
the forms as then most recently filed with the Securities and Exchange
Commission, and authorizes the Distributor and dealers to use such
Prospectus and Statement of Additional Information, in the forms furnished,
from time to time, in connection with the sale of its shares. The Fund
agrees to indemnify, defend and hold the Distributor, its several officers
and directors, and any person who controls it within the meaning of Section
15 of the 1933 Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the
<PAGE>
47.48.cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
the Distributor, its officers or directors, or any such controlling person
may incur, under the 1933 Act, or under common law or otherwise, arising
out of or based upon any alleged untrue statement of a material fact
contained in its registration statement, or Prospectus or Statement of
Additional Information, or arising out of or based upon any alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that Fund's agreement to indemnify the Distributor, its officers or
directors, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of any statements or
representations made by the Distributor or by its representatives or agents
other than such statements and representations as are contained in Fund's
Prospectus or Statement of Additional Information and in such financial and
other statements as are furnished the Distributor pursuant to this
paragraph 12 or paragraphs 10 and 11 hereof; and further provided, that in
no event shall anything herein contained be so construed as to protect the
Distributor against any liability to the Fund or its security holders to
which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of its
duties, or by reason of its reckless disregard of its obligations and
duties under this agreement. The agreement to indemnify the Distributor,
its officers and directors, and any such controlling person as aforesaid,
is expressly conditioned upon the Fund being notified of any action brought
against the Distributor, its officers or directors, or any such controlling
person, such notification to be given by letter or by telegram addressed
to the Fund at its principal office in Denver, Colorado, and sent by the
person against whom such action is brought, within ten days after the
summons or other first legal process shall have been served. The failure
so to notify the Fund of any such action shall not relieve it from any
liability which it may have to the person against whom such action is
brought by reason of any such alleged untrue statement or omission
otherwise than on account of the indemnity agreement contained in this
paragraph 12. The Fund will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing chosen by it
and approved by the Distributor. In the event the Fund does elect to
assume the defense of any such suit and retain counsel of good standing
approved by the Distributor, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of
them; but in case it does not elect to assume the defense of any such suit,
or in case the Distributor does not approve the counsel chosen by it, the
Fund will reimburse the Distributor, its officers and directors, or the
controlling person or persons named as defendant or defendants in such
suit, for the fees and expenses of any counsel retained by it or them. The
Funds indemnification agreement contained in this paragraph 12 and its
representations and warranties in this agreement shall remain operative and
in full force and effect regardless of any investigation made by or on
behalf of the Distributor, its officers and directors, or any controlling
person, and shall survive the delivery of any shares of its capital stock
hereunder. This agreement of indemnity will inure exclusively to the
Distributors benefit, and its successors, and to the benefit of its
officers and directors, and their respective estates, and to the benefit
of any controlling persons and their successors. The Fund agrees promptly
to notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection
with the issue and sale of any of its capital stock.
The Distributor agrees to indemnify, defend and hold the Fund, its
several officers and directors, and any person who controls it within the
meaning of Section 15 of the 1933 Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers
or directors, or any such controlling person may incur under the 1933 Act
or under common law or otherwise; but only to the extent that such
liability or expense incurred by the Fund, its officers or directors, or
such controlling person, resulting from such claims
<PAGE>
50.or demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished in writing
by the Distributor to the Fund for use in its registration statement,
Prospectus or Statement of Additional Information or shall arise out of or
be based upon any alleged omission to state a material fact in connection
with such information required to be stated therein or necessary to make
such information not misleading. The Distributors agreement to indemnify
the Fund, its officers and directors, and any such controlling person as
aforesaid is expressly conditioned upon the Distributor being notified of
any action brought against the Fund, its officers or directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to the Distributor at its principal office in Denver, Colorado,
and sent by the person against whom such action is brought, within ten days
after the summons or other first legal process shall have been served. The
Distributor shall have a right to control the defense of such action, with
counsel of its own choosing, satisfactory to the Fund, if such action is
based solely upon such alleged misstatement or omission on Distributors
part and in any other event, the Distributor or such
controlling person shall each have the right to participate in the defense
or preparation of the defense of any such action. The failure so to notify
the Distributor of any such action shall not relieve it from any liability
which it may have to the Fund, its officers or directors, or to such
controlling person by reason by any such untrue statement or omission on
its part otherwise than on account of its indemnity agreement contained in
this paragraph 13.
51. No shares of the Fund's capital stock shall be bought or sold by
either the Distributor or the Fund under any of the provision of this
agreement and no orders for the purchase or sale of such stock hereunder
shall be confirmed or accepted by the Fund if and so long as the
effectiveness of its registration statement, or any necessary amendments
thereto, covering such stock, shall be suspended under any of the
provisions of the 1933 Act; provided, however, that
<PAGE>
nothing in this paragraph 14 contained shall in any way restrict or limit
or have any application to or bearing upon the Fund's obligation to
repurchase shares of its capital stock from any stockholder.
52. The Fund agrees to advise the Distributor immediately:
(a) of any request by the Securities and Exchange Commission for
amendments to the Funds registration statement, Prospectus or
Statement of Additional Information or for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of its
registration statement or the initiation of any proceedings for that
purpose;
(c) of the happening of any event which makes untrue any statement
made in its registration statement, Prospectus or Statement of
Additional Information or which requires the making of a change therein in
order to make the statements therein not misleading; and
(d) of all action of the Securities and Exchange Commission with
respect to any amendments to its registration statement which may
from time to time be filed with the Securities and Exchange Commission
under the 1933 Act.
53. The Distributor is authorized, as agent, to accept offers for resale
to the Fund and to repurchase shares of its capital stock upon such terms
and conditions as the Fund's Board of Directors by resolution shall
determine. At least once on each business day on which the New York Stock
Exchange is open for trading, the Fund shall determine and promptly
thereupon furnish to the Distributor a statement of the price at which such
repurchases may be made during the period or periods specified in such
statement and, upon request, it shall advise the Distributor of the price
at which such repurchase may be made at other times. In so far as they
concern the Fund it agrees to comply with all applicable laws, rules and
regulations, including without limiting the generality of the foregoing,
all rules or regulations made or adopted pursuant to Section 22 of the 1940
Act by the Securities and Exchange Commission or any securities association
registered under the 1934 Act.
54. (a) Subject to the provisions of paragraph 11 hereof, this agreement
shall continue in effect for a period more than two years from the date
hereof only so long as such continuance is specifically approved at least
annually (x) by
the Fund's Board of Directors or by a vote of a majority of its outstanding
voting securities (as defined in the 1940
<PAGE>
Act) and (y) by the Directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of
the Plan or in this or any other agreement relating to the Plan (the
"Independent Directors"), cast in person at a meeting called for the
purpose of voting on such approval.
(b) This agreement may be terminated at any time, without payment
of any penalty, by the Board of Directors of the Fund, by vote of a
majority of the Independent Directors, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of Class C
shares of the Fund, on not more than 60 days' written notice to the other
party to the agreement. This agreement shall automatically terminate in
the event of its assignment.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be
executed as of the day and year first
written above.
AMERICAN GROWTH FUND, INC.
By
Name:
Title: President
AMERICAN GROWTH FUND SPONSORS, INC.
By
Name:
Title: Executive Vice President
<PAGE>
DISTRIBUTION AGREEMENT
(Class D Shares)
AGREEMENT (the Agreement), dated as of February 29, 1996, between
AMERICAN GROWTH FUND, INC., a Maryland corporation, (the Fund) and
AMERICAN GROWTH FUND SPONSORS, INC., a Colorado corporation, (the
Distributor).
RECITALS
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as a diversified, open-end management
investment company;
WHEREAS, the Fund intends to offer its Class D shares to the public
on a continuous basis;
WHEREAS, the Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the 1934 Act), and is in the
business of selling shares of the Fund and other registered investment
companies to the public, either directly or through other broker-dealers;
WHEREAS, the Fund and the Distributor wish to enter into this
Agreement with respect to the continuous offering of the Funds Class D
shares from and after the date hereof in order to promote the growth of the
Fund and facilitate the distribution of its Class D.
NOW, THEREFORE, the parties agree as follows:
1. The Distributor shall be the distributor for the Class D shares of
the capital stock of the Fund as may from time to time be effectively
registered under the Securities Act of 1933, as amended (hereinafter
referred to as the 1933 Act).
2. The Fund agrees to sell and deliver from time to time, upon the terms
hereinafter described, such number of its fully paid and nonassessable
Class D shares of capital stock as the Distributor shall order, but only
to the extent that the Distributor shall have received purchase orders
therefor. All orders from the Distributor hereunder shall be subject
to confirmation by the Fund.
3. The Distributor may sell and distribute any shares so purchased by
it through dealers or otherwise in such
<PAGE>
manner not inconsistent with the provisions hereof as it may determine from
time to time, and it agrees to use its best efforts to effect such sale and
distribution. The Distributor shall not make any short sales of Fund
shares. The Distributor shall in addition, in so far as they concern it,
comply with all applicable laws, rules and regulations
including, without limiting the generality of the foregoing, all rules or
regulations made or adopted pursuant to Section 22 of the 1940 Act by the
Securities and Exchange Commission or any securities association registered
under the 1934
Act.
4. Subject to the provisions of paragraph 5 hereof, all shares offered
for sale and sold by the Distributor shall be offered for sale and sold by
it at a price per share equal to the offering price per share (hereinafter
called the offering price) rounded to the nearest one cent and equal to (a)
the net asset value per share (determined as authorized from time to time
under the direction of the Board of Directors of the Fund in conformity
with the 1940 Act) plus (b) a sales charge or premium, if any, based upon
the schedule of such charges (including all exceptions therefrom) and
related terms and conditions as may be set forth from time to time in the
then current Prospectus or Statement of Additional Information of the Fund
pertaining to its Class D shares. The Fund shall determine and promptly
thereupon furnish to the Distributor a statement of the Funds net asset
value and offering price as often and at such times as its Board of
Directors shall by resolution determine provided, however, that subject to
the provisions hereinafter contained in this paragraph 4, the Fund shall
determine and furnish such offering price at least once on each business
day on which the New York Stock Exchange is open for trading. Each such
offering price shall become effective at such time, and shall remain in
effect during such period, as may be stated in the statement thereof
furnished to the Distributor as above provided. Every statement of the
offering price furnished to the Distributor as above provided shall show
the basis of its computation. The Fund shall also accept and confirm at
the offering price in effect before a price change such orders as are
entered by the Distributor to fill orders placed with it prior to such time
of price change, but only if such orders are received by the Fund within
a time deemed by the Fund to be reasonable after the time of receipt
thereof by the Distributor and if such orders are time-stamped or bear
other evidence to show that they were filed for transmission at the point
of origin prior to the time of such price change. Anything to the contrary
herein notwithstanding, however, whenever in its judgment such action is
warranted by market, economic or political conditions or by abnormal
circumstances of any kind, Fund officers may suspend the sale of Fund
shares, without incurring any liability under any of the provisions of this
<PAGE>
agreement, and decline to accept or confirm any orders for or make any
sales of any shares to the Distributor under this agreement until such time
as the Fund shall deem it advisable to accept and confirm such orders and
to make such sales, and during any such period, the Fund shall be under no
obligation to confirm or accept any such orders or make any such sales at
any price.
5. At or prior to the time of delivery by the Fund to the Distributor,
for its accounts, of any shares of the Fund's stock, the Distributor will
pay or cause to be paid to the Fund or its order an amount equal to the
offering price of such shares at which the Distributors order has been
confirmed by the Fund, less the applicable sales charge or premium, if any,
which charge or premium shall constitute the Distributors concession for
selling and distributing such shares and may be deducted by it from the
offering price in making payment to the Fund hereunder. The Distributor
may in its discretion allow a concession or other accounting to dealers or
other persons out of such concession to it.
6. Delivery of certificates for shares of the Fund's capital stock, when
and if requested (subject to any determination by the Fund not to issue
certificates for shares), shall be made as soon as practicable after
confirmation by it or the Distributors order therefor and against payment
therefor by the Distributor. The certificates for such shares shall be
registered in such names and amounts as the Distributor may specify to the
Fund in writing.
7. The Fund agrees to pay all costs and expenses in connection with
future registrations of its capital stock under the 1933 Act, and all
expenses in connection with maintaining facilities for the issue and
transfer of its shares, and for supplying information, prices and other
data to be furnished by it hereunder.
The Fund agrees to execute any and all documents and to furnish any
and all information which may be reasonable necessary, in the discretion
of its Board of Directors, in connection with the qualification of its
shares for sale in such states as the Distributor may designate to it. The
Distributor will pay all expenses connected with its own qualification as
a dealer or broker under State or federal laws.
8. The Fund shall furnish the Distributor from time to time, for use in
connection with the sale of its shares, such information with respect to
the Fund and its shares as the Distributor may reasonably request, all of
which, if so requested, shall be signed by one or more of its duly
authorized officers, warranting that the statements contained in any such
information, when so signed by its officers, shall be true and correct.
The Fund shall also furnish the
<PAGE> Distributor with annual audits of its books and accounts made by
independent public accountants, who may also be the independent public
accountants regularly retained by it, with semi-annual earnings statements
prepared by its accountants, with balance sheets at least on a semi-annual
basis, and from time to time with such additional information regarding its
financial condition as the Distributor may reasonably request.
9. As used in this agreement, the term registration statement shall
mean and include the registration statement with respect to shares of Fund
capital stock which became effective under the 1933 Act on April 28, 1959,
and also any other registration statement filed by it under the 1933 Act
which shall become effective, in each case including any amendment thereto
filed after the effective date thereof which amendment shall become
effective. The Fund represents that its registration statement under the
1933 Act, its Prospectus and Statement of Additional Information, have been
or will be, as the case may be, prepared substantially in conformity with
the requirements of said Act and the rules and regulations of the
Securities and Exchange Commission thereunder. The Fund further represents
and warrants that its registration statement, Prospectus and Statement of
Additional Information contain or will contain all statements required to
be stated therein in accordance with the 1933 Act and the rules and
regulations of said Commission, and that all statements of fact contained
or to be contained therein are or will be true and correct; that none of
its registration statement when it shall become effective, or its
Prospectus or its Statement of Additional Information when used, will
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of its shares. The Fund may but
shall not
be obligated to propose from time to time such amendments to its
registration statement, or amendments or supplements to its Prospectus and
Statement of Additional Information, as, in the light of future
developments, may, in its opinion or the opinion of its counsel, be
necessary in order to have such documents at all times contain all material
facts required to be stated therein or necessary to make any statements
therein not misleading to a purchaser of its shares, but, if it shall not
propose such amendment or amendments within fifteen days after receipt by
it of a written request from the Distributor to do so, the Distributor may,
at its option, terminate this agreement immediately. The Fund shall not
file any amendment to its registration statement, or amendment or
supplement to its Prospectus or Statement of Additional Information,
without giving the Distributor reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement shall in any
way limit the Fund's right to file at any time such amendments to its
<PAGE> registration statement, and/or amendments or supplements to its
Prospectus and Statement of Additional Information, of whatever character,
as it may deem advisable, such right being in all respects absolute and
unconditional. The Fund represents and warrants to the Distributor that
any such amendments or supplements hereafter filed by it will, when it
becomes effective, contain all statements required to be stated therein in
accordance with the 1933 Act and the rules and regulations of said
Commission, that all statements of fact contained therein will, when the
same shall become effective, be true and correct and that no such
amendment, when it becomes effective, will include an untrue statement of
a material fact or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of its shares.
