AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER
10, 1998
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. 53
AND/OR
[x]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 23
[x]
(CHECK APPROPRIATE BOX OR BOXES)
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AMERICAN GROWTH FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
110 16th Street, Suite 1400
Denver, Colorado 80202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (303) 626-0600
Robert Brody
110 16th Street, Suite 1400
Denver, CO 80202
(Name and Address of Agent for Service)
- -------------------
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)
[x] on November 10, 1998 pursuant to
paragraph (b)
[_] 60 days after filing pursuant to
paragraph (a) (1)
[_] on (date) Pursuant to paragraph (a)
(1)
[_] 75 days after filing pursuant to
paragraph (a) (2)
[_] on (date) pursuant to paragraph (a)
(2) of Rule 485
If appropriate, check the following box:
[_] this post-effective amendment
designates a new effective
Date for a previously
filed post-effective amendment.
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, 1998 on September 26, 1998.
<PAGE>
<PAGE>
AMERICAN GROWTH FUND, INC.
110 Sixteenth Street, Suite 1400, Denver, Co 80202
(303) 626-0600
PROSPECTUS
November 10, 1998
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 Sixteenth Street, Suite 1400, Denver, CO 80202,
(303) 626-0600, 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
November 10, 1998 (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 Sixteenth Street, Suite 1400, Denver, Co 80202
303-626-0600
800-525-2406
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
<S>
<C> <C>
<C> <C>
CLASS A CLASS B
CLASS C
CLASS D
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% during
the first 2 1% for one year None(b)
years, 4%
for the next 2
years,
decreasing 1%
annually
thereafter to 1%
in 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.............................................................
...0.81% 0.81%
0.81% 0.81%
Distribution and Service
Fees..........................................................
0.30% 1.00%
1.00% None
Other
Expenses.........................................................
....................... 0.66% 0.71%
0.71%
0.73%
Total Fund Operating
Expenses.......................................................
1.77% 2.52%
2.52% 1.54%
</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>
<S>
<C> <C> <C>
<C>
1 Year 3 Years 5 Years
10 Years
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
$74 $110 $148
$254
Class B
$76 $118 $164
$258*
Class C
$36 $78 $134
$286
Class D
$72 $103 $137
$230
An investor would pay the following expenses on the same $1,000
investment
assuming no redemption at the end of the period:
Class A
$74 $110 $148
$254
Class B
$26 $78 $134
$258*
Class C
$26 $78 $134
$286
Class D
$72 $103 $137
$230
* 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 each of the three
years ended July 31, 1998, 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, 1998 is included in the
Statement of Additional Information. This information for each of
the seven years ended July 31, 1995 has been
audited by the Fund's previous independent auditors.
<TABLE>
<CAPTION>
<S> <C>
<C> <C> <C> <C> <C>
<C> <C> <C> <C>
Class D
Year Ended July 31,
Per Share Operating Data: 1998
1997 1996 1995 1994 1993
1992 1991 1990 1989
Net Asset Value,
beginning of period...... $ 11.33
$ 8.85 $ 8.75 $ 9.34 $ 9.39 $ 8.50
$ 8.02 $ 7.59 $ 7.46 $ 6.71
Income(loss) from
investment operations:
Net investment income.... .074
.174 .034 .21 .03 .11
.10 .16 .17 .38
Net realized and unrealized
gain (loss)............... (.90)
2.82 .39 .88 1.00 1.51
.94 .53 .26 .71
Total income (loss) from
investment operations..... (.83)
2.99 .42 1.09 1.03 1.62
1.04 .69 .43 1.09
Dividends and distributions
to shareholders:
Dividends from net
investment income ....... (.08)5
(.12)5 (.12)5 (.12) (.05) (.08)
(.06) (.26) (.30) (.34)
Distributions from net
realized gain............
(.89) (.39) (.20) (1.56) (1.03)
(.65) (.50) - - -
Total dividends and
distributions to
shareholders............. (.97)
(.51) (.32) (1.68) (1.08) (.73)
(.56) (.26) (.30) (.34)
Net Asset Value,
end of period...........
$9.53 $11.33 $8.85 $8.75 $9.34
$9.39 $8.50 $8.02 $7.59 $7.46
Total Return1.............. (7.4)%
35.1% 4.8% 15.2% 11.1% 20.2%
13.6% 9.6% 5.7% 17.0%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands)...........
$89,364 $115,106 $100,130 $90,538 $68,209
$62,180 $55,501 $55,710 $58,574 $63,935
Ratios to average net
assets:
Net investment income
(loss)................... 0.63%
1.71% 0.47% 1.91% 0.35% 0.59%
1.14% 2.02% 2.01% 5.15%
Expenses2.................
1.54% 1.55% 1.63% 1.45% 1.34%
1.44% 1.46% 1.33% 1.33% 1.32%
Portfolio turnover
rate3.................... 103.5%
106.2% 163.1% 173.0% 87.2% 48.8%
39.8% 135.5% 92.3% 60.9%
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
Class A
Class B
Class C
Year Ended July 31,
<TABLE>
<CAPTION>
<S> <C>
<C> <C> <C> <C>
<C> <C> <C> <C>
Per Share Operating Data:
1998 1997 19961 1998
1997 19961 1998 1997
19961
Net Asset Value,
beginning of period...... $11.30
$8.84 $9.21 $11.19 $8.80
$9.21 $11.19 $8.81 $9.21
Income(loss) from
investment operations:
Net investment income.... .044
.144 -4 (.02)4 .074
(.01)4 (.02)4 .074
-4
Net realized and unrealized
gain (loss)............... (.90)
2.83 (.37) (.90) 2.79
(.40) (.90) 2.79 (.40)
Total income (loss) from
investment operations.....
(.86) 2.97 (.37) (.92)
2.86 (.41) (.92) 2.86
(.40)
Dividends and distributions
to shareholders:
Dividends from net
investment income ....... (.06)5
(.12)5 - (.01)5 (.09)5
- (.01)5 (.09)5 -
Distributions from net
realized gain............ (.89)
(.39) - (.89) (.39)
- (.89) (.39) -
Total dividends and
distributions to
shareholders............. (.95)
(.51) - (.90) (.48)
- (.90) (.48) -
Net Asset Value,
end of period............ $9.49
$11.30 $8.84 $9.37 $11.18
$8.80 $9.37 $11.19 $8.81
Total return2............. (7.6)%
34.6% (4.0)% (8.2)% 33.5%
(4.5)% (8.2)% 33.6% (4.3)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands)........... $14,246
$10,536 $3,838 $15,533 $10,962
$3,417 $4,498 $3,023 $367
Ratios to average net
assets:
Net investment income
(loss)................... 0.42%
1.28% 0.13%6 (0.32)%
0.49% (0.52)%6 (0.31)%
0.55%
(0.63)%6
Expenses3................. 1.77%
1.76% 2.06%6 2.52% 2.46%
2.81%6 2.52% 2.50% 2.97%6
Portfolio turnover
rate4................... 103.5%
106.2% 163.1% 103.5%
106.2% 163.1% 103.5% 106.2%
163.1%
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
American Growth Fund, Inc. (the Fund), 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
or IRC) 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 investing,
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 board of 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
<PAGE>
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.
