AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
SEPTEMBER 28, 1999
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. 54
AND/OR
[x]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940
AMENDMENT NO. 24
[x]
(CHECK APPROPRIATE BOX OR BOXES)
--------------------
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)
[_] on (date) pursuant to paragraph (b)
[X] 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, 1999 on September 27, 1999.
<PAGE>
Prospectus
American Growth Fund
110 Sixteenth Street, Suite 1400
Denver, CO 80202
(303) 626-0600
Class A ~ Class B ~ Class C ~ Class D
November 22, 1999
Table of Contents
<TABLE>
<Caption
<S>
<C>
Fund Overview 3
Fund Goal 3
Investment Strategies
3
Risks
3
Investor Profiles
3
Fund Performance History
4
Fee Table 6
Fund Objectives
8
Risks
9
Year 2000 10
Management
11
Board of Directors
11
Investment Advisor
11
Portfolio Managers
11
Pricing of Fund Shares 13
Your Account
14
Class A 14
Class B 14
Class C 15
Class D 15
Class A & D Sales
Charges 16
Reducing Sales Charges
17
Buying Shares 18
Automatic Investment
Plan 19
Direct Deposit 19
Dividend
Reinvestment Plan
19
Systematic
Withdrawal Plan
19
Retirement Plans
19
Redeeming Shares
20
Account Minimum
22
Dividends 22
Distributions
22
Taxes
22
Financial Highlights
23
Class A 23
Class B 24
Class C 25
Class D 26
Understanding Terms
27
Contact Us
28
</TABLE>
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy
of this prospectus, and any representation to the contrary is a
criminal offense.
Meet Wiggins
From time to time you will see Wiggins appear throughout the
Prospectus. Wiggins will provide you
with special information and helpful hints.
A Fund Overview
What is the Fund's investment goal?
The Fund's primary objective is growth of capital. Income as a
factor in portfolio selection is
secondary to the Fund's objectives.
What are the Fund's primary investment strategies and principal
risks?
The Fund's manager selects common stocks and securities that can be
converted into common stocks
traded on national securities exchanges or over-the-counter. A more
detailed description of the Fund's
objectives for investing can be found on page 5.
The Fund's principal risks may be...
* Market Risk - The value of the
Fund's shares will go up and down based on the perfor-
mance of the companies whose securities it
owns and other factors affect-
ing the securities market generally.
* Price Volatility - The value
of the Fund's shares may fluctuate significantly in the short term.
* Principal Loss - As with all mutual
funds, if you sell your shares when their value is less
than the price you paid, you will lose
money.
Who may want to invest in the Fund?
The Fund may be a good investment if you are...
* seeking long-term capital growth from your investment
* comfortable with the Fund's short-term price volatility
* comfortable with the risks associated with the Fund's
investment strategy
Who may not want to invest in the Fund?
The Fund may not be a good investment if you are...
* investing for a short period of time
* uncomfortable with volatility in the value of your
investment
An investment in the Fund is not a bank deposit, and is not insured
or guaranteed by the FDIC or any
other government agency.
Fund Performance History
Set forth below is a graph showing the Fund's performance (Class D)
as of the end of the ten most recently
completed fiscal years. The graph provides some indication of the
risks of investing in the Fund by
showing changes in year to year performance.
You should remember that unlike the Fund, the indexes are unmanaged
and don't reflect the actual costs
of operating a mutual fund, such as the costs of buying, selling,
and holding securities. The Fund's past
performance does not necessarily indicate how it will perform in
the future.
<Chart>
<TABLE>
<Caption
<S> <C>
1989 24.78%
1990 -6.91%
1991 24.00%
1992 12.70%
1993 24.40%
1994 -4.00%
1995 25.50%
1996 10.50%
1997 13.10%
1998 6.10%
</TABLE>
Worst calendar
quarter 12/98 -13.06%
Best calendar
quarter 09/98 17.60%
Performance for the Fund's most recent calendar quarter
ending 10-31-99 was ???.?%
Sales loads or account fees are not reflected in the bar
charts, and if they were, returns would be
less than those shows.
The performance information on this page is designed to help you
see how fund returns can vary. Keep
in mind that past performance does not perdict how the fund will
perform in the future.
The following table sets forth the Fund's average annualized total
returns at maximum offering price for
the one, five, ten, fifteen year periods and period since inception
ended July 31, 1999 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 ended July 31,
1999, and period since inception on March 1, 1996. The table also
sets forth the return of the Dow Jones
Industrial Average (DJIA) for the one, five and 10 year periods
ended July 31, 1999.
AVERAGE ANNUALIZED TOTAL RETURN
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
RELEVANT
PERIOD Class D
DJIA Class A Class B Class C
1 year
- -3.9% 19.9% One year -4.2% -4.0%
.96%
5 years
7.7% 23.1% Since inception 19.1% 19.6%
23.6%
10 years 9.8% 14.9%
15 years 9.9%
41 years 10.7%
</TABLE>
The Dow Jones Industrial Average is an unmanaged index composed of
30 blue-chip industrial corporation
stocks.
The table below shows average annual returns for years ended July
31 for the Fund compared to the returns
of the S&P 500 and the Consumer Price Index for the same periods.
Comparison of change in value of
a $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 ended 7/31/99, -4.2%, 0.96%,
0.96% and -3.9% for Class A, Class B, Class C and Class D,
respectively.
<TABLE>
<CAPTION>
<S> <C>
<C> <C>
Consumer American
Growth
Price Index Fund Class D S & P 500
07/89 10,000 10,000
10,000
07/90 10,483 9,995
10,651
07/91 10,797 10,908
12,009
07/92 11,143 12,386
13,545
07/93 11,455 14,888
14,727
07/94 11,741 16,534
15,487
07/95
12,047 19,045 19,531
07/96 12,396 19,964
22,238
07/97 12,669 26,964
31,277
07/98 12,846 24,972
36,720
07/99
13,116 25,449 45,550
</TABLE>
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
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 in the over-the-counter (OTC) market 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.