10. The Fund agrees to prepare and furnish the Distributor from time to
time copies of its Prospectus and Statement of Additional Information in
the forms as then most recently filed with the Securities and Exchange
Commission, and authorizes the Distributor and dealers to use such
Prospectus and Statement of Additional Information, in the forms furnished,
from time to time, in connection with the sale of its shares. The Fund
agrees to indemnify, defend and hold the Distributor, its several officers
and directors, and any person who controls it within the meaning of Section
15 of the 1933 Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which the Distributor, its officers or directors,
or any such controlling person may incur, under the 1933 Act, or under
common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in its registration statement, or
Prospectus or Statement of Additional Information, or arising out of or
based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that Fund's agreement to indemnify the Distributor, its
officers or directors, and any such controlling person shall not be deemed
to cover any claims, demands, liabilities or expenses arising out of any
statements or representations made by the Distributor or by its
representatives or agents other than such statements and representations
as are contained in Fund's Prospectus or Statement of Additional
Information and in such financial and other statements as are furnished the
Distributor pursuant to this paragraph 10 or paragraphs 8 and 9 hereof; and
further provided, that in no event shall anything herein contained be so
construed as to protect the Distributor against any liability to the Fund
or its security holders to which the Distributor would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence,
<PAGE> in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this agreement. The
agreement to indemnify the Distributor, its officers and directors, and any
such controlling person as aforesaid, is expressly conditioned upon the
Fund being notified of any action brought against the Distributor, its
officers or directors, or any such controlling person, such notification
to be given by letter or by telegram addressed to the Fund at its principal
office in Denver, Colorado, and sent by the person against whom such action
is brought, within ten days after the summons or other first legal process
shall have been served. The failure so to notify the Fund of any such
action shall not relieve it from any liability which it may have to the
person against whom such action is brought by reason of any such alleged
untrue statement or omission otherwise than on account of the indemnity
agreement contained in this paragraph 10. The Fund will be entitled to
assume the defense of any suit brought to enforce any such claim, demand
or liability, but, in such case, such defense shall be conducted by counsel
of good standing chosen by it and approved by the Distributor. In the
event the Fund does elect to assume the defense of any such suit and retain
counsel of good standing approved by the Distributor, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case it does not elect to assume
the defense of any such suit, or in case the Distributor does not approve
the counsel chosen by it, the Fund will reimburse the Distributor, its
officers and directors, or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses of any
counsel retained by it or them. The Funds indemnification agreement
contained in this paragraph 10 and its representations and warranties in
this agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Distributor,
its officers and directors, or any controlling person, and shall survive
the delivery of any shares of its capital stock hereunder. This agreement
of indemnity will inure exclusively to the Distributors benefit, and its
successors, and to the benefit of its officers and directors, and their
respective estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of any of its
capital stock.
11. The Distributor agrees to indemnify, defend and hold the Fund, its
several officers and directors, and any person who controls it within the
meaning of Section 15 of the 1933 Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or
<PAGE> liabilities and any counsel fees incurred in connection therewith)
which the Fund, its officers or directors, or any such controlling person
may incur under the Act or under common law or otherwise; but only to the
extent that such liability or expense incurred by the Fund, its officers
or directors, or such controlling person, resulting from such claims or
demands shall arise out of or be based upon any alleged untrue statement
of a material fact contained in information furnished in writing by the
Distributor to the Fund for use in its registration statement, Prospectus
or Statement of Additional Information or shall arise out of or be based
upon any alleged omission to state a material fact in connection with such
information required to be stated therein or necessary to make such
information not misleading. The Distributors agreement to indemnify the
Fund, its officers and directors, and any such controlling person as
aforesaid is expressly conditioned upon the Distributor being notified of
any action brought against the Fund, its officers or directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to the Distributor at its principal office in Denver, Colorado,
and sent by the person against whom such action is brought, within ten days
after the summons or other first legal process shall have been served. The
Distributor shall have a right to control the defense of such action, with
counsel of its own choosing, satisfactory to the Fund, if such action is
based solely upon such alleged misstatement or omission on Distributors
part and in any other event, the Distributor or such controlling person
shall each have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify the Distributor
of any such action shall not relieve it from any liability which it may
have to the Fund, its officers or directors, or to such controlling person
by reason by any such untrue statement or omission on its part otherwise
than on account of its indemnity agreement contained in this paragraph 11.
12. No shares of the Fund's capital stock shall be bought or sold by
either the Distributor or the Fund under any of the provision of this
agreement and no orders for the purchase or sale of such stock hereunder
shall be confirmed or accepted by the Fund if and so long as the
effectiveness of its registration statement, or any necessary amendments
thereto, covering such stock, shall be suspended under any of the
provisions of the 1933 Act; provided, however, that nothing in this
paragraph 12 contained shall in any way restrict or limit or have any
application to or bearing upon the Fund's obligation to repurchase shares
of its capital stock from any stockholder.
13. The Fund agrees to advise the Distributor immediately:
(a) of any request by the Securities and Exchange Commission <PAGE>
for amendments to the Funds registration statement, Prospectus or
Statement of Additional Information or for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of its
registration statement or the initiation of any proceedings for that
purpose;
(c) of the happening of any event which makes untrue any statement
made in its registration statement, Prospectus or Statement of
Additional Information or which requires the making of a change therein in
order to make the statements therein not misleading; and
(d) of all action of the Securities and Exchange Commission with
respect to any amendments to its registration statement which may
from time to time be filed with the Securities and Exchange Commission
under the 1933 Act.
14. The Distributor is authorized, as agent, to accept offers for resale
to the Fund and to repurchase shares of its capital stock upon such terms
and conditions as the Fund's Board of Directors by resolution shall
determine. At least once on each business day on which the New York Stock
Exchange is open for trading, the Fund shall determine and promptly
thereupon furnish to the Distributor a statement of the price at which such
repurchases may be made during the period or periods specified in such
statement and, upon request, it shall advise the Distributor of the price
at which such repurchase may be made at other times. In so far as they
concern the Fund it agrees to comply with all applicable laws, rules and
regulations, including without limiting the generality of the foregoing,
all rules or regulations made or adopted pursuant to Section 22 of the 1940
Act by the Securities and Exchange Commission or any securities association
registered under the 1934 Act.
15. (a) Subject to the provisions of paragraph 9 hereof, this agreement
shall continue in effect for a period more than two years from the date
hereof only so long as such continuance is specifically approved at least
annually by (x) the Fund's Board of Directors or by a vote of a majority
of its outstanding voting securities (as defined in the 1940 Act); and (y)
and a majority of the Directors who are not parties to this agreement or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval. This agreement shall
automatically terminate in the event of its assignment (as defined in the
1940 Act).
(b) This agreement may be terminated at any time, without
<PAGE>
payment of any penalty, by the Board of Directors of the Fund, by vote of
a majority of the Independent Directors, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of Class B
shares of the Fund, on not more than 60 days' written notice to the other
party to the agreement. This agreement shall automatically terminate in
the event of its assignment.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be
executed as of the day and year first
written above.
AMERICAN GROWTH FUND, INC.
By
Name:
Title: President
AMERICAN GROWTH FUND SPONSORS, INC.
By
Name:
Title: Executive Vice President
<PAGE>
SELLING GROUP AGREEMENT
Dated:
, 19
To Whom It May Concern:
We are the principal underwriter of shares of American Growth Fund, Inc.
(the "Fund"). Subject to the terms and conditions of this letter agreement,
we will sell such shares to you to cover orders received by you as a
principal for your customers.
1.ORDERS. All non-qualified plan mail orders should be sent, together
with check payable to American Growth Fund Sponsors, Inc. in the gross
amount, directly to State Street Bank and Trust Company, c/o American
Growth Fund, Inc., P.O. Box 8500, N. Quincy, MA 02171-8500. All wire orders
should be telephoned to our toll-free number, 800-525-2406, or to
303-623-6137. All wire order confirmations and transfer instructions should
be sent directly to State Street Bank and Trust Company. All qualified
retirement plan mail orders should be sent to State Street Bank and Trust
Company, c/o American Growth Fund, Inc., P.O. Box 8500, N. Quincy, MA
02171-8500. Such orders will be accepted and confirmed to you at the
applicable public offering prices described in the Fund's currently
effective prospectus, less the dealer discount described in paragraph 3
below and expenses, if any.
2.PAYMENT AND DELIVERY. Upon receipt of confirmation you will pay
promptly the net amounts due as shown thereon, including any transfer taxes
due on sale by you as principal to your customer. Payment should be made
payable to American Growth Fund Sponsors, Inc. and should be delivered to:
State Street Bank and Trust Company
c/o American Growth Fund, Inc.
P.O. Box 8500
2 Heritage Dr.
N. Quincy, MA 02171
3.SALES CHARGE AND DEALERS DISCOUNT
(a)The sales charges and discounts allowed to dealers on shares
purchased through us are as follows:
Percentage of Applicable Public
Offering Price Single Transaction Total Sales Charge
Dealer Discount
Less than $50,000 5.75%
5.00%
$50,000 but less than $100,000 4.50%
3.75%
$100,000 but less than $250,000 3.50%
2.75%
$250,000 but less than $500,000 2.50%
2.00%
<PAGE>
$500,000 but less than $1,000,000 2.00%
1.60%
$1,000,000 and over 0.00%
0.00%
In determining the sales charge and dealer discount applicable to
each purchase all previous purchases by the customer may be aggregated, in
accordance with and subject to the terms of the prospectus.
(b)The above scale applies to aggregate purchases by an individual, his
spouse and children under 21, a trustee or fiduciary of a single trust or
fiduciary account, tax exempt organizations enumerated in Section
501(c)(3) of the Internal Revenue Code, and employees' trusts, profit
sharing and other employee benefit plans qualified under Section 401 of the
Internal Revenue
Code, 403(b) Plans and except for 401(k) Plans, in which each 401(k)
investor is considered separately for purposes of computing sales charges.
Provided, however, that the term "any person" shall not include a
group of individuals whose funds are combined directly or indirectly, for
the purchase of shares of the Fund jointly or through a trustee, agent,
custodian or other representative, nor shall it include a trustee,
agent, custodian or other representative of such a group of individuals.
In addition, any of the persons enumerated above may sign a statement
of intention in the form provided by us covering purchases to be made
within a period of 13 months and thereby become eligible for the
reduced sales charge applicable to the total amount purchased or to the
amount of the specified intended purchase, whichever amount is less,
provided such amount is not less than $50,000.
(c)Purchase of Fund shares at net asset value is available to dealers
for their own account or for retirement plans for their employees or sold
to employees of such dealers (and their spouses or for accounts for
their minor children) that have sales agreements with the underwriter. Such
persons must give written assurance that their purchase is made for
investment purposes and that the securities will not be resold except
through redemption or repurchase by the issuer.
(d)If any shares are repurchased by the Fund or by us for the account
of the Fund or are tendered for redemption within seven business days after
confirmation to you of the original purchase order for such shares,
you shall forthwith refund to us (or we may retain) the full dealer
discount allowed to you on the original sale, and upon receipt thereof we
will as soon as practicable thereafter pay to the Fund the full
amount of the sales charge on the original sale by us. We will notify you
of such repurchase or redemption within 10 days of the date on which the
certificate representing such shares is delivered to us or to the
Fund.
4.OTHER TRANSACTIONS IN SHARES
<PAGE>
(a)You will not purchase as principal, or participate as broker in the
purchase of, any shares of the Fund except from us or from your customers,
and then only at the price not lower than the bid price then quoted
by or for the Fund. All purchases from us will be made only to cover orders
already received by you from your customers or for your own bona fide
investment.
(b)You will not sell as principal, or participate as broker in the sale
of, any shares of the Fund except at a price to the purchaser equal to the
applicable public offering price described in the Fund's currently
effective prospectus, unless such sale is to the Fund or to us; but nothing
in this subparagraph (b) shall prevent you from selling to us or to the
Fund any such shares for the account of a customer at the bid price
then quoted by or for the fund and charging the customer a fair commission
for handling the transaction.
(c)You will not withhold placing a customer's order with us in such a
manner as to profit yourself as a result of such withholding.
(d)We will not accept a conditional order for shares of the Fund on any
basis other than at a specified definite price.
5.MISCELLANEOUS
(a)The bid and public offering prices of shares of the Fund will be
furnished from time to time to public information sources.
(b)No person is authorized to make representations concerning shares
of the Fund except those contained in the then effective prospectus and in
other sales literature subsequently issued by
us as information supplementary to such prospectus. In purchasing
shares from us you will rely solely on the representations contained in
such prospectus and other sales literature.
(c)We reserve the right to amend this letter agreement, to reject in
whole or in part any order sent to us by you, and to terminate this letter
agreement for any reason, including the violation by you of any of
its provisions. This letter agreement will terminate automatically if you
cease to be a member in good standing of the National Association of
Securities Dealers, Inc., as you represent yourself to be.
(d)This letter agreement supersedes any prior sales agreement between
us covering shares of the Fund.
(e)All transactions contemplated by this letter agreement are subject
to and must be in compliance with all applicable federal and state laws,
including the Securities Act of 1933 as amended, the Securities
Exchange Act of 1934 as amended, the Investment Company Act of 1940 as
amended, all rules and regulations under such Acts, and any applicable
rules of the National Association of Securities Dealers, Inc.,
particularly Rule 26 of the Rules of Fair Practice.
(f)Nothing in this letter agreement will be deemed or construed to make
you an employee, agent, representative or partner of us or of the Fund, and
you are not authorized to act for us or
<PAGE>
for the Fund or make any representations on our behalf or on behalf
of the Fund. We will not be under any liability to you except for
obligations expressly assumed in this letter agreement and any
liability under the Securities Act of 1933 as amended.
(g)From time to time American Growth Fund Sponsors, Inc. may conduct
Due Diligence conferences. To the extent permitted by applicable law, and
subject to the Rules of Fair Practice, participation in these
conferences generally will be based upon a specified sales volume, and
participants will be entitled to receive airfare, hotel accommodations, and
meals for two. You agree that if you object to permitting your sales
representatives to participate in these conferences (and do not intend to
accept cash in lieu thereof to the extent provided by the Rules of
Fair Practice) you will notify us in writing within 30 days of receiving
notice of any sales promotions intended to result in the availability of
such participation.
Please confirm the foregoing by signing one of the enclosed counterparts
of this letter agreement, in the space provided below, and return it to us.
Very truly yours,
Confirmed as of the above date. AMERICAN GROWTH FUND
SPONSORS, INC.
Firm
By
(Authorized Signature)
Address
By
President
Rev. 12/94
Amendment A, replaces section 3 of your
Selling Group Agreement with American Growth Fund Sponsors, Inc.
March
1, 1996
A. Class A shares.
1.
<PAGE> Sales of shares of Class A Common Stock of the Fund will be subject
to, and American Growth Fund Sponsors will pay to dealers as applicable,
sales charges (including any applicable contingent deferred sales charges
("CDSC")), discounts allowed to dealers, and agency fees on Class A shares
purchased through us, in each case in the amount or amounts and in the
manner and subject to any terms and conditions described in the Fund's
prospectus and statement of additional information in effect at the time
of the sale of the Class A shares subject to such charges.
2. Commencing one year after the investment date American Growth Fund
Sponsors will pay selling broker/dealers up to .25 of 1% of the average
daily net assets as a fee for shareholder servicing related to distribution
of shares of the class (a "service fee") calculated annually and paid
quarterly. The service fee payable to a broker/dealer will be based on the
average daily net asset value of shares sold by such broker/dealer and
remaining outstanding on the Fund's books during the period in which the
fee is calculated.
3. If any shares are repurchased by the Fund or by us for the account of
the Fund or are tendered for redemption within seven business days after
confirmation to you of the original purchase order for such shares, you
shall forthwith refund to us (or we may retain) the full dealer discount
allowed to you on the original sale. We will notify you of such repurchase
or redemption within 10 days of the date on which the certificate
representing such shares is delivered to us or to the Fund.
B. Class D Shares
1. Sales of shares of Class D Common Stock of the fund will be subject to,
and American Growth Fund Sponsors will pay to dealers as applicable, sales
charges (including any applicable CDSC), discounts allowed to
<PAGE> dealers, and agency fees on Class D shares purchased through us, in
each case in the amount or amounts and in the manner and subject to any
terms and conditions described in the Fund's prospectus and statement of
additional information in effect at the time of the sale of the Class D
shares subject to
such charges.
2. If any shares are repurchased by the Fund or by us for the account of
the Fund or are tendered for redemption within seven business days after
confirmation to you of the original purchase order for such shares, you
shall forthwith refund to us (or we may retain) the full dealer discount
allowed to you on the original sale. We will notify you of such repurchase
or redemption within 10 days of the date on which the certificate
representing such shares is delivered to us or to the Fund.