The management and custodial services provided to the
Fund by the Adviser and the Fund's custodian,
and the services provided to shareholders by the Fund's
distributor, transfer agent, and others, depend on the
continued functioning of their computer systems. Many computer
systems in use today cannot recognize the year
2000, but could revert to 1900 or cease to function due to the
manner in which dates were encoded and are
calculated. That failure could have a negative impact on the
handling of the Fund's securities trades, its share
pricing and its account services. The Fund and its service
providers have been actively working on making
necessary changes to their computer systems to deal with the Year
2000 issue and believe that their systems will
be compliant before January 1, 2000, but there can be no assurance
that they will be successful. Furthermore,
services may be impaired at that time as a result of the
interaction of their systems with noncomplying computer
systems of others. IRC plans to test as many such interactions as
practicable prior to December 31, 1999 and
to develop contingency plans for reasonably anticipated failures.
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 IRC, 110 Sixteenth Street,
Suite 1400, 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 the
Adviser. Mr. Brody, as President of the Fund,
and his assistant Timothy E. Taggart, Executive Vice President and
a director of the advisor, have 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, 1998, this fee amounted to 0.81% of the
Fund's average net assets on each of the
four classes. The Advisory fee paid by the Fund is higher than that
paid by most other investment companies.
The Fund's aggregate
<PAGE>
expenses for the same period amounted to 1.54% of the Fund's
average net assets of the Class D shares, 1.77%
for Class A, 2.52% for Class B and 2.52% for Class C.
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 years 1998 and 1997 was
103.5% and 106.2%, respectively. 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 Sixteenth Street,
Suite 1400, 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 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 American
Growth Fund, Inc. 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 contingent
deferred sales charge (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
<PAGE>
approximately seven years after purchase (see Conversion
Feature--Class B shares').
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 after 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
0.30% distribution 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 September 30,
2005, the Distributor is offering 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 consider purchasing Class
D shares rather than Class A shares because there are distribution
and service plan fees imposed on Class A shares.
<PAGE>
<TABLE>
<CAPTION>
<S>
<C>
<C> <C>
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.
SALES CHARGES PAID
SALES CHARGES AS % TO DEALERS
AS % OF SALES CHARGES AS %
AMOUNT INVESTED
OF OFFERING PRICE OFFERING
PRICE OF AMOUNT INVESTED
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.
**From time to time American Growth Fund Sponsors, Inc. may pay a
finders fee to selling group members not to exceed 1% of the
purchase and
net asset value trades over one million dollars.
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 may pay
from the dealer concession an amount not to
exceed the dealer concession to the Fund to reimburse the
shareholder for any penalties they may incur while
transferring assets from another retirement plan.
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. At its discretion, the
Distributor may also make payments from its revenues to dealers
that arrange purchases of Fund shares in
invested amounts of $1,000,000 and over.
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
<PAGE>
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 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 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.
<PAGE>
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'). 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').
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 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.
<TABLE>
<CAPTION>
The following table sets forth the rates of the Class
B CDSC:
<S>
<C>
CLASS B CDSC AS A PERCENTAGE OF
YEAR SINCE
PAYMENT MADE OR OTHER DOLLAR
<PAGE>
PURCHASE
AMOUNT SUBJECT TO CHARGE
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).
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
<PAGE>
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
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 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
<PAGE>
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 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
<PAGE>
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 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.
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.
<PAGE>
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.
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.
This information is only a summary of certain federal tax
information about your investment. More information
is contained in the Statement of Additional Information, and in
addition you should consult with your tax adviser
about the effect of an investment in the Fund on your particular
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 (or life
of class if less than 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 cumulative 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 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 un-managed 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, 1998. The discussion was
provided by the Adviser.
The Fund's holdings in two major industries during
the twelve months ended July 31, 1998, Commercial
Bank and Computer & Peripherals, increased 22.3% and 19.5%
respectively. The Fund's portfolio within the
Insurance industry had an outstanding year increasing by 90.6%. The
Oil Services Industry in the portfolio saw
a 25% decline in the second quarter due to lower oil prices. The
S&P 500 increased 15.5% during the twelve
months ended July 31, 1998.
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: Average annual total returns at maximum
offering price for the one year ending
7/31/98, -12.9%, -13.2%, -9.2% and -12.7% for Class A, Class B,
Class C and Class D, respectively.
<TABLE>
<CAPTION>
<S> <C>
<C>
<C>
Consumer Price Index
American Growth Fund Class D
S & P 500
07/88
10,000
9,425 10,000
07/89 10,502
11,026
13,192
07/90 11,009
11,653
14,051
07/91 11,340
12,768
15,842
07/92 11,702
14,499
17,869
07/93 12,030
17,417
19,428
07/94 12,331
19,354
20,431
07/95 12,651
22,293
25,765
07/96 13,018
23,368
29,337
07/97 13,305
31,563
41,261
07/98 13,491
29,231
48,441
</TABLE>
<TABLE>
<CAPTION>
<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 10,145
9,058
10,083
07/97 10,220
12,198
14,065
07/98 10,363
11,271
16,512
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<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 10,145
9,566
10,083
07/97 10,220
12,766
14,065
07/98 10,363
11,726
16,512
</TABLE>
<TABLE>
<CAPTION>
<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 10,145
9,566
10,083
07/97 10,220
12,778
14,065
07/98 10,363
11,726
16,512
CHART [Camera Ready Copy to Follow]
</TABLE>
The following table sets forth the Fund's average annualized
total returns at maximum offering price for
the one, five, ten and fifteen year periods ended July 31, 1998 for
the Fund's Class D shares. Returns for the
Fund's Class A, Class B and Class C shares are for the one year and
two years ended July 31, 1998, and period
since inception on March 1, 1996.
<TABLE>
<CAPTION>
<S> <C>
<C> <C>
<C> <C>
Class D
RELEVANT AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
Class A Class B Class C
- ---------------- ------------------------------------
---------
--------- ---------
1 year (12.7)%
One year
(12.9)% (13.2)%
(9.2)%
5 year 9.6%
Two years 8.3%
8.4% 10.8%
10 year 11.3%
Since inception 5.0%
5.2% 6.9%
15 year 9.6%
</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.
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.
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 approximately 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 Sixteenth Street, Suite 1400
Denver, CO 80202
DISTRIBUTOR
American Growth Fund Sponsors, Inc.
Administrative Offices & Mailing Address:
110 Sixteenth 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
<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
BE LAWFULLY
MADE.
