This is what American Growth Fund has done for its investors* over
the last 40 years.
$654,377**Total value on 06/30/98 with both dividends and capital
gains reinvested.
<TABLE>
<CAPTION>
<S> <C> <C>
Average Annual thru thru 06/30/98
Total Return** 06/30/98 without sales
charge
1 year 1.4% 7.6%
5 years 10.2% 11.5%
10 years 11.6% 12.3%
15 years 9.6% 10.1%
40 years 10.6% 10.8%
</TABLE>
$10,000 investment on August 1, 1958
*A conservative, long-term growth mutual fund with income as a
secondary objective.
** The figures in this brochure reflects the performance of the
Fund's Class D shares. On 03/01/96,
the fund adopted a multi-class distribution arrangement to issue
additional classes of shares,
designated as Class A, Class B and Class C shares. Shares existing
prior to
3/1/96 became Class D shares. Class A and Class D shares are
subject to a maximum front-end sales
charge of 5.75%, Class B shares are subject to a maximum contingent
deferred sales charge of 5%
and Class C shares are subject to a 1% contingent deferred sales
charge within the first year of
purchase. The Fund may incur 12b-1 expenses up to an annual maximum
of .30 of 1% on its average
daily net assets of its Class A shares, 1% of its average daily net
assets of its Class B shares, and 1%
of its average daily net assets of its Class C shares. Class D
shares have no 12b-1 fees. Performance
figures for Class D shares include the 5.75% initial sales charge
and assume the reinvestment of
income dividends and capital gain distributions. Performance quoted
represents past performance.
The investment return and principal value of an investment will
fluctuate so that the investor's
shares, when redeemed, may be worth more or less than their
original cost. This material must be
preceded or accompanied by a current prospectus. If you have not
received, or need a current
prospectus, please feel free to call for one. Please read the
prospectus carefully before investing.
In the forty years ended 06/30/98, the Fund's average annual total
return was 10.6%, over fifteen
years it was 9.6%, over ten years it was 11.6%, over five years it
was 10.2%, over one year it was
1.4%. The total return figures assume the maximum sales load
(5.75%). The annual returns for the
year ended 06/30/98 were: Class A; 0.2%, Class B; 1.5%, Class C;
5.6%. Annual returns assume a
front end sales charge of 5.75% on Class A, a 5% contingent
deferred sales charge for the first year
on Class B, and a 1% contingent deferred sales charge for a period
of one year or less on Class C.
Class B and Class C performance without the contingent deferred
sales charge during the first year
would be 6.5% and 6.6%, respectively. In the forty years ended
06/30/98, the Fund's average annual
total return calculated without a sales load was 10.8%, for fifteen
years it was 10.1%, for ten years
it was 12.3%, for five years it was 11.5%, and for the one year it
was 7.6%.
Distributor: American Growth Fund Sponsors, Inc. 110 Sixteenth
Street, Suite 1400, Denver, CO
80202.
<PAGE>
<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
Commercial Bank Industry 15.50%
<S>. . . . . . . . . . . . . . . . . . . . . . . . . . . <C>
<C>
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>
<PAGE>
Market
Description of Security Shares
Value
<TABLE>
<CAPTION>
Thrift Industry 6.58%
<S>. . . . . . . . . . . . . . . . . . . . . . . . . . . <C>
<C>
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> Insurance Industry 3.03%
<S>. . . . . . . . . . . . . . . . . . . . . . . . . . . <C>
<C>
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
<talbe>
[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
<TABLE> AMERICAN GROWTH FUND, INC.
<CAPTION>STATEMENT OF ASSETS AND LIABILITIES, JULY 31, 1998
<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) . . . . . . . . $10.11
</TABLE>
PAGE
<PAGE>
Financial Statements
<TABLE> AMERICAN GROWTH FUND, INC.
<CAPTION>STATEMENT OF OPERATIONS FOR THE YEAR ENDED JULY 31, 1998
<S>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<C>
INVESTMENT INCOME:
Interest . .
. . .$ 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
<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
<PAGE>
Financial Highlights
Class D
<TABLE>
Year Ended July 31,
<CAPTION> 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 1.091.03
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
<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.
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.
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>
<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>