3. Class D shares are limited to the Fund's, the Adviser's and the
Distributor's directors and officers and their spouses and family members,
to certain institutional investors, including banks, corporations and
accounts managed by specified types of fiduciaries, and to or for
retirement plans for their employees or sold <PAGE> to employees
of such dealers (and their spouses or for accounts for their
minor children) that have sales agreements with the
underwriter. Such persons must give written assurance that
their purchase is made for investment purposes and that the
securities will not be resold except through redemption or
repurchase by the issuer. Class D shares are also limited to
the existing beneficial holders of Class D shares at the time
of implementation (March 1, 1996). Sponsors reserves the right
to ask for adequate documentation to ensure that shareholders
are <PAGE> eligible for the above shares.
C. Class B Shares
1. Sales of shares of Class B Common Stock of the Fund will be subject to,
sales charges (including any applicable CDSC), and agency fees on Class B
shares purchased through us, in each case in the amount or amounts and in
the manner and subject to any terms and conditions described in the Fund's
prospectus and statement of additional information in effect at the time
of the sale of Class B shares subject to such charges. American Growth Fund
Sponsors will pay a sales commission of 4% of the aggregate value of shares
sold payable on the next normally scheduled commission payment date
following receipt of funds.
2. Commencing one year after the investment date American Growth Fund
Sponsors will pay up to .25 of 1% of the average daily net assets for
shareholder servicing related to distribution of shares of the class (a
"service fee") calculated annually and paid quarterly. The service fee
payable to a broker/dealer will be based on the average daily net asset
value of shares sold by such broker/dealer and remaining outstanding on the
Fund's books during the period in which the fee is calculated.
3. If any shares are repurchased by the Fund or by us for the account of
the Fund or are tendered for redemption within seven business days after
confirmation to you of the original purchase order for such shares, you
shall forthwith refund to us (or we may retain) the full dealer discount
allowed to you on the original sale. We will notify you of such repurchase
or redemption within 10 days of the
<PAGE>
date on which the certificate representing such shares is delivered to us
or to the Fund.
D. Sales Charge Structure for American Growth Fund Class C Shares
1.
Sales of shares of Class C Common Stock of the Fund will be subject to,
sales charges (including any applicable CDSC), and agency fees on Class C
shares purchased through us, in each case in the amount or amounts and in
the manner and subject to any terms and conditions described in the Fund's
prospectus and statement of additional information in effect at the time
of the sale of the Class C shares subject to such charges. American Growth
Fund Sponsors will pay a sales commission of 1% of the aggregate value of
shares sold payable on the next normally scheduled commission payment date
following receipt of funds.
2.
In addition, commencing one year after the investment date, American Growth
Fund Sponsors will pay a fee to qualifying broker/dealer firms at the
equivalent of an annual rate of 1% of the average daily net asset value of
the Class C shares, of which .75 of 1% would be a distribution fee and .25
of 1% will be a service fee. Such distribution and service fees will be
paid quarterly, based on the average daily net asset value of shares sold
by such broker/dealers and remaining outstanding on the Funds' books during
the period in which the fee is calculated. 3. If any shares are
repurchased by the Fund or by us for the account of the Fund or are
tendered for redemption within seven business <PAGE> days after
confirmation to you of the original purchase order for such
shares, you will forthwith refund to us (or we may retain) the
full dealer discount allowed to you on the original sale. We will
notify you of such repurchase or redemption within 10 days of
the date on which the certificate representing such shares is
delivered to us or to the Fund.
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
American Growth Fund, Inc.:
We consent to the use of our report dated August 30, 1996 appearing in the
Statement of Additional Information, which is part of this Registration
Statement and to the reference to our Firm under the heading "Financial
Highlights" appearing in the Prospectus, which is also a part of such
Registration Statement.
/s/ KPMG Peat Marwick
Denver, Colorado
September 26, 1996
<PAGE>
Accountants Consent
The American Growth Fund, Inc. (The Fund)
We hereby consent to the incorporation by
reference into Post-Effective Amendment No. 51 to your Registration
Statement, (File No. 2-14543) (the Registration Statement) of our report
dated August 18, 1995, to the extent it covers the statement of changes in
net assets for the Fund for the year ended July 31, 1995, and the selected
per share data and ratios set forth under the caption Supplementary
Information for each of the four years in the period then ended, which
statement, data, ratios and report appear in the July 31, 1995, Annual
Report of the fund and are incorporated by reference into the
Registration Statement.
/s/ Smith, Brock &
Gwinn
Denver, Colorado
September 27, 1996
<PAGE>
Who
We
Are:<PAGE>
merican Growth Fund, Inc. is a diversified, open-end investment company
with the goal of providing the most professional form of investment
management attainable anywhere. We are committed to helping serious long-
term investors achieve or maintain their financial independence.
We believe we can accomplish our goal by being fully committed to your
success and by making investing with us as simple and convenient as
possible.
For four decades we have served our shareowners well. We have
successfully demonstrated our ability to manage their money through periods
of economic expansion and contraction, through years of political tensions
and armed conflicts, through times of vast social and technological
changes, and through an era of increasingly complex securities markets.
We believe American Growth Fund, Inc. should be the preferred investment
of choice for those investors who seek to have serious, conservative
professional management. While there can be no guarantee that the future
will be as rewarding as the past, we look forward to the future with
unbridled enthusiasm, for we feel investing can be a rewarding, enjoyable
experience.
PAGE
<PAGE>
The
Benefits
of
Professional
Management
Is American
Growth Fund A
Good
Investment For
My Retirement
Plan?<PAGE>
merican Growth Fund, Inc. is a professionally managed investment company
which:
Has a proven history of keeping its investors ahead
of the cost of living.
Is managed to try to avoid or reduce the effects of
market declines on its investment portfolio.
Is liquid, with the value of its investment shares
determined daily.
Has a proven history of long-term growth.
Has a proven history of significant income
generation.
American Growth Fund's management believes that long-term investors should
invest in a serious manner which takes advantage of opportunities, yet
helps safeguard their valuable investment capital against loss. American
Growth Fund's investment approach, which emphasizes anticipation of change
and awareness of risks, is designed to help you make your financial
independence a reality.
merican Growth Fund, Inc. is an excellent vehicle for your Individual
Retirement Account (IRA), Simplified Employee Pension Plan (SEP), or other
qualified retirement plan.
The management of American Growth Fund, Inc. constantly monitors economic
and financial conditions. Before investing, your management must be
satisfied that the overall picture is right. When many people think about
long-term growth investing, they assume they must always be 80% to 100%
invested. If you encounter an unfavorable environment in that position,
it stands to reason you can encounter serious setbacks from time to time.
For example, if one investment declines 50%, it needs to go up 100% just
to get back to break-even; but if a decline only sets you back 25%, you
only need to go up 33% to get back to break-even.
<PAGE> <PAGE>
Our purchases have often been made when industry and company conditions
have
seen their bleakest hour, but other investors have not yet recognized the
potential profits to come. We often find prices of good, sound businesses
selling for a fraction of their value; yet, no one else seems interested
in buying! We seek to invest in companies where, in addition to sound
value, competent management and financial strength can combine to create
big profits for our shareowners.
We believe that all you can be certain of is change. There are no "always"
or "never" rules when it comes to successful investing because
opportunities and risks constantly change - change is, in fact, the only
constant.
It's never enough for us to be satisfied with an investment that has done
well. New, fresh ideas and insights offer constant opportunities for those
who can understand the nature of change. We don't believe it's enough to
say this or that investment area will always be the best investment choice.
To do the best you can do, to have the most you can have over the years,
we believe you must look at change as your friend. We feel we must invest
in a manner which constantly seeks to help you benefit from change.
American Growth Fund, Inc. does more than focus only on a narrow field
(such as picking stocks, or bonds, or cash instruments). When you invest
in American Growth Fund shares, you become a shareowner of a professionally
managed investment company. As a professionally managed investment company,
American Growth Fund, Inc. fully manages your money by performing these
four important functions:
Changing the proportions of stocks, bonds, or cash
held within the Fund, as times and conditions change.
Providing selective diversification by investing in
several different
companies in various industries (when management
feels equity markets are attractive).
Carefully selecting the securities the Fund invests
in.
Continuously supervising each investment after it is
made.
PAGE
<PAGE>
What is a
Rollover
IRA?<PAGE>
Rollover IRA account continues to be one of the most effective retirement
planning tools available to the individual investor. A Rollover IRA
account may enable you to retain the tax-sheltered status of your
retirement funds if you are receiving an eligible rollover distribution
(any distribution other than a required minimum distribution or one of a
series of substantially equal periodic payments) from an employer sponsored
retirement plan because you
(1) Retired as defined in the plan,
(2) Terminated your current employment,
(3) Plan has been terminated, or
(4) Received a distribution from your spouse's
retirement plan,
A Rollover IRA account helps you to defer and possibly reduce the tax you
would otherwise owe on the distribution from an employer sponsored
retirement plan and continues to let the earnings on those funds accumulate
tax deferred until you withdraw them.
A Rollover IRA account is a special type of individual retirement account
(IRA) designed to receive distributions from retirement plans set up by
employers. For one of the reasons listed above, the employer may make
available to you your portion of the funds set aside for your benefit from
your retirement plan where you work. You must decide whether to take
actual receipt and keep the money and pay taxes on the distribution now at
your current federal income tax bracket or to set aside the money in a
special IRA account and let your assets continue to accumulate tax deferred
until you withdraw them later. By setting aside the funds in a special
Rollover IRA account, you not only postpone any federal income tax that you
owe, but you will avoid penalty tax which might apply and you may even
reduce the amount of tax that you owe assuming your tax bracket will be
lower when you retire than it is now.
PAGE
<PAGE>
How to Make a
Tax-Free
Rollover of a
Eligible
Rollover
Distribution<PAGE>
A rollover IRA account is a special kind of IRA account. While a
regular
IRA account is established to receive individual deductible or
non-deductible contributions, a rollover IRA account is established to
segregate funds received due to a distribution from an employer sponsored
retirement plan. By keeping these funds segregated, unless they relate to
a distribution from your spouse's retirement plan made due to his or her
death, they will be eligible for contribution to another employer sponsored
retirement plan at a future date. You may combine individual deductible
or nondeductible contributions with rollover funds; however, commingling
a rollover IRA with individual IRA amounts will prohibit your returning
those rollover funds to another employer sponsored retirement plan.
Rollover IRA account has long been favored by employees who want to
extend the tax-sheltered treatment of their retirement funds.
One of the simplest ways for you to get the greatest value out of a
retirement plan distribution is to make arrangements to transfer your funds
directly to another plan or to a Rollover (IRA) before you receive the
distribution. If you leave a job and you receive a distribution yourself,
your employer generally must withhold 20 percent income tax from the
distribution. If you want to roll the distribution into a rollover IRA,
you must do so within 60 days after you receive it. To roll over 100% of
the distribution you will need to obtain the withheld amount from other
sources, then claim a refund on your tax return. If you choose not to roll
over the entire amount of the distribution (determined before the
withholding), you may have to pay income tax on the amount not rolled over,
as well as a 10 percent penalty to the federal government if you are under
age 59 1/2.
Your employer will tell you in writing what portion of your distribution
is available for rollover treatment. For example, any amounts that you
receive that are a return of non-deductible employee contributions are not
eligible for rollover treatment. Since you have already paid federal
income tax on these contributions, they are not taxed to you at the time
of distribution anyway.
PAGE
<PAGE>
Federal Income
Tax Information
<PAGE>
If part of your distribution from your employer is in the form of stock or
other
property, you may choose to sell the property and transfer the proceeds of
the sale to your Rollover IRA account. The sale and the rollover must be
accomplished within 60 days in order to retain the tax-sheltered treatment
of
those assets.
Because the Internal Revenue Service limits the number of rollovers that
you may make within a 12 month period and because in certain situations it
may not be to your advantage to make a rollover contribution, you should
consult with your tax advisor before making any type of rollover
contribution or consenting to any distribution from your retirement plan
account.
istributions from your employer sponsored retirement plan are reportable
for federal income tax purposes in the year you received the funds;
however, you are entitled to a deduction for the amount eligible for
rollover treatment when you place all or a part of your distribution into
a Rollover IRA account within 60 days of its receipt. Generally, if you
rollover the full amount of the eligible rollover distribution (before any
income tax withholding) into a Rollover IRA Account, then you will be
eligible to deduct that amount on your federal income tax return. If you
elect to rollover only a portion of the funds you received from your
employer sponsored retirement plan to a Rollover IRA Account, then you will
only be able to deduct that amount rolled over on your federal income tax
return. The remainder which is not rolled over will be taxable in the year
in
which it was received.
The discussion above pertains only to federal income taxes in effect at
the time this brochure was written. Local and state taxes may vary. You
should consult a competent tax advisor before you consent to any
distribution from your retirement plan.
PAGE
<PAGE>
Why Should I
Consider an
IRA Rollover
Account
Instead of
Taking My
Distribution in
Cash?<PAGE>
axes. While the Internal Revenue Code provides special tax treatment for
certain distributions that you elect to receive, you may be left with a
heavy tax bill. Retirement plan distributions are generally taxed as
ordinary income. However, a special five-year averaging on certain
distributions may apply (the tax bill on your lump-sum distribution is
computed as if the distribution had been spread out over five years), and
if part of your distribution was a result of pre- 1974 plan participation,
that part may be eligible for favorable capital gain treatment. More
favorable tax treatment may apply to taxpayers who were at
least 50 years old before January 1, 1986.
Penalty. Even if you qualify for one of the favorable tax treatments on
your distribution, you may need to pay a penalty tax, currently 10% of the
amount of the distribution you receive, if you receive your distribution
before you reach age
591/2.
Decision. The decision that you make now will effect you later when you
retire. You can choose to avoid paying taxes now and defer them until
later years when you may be in a more favorable tax status. In the
meantime, your earnings will continue to accumulate tax-deferred.
PAGE
<PAGE>
Withdrawals
From IRA
Rollover
Accounts
To Establish a
Rollover IRA
Account:<PAGE>
ithdrawals from your Rollover IRA account are subject to the same IRS
regulations that govern regular IRA accounts. Withdrawals can be made any
time after you reach age 591/2. Withdrawals made before age 591/2 are
subject to a penalty tax, currently 10% of the amount withdrawn, unless
your withdrawal meets certain specific requirements.
Distribution of your Rollover IRA account must begin by April 1 of the year
following the year you reach 701/2. If you do not begin distributions by
then, the IRS imposes a penalty tax for not taking the required minimum
distribution which is a fraction of the amount in the account and your age.
The IRS also imposes a penalty if your total annual distributions exceed
a certain level.
o establish your American Growth Fund Rollover IRA account:
1. Complete the IRA Application and Agreement found in
the Fund's IRA application be sure to check the
box for "Rollover IRA,"
2. Complete the Designation of Beneficiary form on the
back of the application form,
3. Write a check payable to the Fund's Retirement Plan
Custodian for the amount of the rollover funds you
want to apply to your Fund Rollover
IRA account, and
4. Send the IRA Application and Designation of
Beneficiary forms along with your check to the
Fund's Retirement Plan Custodian listed on the
back of this booklet.
5. If the Rollover is going to be made directly from
your employer
sponsored retirement plan, complete the Transfer of
Assets form found in
the Fund's IRA application.<PAGE>
<PAGE> he following chart
illustrates the history of an IRA Retirement Account
invested in American Growth Fund, Inc. from its
inception on August 1, 1958. The results shown in
the chart should not be considered representative of
the dividend income or capital gain or loss which may be realized from
an investment made in American Growth Fund today.
Programs of this type neither assure a profit nor
protect against depreciation in declining markets. Acquisition
costs on investments in an IRA account are 5.75% and are
included in the illustrations unless otherwise
noted. Unless otherwise indicated, dividends and
capital gain distributions have been reinvested at net asset value. No
adjustment has been made for any income taxes
payable by shareholders on capital gains
distributions and dividends reinvested in shares.