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
<S>
<C>
TABLE OF CONTENTS
FEE TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 3
FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 4
INVESTMENT OBJECTIVES AND POLICIES. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 6
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 7
BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 7
PURCHASE OF SHARES. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 8
INITIAL SALES CHARGE ALTERNATIVES--CLASS A AND CLASS D SHARES . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 9
DEFERRED SALES CHARGE ALTERNATIVES--CLASS B AND CLASS C SHARES. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .11
DISTRIBUTION PLANS. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .13
REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .14
REINSTATEMENT PRIVILEGE--CLASS A AND CLASS D SHARES . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .14
EXCHANGE PRIVILEGE. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .15
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .15
AUTOMATED INVESTMENT PLAN . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .15
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .15
PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .16
CALCULATION OF NET ASSET VALUE; GENERAL INFORMATION . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .18
</TABLE>
PROSPECTUS
November 10, 1998
DISTRIBUTOR
AMERICAN GROWTH FUND
SPONSORS, INC.
110 SIXTEENTH STREET, SUITE 1400
DENVER, CO 80202
(800) 525-2406
PAGE
<PAGE>
AMERICAN GROWTH FUND, INC.
110 16th Street, Suite 1400, Denver, Colorado 80202
303-626-0600
STATEMENT OF ADDITIONAL INFORMATION
November 10, 1998
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 November 10, 1998. A copy of the Prospectus may be obtained
by writing American Growth Fund
Sponsors, Inc. (the "Distributor"), 110 16th Street, Suite 1400,
Denver, Colorado 80202.
AMERICAN GROWTH FUND SPONSORS, INC.
110 16th Street, Suite 1400, Denver, Colorado, 80202
303-626-0600
800-525-2406
<TABLE>
<CAPTION>
<S>
<C>
ADDITIONAL INVESTMENT INFORMATION . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-2
AUTOMATIC CASH WITHDRAWAL PLAN. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-7
BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-9
CALCULATION OF NET ASSET VALUE. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-9
CUSTODIAN AND INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-9
DISTRIBUTION OF SHARES. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-5
DISTRIBUTION PLANS. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-8
DIVIDENDS, DISTRIBUTIONS AND TAXES. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .B-10
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .B-20
INDEPENDANT AUDITORS' REPORT. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .B-28
INVESTMENT ADVISORY AGREEMENT . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-4
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-3
PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .B-11
RETIREMENT PLANS. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. B-7
</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. The Fund may purchase
securities of other investment companies in the open market if the
purchase involves only customary brokers' commissions and only if
immediately thereafter (i) no more than 3% of the voting securities
of any one investment company are owned by the Fund, (ii) no more
than 5% of the value of the total assets of the Fund would be
invested in any one investment company, and (iii) no more than 10%
of the value of the total assets of the Fund would be invested
in the securities of such investment companies. Should the Fund
purchase Securities of other investment companies, the Fund's
shareholders may incur additional management and distribution fees.
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. In applying its restrictions on
concentration of investments in any one industry, the Fund uses
industry classifications
based, where applicable, on Bridge Information Systems, Reuters,
the S&P Stock Guide published by Standard & Poor's, the O'Neil
Database published by William O'Neil & Co., Inc., information
obtained from Value Line, Bloomberg L.P. and Moody's International,
and/or the prospectus of the issuing company, and/or other
recognized classification resources. Selection of an appropriate
industry
classification resource will be made by management in the exercise
of its reasonable discretion. 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.
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
<PAGE>
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.
Year 2000 Computer Issue. Many computer systems in
use today cannot recognize the year 2000, but could, unless
corrected,
revert to 1900 or cease to function at that time, due to the manner
in which dates were encoded and are calculated. The markets for
securities in which the Fund invests may be detrimentally affected
by computer failures affecting portfolio investments pricing or
trading of securities beginning January 1, 2000. Improperly
functioning trading systems may result in settlement problems and
liquidity
issues. In addition, corporate and governmental data processing
errors may result in production issues for individual companies and
overall economic uncertainties. Earnings of individual issuers may
be affected by remediation costs, which could be substantial. The
Fund and its service providers have been actively working on making
necessary changes to their computer systems to address the year
2000 issue and expect that their systems will be compliant before
January 1, 2000, but there can be no assurance that they will be
successful. The Fund's investments could be adversely affected.
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* (73)
President, Director See below
for affiliations
110 Sixteenth Street, Suite 1400
with
Investment Research Corporation
Denver, Colorado
(the
Adviser or IRC) and Distributor
Michael J. Baum, Jr. (81)
Director
Investor in securities and
1321 Bannock St.
real
estate; engaged in
Denver, Colorado
mortgage
financing;. president
of Baum Securities, M &
N
Investment Company and First
Ave. Corp. all of which are real
estate investment companies.
Eddie R. Bush (59)
Director
Certified Public Accountant
1400 W. 122nd Ave.
Suite 220
Westminster, Colorado
Harold Rosen (71)
Director
Owner of Bi-Rite Furniture
#1 Middle Road
Stores.
Englewood, CO
Timothy E. Taggart (45)
Treasurer Principal
financial and
110 Sixteenth Street, Suite 1400
accounting
officer.
Denver, Colorado
Employee of
Adviser since 1983.
See below
for affiliation with Distributor.
D. Leann Baird (51)
Secretary Employee of
Adviser since
<PAGE>
110 Sixteenth Street, Suite 1400
1977. See
below for
Denver, CO
affiliations with Adviser and
Distributor
William D. Farr (88)
Advisory Board Member President
and Director
P.O. Box 878
of Farr
Farms Company,
Greeley, Colorado
Chairman of
the Board of Northern Colorado
Water Conservancy, Past
President of the
National
Cattlemen's Association, Board
Member of Greeley Water
Board.
Frank J. Johns (96)
Advisory Board Member Retired
President of Denver
111 Emerson Street
Dry 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 8) received total
compensation
of $10,000, from the Fund in fiscal year 1998. Directors of the
Fund except Mr. Brody were compensated at the rate of $400 per
meeting attended; 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 year ended July 31,1998, 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>
<S>
<C>
Aggregate Compensation Paid by the
Fund
Name of Director
During the Fiscal Year Ended July 31,
1998.
Michael J. Baum, Jr.
$1,600
Eddie R. Bush
$2,000
Don S. Strauss (deceased)
$1,500
Harold Rosen
$1,600
</TABLE>
In addition, for the fiscal year ended July 31, 1998,
Messrs. Farr and Johns served as advisory board members and 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 30, 1998, no person owned more than
5% of the Fund and all officers and directors as a group (a total
of
7) owned directly 287,262.578 of its shares or 2.3% of shares
outstanding. Together, directly and indirectly, all the officers
and
directors as a group owned 307,067.400 shares or 2.5% of all shares
outstanding.
As of September 30, 1998, officers, directors and
members of the advisory board and their relatives owned of record
and
beneficially Fund shares with net asset value of approximately
$3,567,076 representing approximately 3.4% of the total net asset
value
of the Fund.
<PAGE>
INVESTMENT ADVISORY AGREEMENT
Since the organization of the Fund in 1958, its
investment adviser has been Investment Research Corporation (the
"Adviser"),
110 16th Street, Suite 1400, 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. 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 1996, 1997 and 1998 were $866,681, $978,027 and
$1,102,795, resulting in management fees of 0.81%, 0.80% and
0.81% of average net assets. In fiscal years 1996, 1997 and 1998
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., 110 16th Street, Suite 1400, Denver, Colorado
80202, 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 with a 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 distribution and service
plan
fees and any incremental transfer agency or other 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 distribution and service plan adopted with respect
to such
class pursuant to which distribution and service plan fees are
paid, except that because Class B shares convert automatically to
Class
A shares approximately seven years after issuance. The distribution
and service plan for Class A shares is also subject to the right of
Class B shareholders to vote with respect to it.
