AMERICAN GROWTH FUND, INC.
110 16th Street, Suite 1400, Denver, Colorado 80202
(303) 623-6137
PROSPECTUS
December 1, 1996 as supplemented December 18, 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'), 110 16th Street, Suite 1400, 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.
110 16th Street, Suite 1400, Denver, Colorado 80202
303-623-6137
800-525-2406
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
CLASS A CLASS B
CLASS C CLASS D
<C> <S> <S>
<S> <S>
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% None(b)
years,4% for the next
2 for
years, decreasing 1%
one
annually thereafter to
0.0% year
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
<C> <S> <S> <S>
<S>
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,
<C> <S> <S> <S> <S> <S> <S>
<S> <S> <S> <S>
Per Share
Operating Data: 1996 1995 1994 1993 1992 1991
1990 1989 1988 1987
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 Return1 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%
Expenses2..... 1.63% 1.45% 1.34% 1.44% 1.46% 1.33%
1.33% 1.32% 1.29% 1.28%
Portfolio Turnover
Rate3........ 163.1% 173.0% 87.2% 48.8% 39.8% 135.5%
92.3% 60.9% 241.7% 197.0%
Average Brokerage
Commission Rate4 $0.0561 - - - - -
- - - - -
</TABLE>
See notes to financial statements.
1 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.
2 Beginning fiscal 1996, the expense ratio reflects the effect
of expenses paid indirectly by
the Fund. Prior year expenses have not been adjusted.
3 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.
4 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>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Class A Class B
Class C
Period Ended July 31,
<C> <S> <S>
<S>
Per Share Operating Data: 19965 19965
19965
Net Asset Value,
Beginning of Period...... $9.21 $9.21
$9.21
Income(loss) from
investment operations:
Net investment income.... -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 Return6............. (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)%
Expenses2................. 2.06%6 2.81%6
2.97%6
Portfolio Turnover
Rate3................... 163.1% 163.1%
163.1%
Average Brokerage
Commission Rate4........ $0.0561 $0.0561
$0.0561
</TABLE>
See notes to financial statements.
1 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.
2 Beginning in fiscal 1996, the expense ratio reflects the
effect of expenses paid indirectly
by the Fund.
3 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.
4 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.
5 For the period from March 1, 1996 (inception of offering) to
July 31, 1996.
6 Annualized
7 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.
<PAGE>
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 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.
<PAGE>
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, 110 16th Street, Suite
1400,
Denver, Colorado 80202, a registered investment adviser. Robert
Brody,
the sole shareholder, president and a director of the Adviser, is
a
control person of the Adviser. Mr. Brody, as President of the Fund,
has
primary responsibility for the selection of the Funds investments
and
the day-to-day management of the Funds investment 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 Funds portfolio of securities, and
furnishes
such satistical and analytical information as the Fund may
reasonably
require. Under separate agreements with the Adviser, the Fund makes
payments for the provision of such office space and personnel as
are
necessary to provide administrative and shareholder support
services for
the Fund. See Management of the Fund in the Statement of
Additional
Information.
Pursuant to the Investment Adviser Agreement with the
Adviser, the
Fund pays an annual advisory fee based upon a percentage of the
Funds
average net assets, subject to reduction if the Funds expenses
exceed
specified levels. For the year ended July 31, 1996, this fee
amounted to
0.82% of the Funds 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 funds aggregate expenses for the same period,
including
the cost of office space and personnel provided by the Adviser,
amounted
to 1.63% of the Funds 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
<PAGE>
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'), 110 16th Street, Suite 1400, Denver, Colorado
80202.
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 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
<PAGE>
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 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
<PAGE>
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 September 30, 2005, 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.
<TABLE>
<CAPTION>
SALES CHARGES
Paid to
As % of Dealers
as % As % of
Amount Invested Offering Price Offering
Price Amount Invested
<C> <S>
<S> <S>
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
* 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 redeemed
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
<PAGE>
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
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
<PAGE>
Plans. The Fund also offers an 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 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
<PAGE>
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 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
<PAGE>
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>
<TABLE>
<CAPTION>
CLASS B CDSC AS
A PERCENTAGE OF
YEAR SINCE PAYMENT MADE OR
OTHER DOLLAR
PURCHASE AMOUNT SUBJECT
TO CHARGE
<C>
<S>
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
<PAGE>
redemption proceeds will be charged at a rate of 4.00% (the
applicable
rate in the third year after purchase).
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
<PAGE>
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
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.
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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
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.
<PAGE>
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 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.
<PAGE>
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 return 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>
<CAPTION>
Consumer Price Index American Growth Fund Class D S & P
500
<C> <S> <S>
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>
<PAGE>
<TABLE>
<CAPTION>
Consumer Price Index American Growth Fund Class A
S & P 500
<C> <S> <S>
<S>
03/96 10,000 9,425
10,000
07/96 10,080 9,048
9,932
</TABLE>
<TABLE>
<CAPTION>
Consumer Price Index American Growth Fund Class B S & P
500
<C> <S> <S>
03/96 10,000 10,000
10,000
07/96 10,080 9,077
9,932
</TABLE>
<TABLE>
<CAPTION>
Consumer Price Index American Growth Fund Class C S & P
500
<C> <S> <S>
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 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:
<TABLE>
<CAPTION>
Class D
RELEVANT AVERAGE ANNUALIZED Class A, Class B & Class C
PERIOD TOTAL RETURN Total Return (five months)
- --------- ------------------ --------------------------
<C> <S> <S> <S>
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%
</TABLE>
<PAGE>
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 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:
110 16th Street, Suite 1400
Denver, CO 80202
DISTRIBUTOR
American Growth Fund Sponsors, Inc.
Administrative Offices & Mailing Address:
110 16th Street, Suite 1400
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
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
IN CONNESTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS 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.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<C>
<S>
Fee Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 2
Financial Highlights - Class D . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 3
Financial Highlights - Class A,B & C . . . . . . . . . . . . . . .
. . . . . . . . . . . . 4
Investment Objectives and Policied . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 5
Management of the Fund . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 7
Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 8
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 8
Initial Sales Charge
Alternatives - Class A and Class D Shares . . . . . . . . . . . .
. . . . . . . . . . . .11
Deferred Sales Charge
Alternatives - Class B and Class D Shares . . . . . . . . . . . .
. . . . . . . . . . . .14
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .18
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .19
Reinstatement Privilege
Class A and Class D Shares. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .20
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .20
Dividends and Distributions. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .21
Automated Investment Plan. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .21
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .21
Performance Data . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .23
Calculation of Net Asset Value; General Information. . . . . . . .
. . . . . . . . . . . .26
</TABLE>
<PAGE>