PAGE
<PAGE>
INVESTING FOR YOUR OWN RETIREMENT
. . . The IRA Retirement Program*
If you are an employed person, you may be eligible to contribute up to
$2,000 of your compensation or 100% of your income, whichever is less, to
your own personal IRA. Further tax savings may be achieved by creation of
a separate IRA for an unemployed spouse. Depending on your adjusted gross
income and whether or not you participate in an employer sponsored pension
plan, your investment in our IRA may be tax-deductible. Every dollar your
IRA earns is tax deferred. Illustration of an Assumed Initial
Investment, August 1, 1958, of $2,000,
Subsequent Investments of $166.66 Monthly and Dividends
Reinvested and
Capital Gains Distributions Accepted in Shares - 37 Year
Record
COST OF SHARES PURCHASED
<PAGE>
VALUE OF SHARES
Cumulative
Cost of Shares
Total ofDividendsPurchased Acquired Purchased
Initial from throughTotal CostthroughAccepted asthrough
Year andInvestmentInvestment ofIncludingInitial andCapital
GainsReinvestment
Ended Annual Income IncomeReinvestedAnnualDistributionsof IncomeTotal
July
31InvestmentsReinvestedDividendsDividendsInvestments(Cumulative)Subtotal
(Cumulative)Value
1959$ 4,000$ 79 $ 79$ 4,079$ 4,485$
0$ 4,485$ 83$ 4,568 1960 6,000 108 187
6,187 5,983 23 6,006 184 6,190
1961 8,000 196 383 8,383 9,738 174 9,912 459 10,371
1962 10,000 220 603 10,603 10,054 199 10,253 589 10,842
1963 12,000 268 871 12,871 14,098 580 14,678 1,005 15,683
1964 14,000 272 1,143 15,143 19,644 977 20,621 1,558 22,179
1965 16,000 320 1,463 17,463 20,356 2,420 22,776 1,781 24,557
1966 18,000 432 1,895 19,895 22,236 4,659 26,895 2,208 29,103
1967 20,000 799 2,694 22,694 24,926 8,131 33,057 3,165 36,222
1968 22,000 754 3,448 25,448 29,298 8,926 38,224 4,272 42,496
1969 24,000 868 4,316 28,316 25,417 12,041 37,458 4,194 41,652
1970 26,000 871 5,187 31,187 21,495 10,959 32,454 3,978 36,432
1971 28,000 1,239 6,426 34,426 29,499 14,026 43,525 6,433 49,958
1972 30,000 1,436 7,862 37,862 32,985 14,769 47,754 8,278 56,032
1973 32,000 1,075 8,937 40,937 33,421 15,266 48,687 8,950 57,637
1974 34,000 1,647 10,584 44,584 28,563 13,256 41,819 8,646 50,465
1975 36,000 2,947 13,531 49,531 28,075 19,520 47,595 10,886 58,481
1976 38,000 2,458 15,989 53,989 34,534 22,588 57,122 15,353 72,475
1977 40,000 2,256 18,245 58,245 40,406 25,123 65,529 19,524 85,053
1978 42,000 2,132 20,377 62,377 49,174 29,258 78,432 25,202 103,634
1979 44,000 4,316 24,693 68,693 56,375 32,282 88,657 32,666 121,323
1980 46,000 6,151 30,844 76,844 79,126 47,153126,279 51,911 178,190
1981 48,000 7,906 38,750 86,750 63,650 86,639150,289 47,513 197,802
1982 50,000 8,891 47,641 97,641 57,931 82,729140,660 50,302 190,962
1983 52,000 14,202 61,843113,843 83,627116,379200,006 89,403 289,409
1984 54,000 11,877 73,720127,720 73,125122,322195,447 87,414 282,861
1985 56,000 9,734 83,454139,454 79,106153,685232,791103,007 335,798
1986 58,000 15,387 98,841156,841 86,122163,335249,457126,383 375,840
1987 60,000 12,582111,423171,423 92,842224,559317,401147,452 464,853
1988 62,000 7,743119,166181,166 66,557222,095288,652111,096 399,748
1989 64,000 20,288139,454203,454 76,118246,919323,037146,798 469,835
1990 66,000 18,920158,374224,374 79,394251,222330,616167,909 498,525
1991 68,000 17,101175,475243,475 85,965265,454351,419196,931 548,350
1992 70,000 4,107179,582249,582 93,122318,451411,573213,171 624,744
1993 72,000 5,886185,468257,468104,913405,965510,878242,158 753,036
1994 74,000 4,052191,317265,317106,233487,096593,329244,912 838,241
1995 76,000 10,778200,262276,259101,569623,814725,383272,325 967,708
12/95 76,830 13,280213,542290,372103,523653,228756,751258,4651,015,216
The total cost figures represent the initial investment of $2,000 plus the
cumulative amount of income dividends reinvested, and include acquisition
costs on all shares so purchased as described in the
Prospectus. Capital gains distributions are reinvested at net asset value.
The dollar amounts of the capital gains distributions accepted in shares
were: 1960 - $23; 1961 - $114; 1962 - $58; 1963 - $277;
1964 - $208; 1965 - $1,465; 1966 - $2,163; 1967 - $2,630; 1969 - $5,370;
1970 - $1,981; 1973 - $1,171; 1974 - $1,169; 1975 - $5,700; 1980 - $2,409;
1981 - $46,763; 1982 - $6,617; 1984 - $24,483;
1985 - $21,824; 1987 - $44,821; 1988 - $61,463; 1991 - $34,227; 1992 -
$47,824; 1993 - $82,669; 1994 - $140,115; 1995 - $22,134 : Total $557,680.
If you had invested $2,000 the first year and $166.66 per month thereafter,
your total value would be $1,015,216!
* The results shown in the chart should not be considered representative
of the dividend income or capital gain or loss which may be realized from
an investment made in American Growth Fund today.
PAGE
<PAGE>
INDIVIDUAL RETIREMENT ACCOUNT (IRA)
for investing in shares of American Growth Fund, Inc.
Highlights
Eligibility
If you are an employed person and under the age of 701/2,
you may set up an Individual Retirement Account.
Contributions
You may contribute $2,000.00 ($2,250.00 for a spousal
IRA) or 100% of your compensation, whichever is less, and
take a full tax deduction if you meet either of the following
conditions:
1. You, or, if you file a joint return, you and your spouse, do
not actively participate in certain employer maintained
retirement plans;
2. You, or you and your spouse, actively participate in certain
employer maintained retirement plans, but your adjusted gross
income is $25,000.00 or less if you are single, $10,000.00 or
less if you are married and file a separate tax return or
$40,000.00 or less if you are married and file a joint tax return.
If you participate in an employer maintained retirement
plan, you may still contribute to an IRA. A limited tax
deduction is available to you if (i) you are single and your
adjusted gross income falls between $25,000.00 and $35,000.00;
(ii) you are married, you file a separate tax return and your
adjusted gross income falls between $1.00 and $10,000.00; or
(iii) you are married, you file a joint return and your adjusted
gross income falls between $40,000.00 and $50,000.00. If you
are not eligible to make fully deductible contributions, you may
be able to make non-deductible contributions to an IRA up to
the maximum amount allowed.
You should consult with your employer to determine if you
are a participant in your employer's retirement plan or refer to
IRS Form W-2 where your employer should check the "Pension
Plan" box if you are covered.
Contributions to your IRA are not required to be made
every year. Contributions can be made at any time during the
year or by the due date for your tax return for that year, not
including extensions.
Tax Advantages
Contributions to your IRA may be deductible on your
federal income tax return. Even if you are not eligible to
deduct all or part of your IRA contribution, all income earned
in your retirement account is tax deferred until you begin
withdrawals from your account.
Roll-over Contributions
You may use an IRA to preserve the tax-deferred status of
certain distributions from another tax qualified plan if you act
within 60 days after you receive it. The annual contribution
limitation does not apply to such "roll-over" contributions.
PAGE
<PAGE>
Withdrawals
Withdrawals from your IRA are taxed
as ordinary income
except that pursuant to the provisions of the Internal Revenue
Code, a portion of each withdrawal will not be taxed if you
have made designated non-deductible contributions. Nondeduct-
ible contributions are not taxed when distributed to you to the
extent provided by the Internal Revenue Code. You may
withdraw your money in installments or in one lump sum. In
case of death, disability, certain continuous periodic payments
over your life or life expectancy or the joint lives or life
expectancies of you and your spouse or certain payments
pursuant to qualified domestic relations orders, the money in
your IRA becomes available without penalty.
Restrictions
Your IRA account is intended to be
used for your
retirement. The tax advantages provided by participating in this
retirement plan may be offset if you fail to follow certain rules
established by the Internal Revenue Code. You may be
penalized for excess contributions, making withdrawals prior to
age 591/2 (except as noted above), delaying the commencement
of withdrawals beyond age 701/2, getting to much money from
your account, not taking enough money from your account or
using your IRA account in ways that are not permitted.
To Start Your IRA Plan
Complete and sign the "American
Growth Fund, Inc. - IRA
APPLICATION AND AGREEMENT" form. If accounts are
being opened for both you and your spouse or if you are
establishing more than one IRA account, complete separate
applications for each account to be established.
The initial contribution must be
at least $100 or establish a
"pre-authorized check" form for monthly investing.
If you are transferring assets from
another retirement plan,
a transfer of assets form is located in the back of this booklet
for your convenience.
Send the completed application
form, a check made payable
to State Street Bank and Trust Company for the initial con-
tribution and custodian fee and any pre-authorized check and/or
transfer of assets forms to:
State Street Bank and Trust Company
c/o American Growth Fund, Inc.
410 17th Street, Suite 800
Denver, CO 80202
Schedule of Fees
The annual custodian fee is $20 per
account.
PAGE
<PAGE>
Individual Retirement Custodial Account
(Under Section 408(a) of the Internal Revenue Code)
Name of depositor<PAGE>
Date of birth of depositor Identifying number
(see instructions)<PAGE>
Address of depositor Check if Amendment Name of
custodian<PAGE>
Address or principal place of business of custodian The Depositor
whose name appears above is establishing an individual
retirement account under section 408(a) to provide for his
or her
retirement and for the support of his or her beneficiaries after death.
The Custodian named above has given the Depositor the disclosure
statement required under Regulations section 1.408-6.
The Depositor assigned the custodial account
dollars ($ ), the
amount set forth in the attached IRA Application, in cash.
The Depositor and the Custodian make the following agreement:
Agreement
This Agreement entered into as of the date stated on the
attached IRA Application is by and between the Depositor
identified in such Application (hereinafter referred to as
"Depositor") (Depositor's date of birth and social security
number as stated in such Application), presently residing at the
address stated in such Application and State Street Bank and
Trust Company (hereinafter referred to as "Custodian"), having
its principal place of business at 2 Heritage Drive, N. Quincy
MA 02171.
Article I
The Custodian may accept additional cash contributions on
behalf of the Depositor for a tax year of the Depositor. The
total cash contributions are limited to $2,000 for the tax year
unless the contribution is a rollover contribution described in
section 402(c) (but only after December 31, 1992), 403(a)(4),
403(b)(8), 408(d)(3), or an employer contribution to a simplified
employe pension plan as described in section 408(k). Rollover
contributions before January 1, 1993, include rollovers
described in section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4),
403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k).
Article II
The Depositor's interest in the balance in the custodial account
is nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life
insurance contracts, nor may the assets of the custodial account
be commingled with other property except in a common trust
fund or common investment fund (within the meaning of section
408(a)(5)).
2. No part of the custodial funds may be invested in
collectibles (within the meaning of section 408(m)) except as
otherwise permitted by section 408(m)(3) which provides an
exception for certain gold and silver coins and coins issued
under the laws of any state.
Article IV
1. Notwithstanding any provision of this agreement to the
contrary, the distribution of the Depositor's interest in the
custodial account shall be made in accordance with the
following requirements and shall otherwise comply with section
408(a)(6) and Proposed Regulations section 1.408-8, including
the incidental death benefit provisions of Proposed Regulations
section 1.401(a)(9)-2, the provisions of which are incorporated
by reference.
2. Unless otherwise elected by the time distributions are
required to begin to the Depositor under paragraph 3, or to the
surviving spouse under paragraph 4, other than in the case of a
life annuity, life expectancies shall be recalculated annually.
Such election shall be irrevocable as to the Depositor and the
surviving spouse and shall apply to all subsequent years. The
life expectancy of a nonspouse beneficiary may not be
recalculated.
3. The Depositor's entire interest in
the custodial account<PAGE>
must
be, or begin to be, distributed by the Depositor's required
beginning date (April 1 following the calendar year end in
which the Depositor reaches age 701/2). By that date, the
Depositor may elect, in a manner acceptable to the Custodian,
to have the balance in the custodial account distributed in:
(a)A single sum payment.
(b)An annuity contract that
provides equal or substantially
equal monthly, quarterly, or annual payments over the life of
the Depositor.
(c)An annuity contract that
provides equal or substantially
equal monthly, quarterly or annual payments over the joint and
last survivor lives of the Depositor and his or her designated
beneficiary.
(d)Equal or substantially equal
annual payments over a
specified period that may not be longer than the Depositor's life
expectancy.
(e)Equal or substantially equal
annual payments over a
specified period that may not be longer than the joint life and
last survivor expectancy of the Depositor and his or her
designated beneficiary.
4. If the Depositor dies before his
or her entire interest is
distributed to him or her, the entire remaining interest will be
distributed as follows:
(a)If the Depositor dies on or
after distribution of his or
her interest has begun, distribution must continue to be made in
accordance with paragraph 3.
(b)If the Depositor dies before
distribution of his or her
interest has begun, the entire remaining interest will, at the
election of the Depositor or, if the Depositor has not so elected,
at the election of the beneficiary or beneficiaries, either
(i)Be distributed by the December
31 of the year
containing the fifth anniversary of the Depositor's death, or
(ii)Be distributed in equal or
substantially equal
payments over the life or life expectancy of the designated
beneficiary or beneficiaries starting by December 31 of the year
following the year of the Depositor's death. If, however, the
beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the
year in which the Depositor would have turned age 701/2.
(c)Except where distribution in the
form of an annuity
meeting the requirements of section 408(b)(3) and its related
regulations has irrevocably commenced, distributions are treated
as having begun on the Depositor's required beginning date,
even though payments may actually have been made before that
date.
(d)If the Depositor dies before his or her entire interest
has been distributed and if the beneficiary is other than the
surviving spouse, no additional cash contributions or rollover
contributions may be accepted in the account.
5. In the case of distribution over life expectancy in equal or
substantially equal payments, to determine the minimum annual
payment for each year, divide the Depositor's entire interest in
the Custodial account as of the close of business on December
31 of the preceding year by the life expectancy of the Depositor
(or the joint life and last survivor expectancy of the Depositor
and the Depositor's designated beneficiary, or the life
expectancy of the designated beneficiary, whichever applies).
In the case of distributions under paragraph 3, determine the
initial life expectancy (or joint life and last survivor expectancy)
using the attained ages of the Depositor and designated benefi-
<PAGE>
ciary as of their birthdays in the year the Depositor reaches age
701/2. In the case of distribution in accordance with paragraph
4(b)(ii), determine life expectancy using the attained age of the
designated beneficiary as of the beneficiary's birthday in the
year distributions are required to commence.
6. The owner of two or more individual retirement accounts
may use the "alternative method" described in Notice 88-38,
1988-1 C.B. 524, to satisfy the minimum distribution
requirements described above. This method permits an
individual to satisfy these requirements by taking from one
individual retirement account the amount required to satisfy the
requirement for another.
Article V
1. The Depositor agrees to provide the Custodian with
information necessary for the Custodian to prepare any reports
required under section 408(i) and Regulations sections 1.408-5
and 1.408-6.
2. The Custodian agrees to submit reports to the Internal
Revenue Service and the Depositor prescribed by the Internal
Revenue Service.
Article VI
Notwithstanding any other articles which may be added or
incorporated, the provisions of Articles I through III and this
sentence will be controlling. Any additional articles that are not
consistent with section 408(a) and the related regulations will be
invalid.
Article VII
This agreement will be amended from time to time to comply
with the provisions of the Code and related regulations. Other
amendments may be made with the consent of the persons
whose signatures appear below.
Article VIII
1. The amount of each contribution credited to the Depositor's
custodial account shall be applied to purchase full and fractional
shares of American Growth Fund, Inc., ("Fund").