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.
<PAGE>
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, 1996, 1997 and 1998 were $1,214,039, $156,121
and $176,815, respectively. The gross sales charges for the
sale of Class A shares for the period ended July 31, 1997 and 1998
was $313,777 and $458,078. For the fiscal years ended July 31,
1996, 1997 and 1998, for the sale of Class D shares the Distributor
retained $245,360, $92,772 and $89,162 respectively, as its
portion
of commissions paid by purchasers of the Fund's shares after
allowing as concessions to other dealers $968,679, $63,349 and
87,652
respectively. For the period ended July 31, 1998, for the sale of
Class A shares the Distributor retained $33,164 as its portion of
commissions paid by purchases of the Fund's shares after allowing
as concession to other dealers $30,786.
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,
1998 and a transaction with an applicable sales charge at the
maximum
rate of 5.75%.
<TABLE>
<CAPTION>
<S>
<C> <C>
<C> <C>
Net asset value per share
Class D Class A
Class B Class C
(Total net assets/
Total shares outstanding)
$ 9.53 $ 9.49
$ 9.37 $ 9.37
(5.75% of offering price)
0.58 0.58
0.00 0.00
Maximum offering price per share
$ 10.11 $10.07
$ 9.37 $ 9.37
</TABLE>
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 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 purchase. In any thirteen (13) month period if
any investor invests additional
sums to reach the next break-point the entire investment in the 13
month period is eligible for the
reduced sales charge. 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 within
the 13 months from the
original $20,000, $80,000 of additional Class A or Class D shares,
respectively, the charge
applicable to the trade of $80,000 would be 3.50%, and the original
$20,000 will also be
applicable for the reduced sales charge of 3.50%. Shareholders
wanting to take advantage of the
reduced sales charges must notify the Fund of their participation
in this program by identifying
each subsequent purchase as a qualifying purchase at the time of
purchase.
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,
<PAGE>
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 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, 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. However,
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
contingent
deferred sales charge (CDSC) 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, 1998, the
Distributor received CDSCs of $22,978, with respect to redemptions
of Class B
shares, all of which was paid to the Distributor. For the fiscal
year ended July 31, 1998 the Distributor received no CDSCs with
respect
to redemptions of Class C shares.
Additional Information - Sales of Fund Shares.
Commencing June 30, 1995 and ending September 30, 2005, the
Distributor
is offering 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.
From time to time the distributor may pay a finders
fee to Selling Group Members not to exceed 1% of the purchase for
net
asset value trades over one million dollars.
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 from their investment in
shares of the
Fund. A Plan is opened by completing an application for such Plan
and
<PAGE>
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 (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. The Distributor, in its sole discretion, may
reimburse a Fund shareholder for any penalties which the
shareholder may incur in transferring assets from a retirement plan
established with a third party to one or more of the retirement
plans offered by the Fund. No such reimbursement shall exceed the
amount of the dealer concession which the Distributor would
otherwise pay to a dealer in conjunction with the investment by the
shareholders in the Fund's retirement plan(s).
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 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.
<PAGE>
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 of 1940. 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 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, 1998, the Fund
paid the Distributor $34,759 (based on average net assets relating
to the
Class A shares of approximately $14,022,747) pursuant to the Class
A Distribution Plan, $30,781 of which was paid to other
Broker-Dealers for providing account maintenance and
distribution-related services in connection with the Class A
shares and $3,978
was retained by the Distributor. For the fiscal year ended July
31, 1998, the Fund paid the Distributor $149,515 (based on average
net assets relating to the Class B shares of approximately
$15,099,896) 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, 1998, the Fund paid the
Distributor $40,975 (based on average net assets relating to the
Class C
shares of approximately $4,129,764) 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, 1998, the net
assets
of the Fund subject to the Class B Distribution Plan aggregated
approximately $15,533,056.
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
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
<PAGE>
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, if in the Adviser's best
judgment based on all relevant factors, the affiliated broker is
able to 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
$462,481, $306,385 and $364,892 in fiscal years 1996, 1997 and
1998,
respectively. The Fund did not purchase securities issued by any
broker-dealer that executed portfolio transactions during such
fiscal
year. The Fund paid brokerage commissions of $364,892 for the 1998
fiscal year to American Growth Fund Sponsors, Inc. (Sponsors,)
the underwriter and an affiliate of the Fund which represents 100%
of the total brokerage commissions paid. Commissions and sales
charges paid by investors on the purchase of Fund shares totaled
$1,439,562, $472,212, and $634,893 in fiscal years 1996, 1997 and
1998 respectively, of which $275,651, $140,586, and $176,388 were
retained by Sponsors. The aggregate dollar amount of transactions
effected through American Growth Fund Sponsors involving the
payment of commissions represented 91.8% of the aggregate dollar
amount of all transactions involving the payment of commissions
during 1998.
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 turnover rate of the
Fund for the fiscal years ended July 31, 1996, 1997 and 1998 was
163.1%, 106.2% and 103.5%, respectively.
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
<PAGE>
will be ascertained by dividing the Fund's net assets by the total
number of shares 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 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
<PAGE>
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 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.
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.
If a shareholder has elected to receive dividends
and/or capital gain distributions in cash and the postal or other
delivery
service is unable to deliver checks to the shareholder's address of
record, such shareholder's distribution option will automatically
be
converted to having all dividends and other distributions
reinvested in additional shares. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
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
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, 1998, the average
annual total returns at maximum offering price for the Class D
shares of
the Fund were (12.7)% for 1 year, 9.6% for 5 years, 11.3% for 10
years and 9.6% for 15 years. For the year ended July 31, 1998 and
period since inception on March 1, 1996, the average annual total
return for the Fund's Class A shares were (12.9)% and 5.0%, Class
B shares were (13.2)% and 5.2%, and Class C shares were (9.2)% and
6.9%, 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
<PAGE>
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 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, 1998. 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>
<S> <C> <C> <C>
<C> <C>
<C> <C> <C>
Accepted
Dividends
Cumulative Acquired
as Purchased
Total of from
cost with
capital through
initial investment
Cumulative including
initial gains reinvestment
Year & annual income
reinvested reinvested & annual
distributions of income
Ended
Ended investments reinvested
dividends dividends investments
(Cumulative) (Cumulative)
Value
08/01/58 $ 1,000 -
- $ 1,000 $1,000
- -
$1,000
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
<PAGE>
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
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
07/31/97 40,000 6,564
108,153 148,153 65,012
424,387 165,392
654,791
07/31/98 41,000 4,623
112,776 153,776 55,644
463,669 143,706
607,375
</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>
<S> <C> <C>
<C> <C>
<C> <C> <C>
Withdrawn
Withdrawn from
Value Accepted
from principal
of as
investment and
Annual Cumulative
remaining Capital
Period income capital
total total
original Gains Total
Ended dividends gains
withdrawn withdrawn
shares distributions Value
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
<PAGE>
07/31/94 463 337
800 28,800
22,086 73,961 96,046
07/31/95 800 0
800 29,600
21,316 88,412 109,728
07/31/96 800 0
800 30,400
22,293 91,941 114,235
07/31/97 800 0
800 31,200
29,491 123,845 153,366
07/31/98 800 0
800 32,000
25,127 116,106 141,233
TOTAL $22,086 $ 9,914
$ 32,000
</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
what may be achieved in the future.
<PAGE>
To Our Investors
Dear Shareholder:
Since mid-1998 we have kept a large part of your money in U.S.
government bonds and other cash type
instruments. Unstable foreign markets sent the U.S. stock market
into decline and we decided to protect
your assets by reducing common stock holdings.
We have placed your portfolio in a position to take advantage of
the forthcoming economy. The common
stock we have, for the most part, are defensive in nature and
usually perform well in a economy that
is rising at a slower rate of growth. You will recognize many of
the stocks you own as large American
companies which should do well through these turbulent times:
Clorox, Procter & Gamble, IBM and
General Electric are among them.
We are excited about the years ahead and are optimistic that we
will continue to give you, our
shareholder, rewarding performance. The stock market has been a
good one for American Growth over
the past 40 years and you have benefitted because of it.
My staff and I are always available to discuss your account with
you. Our toll free number is (800) 525-
2406 or (303) 626-0600.
American Growth Fund wishes you A Good Future!
Sincerely,
Robert Brody
President & Shareholder
PAGE
<PAGE>
How American Growth Fund Has Its Shareowners' Money Invested
<TABLE>
STATEMENT OF INVESTMENTS
<CAPTION>
July 31, 1998
Market
Description of Security
Shares Value
COMMON STOCKS
<S>
<C> <C>
Commercial Bank Industry 15.50%
City National Corp. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
197,800 $ 7,306,238
(Owns City National Bank, largest independent bank in southern
California.)
SouthTrust Corp.. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135,000 5,459,062
(The 33rd largest bank in the U.S.)
Royal Bank of Canada. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70,000 3,801,875
(Canada's largest bank.)
NationsBank Corp. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32,624 2,601,764
(The 3rd largest bank in the United States.)
19,168,939
Computer & Peripherals Industry
10.90%
International Business Machines . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64,000 8,480,000
(The world's largest supplier of advanced information
processing technology.)
Hewlett Packard Company . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90,000 4,995,000
(A designer and manufacturer of precision electronic products.)
13,475,000
Household Products Industry 9.76%
Clorox Company. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60,000 6,150,000
(A producer of household laundry & cleaning products, also
insecticides, cat litter, dressings, sauces.)
Procter & Gamble Company. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,000 3,968,750
(#1 manufacturer of household products in the U.S. and the
world's largest advertiser.)
Colgate Palmolive Company . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,000 1,941,188
(2nd largest domestic maker of detergents, toiletries and other
household products.)
12,059,938
</TABLE>
<PAGE>
Market
Description of Security
Shares Value
<TABLE>
<CAPTION>
<S> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<C> <C>
Thrift Industry 6.58%
Golden West Financial . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
88,000 $ 8,129,000
(Third largest thrift in the United States)
Airline Industry 5.17%
UAL Corporation*. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82,000 6,385,750
(The largest domestic carrier in passenger revenue. Serves 152
airports in 30 countries.)
Chemical Industry 4.42%
Solutia, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,000 2,968,750
(The twentieth largest chemical company in the U.S.)
Monsanto Co.. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44,000 2,491,500
(Produces a variety of consumer products.)
5,460,250
Electronic Equipment Industry 4.33%
General Electric Company. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60,000 5,358,750
(One of the largest and most diversified industrial companies
in the world.)
Retail Store Industry 3.69%
Sears, Roebuck and Company . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90,000 4,567,500
(World's second largest retailer.)
Paper & Forest Products Industry 3.41%
Fort James Corp.. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125,000 4,218,750
(The second largest paper goods producer in the United States.)
</TABLE>
<PAGE>
Market
Description of Security
Shares Value
<TABLE>
<CAPTION>
<S> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<C> <C>
Insurance Industry 3.03%
Equitable Companies, Inc. (The) . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,000 $ 3,753,125
(Parent holding company of the Equitable Life Assurance society
of the United States.)
Auto Industry 2.92%
General Motors Corporation. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,000 3,615,625
(The world's largest auto manufacturer.)
Financial Services Industry 2.17%
Travelers Group, Inc. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,000 2,680,000
(The largest non-bank financial company.)
Machine Industry 1.18%
Caterpillar, Inc. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,000 1,455,000
(The world's largest producer of earthmoving equipment.)
Building Materials Industry 1.15%
Ameron International Corporation. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,500 1,419,656
(The largest supplier of high-performance marine and offshore
coatings in the U.S.)
</TABLE>
<PAGE>
Market
Description of Security
Shares/Face Value
<TABLE>
<CAPTION>
Aerospace/Defense Industry 0.31%
<S> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<C> <C>
Boeing Company (The). . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,000 $ 388,125
(The leading manufacturer of commercial jet aircraft.)
Solid Waste Industry 0.16%
Republic Services Inc.* . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,000 200,000
(Provides non-hazardous solid waste collection and disposal
services.)
Total Common Stocks (cost $67,053,643) (74.68%) . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92,335,408
U.S. GOVERNMENT OBLIGATIONS 21.42%
U.S. Treasury Bond, 6.25%, 08/15/23. . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,320,000 8,803,558
U.S. Treasury Bond, 6.00%, 02/15/26. . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,190,000 17,673,383
Total U.S. Government Obligations (cost $26,368,550). . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,476,941
MONEY MARKET INSTRUMENTS 0.01%
LIR Government Money Fund, 5.28%, (cost 12,976) . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,976
Total Investments, at Value (cost $93,435,169). . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96.11% 118,825,325
Cash and Receivables, Less Liabilities. . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.89% 4,815,132
Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.00% $123,640,457
</TABLE>
<PAGE>
Financial Statements
AMERICAN GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES, JULY 31, 1998
<TABLE>
<CAPTION>
<S> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<C>
ASSETS:
Investments, at value (cost $93,435,169)-see accompanying
statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . $ 118,825,325
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 907,391
Receivables:
Shares of beneficial interest sold. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 133,912
Investments sold. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 3,133,260
Dividends . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 110,734
Interest. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 715,759
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 123,826,381
LIABILITIES:
Shares of beneficial interest redeemed . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 185,924
NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . $123,640,457
COMPOSITION OF NET ASSETS:
Paid-in capital. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . $ 101,433,245
Undistributed net investment income. . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 331,075
Accumulated net realized loss from investment transactions . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . (3,514,019)
Net unrealized appreciation of investments . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 25,390,156
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . $123,640,457
NET ASSET VALUE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (based on net
assets
of $14,246,106 and 1,501,200 shares of beneficial interest
outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . $9.49
Maximum offering price per share (net asset value plus sales
charge of
5.75% of offering price). . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . $10.07
Class B Shares:
Net asset value, redemption price and offering price per
share (based
on net assets of $15,533,056 and 1,658,179 shares of
beneficial interest outstanding) . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . $9.37
Class C Shares:
Net asset value, redemption price and offering price per
share (based
on net assets of $4,497,515 and 479,948 shares of beneficial
interest outstanding). . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . $9.37
Class D Shares:
Net asset value and redemption price per share (based on net
assets of
$89,363,780 and 9,382,124 shares of beneficial interest
outstanding). . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . $9.53
Maximum offering price per share (net asset value plus sales
charge of
5.75% of offering price). . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . $10.11
</TABLE>
<PAGE>Financial Statements
<TABLE>
AMERICAN GROWTH FUND, INC.