2. All dividends and capital gain distributions received on the
shares held in the Depositor's custodial account shall be
reinvested in such shares which shall be credited to such
account. If any distribution of the Fund may be received at the
election of the shareholder in additional shares or in cash or
other property, the Custodian shall elect to receive it in
additional shares.
3. Sales charges attributable to the acquisition of shares shall
be charged to the account for which such shares are acquired.
4. The Depositor shall have the right, by written notice to the
Custodian, to designate or to change a beneficiary to receive
any benefit to which the Depositor may be entitled in the event
of his/her death prior to the complete distribution of such
benefits. Any such change shall be effective upon receipt by
the Custodian. If no designation of beneficiary has been
received by the Custodian upon the Depositor's death, his/her
beneficiary shall be his/her estate.
5. The Custodian shall forward, or cause to be forwarded, to
the Depositor any mutual fund notices, prospectuses, financial
statements, proxies and proxy soliciting materials relating to
such shares. The Custodian shall not vote any of the shares of
the Fund held in the custodial account except in accordance
with the written instructions of the Depositor.
6. Any income taxes or other taxes of
any kind whatsoever that
may be levied or assessed upon or in respect to the custodial
account, any transfer taxes incurred in connection with the
investment and reinvestment of the assets of the custodial
account, other administrative expenses incurred by the
<PAGE>
Custodian in the performance of its duties including fees for
legal services rendered to the Custodian, and the compensation
to the Custodian that may be agreed upon in writing from time
to time between the Custodian and the Depositor, shall be paid
from the assets of the custodial account and shall, unless
allocable to a specific account, be charged proportionately to the
Depositor's accounts.
7. Whenever the Depositor is
responsible for any direction,
notice, warranty, representation or instruction under this
agreement the Custodian shall be entitled to assume the truth of
any statement made by the Depositor in connection therewith,
and shall have no liability with respect to any action taken in
reliance upon the trust of such statement.
8. This Custodian Agreement shall
terminate upon the
complete distribution of the custodial account to the Depositor
or his/her beneficiaries or to successor individual retirement
accounts or annuities. The Custodian shall have the right to
terminate this custodial account upon thirty (30) days' notice to
the Depositor, or to his/her beneficiaries if the Depositor shall
be dead. In such event, upon expiration of such period, the
Custodian shall distribute the custodial account into such
successor individual retirement accounts and annuities as the
Depositor (or his/her beneficiaries) shall designate, or, in the
absence of such direction, to the Depositor, or, if he/she shall be
dead, to the beneficiaries, as their interests appear.
9. The Custodian may resign at any
time upon thirty (30) days'
notice in writing to the Depositor, and may be removed by the
Depositor or the Fund at any time upon thirty (30) days' notice
in writing to the Custodian. Upon such resignation or removal
the Depositor or the Fund shallappoint a successor Custodian which
shall be a bank (as defined
in Section 408(n) of the Code) or other person who
demonstrates, to the satisfaction of the Secretary of the Treasury
or his/her delegate, that the manner in which he/she will hold
the assets of the custodial account will be consistent with the
requirements of Section 408 of the Code.
10. Upon receipt by the Custodian of written acceptance of
such appointment by the successor Custodian, the Custodian
shall transfer and pay over to such successor the assets of the
custodial account and all records pertaining thereto. The
Custodian is authorized, however, to reserve such sum of money
as it may deem advisable for payment of all of its fees,
compensation, costs and expenses, or for payment of any other
liability constituting a charge on or against the assets of the
custodial account or on or against the Custodian, with any
balance of such reserve remaining after the payment of all such
items to be paid over to the successor Custodian. The successor
Custodian shall hold the assets paid over to it under terms
similar to those of this Agreement that qualify under Section
408 of the Internal Revenue Code.
11. If within sixty (60) days after the Custodian's resignation
or removal, a successor custodian has not been appointed which
has accepted such appointment, the Custodian shall, unless it
elects to terminate the Custodial Agreement pursuant to Section
8 of Article IX, appoint such successor itself.
12. The Custodian is authorized to appoint a transfer agent for
the Fund shares authorized to be held by it here-under.
13. Any notice sent from the Custodian to the Depositor shall
be effective if sent by mail to him/her at his/her last address of
record.
14. This agreement shall be construed, administered and
enforced according to the laws of Colorado.
Your signature on the attached IRA application constitutes your
agreement to the foregoing. Acceptance by the Custodian of
your initial deposit constitutes the Custodian's agreement to the
foregoing.
PAGE
<PAGE>
Depositor's signature Date
Custodian's signature Date
Witness
(Use only if signature of the Depositor or the Custodian is required to
be witnessed)
<PAGE>
General Instructions
(Section references are to the Internal Revenue Code unless
otherwise noted.)
Purpose of Form
Form 5305-A is a model custodial account agreement that meets
the requirements of section 408(a) and has been automatically
approved by the IRS. An individual retirement account (IRA)
is established after the form is fully executed by both the
individual (Depositor) and the Custodian and must be completed
no later than the due date of the individual's income tax return
for the tax year (without regard to extensions). This account
must be created in the United States for the exclusive benefit of
the Depositor or his or her beneficiaries.
Individuals may rely on regulations for the Tax Reform Act
of 1986 to the extent specified in those regulations.
Do not file Form 5305-A with the IRS. Instead, keep it for
your records.
For more information on IRAs, including the required
disclosure you can get from your custodian, get Pub. 590,
Individual Retirement Arrangements (IRAs).
Definitions
Custodian. - The Custodian must be a bank or savings and
loan association, as defined in section 408(n), or any person
who has the approval of the IRS to act as custodian.
Depositor. - The Depositor is the person who establishes the
custodial account.
PAGE
<PAGE>
Identifying Number
The depositor's social security number will serve as the
identification number of his or her IRA. An employer
identification number is required only for an IRA for which a
return is filed to report unrelated business taxable income. An
employer identification number is required for a common fund
created for IRAs.
IRA for Nonworking Spouse
Form 5305-A may be used to establish the IRA custodial
account for a nonworking spouse.
Contributions to an IRA custodial
account for a nonworking
spouse must be made to a separate IRA custodial account
established by the nonworking spouse.
Specific Instructions
Article IV. - Distributions made under this article may be
made in a single sum, periodic payment, or a combination of
both. The distribution option should be reviewed in the year
the Depositor reaches age 701/2 to ensure that the requirements
of section 408(a)(6) have been met.
Article VIII - Article VIII and any that follow it may incor-
porate additional provisions that are agreed upon by the
depositor and custodian to complete the agreement. These may
include, for example, definitions, investment powers, voting
rights, exculpatory provisions, amendment and termination,
removal of custodian, custodian's fees, state law requirements,
beginning date of distributions, accepting only cash, treatment
of excess contributions, prohibited transactions with the
depositor, etc. Use additional pages if necessary and attach
them to this form. DISCLOSURE STATEMENT
The following summary is furnished to you in accordance
with the requirements of Section 219 and 408 of the Internal
Revenue Code ("Code") and regulations thereunder to assist you
in understanding your individual retirement plan account
("IRA").
Revocation
You may cancel your IRA Custodial Agreement and your
IRA application for any reason within seven days of the date
you signed the Custodial Agreement. To cancel within this
seven-day period, merely write a note or a letter which contains
your name and address in it and which says that your IRA
Custodial Agreement is canceled. Mail or deliver your note or
letter to:
State Street Bank and Trust Company
c/o American Growth Fund, Inc.
2 Heritage Drive
N. Quincy, MA 02171
If you mail the note or letter, it is considered received on
the date of the postmark (or the date of registration or
certification if sent by registered or certified mail).
If you do cancel your IRA within the seven-day period after
you signed the Custodial Agreement, your initial contribution
will be refunded to you without cost, charge or decrease of any
kind.
Contributions
Your annual allowable contributions to your IRA must be
in cash or a cash equivalent (like a check) and cannot exceed
the lesser of your earned income for the year or $2,000, except
that no ceiling is placed on rollover contributions, which are
discussed below.
There are two different types of allowable contributions,
one type is a deductible contribution; the other is a designated
non-deductible contribution. Depending on your own personal
situation, your contribution may be entirely deductible, entirely
a designated nondeductible contribution, or a portion of both.
<PAGE>
If you are a participant in a qualified plan, you may not be
eligible to make a fully deductible contribution to your IRA,
depending upon your income and tax filing status. The Code
requires you to determine what portion of your allowable
contribution is deductible and/or nondeductible. You are not
required to inform the Custodian and the Custodian is not
obligated to check whether you are correct or not; however,
there are penalties, discussed later, for overstating the amount
of your deductible and/or nondeductible contributions.
The amount of your deductible IRA
contribution may be
subtracted from your gross income in computing your tax
liability for the year. This is true whether or not you itemize
deductions.
If your deductible IRA contribution
is less than the
maximum allowable contribution you may make a designated
nondeductible contribution of the balance. Or, you may
designate your entire allowable IRA contribution as a
nondeductible contribution, if you so choose. You have the
responsibility of determining and reporting how much you
contributed and what portion of the contributions you made
were deductible and what were designated nondeductible
contributions. Once contributed, the deductible and designated
nondeductible contributions are treated the same, meaning, each
type receives tax free accumulation of income. However, it is
important for you to know how much of your account is made
up of deductible and designated nondeductible contributions in
order to determine the taxable portion of any distributions you
receive. If you make nondeductible contributions to your IRA
account, you are required to report the amount and types of
your contributions to the Internal Revenue Service by filing
Form 8606 with your Federal income tax return. Failure to file
Form 8606 may subject you to a penalty, currently set at $50.
You may be subject to a penalty, currently $100, if you
overstate the amount of your nondeductible contributions.
Because the IRS does not allow
deductions for any contribu-
tions made for the taxable year in which you reach age 701/2 or
any year thereafter, the IRA custodial agreement provides that
no cash contributions may be made to your account for that or
any following taxable year. Rollover contributions, however,
can be made at any time.
Distributions
You must begin to receive
distributions from your IRA
account no later than the April 1st following the calendar year
in which you reach age 701/2 ("the required beginning date").
You reach age 701/2 six months after your 70th birthday. The
taxable portions of distributions from your IRA are treated as
ordinary income regardless of their source. Distributions are
subject to a 10% withholding tax unless you file IRS form W-
4P, Withholding Certificate for Pension and Annuity Payments,
with the Custodian.
If you or your beneficiary do not begin taking distributions
from your IRA account before the required beginning date or if
you or your beneficiary do not make the required minimum
distribution, you or your beneficiary will be liable for an excise
or penalty tax equal to 50% of the amount of the
underdistribution. The amount of underdistribution is the
difference between the minimum amount required to be paid in
the tax year and the amount actually received. For example, if
you are required to receive $1,000 for the taxable year and you
received only $800, then you would be liable for a penalty tax
in the amount of $100 ($1,000 - $800 = $200, $200 x 50% =
$100).
If you die after distributions to you from your IRA have
<PAGE>
started, the remaining amount in your IRA account must be
distributed at least as rapidly as prior to your death. If you had
chosen a method of payment which provides for continued
payments to your designated beneficiary when you die, then
your designated beneficiary, if living at your death, will receive
those payments.
If you die before distribution from your IRA account has
started, your IRA account must be distributed (1) in a lump sum
by December 31 of the year containing the fifth anniversary of
your death or (2) in installment payments to your designated
beneficiary beginning by December 31 of the year following
your death. If your designated beneficiary is your spouse,
commencement of distribution may be deferred until December
31 of the year that you would have reached age 701/2, or your
spouse may elect to treat the account as his or her own IRA.
Prohibited Transactions, Loans
You should be aware that if you or any of your IRA
beneficiaries enter into transactions with your IRA prohibited by
Section 4975(c) of the Code, which generally prescribes
dealings (other than your contributions and permitted
distributions) between you or such beneficiaries and your IRA,
your IRA will lose its tax exemption and you or such
beneficiaries will be required to include in your gross income
for the year of such transaction the market value of the account.
If you borrow from your IRA, that transaction will be
treated as a prohibited transaction under Section 4975(c). If
you use all or any portion of your IRA as security for a loan,
then the portion so used will be treated as a distribution and
must be included in your income for the year it is so used. In
addition, the 10% penalty for premature distributions will be
imposed.
Minimum Withdrawals
You may generally withdraw all or any portion of your IRA
account at any time after you reach age 591/2. Your entire
interest in all of your IRA accounts must begin to be distributed
effective with the calendar year you reach age 701/2, although
the first year required minimum distribution can be delayed
until April 1 of the following calendar year. The amount of the
required minimum distribution must be computed based upon
IRS rules regarding your life expectancy and/or your
beneficiary's life expectancy. If the amount withdrawn is less
than the required minimum distribution, an excise tax equal to
50% of the shortfall will be imposed upon you.
Excess Withdrawals
If the total of all distributions to you from IRAs, qualified
plans and tax-sheltered annuities during a calendar year exceeds
$150,000 (may be indexed for inflation in future years), such
excess is generally subject to a 15% excise tax in addition to
applicable income taxes. This excise tax does not apply to (i)
a post-death distribution, (ii) a distribution to a spouse or former
spouse under a qualified domestic relations order, (iii) the
portion of a distribution attributable to employee contributions
and designated non-deductible contributions, (iv) a distribution
that is properly rolled over to another IRA or, if applicable,
another qualified plan, and (v) a lump sum distribution. A post-
death distribution is subject to a 15% excise tax to the extent
that the total value of the decedent's interests in all qualified
plans and IRAs exceeds a certain level determined under IRS
tables based upon the decedent's age at the time of his or her
death. A lump sum distribution is subject to a separate 15%
excise tax if it exceeds $641,440 in 1990 (indexed for inflation).
Tax Status
All deductible contributions made
to your IRA are
<PAGE>
deductible (unless designated on your tax return as
nondeductible) from gross income for federal income tax
purposes regardless of whether you itemize deductions.
The earnings on your IRA account
are not taxable in the
year they are earned. Distributions from your IRA will be taxed
in the taxable year you receive them. If you withdraw only a
part of your IRA account in a taxable year, only the part
withdrawn will be taxable for that year. Withdrawals from your
IRA will be apportioned between deductible and designated
nondeductible contributions to all of your IRAs and the earnings
thereon. The portion attributable to designated nondeductible
contributions will not be taxable. The balance will be taxed at
ordinary income tax rates. Also, a withdrawal may be subject
to certain penalty taxes as set forth below. The favorable
income tax treatment for certain lump-sum distributions which
is granted by Section 402(e) of the Code does not apply to
distributions from your IRA account. This is true regardless of
the type of distribution you receive from your IRA and
regardless of the source of your contribution to the IRA.
Federal and state income,
inheritance or other taxes may
apply to IRA distributions. You should ask your tax advisor for
more information.
When You May Make Your
Contributions
Except for rollover contributions,
contributions to your IRA
for a taxable year may be made up through the due date (not
including extensions) for that year's federal income tax return.
For example, a calendar year taxpayer must make contributions
no later than April 15 following the year for which the
deduction is to be taken. The taxable year for which the
contribution is made must be designated at the time the
contribution is made. If you do not designate the year for your
contribution, the Custodian will apply your contribution as a
current year contribution.
Tax Penalty On Excess
Contributions
Except for a rollover contribution,
any contribution in
excess of your deductible contribution specified in the above
section entitled Contributions will not be deductible and may
also be subject to an annual 6% excise tax. This excise tax is
not deductible.
You can avoid the excise tax by
withdrawing the excess and
any earnings on it before the due date for filing your federal tax
return for that taxable year. The withdrawn earnings, if any,
must be included in income for the tax year in which the excess
contribution was made. You may also designate any
contributions which are allowable, but not deductible, as
designated nondeductible contributions by the due date of your
tax return. These contributions will not be subject to the 6%
excise tax. The 6% excise tax will also be imposed in each
future year if you do not withdraw the excess or if you do not
eliminate the excess by making reduced contributions for future
years. If you overstate the amount of a designated
nondeductible contribution, you will be subject to a $100
penalty for each overstatement unless you can demonstrate that
the overstatement was due to reasonable cause.