<CAPTION>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JULY 31, 1998
<S> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . <C>
INVESTMENT INCOME:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . $ 1,550,053
Dividends (net of $12,269 foreign withholding tax). . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 1,310,450
Total investment income. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 2,860,503
EXPENSES:
Investment advisory fees (Note 5) . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 1,102,795
Administration expenses (Note 5). . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 426,460
Transfer agent, shareholder servicing and data processing
fees (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 238,774
Custodian fees (Note 4) . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 144,351
Professional fees . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 29,828
Registration and filing fees:
Class A. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 4,731
Class B. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 5,059
Class C. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 1,370
Class D. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 36,943
Shareholder reports . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 22,037
Distribution and service fees:
Class A. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 34,759
Class B. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 149,515
Class C. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 40,975
Directors fees. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 6,700
Other expenses. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 66,429
Total expenses . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 2,310,726
Less expenses paid indirectly (Note 4). . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . ( 88,171)
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 2,222,555
Net Investment Income . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 637,948
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments. . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . (3,209,919)
Net change in unrealized depreciation on investments. . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . (8,201,493)
Net realized and unrealized loss. . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . (11,411,412)
Net Decrease in Net Assets Resulting From Operations. . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . $ (10,773,464)
</TABLE>
<PAGE>Financial Statements
<TABLE>
<CAPTION>
AMERICAN GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 1998 AND 1997
<S> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .<C> <C>
1998 1997
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . $
637,948 $ 1,935,396
Net realized gain (loss) . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(3,209,919) 10,854,048
Net change in unrealized appreciation or depreciation. . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(8,201,493) 24,155,373
Net increase (decrease) in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . . . . .
(10,773,464) 36,944,817
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(75,567) (78,116)
Class B . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(14,141)
(60,893). . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Class C . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(3,850)
(17,406)
Class D. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(790,735) (1,288,377)
Distributions from net realized gain:
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(1,120,917)
(253,876)
Class B . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(1,258,568)
(263,868)
Class C . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(342,696)
(75,426)
Class D. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(8,796,922) (4,187,225)
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net assets resulting from beneficial
interest transactions(Note 2):
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
5,962,986 4,705,260
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
7,163,360 5,694,054
Class C. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
2,200,744 2,104,311
Class D. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(8,137,343) (11,347,787)
NET ASSETS:
Total increase (decrease). . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
(15,987,113) 31,875,468
Beginning of period. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
139,627,570 107,752,102
End of period (including undistributed net investment
income of $331,075 and $577,421 respectively). . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . $123,640,457
$139,627,570
</TABLE>
<PAGE>Financial Highlights
<TABLE>
<CAPTION>
Class D
Year Ended July 31,
1998 1997 1996
1995 1994
<S>
<C> <C> <C>
<C> <C>
Per Share Operating Data:
Net Asset Value, Beginning of Period. . . . . . . . . . . . . . .
. . . . . . . . . . . $11.33 $ 8.85 $ 8.75
$ 9.34 $ 9.39
Income from investment operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 0.075 0.175 0.035
0.21 0.03
Net realized and unrealized gain(loss). . . . . . . . . . . . . .
. . . . . . . . . . . (0.90) 2.82 0.39
0.88 1.00
Total income(loss) from investment operations . . . . . . . . . .
. . . . . . . . . . . (0.83) 2.99 0.42
1.09 1.03
Dividends and distributions to shareholders:
Dividends from net investment income. . . . . . . . . . . . . . .
. . . . . . . . . . . (0.08)6 (0.12)6 (0.12)6
(0.12) (0.05)
Distributions from net realized gain. . . . . . . . . . . . . . .
. . . . . . . . . . . (0.89) (0.39) (0.20)
(1.56) (1.03)
Total dividends and distributions
to shareholders . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . (0.97) (0.51) (0.32)
(1.68) (1.08)
Net Asset Value, End of Period. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . $9.53 $11.33 $8.85
$8.75 $ 9.34
Total Return at Net Asset Value1. . . . . . . . . . . . . . . . .
. . . . . . . . . . . (7.4)% 35.1% 4.8%
15.2% 11.1%
Ratios/Supplemental Data:
Net assets, end of period (in thousands). . . . . . . . . . . . .
. . . . . . . . . . . $89,364 $115,106 $100,130
$90,538 $68,209
Ratios to average net assets:
Net investment income.. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 0.63% 1.71% 0.47%
1.91% 0.35%
Expenses2 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 1.54% 1.55% 1.63%
1.45% 1.34%
Portfolio turnover rate3. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 103.5% 106.2% 163.1%
173.0% 87.2%
Average brokerage commission rate4
$0.0577 $0.0578 $0.0561
- -
</TABLE>
1. Assumes a hypothetical initial investment on the business day
before the first day of the fiscal period 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. Prior year expenses
have not been adjusted.
3. The lesser of purchases and sales of portfolio securities for
a period, divided by the monthly average of the market value of
securities owned during the
period. Securities with a maturity or expiration
date at the time of acquisition of one year or less are excluded
from the calculation. Purchases and
sales of investment
securities (other than short-term securities) for the period
ended July 31, 1998, aggregated $128,300,481 and $136,434,454,
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. Net investment income per share is based upon relative daily
net asset values.
6. Distributions from net investment income per share are based
upon relative net asset values as of the business day following the
distribution record date.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
Class C
<S>
<C> <C> <C> <C> <C> <C>
<C> <C> <C>
Year Ended July 31,
1998 1997 19961 1998 1997 19961
1998 1997 19961
Per Share Operating Data:
Net Asset Value,
Beginning of Period . . . . . . . . . . . . . . . . . . . . .
$11.30 $8.84 $9.21 $11.19 $ 8.80 $ 9.21
$11.19 $8.81 $9.21
Income (loss) from investment operations:
Net investment income(loss) . . . . . . . . . . . . . . . . .
.0.047 0.147 -7 (0.02)7 0.077 (0.01)7
(0.02)7 0.077 -7
Net realized and unrealized gain (loss) . . . . . . . . . . .
(0.90) 2.83 (0.37) (0.90) 2.79 (0.40)
(0.90) 2.79 (0.40)
Total income (loss) from investment
operations . . . . . . . . . . . . . . . . . . . . . . . . .
(0.86) 2.97 (0.37) (0.92) 2.86 (0.41)
(0.92) 2.86 (0.40)
Dividends and distributions to shareholders:
Dividends from net investment income. . . . . . . . . . . .
.(0.06)8 (0.12)8 - (0.01)8 (0.09)8
- (0.01)8 (0.09)8 -
Distributions from net realized gain. . . . . . . . . . . . .
(0.89) (0.39) - (0.89) (0.39)
- - (0.89) (0.39) -
Total dividends and distributions
to shareholders . . . . . . . . . . . . . . . . . . . . . . .
(0.95) (0.51) - (0.90) (0.48)
- - (0.90) (0.48) -
Net Asset Value, End of Period. . . . . . . . . . . . . . . .
.$9.49 $11.30 $ 8.84 $9.37 $11.18 $8.80
$9.37 $11.19 $8.81
Total Return at Net Asset Value2. . . . . . . . . . . . . . .
(7.6)% 34.6% (4.0)% (8.2)% 33.5% (4.5)%
(8.2)% 33.6% (4.3)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $14,246
$10,536 $3,838 $15,533 $10,962 $3,417
$4,498 $3,023 $367
Ratio to average net assets:
Net investment income (loss). . . . . . . . . . . . . . . . .
.0.42% 1.28% 0.13%6 (0.32)% 0.49% (0.52)%6
(0.31)% 0.55% (0.63)%6
Expenses3 . . . . . . . . . . . . . . . . . . . . . . . . . .
.1.77% 1.76% 2.06%6 2.52% 2.46% 2.81%6
2.52% 2.50% 2.97%6
Portfolio turnover rate4. . . . . . . . . . . . . . . . . . .
103.5% 106.2% 163.1% 103.5% 106.2% 163.1%
103.5% 106.2% 163.1%
Average brokerage commission rate5 . . . . . . . . . . . .
.$0.0577 $0.0578 $0.0561 $0.0577 $0.0578
$0.0561 $0.0577 $0.0578 $0.0561
</TABLE>
1. For the period from March 1, 1996 (inception of offering) to
July 31, 1996.
2. 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.
3. Beginning in fiscal 1996, the expense ratio reflects the
effect of expenses paid indirectly by the Fund. Prior year expenses
have not been adjusted.
4. The lesser of purchases and sales of portfolio securities for
a period, divided by the monthly average of the market value of
securities owned during the
period. Securities with a maturity or expiration
date at the time of acquisition of one year or less are excluded
from the calculation. Purchases and
sales of investment
securities (other than short-term securities) for the period
ended July 31, 1998, aggregated $128,300,481 and $136,434,454,
respectively.
5. 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.
6. Annualized.
7. Net investment income per share is based upon relative daily
net asset values.
8. Distributions from net investment income per share are based
upon relative net asset values as of the business day following the
distribution record date.
<PAGE>
Notes to Financial Statements
1. Summary of Significant Accounting Policies
American Growth Fund, Inc. (the "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's investment advisor is Investment
Research Corporation (IRC). The Fund offers Class A, Class B,
Class C and Class D shares. Class D shares are available to
shareholders in existence prior to 3/1/96. 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 that class and exclusive voting rights with respect
to matters affecting that 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, Gains and Losses - Income,
expenses (other than those attributable to a specific
class), 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 the Fund intends 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. Also,
due to timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the fiscal year in
which the income or realized gain was recorded by the Fund.
The Fund has available for federal income tax purposes an
unused capital loss carryover approximately $3,514,000 which
expires in 2007.
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>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>
<S>
<C> <C>
<C> <C>
Year Ended July 31, 1998
Year Ended July 31, 1997
Shares Amount
Shares Amount
Class A:
Sold
837,941 $ 8,739,433
794,548 $ 7,631,271
Dividends and distributions reinvested
124,601 1,193,679
33,407 311,961
Redeemed
(393,818) (3,970,124)
(329,452) (3,237,972)
Net increase
568,724 5,962,988
498,503 4,705,260
Class B:
Sold
843,318 8,810,905
700,555 6,739,509
Dividends and distributions reinvested
129,536 1,231,569
29,453 273,621
Redeemed
(294,805) (2,879,114)
(137,934) (1,319,076)
Net increase
678,049 7,163,360
592,074 5,694,054
Class C:
Sold
218,226 2,295,012
247,873 2,292,548
Dividends and distributions reinvested
35,910 341,141
8,632 80,191
Redeemed
(44,447) (435,409)
(28,005) (268,428)
Net increase
209,689 2,200,744
228,500 2,104,311
Class D:
Sold
394,322 4,226,052
423,812 4,042,281
Dividends and distributions reinvested
969,644 9,308,601
541,417 5,060,925
Redeemed
(2,144,192) (21,671,996)
(2,117,535) (20,450,993)
Net increase (decrease)
(780,226) $ (8,137,343)
(1,152,306) $(11,347,787)
</TABLE>
3. Unrealized Gains and Losses on Investments
The identified tax cost basis of investments at July 31, 1998
was $93,435,169. Net unrealized appreciation on investments of
$25,390,156, based on identified tax cost as of July 31, 1998,
was comprised of gross appreciation of $27,208,739 and gross
depreciation of $1,818,583.
4. Fund Expenses Paid Indirectly
For the year ended July 31, 1998, fees for transfer agent/data
processing services and custodian services totaling $13,031 and
$75,140, 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 IRC, the advisor
receives annual compensation for investment advice, computed
and paid monthly, equal to 1% of the first $30 million of the
Fund's average annual net assets and 0.75% of such assets in
<PAGE> <PAGE>
Notes to Financial Statements
excess of $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 annual service and
distribution fees of 0.25% and 0.75% of average daily net assets,
respectively. Class A shares are subject to annual service and
distribution fees of 0.25% and 0.05% of average daily net assets,
respectively.
For the year ended July 31, 1998 commissions and sales charges
paid by investors on the purchase of Fund shares totaled
$634,893 of which $176,388 was retained by American Growth
Fund Sponsors, Inc. ("Sponsors"), an affiliated broker/dealer
which serves as the underwriter and distributor of the Fund.
The Fund paid sales charges advanced to broker/dealers by
Sponsors on sales of the Fund's Class B and C shares totaled
$285,731. For the year ended July 31, 1998, Sponsors received
contingent deferred sales charges of $22,978 upon redemption
of Class B and C shares, as reimbursement for sales
commissions advanced by Sponsors upon the sale of such shares.
The Fund paid $364,892 to Sponsors for brokerage
commission on securities transactions.
Certain officers of the Fund are also officers of Sponsors and
IRC. For the year ended July 31, 1998 the Fund paid directors'
fees and expenses of $6,700.
For the year ended July 31, 1998, under an agreement with IRC,
the Fund was charged $276,510 for the costs and expenses
related to employees of IRC who provide administrative,
clerical and accounting services to the Fund. In addition, the
Fund was
charged $65,699 by an affiliated company of IRC for the rental
of office space.