Rollover
Certain distributions from
qualified plans, annuity plans,
Keogh plans, bond purchase plans and other arrangements may
be contributed to your IRA account. This is called a rollover
contribution. The rollover contribution must be made within 60
days after you receive the funds or property in order to be
<PAGE>
contributed to your IRA account. If the rollover is made within
that 60 day period, you will not be taxed on the amount of the
rollover for that taxable year. Taxation of the rollover occurs
only when it is withdrawn from your IRA account and not
rolled over to another IRA account within 60 days. The plan
administrator of your employer sponsored retirement plan is
required to provide you with a written explanation of the
amount of the distribution which is eligible for rollover
treatment.
If your rollover contribution is
property other than cash, you
must sell the property and contribute the cash proceeds to your
IRA account. You may also make rollover contributions from
your IRA account into another IRA and certain types of plans
and annuities.
Because there are limits on the number of rollovers that can
be made in one year, and because in certain situations it may
not be to your tax advantage to make a rollover contribution to
a particular IRA or other allowable arrangement, you should
consult with your tax advisor before making any type of
rollover contribution to or from your IRA account.
If you ever intend to return to an employer-sponsored
retirement plan, the proceeds from the existing plan which is
being rolled over into an IRA Rollover account should not be
commingled with voluntary IRA contributions. In order to keep
such funds separate, two accounts should be established, one for
the IRA rollover funds and one for the voluntary contributions.
The combination of voluntary contributions and rollover
contributions which originated from a "qualified plan"
distribution would prohibit the future rollover of the funds of
the IRA into another qualified plan and thereby result in the
permanent loss of special forward income averaging and other
advantages of qualified plans for such funds. If after
understanding this, you still wish to combine rollover and
voluntary funds into one account, you can establish the Regular
IRA on the Application and Agreement and make all
contributions to one account.
Tax Penalties On Early Withdrawals
Because IRAs are intended to be used for income during
retirement years, early withdrawal or premature distribution of
money from your IRA account is subject to a federal penalty
tax as well as applicable income tax. If you receive a payment
from your IRA account, borrow funds or otherwise use the
funds as collateral for a loan before you reach age 591/2 or
become disabled, the entire payment or amount borrowed or
pledged will be considered a premature distribution. The
penalty tax is 10% of the amount withdrawn, borrowed or
pledged. The amount will also be included in your gross
income for the tax year in which it is withdrawn, borrowed or
pledged. There is no penalty tax if a withdrawal is made (a)
after reaching age 591/2, or (b) because of death or disability at
any age, or (c) pursuant to a qualified domestic relations order,
or (d) as part of a series of substantially equal periodic
payments (at least annually) over your life or the joint lives of
you and your beneficiary. Also, withdrawals made before the
due date of your tax return to correct an excess contribution or
to correct an excess rollover contribution which was caused by
erroneous tax information supplied by your employer on which
you reasonably relied are not subject to the penalty tax. Finally,
withdrawals rolled over to another IRA or qualified retirement
plan (subject to the requirements as set forth above) are not
subject to the penalty tax and may be excluded from gross
income.
<PAGE>
Under the IRA agreement, you must advise us of your
intended use of a withdrawal if the withdrawal is made prior to
death, disability or age 591/2.
Beneficiaries
A "Designation of Beneficiaries" form is included in this
booklet where you may choose your beneficiary or beneficiaries
and choose the type of distribution your beneficiaries will
receive if you die. If you want to change that designation, you
may do so at any time by notifying the Custodian either in
writing or by submitting a new form. Any change in
beneficiary will be effective upon receipt by the Custodian and
will cancel all your prior designations of beneficiary.
The last designation of beneficiary which is filed with us
during your lifetime will be the controlling designation at death.
If you do not designate a beneficiary, your IRA will go to your
estate.
Tax Reporting
Allowable deductions for your IRA contributions are
reported on your regular Form 1040 tax return every year.
However, if you owe penalty taxes for excess contributions,
early withdrawals or failure to take minimum distributions, you
must also file Form 5329.
If you made a designated nondeductible contribution to
your IRA or if you received a distribution from your IRA, you
are required to file Form 8606 with your federal income tax
return for the year in which the designated nondeductible
contribution was made or the distribution was received.
The information you supply must
include:
1.the amount of your designated
nondeductible
contribution the year;
2.the amount of any distributions
you received from
your IRA during the year;
3.the excess, if any, of the
aggregate amount of desig-
nated nondeductible contributions for all preceding taxable years
over the aggregate amount of distributions from all your IRAs
which were excludable from your gross income for the taxable
year;
4.the total balance of all your
IRAs as of the close of
the calendar year with or within which your taxable year ends;
and
5.such other information as the
Secretary of the
Treasury may require.
For more information about tax
filing requirements or
general information about IRAs, contact any IRS District Office
and/or your tax advisor.
IRS Approval
If you establish your IRA Account
using IRS Form 5305-A
contained in this material, you should know that this form
(excluding Article IX) has been approved by the Internal
Revenue Service. Such approval applies only to the form of the
account and not to the merits of the investment.
Financial Information
As more fully discussed in the
American Growth Fund, Inc.
("Fund") prospectus (the "Prospectus") furnished to you, the
value of your IRA will increase or decrease by changes in the
net asset value of the Fund, computed as of each business day.
The growth in the value of the account is neither guaranteed nor
projected. For a detailed explanation of calculation of net asset
value, see "Calculation of Net Asset Value" in the Prospectus.
Your IRA may also grow through your pro rata share of the
Fund's income from its investments and capital gains from the
sale of securities by the Fund. See "Dividends, Distributions
and Tax Status" in the Prospectus for a detailed explanation.
<PAGE> The Fund pays its investment
advisor an annual fee for
managing its investment of 1% of the Fund's average net assets
for the first $30,000,000 of such assets and 3/4% for the balance.
The Fund also pays its own expenses subject to the limitations
set by the securities laws in effect from time to time in the
states in which the Fund's securities are registered for sale or
are exempt from registration and are offered for sale. The
management believes that the current limitation on expenses
payable by the Fund would result from application of the most
restrictive state laws in an amount equal to two and one-half
percent of the first $30 million of the Fund's average net assets,
two percent of the next $70 million and one and one-half
percent of the remaining net assets. State laws governing the
limitation on expenses may change from time to time, and
management of the Fund will comply with the most restrictive
state law. Any expense of the Fund over this limitation (except
certain excluded expenses) are paid by the Fund's investment
advisor. See "Investment Adviser Agreement" in the Statement
of Additional Information. The sales price for Fund shares
includes a sales charge of no more than 53/4% of the offering
price of the selling dealer and the Fund's underwriter. The
sales charge and amounts which may be paid to dealers vary
with the amount of the investment. See "Purchase of Shares"
in the Prospectus for a detailed explanation.
The Custodian charges each IRA
account an annual fee in
the amount of $20.00 to service and maintain your account. An
annual Custodian fee will be charged for any year or portion of
any year during which you have an account with the Fund.
You may, if you desire, pay this annual fee in advance if you
remit a check in the amount of $20.00 per account made
payable to State Street Bank and Trust Company and send it to
State Street Bank and Trust Company, c/o American Growth
Fund Sponsors, Inc., 410 17th Street, Suite 800, Denver, CO
80202-4418 by December 1 of each calendar year. Please note
on your check your IRA account number and that this is for the
Custodian Fee. If you do not pay this fee in advance by
December 1 of each calendar year, this $20.00 fee will be
deducted from your IRA account. If this fee is deducted from
your IRA account, you may not add additional funds to your
IRA account to reimburse your IRA account for the fee. If you
pay your fee in advance with a separate check, you may be able
to deduct the fee if you itemize your deductions on your federal
income tax return. Please contact your tax advisor regarding
the tax consequences for your personal situation.
The Fund's average annual total return is a percentage
expressed in terms of the average annual compounded rate of
return of a hypothetical investment of $1,000 in the Fund over
periods of 1, 5 and 10 years, will reflect the deduction for the
sales charge imposed upon an initial investment in the Fund and
the deduction of a proportional share of Fund expenses (on an
annual basis) and will assume that all dividends and
distributions are reinvested when paid. If such charges were
excluded from the total return figures, the total return figures
would be greater than depicted.
In addition to the standardized calculation of annual total
return, the Fund may use other methods of calculating its
performance. These calculations may be expressed in terms of
the total return as well as the average annual compounded rate
of return of a hypothetical investment in the Fund over varying
periods of time in addition to 1, 5 and 10 years up to the life of
the Fund and may reflect the deduction of the appropriate sales
charge imposed upon an initial investment of more than $1,000
in the Fund. These performance calculations will reflect the
deduction of a proportional share of Fund expenses (on an
<PAGE>
annual basis), will assume that all dividends and distributions
are reinvested when paid, may include periodic investments or
withdrawals from the account and may include deductions for
an annual custodian fee. The Fund may calculate its total return
or other performance information prior to the deduction of a
sales charge. See "Performance Information" in the Prospectus
for more information.
Miscellaneous
Your interest in your IRA must be and is nonforfeitable.
Your IRA custodian is State Street Bank and Trust
Company and must continue to be a bank or other qualified
trustee.
No part of your IRA may be commingled with other funds
or invested in life insurance contracts. Your IRA custody
agreement provides for investment solely in shares of American
Growth Fund, Inc. which will be held in the name of your IRA
or the bank as custodian for your IRA.
Further information as to your IRA can be obtained from
any District Office of the Internal Revenue Service.
Please Note: This booklet was prepared in accordance with
the IRS Code in effect at the time the booklet was printed; it is
suggested, therefore, that the Participant obtain Internal
Revenue Service Publication 590 or consult with a competent
tax advisor for changes in the Code which may effect his or her
retirement plan.
<PAGE>
<PAGE>
AMERICAN GROWTH FUND, INC.
IRA Application and Agreement
The Disclosure Statement and the Prospectus contain additional information
you should know before you establish your account. Please read these
documents carefully before you
establish your account. Please complete a separate IRA Application form for
each account to be established.
NAME AND ADDRESS OF IRA PARTICIPANT:
First Middle Initial Last Name
Address Home Phone ()
Work Phone ()
City State Zip
Social Security Number Birthdate
INITIAL INVESTMENT
The Depositor has deposited with the Custodian the following amount for
investment in American Growth Fund, Inc.
The initial contribution must be at least $100.00 or establish a
"pre-authorized check" form for monthly investing:$
The Custodian charges an annual fee in the amount of $20.00. You may, if
you desire, pay this fee in advance when
you establish your account. If you do not pay this fee in advance, the fee
will be deducted from your account.$20.00
Total amount remitted: (Make check payable to State Street Bank and
Trust Company.)$
I, being of legal age, wish to purchase: (choose one)
____________ Class A shares ____________ Class B shares ____________
Class C shares ____________ Class D shares
of American Growth Fund and establish an Investment Account as described
in the Prospectus. In the event that I am not eligible to purchase Class
D shares, I understand
that Class A shares will be purchased.
TYPE OF ACCOUNT:
The proceeds are to be applied as follows.
[ ] A Regular IRAAmount of Contribution $ For Contribution Year
.
Unless you tell the Custodian which year your contribution
is for, we will assume your contribution is for the current taxable year.
$ $
(deductible) (non-deductible)
These amounts are for your reference only. It is the
responsibility of the Participant to determine the
deductible/non-deductible amount. The Custodian
is not responsible for such reporting to the Internal
Revenue Service.
[ ] A Rollover IRAFor a distribution from a qualified plan. If you ever
intend to return to an employer-sponsored plan, the proceeds should not be
commingled with
voluntary contributions. For your records only, you may
record the source of your rollover funds here:.
You may establish both a Regular IRA account and a separate
Rollover IRA account if you want to keep rollover amounts separate from
voluntary
contributions. Please complete a separate application form
for each account.
[ ] A Transfer IRAPlease indicate which type of IRA transfer you are
making.
[ ] Direct TransferIf you are transferring an IRA to American Growth
Fund, Inc. directly from another custodian or trustee, please complete this
application and a Transfer
of Assets form. (Also contained in this booklet.)
[ ] 60-Day RolloverIf you have taken receipt of funds from an IRA at
another institution and are enclosing a check for these funds.
List amount $ .
[ ] A Spousal IRAAmount of Contribution $ For Contribution Year
.
Unless you tell the Custodian which year your contribution
is for, we will assume your contribution is for the current taxable year.
$ $
(deductible) (non-deductible)
A spouse with earned income under $250 may contribute to
a spousal IRA. (Combined amount may not exceed $2,250 to Participant's IRA
and the
<PAGE> spousal IRA nor exceed $2,000 to any one account.)
[ ] A SEP IRA Your Employer must adopt a SEP IRA (a Simplified Employee
Pension - Individual Retirement Account) in order to have this type of
account.
Please provide us with the following information about your employer who
adopted American Growth Fund, Inc.'s SEP-IRA Plan.
Name of Employer:
Employer Address:
Employer Telephone:
City State Zip
If you have any questions regarding the tax consequences of a rollover,
please consult your tax advisor.
ACCOUNT OPTIONS:
[ ] RIGHTS OF ACCUMULATIONReduced sales charge is based on cumulative
dollar amount held in currently existing account(s) in accordance with the
Prospectus. If you
or "any person" as that term is defined in the Fund's
currently effective prospectus hold shares in Fund accounts, please list
these existing
account numbers here:
1. 2.
3. 4.
[ ] PRE-AUTHORIZED DRAFTPlease complete application form for periodic
investments contained in this booklet.
SIGNATURE:
By signing this application establishing the IRA, the Depositor (1)
appoints State Street Bank and Trust Company, or its successors, as
Custodian of the account, (2) states that he
or she has received, read, accepts and specifically incorporates the
Custodial Agreement and Disclosure Statement by reference into this
application, (3) acknowledges receipt of the
current prospectus of the investment company, (4) consents to the
Custodian's fee as specified in the Custodial Agreement, (5) agrees to
promptly give instructions to the Custodian
necessary to enable the Custodian to carry out its duties under the
Custodial Agreement and (6) represents that whenever information as to any
taxable year is required to be filed
by the individual, the individual will file such information with the
Internal Revenue Service.
By signing below, I certify that I am of legal age and certify under
penalties of perjury (1) that the Social Security Number provided is
correct and (2) that the IRS has never notified
me that I am subject to 20% backup withholding, or has notified me that I
am no longer subject to such backup withholding. (Note: if part (2) of this
sentence is not true in your case,
please strike out that part before signing.)
X Date
DEALER AND REPRESENTATIVE INFORMATION:
Dealer Name
Registered Representative Number
Branch Office Telephone
Address
City State Zip
Authorized Signature
<PAGE>
<PAGE>
AMERICAN GROWTH FUND, INC.
Automatic Investment Plan
State Street Bank and Trust Company
c/o American Growth Fund, Inc.
410 17th Street, Suite 800
Denver, CO 80202
Gentlemen:
I/We hereby request that State Street Bank and Trust Company collect
deposits of funds by drawing checks to the order of American Growth Fund
Sponsors, Inc. on our checking
account. The checks will be drawn on or about the due date of each deposit.
The canceled checks will constitute receipts for such deposits. This Plan
may be discontinued by
American Growth Fund Sponsors, Inc. without prior notice if any check is
not paid upon presentation or for any reason, upon thirty (30) day's
written notice prior to any deposit
day or at any time by the shareholder by written notice to American Growth
Fund Sponsors, Inc. which is received at least fifteen (15) business days
prior to the due date of
any deposit. American Growth Fund Sponsors, Inc. will be under no
obligation to notify the shareholder as to the non-payment of any check.
This Plan will not be construed
as a modification of any of the provisions of the Investment Plan Agreement
entered into with American Growth Fund Sponsors, Inc.
Beginning
, 19 , draw a [ ] monthly or [ ] quarterly check in the amount
of $
on the [ ] fifth day or [ ] 20th day of the month
and invest that amount in my American Growth Fund, Inc. account number
registered as
follows:
.
Please complete the Pre-authorized check request found on the back of this
page and attach a voided sample of your check so that we may establish this
option with your bank.
SIGNATURE X DATE
SIGNATURE X DATE
<PAGE>
<PAGE> AMERICAN GROWTH FUND, INC.
Designation of Beneficiary Form
Name and Address of IRA Custodial Account Participant
Participant's Name
First NameMiddle Initial Last Name
Address
City State
Zip Code
Home Phone ( ) Work Phone ( )
Social Security No. Date of Birth
[ ] Please check here if this is a change of beneficiary or beneficiaries
currently listed on your account with the Fund and provide your IRA
custodial account number
.
DESIGNATION OF BENEFICIARY
If no beneficiary is designated for your IRA custodial account, your estate
will be your beneficiary.
I hereby designate the following person or persons as beneficiary or
beneficiaries to receive any amount which becomes distributable from my IRA
custodial account by reason
of my death.
Name of Primary Beneficiary Relationship
Share (%)
1. |
2. |
3. |
FOR CONTINGENT BENEFICIARIES, YOU MAY CHOOSE ONE OF THE BELOW:
[ ] If any beneficiary named above does not survive me, I hereby
designate the survivor(s) of the above-named beneficiary to receive such
amount in the relative
proportions shown under the column entitled "Share."
[ ] If any beneficiary named above does not survive me, I hereby
designate the following person or persons as contingent beneficiaries to
receive such amount:
Contingent Beneficiaries Relationship
Share (%)
1. |
2. |
3. |
If more than one beneficiary is named, the amount distributed under the
retirement plan to the beneficiaries will be divided equally between them
unless otherwise indicated
under the column entitled "Share." In the event of the death of all
designated beneficiaries, the amount distributed will become the property
of the Participant's estate.
If additional space is needed, please attach a separate sheet of paper
listing the designated beneficiaries and/or contingent beneficiaries.
PARTICIPANT'S SIGNATURE
X Date
PLEASE CONSULT WITH YOUR PROFESSIONAL ADVISORS REGARDING COMPLETION OF
THESE FORMS.
<PAGE>
(Rev 1/94)<PAGE>
AMERICAN GROWTH FUND, INC.
Pre-Authorized Check Request
TO: Date:
Name of Bank
Address
City State
Zip
Please honor pre-authorized checks drawn on the account of the undersigned
by American Growth Fund Sponsors, Inc., 410 17th Street, Suite 800, Denver,
CO 80202, to its
own order and charge them to the checking account of the undersigned.
Authority to do so shall continue until written notice is received by the
bank from the undersigned
revoking it, and the bank may terminate its participation in this
arrangement by written notice to American Growth Fund Sponsors, Inc. and
to the undersigned. The undersigned
agrees that the bank's right with respect to each pre-authorized check
shall be the same as if it were a check drawn and signed by the
undersigned. The undersigned further
agrees that should any check be dishonored, with or without cause,
intentionally or inadvertently, the bank shall be under no liability
whatsoever.
Bank account number Signature on bank account
If two signatures are on bank
account,
then both parties must sign.
INDEMNIFICATION AGREEMENT
In consideration of your compliance with the request and authorization of
the depositor American Growth Fund Sponsors, Inc. agrees:
1. To indemnify and hold you harmless from any loss you may suffer as a
consequence of your actions resulting from or in connection with the
execution and issuance
of any check, draft or order, whether or not genuine, purporting to
be executed and received by you in the regular course of business under the
pre-authorized check
arrangement of American Growth Fund Sponsors, Inc., including any
costs or expenses reasonably incurred in connection therewith.
2. In the event that any such check, draft or order shall be dishonored
whether with or without cause, and whether intentionally or inadvertently,
to indemnify you for
any loss, even though dishonor results in a failure to invest under
the American Growth Fund, Inc. Investment Plan.
3. To defend at our cost and expense any action which might be brought
by any depositor or any other persons because of your actions taken
pursuant to the foregoing
requests, or in any manner arising by reason of your participation in
the foregoing plan.
4. Your participation in the plan or that of the depositor may be
terminated by written notice from either party to the other. Likewise, your
participation and that of
American Growth Fund Sponsors, Inc. may be terminated by thirty days'
written notice from either party to the other.
/s/AMERICAN GROWTH FUND
SPONSORS, INC.
Authorized in a resolution adopted by the Board of Directors of American
Growth Fund Sponsors, Inc.<PAGE>
<PAGE> AMERICAN GROWTH FUND, INC.
Authorization to Transfer Assets
Date:
CURRENT INVESTMENT
Current Trustee or
Custodian:
Address:
Fund(s) Invested In:
Current Account Number: <PAGE>
<PAGE>
INVESTOR
Name:
Address:
Social Security Number:
American Growth Fund, Inc.
Account Number:
TO THE ABOVE-NAMED TRUSTEE OR CUSTODIAN:
You act as the custodian or trustee for the retirement plan listed
above. I hereby authorize and direct you to transfer the assets in said
account as indicated below, within 30
days of the above date, to the Custodian of my retirement plan account,
State Street Bank and Trust Company. Please send a copy of this letter with
your transmittal of funds
to:
State Street Bank and Trust Company
c/o American Growth Fund, Inc.
410 17th Street, Suite 800
Denver, CO 80202
TRANSFER INSTRUCTIONS (Check One)
[ ]Convert to cash immediately (all
or $ amount) of my assets and forward a check for the proceeds to State
Street Bank and Trust Company.
[ ]Convert to cash at maturity (all
or $ amount) of my assets and forward a check for the proceeds to State
Street Bank and Trust Company.
Maturity Date . Note: Maturity
date must be within four (4) weeks of this request.
[ ]Cash surrender the enclosed annuity contract(s) and forward the
proceeds to State Street Bank and Trust Company.
If adding to an existing American Growth Fund Account, please provide
the account number and name of account below:
Please add to account number
Name
State Street Bank and Trust Company has stated its willingness to accept
funds transmitted by you to it as custodian or trustee for reinvestment in
shares of American Growth
Fund, Inc. in accordance with the amended plan by signature of its
authorized officer on the bottom of this letter. Please furnish the
undersigned with a closing statement and
send a copy of such statement to the new custodian.
Please do not have an investment representative contact me. If you have
any questions, please call American Growth Fund, Inc. at 800-525-2406.
Very truly yours,
Individual's Signature (Please sign exactly as your account is registered)
Guaranteed Signature (If required)
PAGE
<PAGE>
Acceptance of transmittal of funds agreed to by State Street
Bank and Trust Company.
By:
Trust Officer(Rev 1/94)<PAGE>
N O T E S<PAGE>
<PAGE>
. . . The Professionally
Managed Choice
Retirement Plan Custodian:
State Street Bank and Trust Company
2 Heritage Drive
N. Quincy, Massachusetts 02171
Principal Underwriter:
American Growth Fund Sponsors, Inc.
410 Seventeenth Street
Suite 800
Denver, Colorado 80202-4418
American Growth Fund, Inc.
410 Seventeenth Street
Suite 800
Denver, Colorado 80202-4418
303-623-6137
800-525-2406
This material must be accompanied or preceded by a current
prospectus.
Revised 02/96
<PAGE>
PLAN OF DISTRIBUTION PURSUANT
TO RULE 12b-1
(CLASS A SHARES)
PLAN OF DISTRIBUTION adopted as of the 29th day of February, 1996, by
American Growth Fund, Inc., a Maryland corporation (the "Fund"), on behalf
of its Class A shares.
W I T N E S S T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company; and
WHEREAS, the Fund from time to time will offer Class A shares of common
stock, par value $.01 per share; and
WHEREAS, the Fund has entered into a Distribution Agreement with American
Growth Fund Sponsors, Inc. (the "Distributor"), pursuant to which the
Distributor acts as the
exclusive distributor and representative of the Fund in the offer and sale
of the Class A shares to the public; and
WHEREAS, the Fund desires to adopt this Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act, pursuant to which the Fund will pay
the Distributor for certain
distribution-related expenses incurred, as well as expenses incurred by it
with respect to shareholder services, relating to holders of Class A
shares of the Fund; and
WHEREAS, the Board of Directors of the Fund (the "Directors") as a whole,
and the Directors who are not interested persons of the Fund and who have
no direct or indirect
financial interest in the operation of this Plan or in any agreement
relating hereto (the "12b-1 Directors"), having determined, in the exercise
of reasonable business judgment
and in light of their fiduciary duties under state law and under Sections
36(a) and (b) of the Act, that there is a reasonable likelihood that this
Plan will benefit the Fund and
its Class A shareholders, have approved this Plan by votes cast in person
at a meeting called for the purpose of voting hereon and on any agreements
related hereto;
NOW THEREFORE, the Fund hereby adopts this Plan on the following terms:
1. Fees; Distribution-Related
Activities; Shareholder Services.
(a)The Fund shall pay the
Distributor a fee under the Plan at the end of each quarter or at
such other intervals as the Directors may determine at the
annual rate of up to 0.30% of average daily net assets attributable to
Class A shares
of the Fund. Of such fee, (i) up to 0.25% of such average
daily net assets may be used to compensate the Distributor and
broker-dealers and
other financial institutions ("Securities Firms") for
shareholder servicing related to distribution of shares of the class (a
"service fee") and (ii)
the balance may be used to compensate the Distributor and
Securities Firms for certain distribution-related activities (a
"distribution fee");
provided, that the sum of any service fee and distribution
fee shall not exceed 0.30% of such average daily net assets.
Notwithstanding the
foregoing, no fee shall be payable hereunder which would
cause the Fund to fail to comply with the requirements of Article III,
Section 26 of
the Rules of Fair Practice of the National Association of
Securities Dealers, Inc.
(b)The distribution fee under
paragraph (a) shall be used to compensate the Distributor and/or
<PAGE>
Securities Firms having agreements with the Distributor for
providing distribution assistance to customers and to pay for the
preparation,
printing and distribution of prospectuses, statements of
additional information and periodic financial reports to persons other than
current
shareholders of the Fund, as well as to pay for the
preparation and distribution of sales literature and pay for other
promotional and distribution
activities.
(c)The service fee payable under
paragraph (a) above shall be used to compensate the
Distributor and/or Securities Firms for providing personal
services such as shareholder liaison services (responding to customer
inquiries and
providing information on their investment) to Fund
shareholders and/or maintaining shareholder accounts.
(d)Payments to Securities Firms
hereunder may take the form of sales commissions or trailer
commissions.
2. Payments to Other Parties. The
Fund hereby authorizes the Distributor to enter into agreements
with Securities Firms to provide compensation to such Securities Firms for
activities and services of the type referred to in Section 1 hereof. The
Distributor may reallocate
all or a portion of its fee to such Securities Firms as compensation for
the above-mentioned activities and services. Such agreements shall provide
that the Securities Firms
shall deliver to the Distributor such information as is reasonably
necessary to permit the Distributor to comply with the reporting
requirements set forth in Section 4 hereof.
3. Related Agreements. All
agreements with any person relating to implementation of this Plan
shall be in writing, and any agreement related to this Plan shall provide:
(a)that such agreement may be
terminated at any time, without payment of any penalty, by vote
of a majority of the 12b-1 Directors, or by vote of a
majority of the outstanding voting securities constituting Class A shares
of the Fund, on
not more than 60 days' written notice to any other party
to the agreement; and
(b)that such agreement shall
terminate automatically in the event of its assignment.
4. Quarterly Reports. The Treasurer
of the Fund shall provide to the Directors and the Directors
shall review, at least quarterly, a written report of the amounts expended
pursuant to this Plan with respect to Class A shares of the Fund and any
related agreement and the
purposes for which such expenditures were made.
5. Term and Termination.
(a)This Plan shall become
effective as of the date hereof, and, unless terminated as herein
provided, shall continue from year to year thereafter, so
long as such continuance is specifically approved at least annually by
votes, cast in
person at a meeting called for the purpose of voting on
such approval, of a majority of both (i) the Directors of the Fund, and
(ii) the 12b-1
Directors.
(b)This Plan may be terminated
at any time by vote of a majority of the 12b-1 Directors or
by vote of a majority of the outstanding voting securities
constituting Class A shares of the Fund.
6. Amendments; Shareholder Voting.
<PAGE>
(a)This Plan may not be amended
to increase materially the maximum expenditures permitted
by Section 1 hereof unless such amendment is approved by
a vote of a majority of the outstanding voting securities constitutes Class
A shares
of the Fund, and no material amendment to this Plan shall
be made unless approved in the manner provided for the annual renewal of
this Plan
in Section 5(a) hereof.
(b)Any shareholder vote under
this paragraph shall also require the vote of any class of shares
of the Fund that converts or is exchanged automatically
into Class A shares of the Fund.
7. Selection and Nomination of
Directors. While this Plan is in effect, the selection and nomination
of those Directors of the Fund who are not interested persons of the Fund
shall be committed to the discretion of such disinterested Directors.
8. Recordkeeping. The Fund shall
preserve copies of this Plan and any related agreement and
all reports made pursuant to Section 4 hereof for a period of not less than
six years from the date of this Plan, any such related agreement or such
reports, as the case may
be, the first two years in an easily accessible place.
9. Definition of Certain Terms. For purposes of this Plan, the terms
"assignment," "interested person," "majority of the outstanding voting
securities" and "principal underwriter"
shall have their respective meanings defined in the Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be
granted to either the Fund
or the Distributor by the Securities and Exchange Commission, or its staff
under the Act.
<PAGE>
PLAN OF DISTRIBUTION PURSUANT
TO RULE 12b-1
(CLASS B SHARES)
PLAN OF DISTRIBUTION adopted as of the 29th day of February, 1996, by
American Growth Fund, Inc., a Maryland corporation (the "Fund"), on behalf
of its Class B shares.
W I T N E S S T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company; and
WHEREAS, the Fund from time to time will offer Class B shares of common
stock, par value $.01 per share; and
WHEREAS, the Fund has entered into a Distribution Agreement with American
Growth Fund Sponsors, Inc. (the "Distributor"), pursuant to which the
Distributor acts as the
exclusive distributor and representative of the Fund in the offer and sale
of the Class B shares to the public; and
WHEREAS, the Fund desires to adopt this Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act, pursuant to which the Fund will pay
the Distributor for certain
distribution-related expenses incurred, as well as expenses incurred by it
with respect to shareholder services, relating to holders of Class B shares
of the Fund; and
WHEREAS, the Board of Directors of the Fund (the "Directors") as a whole,
and the Directors who are not interested persons of the Fund and who have
no direct or indirect
financial interest in the operation of this Plan or in any agreement
relating hereto (the "12b-1 Directors"), having determined, in the exercise
of reasonable business judgment
and in light of their fiduciary duties under state law and under Sections
36(a) and (b) of the Act, that there is a reasonable likelihood that this
Plan will benefit the Fund and
its Class B shareholders, have approved this Plan by votes cast in person
at a meeting called for the purpose of voting hereon and on any agreements
related hereto;
NOW THEREFORE, the Fund hereby adopts this Plan on the following terms:
1. Fees; Distribution-Related
Activities; Shareholders Services.
(a)The Fund shall pay the
Distributor under this Plan at the end of each quarter or at such
other intervals as the Directors may determine (i) a fee
at the annual rate of up to 0.75% of average daily net assets attributable
to Class B
shares of the Fund to compensate the Distributor and
broker-dealers and other financial institutions ("Securities Firms") for
certain distribution-
related activities (a "distribution fee"), and (ii) a fee
at the annual rate of up to 0.25% of such average daily net assets to
compensate the
Distributor and Securities Firms for shareholder servicing
related to distribution of such shares (a "service fee"). Notwithstanding
the foregoing,
no fee shall be payable hereunder which would cause the
Fund to fail to comply with the requirements of Article III, Section 26 of
the Rules
of Fair Practice of the National Association of Securities
Dealers, Inc.
(b)The distribution fee under
paragraph (a) shall be used to compensate the Distributor and/or
Securities Firms having agreements with the Distributor for
providing distribution assistance to customers and to pay for the
preparation,
<PAGE>
printing and distribution of prospectuses, statements of
additional information and periodic financial reports to persons other than
current
shareholders of the Fund, as well as to pay for the
preparation and distribution of sales literature and pay for other
promotional and distribution
activities.
(c)The service fee payable under
paragraph (a) above shall be used to compensate the
Distributor and/or Securities Firms for providing personal
services such as shareholder liaison services (responding to customer
inquiries and
providing information on their investment) to Fund
shareholders and/or maintaining shareholder accounts.