6. Federal Income Tax Matters (unaudited)
On December 16, 1997, per share distributions were declared
as follows: Class A: $0.06, Class B: $0.01, Class C: $0.01 and
Class D: $0.08 from net investment income, respectively, and
$0.89 for each share class from realized gains. The dividends were
paid December 19, 1997. For the Fund's year ended July 31,
1998, all ordinary income dividends have been determined to
qualify for the dividend received deduction for corporate
shareholders.
<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, 1998, and the related statement of operations
for the year then ended, the statement of changes
in net assets for each of the years in the two year period then
ended, and the financial highlights for each of the years
in the three-year period 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 audits. The financial highlights for each of the
years in the two-year period ended July 31,1995 were
audited by other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements 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, 1998, by correspondence with the custodian and brokers;
and where confirmations were not received from
brokers, we performed other auditing 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 audits provide 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, 1998, the results of its operations for
the year then ended, the changes in its net assets for each of the
years in the two-year period then ended, and the
financial highlights for each of the years in the three-year period
then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
August 28, 1998
<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, 1998
Statement of operations
- - year ended July 31, 1998
Statement of changes in
net assets - years ended
July 31, 1997 and 1998
Notes to financial
statements
Portfolio of investments
(Schedule I -
Investments in
securities of
unaffiliated issuers) -
July 31, 1998
(b) Exhibits
1. (a) Articles of
Amendment and Restatement
(6)
(b) Articles
Supplementary (6)
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. (6)
5. Investment advisory
contract between
Investment Research
Corporation and
registrant.
a. Distribution
Agreement for Class A
Shares (6)
b. Distribution
Agreement for Class B
Shares (6)
c. Distribution
Agreement for Class C
Shares (6)
d. Distribution
Agreement for Class D
Shares (6)
e. Selling
group
agreement
between
American
Growth Fund
Sponsors,
Inc. And
dealers as
amended.
(6)
6. Not applicable
7. Custodian agreement
between state Street
Bank and Trust Company
and registrant. (1)
. Transfer agent
agreement between
State Street Bank &
Trust Company and
Registrant. (1)
9. Not applicable.
10. Not applicable
11. Consent of KPMG Peat
Marwick LLP.
12. Not applicable
13. Not applicable
14. a.
Registrant's
Self-Employed
Retirement Plan.
(2)
. Registrant's
Simplified
Employee
Pension Plan
Application
and
Agreement.(1)
<PAGE>
. Registrant's
Salary
Reduction
Simplified
Employee
Pension
Plan
Application and
Agreement.
(4)
. Registrant's
Individual
Retirement
Account
Plan and
Agreement.
(6)
. Registrant's
403(b)
Retirement
Plan and
Custody
Agreement.
(3)
f. Registrant's
Prototype
Paired
Defined
Contribution
Plans. (4)
. Registrant's
Prototype
Profit
Sharing/401(k)
Plan.(4)
15. a.
Distribution Plan
for Class A
Shares (6)
. Distribution
Plan
for Class B
Shares
(6)
. Distribution
Plan
for Class C
Shares
(6)
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.
(6) Incorporated
by reference to identically
numbered exhibit in Post
Effective Amendment No. 51
to the Registration
Statement under the
Securities Act of 1933 on
Form N-1A (File No. 2-
14543) of Registrant filed
on September 30, 1996.
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, 1998.
(1)
(2)
Title of Class
Number of
Record Holders
One Cent Par Value
Common Stock
7,064
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
<PAGE>
registrant's Articles of
Incorporation
(Exhibit 1 to this
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, 1998.
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., 110 16th Street,
Denver, Colorado Mr.
Taggart is also Vice
President, secretary and a
director of American Growth
Fund Sponsors, Inc., the
Registrant's underwriter,
110 16th Street, Denver,
Colorado; and Vice
President and Director of
American Growth Financial
Services, Inc., 110 16th
Street, Denver, Colorado.
Mrs. Baird is also
secretary of American
Growth Fund, Inc., the
Registrant; and secretary
of American Growth
Financial Services, Inc.,
110 16th Street, Denver,
Colorado.
Item 29.
Principal
Underwriters
(a)
None
(b)
<TABLE>
<CAPTION>
<S>
<C>
<C>
(1)Name and Principal
(2)Positi
on & Offices(3) Position &
Offices
Business Address
with
Underwrit
erwith
Registrant
Robert Brody
110 16th Street
Suite 1400
President,
Treasurer
Denver, CO 80202
Director
P
r
e
s
i
d
e
n
t
,
D
i
r
e
c
t
o
r
Timothy E. Taggart
110 16th Street
Suite 1400
Exec. Vice
presidentTreasurer
Denver, CO 80202
Secretary,
Director
None
</TABLE>
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, 110
16th Street, Suite
1400, 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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act
of 1940, the Registrant certifies that it meets all of the
requirements for effectivness
of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933
and has duly caused this post-effective amendment to the
registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City and
County of Denver, State of Colorado, on the 30th day of September,
1998.
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
09/30/98
Robert Brody
(b) Principal Financial and Accounting Officer:
/s/ Timothy E. Taggart Treasurer
09/30/98
- ----------------------------------
Timothy E. Taggart
(c) Majority of the Directors:
/s/ Michael J. Baum, Jr.
09/30/98
- ----------------------------------
Michael J. Baum, Jr.
/s/ Eddie R. Bush
09/30/98
- ----------------------------------
Eddie R. Bush
/s/ Harold Rosen
09/30/98
- ----------------------------------
Harold Rosen
<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>
September 28, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re:
American Growth Fund, Inc.
Investment Company Act File No. 811-825
Securities Act file No. 2-14543
Form N-1A: 1933 Act Post-Effective
Amendment No. 53
1940 Act Post-Effective
Amendment No. 23
INDEPENDENT AUDITORS' CONSENT
To Board of Directors
American Growth Fund, Inc:
We consent to the use of our report dated August 28, 1998 included
herein in this Registration Statement of American Growth Fundf,
Inc. and to the reference to our firm under the heading "Financial
Highlights" in the Prospectus, which is a part of such Registration
Statement.
KPMG Peat Marwick LLP
By: KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick
Denver, Colorado
November 10, 1998
<PAGE>
Ladies and Gentlemen:
This firm serves as counsel to American Growth Fund,
Inc., a registered, open-end diversified investment
company (the "Fund").
In furtherance of that representation, this firm has
reviewed disclosure changes made in the Fund's post-effective
amendment number 53 to its Registration Statement under the
Securities Act of 1933, which is being filed with the
Commission pursuant to the provisions of Rule 485(b) of the
Generals Rules and Regulations under the Securities Act
of 1933, as amended.
In compliance with the provisions of Rule 485(e), we
herewith provide the Commission with this written
representation that this post-effective amendment number 53 of
American Growth Fund, Inc. does not contain
disclosures which would render the amendment ineligible to become
effective pursuant to paragraph (b) of the Rule.
Very truly yours,
Miles, Giles, O'Keefe, Vermeire & Gorrell LLP
By: Edward F. O'Keefe, P.C.
/s/ Edward F. O'Keefe, President
Edward F. O'Keefe, President
<PAGE>