(d)Payments to Securities Firms
hereunder may take the form of sales commissions or trailer
commissions.
2. Payments to Other Parties. The
Fund hereby authorizes the Distributor to enter into agreements
with Securities Firms to provide compensation to such Securities Firms for
activities and services of the type referred to in Section 1 hereof. The
Distributor may reallocate
all or a portion of its fee to such Securities Firms as compensation for
the above-mentioned activities and services. Such agreements shall provide
that the Securities Firms
shall deliver to the Distributor such information as is reasonably
necessary to permit the Distributor to comply with the reporting
requirements set forth in Section 4 hereof.
3. Related Agreements. All
agreements with any person relating to implementation of this Plan
shall be in writing, and any agreement related to this Plan shall provide:
(a)that such agreement may be
terminated at any time, without payment of any penalty, by vote
of a majority of the 12b-1 Directors, or by vote of a
majority of the outstanding voting securities constituting Class B shares
of the Fund, on
not more than 60 days' written notice to any other party
to the agreement; and
(b)that such agreement shall
terminate automatically in the event of its assignment.
4. Quarterly Reports. The Treasurer
of the Fund shall provide to the Directors and the Directors
shall review, at least quarterly, a written report of the amounts expended
pursuant to this Plan with respect to Class B shares of the Fund and any
related agreement and the
purposes for which such expenditures were made.
5. Term and Termination.
(a)This Plan shall become
effective as of the date hereof, and, unless terminated as herein
provided, shall continue from year to year thereafter, so
long as such continuance is specifically approved at least annually by
votes, cast in
person at a meeting called for the purpose of voting on
such approval, of a majority of both (i) the Directors of the Fund, and
(ii) the 12b-1
Directors.
(b)This Plan may be terminated
at any time by vote of a majority of the 12b-1 Directors or
by vote of a majority of the outstanding voting securities
constituting Class B shares of the Fund.
6. Amendments. This Plan may not
be amended to increase materially the maximum expenditures
permitted by Section 1 hereof unless such amendment is approved by a vote
of a majority of the
<PAGE>
outstanding voting securities constituting Class B shares of the Fund, and
no
material amendment to this Plan shall be made unless approved in the manner
provided for the annual renewal of this Plan in Section 5(a) hereof.
7. Selection and Nomination of
Directors. While this Plan is in effect, the selection and nomination
of those Directors of the Fund who are not interested persons of the Fund
shall be committed to the discretion of such disinterested Directors.
8. Recordkeeping. The Fund shall
preserve copies of this Plan and any related agreement and
all reports made pursuant to Section 4 hereof for a period of not less than
six years from the date of this Plan, any such related agreement or such
reports, as the case may
be, the first two years in an easily accessible place.
9. Definition of Certain Terms. For purposes of this Plan, the terms
"assignment," "interested person," "majority of the outstanding voting
securities" and "principal underwriter"
shall have their respective meanings defined in the Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be
granted to either the Fund
or the Distributor by the Securities and Exchange Commission, or its staff
under the Act.
PLAN OF DISTRIBUTION PURSUANT
TO RULE 12b-1
(CLASS C SHARES)
PLAN OF DISTRIBUTION adopted as of the 29th day of February, 1996, by
American Growth Fund, Inc., a Maryland corporation (the "Fund"), on behalf
of its Class C shares.
W I T N E S S T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company; and
WHEREAS, the Fund from time to time will offer Class C shares of common
stock, par value $.01 per share; and
WHEREAS, the Fund has entered into a Distribution Agreement with American
Growth Fund Sponsors, Inc. (the "Distributor"), pursuant to which the
Distributor acts as the
exclusive distributor and representative of the Fund in the offer and sale
of the Class C shares to the public; and
WHEREAS, the Fund desires to adopt this Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act, pursuant to which the Fund will pay
the Distributor for certain
distribution-related expenses incurred, as well as expenses incurred by it
with respect to shareholder services, relating to holders of Class C shares
of the Fund; and
WHEREAS, the Board of Directors of the Fund (the "Directors") as a whole,
and the Directors who are not interested persons of the Fund and who have
no direct or indirect
financial interest in the operation of this Plan or in any agreement
relating hereto (the "12b-1 Directors"), having determined, in the exercise
of reasonable business judgment
and in light of their fiduciary duties under state law and under Sections
36(a) and (b) of the Act, that there is a reasonable likelihood that this
Plan will benefit the Fund and
its Class C shareholders, have approved this Plan by votes cast in person
at a meeting called for the purpose of voting hereon and on any agreements
related hereto;
NOW THEREFORE, the Fund hereby adopts this Plan on the following terms:
1. Fees; Distribution-Related
Activities; Shareholders Services.
(a)The Fund shall pay the
Distributor under this Plan at the end of each quarter or at such
other intervals as the Directors may determine (i) a fee
at the annual rate of up to 0.75% of average daily net assets attributable
to Class C
shares of the Fund to compensate the Distributor and
broker-dealers and other financial institutions ("Securities Firms") for
certain distribution-
related activities (a "distribution fee"), and (ii) a fee
at the annual rate of up to 0.25% of such average daily net assets to
compensate the
Distributor and Securities Firms for shareholder servicing
related to distribution of such shares (a "service fee"). Notwithstanding
the foregoing,
no fee shall be payable hereunder which would cause the
Fund to fail to comply with the requirements of Article III, Section 26 of
the Rules
of Fair Practice of the National Association of Securities
Dealers, Inc.
(b)The distribution fee under
paragraph (a) shall be used to compensate the Distributor and/or
Securities Firms having agreements with the Distributor for
providing distribution assistance to customers and to pay for the
preparation,
printing and distribution of prospectuses, statements of
additional information and periodic financial reports to persons other than
current
shareholders of the Fund, as well as to pay for the
preparation and distribution of sales literature and pay for other
promotional and distribution
activities.
(c)The service fee payable under
paragraph (a) above shall be used to compensate the
Distributor and/or Securities Firms for providing personal
services such as shareholder liaison services (responding to customer
inquiries and
providing information on their investment) to Fund
shareholders and/or maintaining shareholder accounts.
(d)Payments to Securities Firms
hereunder may take the form of sales commissions or trailer
commissions.
2. Payments to Other Parties. The
Fund hereby authorizes the Distributor to enter into agreements
with Securities Firms to provide compensation to such Securities Firms for
activities and services of the type referred to in Section 1 hereof. The
Distributor may reallocate
all or a portion of its fee to such Securities Firms as compensation for
the above-mentioned activities and services. Such agreements shall provide
that the Securities Firms
shall deliver to the Distributor such information as is reasonably
necessary to permit the Distributor to comply with the reporting
requirements set forth in Section 4 hereof.
3. Related Agreements. All
agreements with any person relating to implementation of this Plan
shall be in writing, and any agreement related to this Plan shall provide:
(a)that such agreement may be
terminated at any time, without payment of any penalty, by vote
of a majority of the 12b-1 Directors, or by vote of a
majority of the outstanding voting securities constituting Class C shares
of the Fund, on
not more than 60 days' written notice to any other party
to the agreement; and
(b)that such agreement shall
terminate automatically in the event of its assignment.
4. Quarterly Reports. The Treasurer
of the Fund shall provide to the Directors and the Directors
shall review, at least quarterly, a written report of the amounts expended
pursuant to this Plan with respect to Class C shares of the Fund and any
related agreement and the
purposes for which such expenditures were made.
5. Term and Termination.
(a)This Plan shall become
effective as of the date hereof, and, unless terminated as herein
provided, shall continue from year to year thereafter, so
long as such continuance is specifically approved at least annually by
votes, cast in
person at a meeting called for the purpose of voting on
such approval, of a majority of both (i) the Directors of the Fund, and
(ii) the 12b-1
Directors.
(b)This Plan may be terminated
at any time by vote of a majority of the 12b-1 Directors or
by vote of a majority of the outstanding voting securities
constituting Class C shares of the Fund.
6. Amendments. This Plan may not
be amended to increase materially the maximum expenditures
permitted by Section 1 hereof unless such amendment is approved by a vote
of a majority of the outstanding voting securities constituting Class C
shares of the Fund, and no
material amendment to this Plan shall be made unless approved in the manner
provided for the annual renewal of this Plan in Section 5(a) hereof.
7. Selection and Nomination of
Directors. While this Plan is in effect, the selection and nomination
of those Directors of the Fund who are not interested persons of the Fund
shall be committed to the discretion of such disinterested Directors.
8. Recordkeeping. The Fund shall
preserve copies of this Plan and any related agreement and
all reports made pursuant to Section 4 hereof for a period of not less than
six years from the date of this Plan, any such related agreement or such
reports, as the case may
be, the first two years in an easily accessible place.
9. Definition of Certain Terms. For purposes of this Plan, the terms
"assignment," "interested person," "majority of the outstanding voting
securities" and "principal underwriter"
shall have their respective meanings defined in the Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be
granted to either the Fund
or the Distributor by the Securities and Exchange Commission, or its staff
under the Act.<PAGE>
<PAGE>
<PAGE>
AMERICAN GROWTH FUND, INC.
PLAN PURSUANT TO RULE 18f-3
American Growth Fund, Inc. (the Fund), by its board of Directors,
including by a majority of the Funds Directors who are not interested
persons of the Fund (the independent
Directors), hereby adopts this plan (the Plan) pursuant to Rule 18f-3
under the Investment Company Act of 1940 (the 1940 Act). This Plan sets
forth the separate
arrangements and expense allocation of each class of shares of the Fund.
CLASS CHARACTERISTICS
The Board of Directors of the Fund has designated four classes of shares
of the Fund, to be known as Class A shares, Class B shares, Class C shares
and Class D shares
(collectively, the Classes). The following is a description of the
characteristics of the different Classes:
CLASS A SHARES: Class A shares will be sold to
investors subject to a charge at the time of sale of such shares,
which charge may be reduced or
waived for particular investors, subject to the conditions of
sale described in the Funds then
current Prospectus and Statement of Additional Information
pertaining to Class A shares.
Class A shares may be subject to a contingent deferred sales
charge on redemptions of such
shares under certain conditions as described in the Funds
then current Prospectus and
Statement of Additional Information pertaining to Class A shares.
Class A shares also will be
subject to ongoing distribution fees and service fees pursuant to
Rule 12b-1 under the 1940 Act
(Rule 12b-1 fees), which shall not exceed in the aggregate .30
of 1% per annum of the average
daily net assets attributable to the Class A shares of the
Fund.
CLASS B SHARES: Class B shares will be sold to
investors without any charge at the time of sale of such shares.
Class B shares will be subject
to a contingent deferred sales charge which will be imposed
on certain redemptions of such
shares, which charge may be reduced or waived for particular
investors, subject to the
conditions of redemption described in the Funds then current
Prospectus and Statement of
Additional Information pertaining to Class B shares. Class B
shares also will be subject to
ongoing Rule 12b-1 fees, which shall not exceed in the
aggregate 1% per annum of the
average daily net assets attributable to the Class B shares of
the Fund. Class B shares will
automatically convert to Class A shares approximately seven
years after purchase.
CLASS C SHARES: Class C shares will be sold to
investors without any charge at the time of sale of such shares.
Class C shares will be subject
to a contingent deferred sales charge which will be imposed
on certain redemptions of such
shares, which charge may be reduced or waived for particular
investors, subject to the
conditions of redemption
<PAGE>
described in the Funds then current
Prospectus and Statement of
Additional Information pertaining to Class C shares. Class C
shares also will be subject to
ongoing Rule 12b-1 fees, which shall not exceed in the
aggregate 1% per annum of the
average daily net assets attributable to the Class C shares
of the Fund. Class C shares will
not automatically convert to shares of any other class of the
Fund.
CLASS D SHARES: Class D shares will be sold to
investors subject to a charge at the time of sale of such shares,
which charge may be reduced or
waived for particular investors, subject to the conditions of
sale described in the Funds then
current Prospectus and Statement of Additional Information
pertaining to Class D shares.
Class D shares will not be subject to any ongoing Rule 12b-1
fees.
INCOME AND EXPENSE ALLOCATIONS
Income, any realized and unrealized capital gains and losses, and expenses
not allocated to a particular Class, will be allocated to each Class on the
basis of the net asset value
of that Class in relation to the net asset value of the Fund.
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions paid by the Fund to each Class, to the extent
paid will be paid on the same day and at the same time, and will be
determined in the same manner
and will be in the same amount, except that the amount of the dividends and
other distributions declared and paid by a particular Class may be
different from that paid by
another Class because of any Rule 12b-1 fees and other expenses borne
exclusively by that Class.
CONVERSION FEATURES
Class B shares will automatically convert to Class A shares on at least a
quarterly basis approximately seven years after purchase, except that Class
B shares attributable to
the reinvestment of dividends and distributions will convert to Class A
shares at the same time that the Class B shares to which the such dividends
and distributions were
attributable convert to Class A shares. Conversions will be effected at
relative net asset values of the Class B shares and the Class A shares
without the imposition of any sales
charge or other fee at the time of conversion.
GENERAL
A. Each Class shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its arrangement and shall
have
separate voting rights on any matter submitted to
shareholders in which the interests of one Class differ from the interests
of any other Class.
B. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the 1940 Act and otherwise, will monitor
the Fund for
the existence of any material conflicts among the interests
of the Classes. The Directors, including a majority of the independent
Directors,
shall take such action as is reasonably necessary to
eliminate any such conflicts that may develop. Investment Research
Corporation, Inc., the
Fund's Adviser, will be responsible for reporting any
potential or existing conflicts to the Directors.
C. For purposes of expressing an opinion on the financial
statements of the Fund, the methodology and procedures for calculating the
net asset
<PAGE>
value and dividends/distributions of the Classes and the
proper allocation of income and expenses among the Classes will be examined
annually
by the Fund's independent auditors who, in performing such
examination, shall consider the factors set forth in the relevant auditing
standards
adopted, from time to time, by the American Institute of
Certified Public Accountants.
D. Any material amendment to this Plan is subject to prior
approval of the Funds Board of Directors, including a majority of the
independent
Directors.
Dated: ___________, 1996
<PAGE>
[ARTICLE] 6
[CIK] 0000005138
[NAME] AMERICAN GROWTH FUND, INC.
[SERIES]
[NUMBER] 6
[NAME]
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUL-31-1996
[PERIOD-START] AUG-01-1995
[PERIOD-END] JUL-31-1996
[INVESTMENTS-AT-COST] 71,914,166
[INVESTMENTS-AT-VALUE] 81,350,441
[RECEIVABLES] 18,073,994
[ASSETS-OTHER] 9,281
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 107,816,409
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 64,307
[TOTAL-LIABILITIES] 64,307
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 93,087,660
[SHARES-COMMON-STOCK] 12,178,445
[SHARES-COMMON-PRIOR] 10,342,095
[ACCUMULATED-NII-CURRENT] 86,817
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 5,141,350
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 9,436,275
[NET-ASSETS] 107,752,102
[DIVIDEND-INCOME] 1,664,695
[INTEREST-INCOME] 256,036
[OTHER-INCOME] 0
[EXPENSES-NET] 1,437,016
[NET-INVESTMENT-INCOME] 483,715
[REALIZED-GAINS-CURRENT] 7,083,415
[APPREC-INCREASE-CURRENT] (3,074,255)
[NET-CHANGE-FROM-OPS] 4,492,875
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1,387,812
[DISTRIBUTIONS-OF-GAINS] 2,312,575
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3,421,206
[NUMBER-OF-SHARES-REDEEMED] 1,960,404
[SHARES-REINVESTED] 375,550
[NET-CHANGE-IN-ASSETS] 17,213,798
[ACCUMULATED-NII-PRIOR] 990,914
[ACCUMULATED-GAINS-PRIOR] 370,510
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 866,681
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,729,260
[AVERAGE-NET-ASSETS] 107,681,176
[PER-SHARE-NAV-BEGIN] 8.75
[PER-SHARE-NII] .03
[PER-SHARE-GAIN-APPREC] .39
[PER-SHARE-DIVIDEND] (.12)
[PER-SHARE-DISTRIBUTIONS] (.20)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 8.85
[EXPENSE-RATIO] 1.63
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