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.
Fee Table
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
CLASS A CLASS B CLASS
C CLASS D
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge (load) imposed on
purchases (as a percentage of
offering price)........ 5.75% None None
5.75%
Maximum sales charge (load) imposed on
reinvested
dividends.............................................. None
None None None
Maximum contingent deferred sales charge
(load) as a percentage of original
purchase price or redemption proceeds,
whichever is lower
.............................................. None(b)
1st 2 years - 5% 1% for one year None(b)
3rd & 4th yrs - 4%
5th yr - 3%
6th yr - 2%
7th yr - 1%
Exchange
Fee.........................................................
None None None None
Redemption
Fees.................................................... None
None None None
ANNUAL FUND OPERATING EXPENSES (AS
A PERCENTAGE OF AVERAGE NET ASSETS)(a):
Management fees...................................................
0.83% 0.86% 0.87%
0.82%
Distribution and Service (12b-1) fees......................
0.30% 1.00% 1.00%
None
Other
Expenses......................................................
0.85% 0.87%
0.88% 0.90%
Total Fund Operating Expenses......................... 1.98%
2.73% 2.75%
1.72%
(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>
Sales Charges are fees paid directly from your investments when you
buy or sell shares of the Fund. The
Fund may waive or reduce sales charges; please see the Statement of
Additional Information for details.
Annual fund operating expenses are deducted from the Fund's assets
before it pays dividends and before
its net asset value and total return are calculated. We will not
charge you seperately for these expenses.
These expenses are based on amounts incurred during the Fund's most
recent fiscal year.
<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 $10,000
investment including the maximum $575.00
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 $257 $675 $1,119
$2,350
Class B $776 $1,247 $1,545
$3,061*
Class C $378 $853 $1,454
$3,080
Class D $231 $596 $986 $2,076
An investor would pay the following expenses on the same $10,000
investment assuming no redemption
at the end of the period:
Class A $257 $675 $1,119
$2,350
Class B $276 $847 $1,445
$3,061*
Class C $278 $853 $1,454
$3,080
Class D $231 $596 $986 $2,076
* 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".
This example is intended to help you compare the cost of investing
in the Fund to the cost of investing
in other mutual funds with similar investment objectives. We show
the cumulative amount of Fund
expenses on a hypothetical investment of $10,000 with an annual 5%
return over the time shown (the
Fund's actual rate of return may be greater or less than the
hypothetical 5% we use here). This is an
example only, and does not represent future expenses, which may be
greater or less than those shown
here. Also, this example assumes that the Fund's total operating
expenses remain unchanged in each
of the periods we show.
Information about the Fund
What is the Fund's investment objective?
The Fund's primary objective is growth of capital. Income as a
factor in portfolio selection is secondary
to the Fund's objectives.
How does the Fund achieve its objective?
In attempting to achieve its investment objective, the Fund will
invest at least 65% of its assets in common
stocks and securities convertible into common stocks traded on
national securities exchanges or over-the-
counter. Investment Research Corporation, the Fund's investment
adviser (the "Adviser") will choose
common stocks (or convertible securities) that it believes have a
potential for capital appreciation because
of existing or anticipated economic conditions or because 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 Investor Service or Standard
and Poor's Ratings Services, or, if
unrated, will be 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
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 any agency thereof, or retain funds
in cash or cash equivalents. The
Fund's performance could be lower during periods when it retains or
invests its assets in these more
defensive holdings. 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.
Investing in any mutual fund involves risk, including the risk that
you may receive little or no return on
your investment, and the risk that you may lose part or all of the
money you invest. Before you invest in
a Fund you should carefully evaluate the risks. Because of the
nature of the Funds, you should consider
an investment in either one to be a long-term investment that
typically provides the best results when held
for a number of years. The following are the cheif risks you assume
when investing in American Growth
Fund. Please see the Statement of Additional Information for
further discussion of these risks and other
risks not discussed here.
<TABLE>
<CAPTION>
<S>
<C>
Risks
How the Fund strives to manage them
Market risk is the risk that all or a majority of the
securities in a certain market - like the stock or bond
market - will decline in value because of factors such as
economic conditions, future expectations or investor
confidence.
Industry and security risk is the risk that the value of
securities in a particular industry or the value of an
individual stock or bond will decline because of
changing expectations for the performance of that
industry or for the individual company issuing the stock
or bond.
Interest rate risk is the risk that securities will decrease
in value if interest rates rise. The risk is greater for bonds
with longer maturities than for those with shorter
maturities.
Credit risk is the possibility that the bond's issuer (or an
entity that insures the bond) will be unable to make
timely payments of interest and principal.
Foreign risk is the risk that foreign securities may be
adversely affected by political instability, changes in
currency exchange rates, foreign economic conditions or
inadequate regulatory and accounting standards.
Liquidity risk is the possibility that securities cannot be
readily sold, or can only be sold at a price lower than the
price that the Fund has valued them.
The Fund maintains a long-term investment approach
and focus on stocks we believe can appreciate over an
extended time frame regardless of interim market
fluctuations. We do not try to predict overall stock
market movements and do not trade for short-term
purposes.
We limit the amount of each Fund's assets invested in
any one industry and in any individual security. We also
follow a rigorous selection process designed to identify
undervalued securities before choosing securities for the
portfolio.
American Growth Fund generally invests in U.S.
government securities only. If corporate debt is used it is
rated A or better by the Standard & Poors rating agency.
We typically invest only a small portion of the Fund's
portfolio in foreign corporations through American
Depository Receipts. We do not invest directly in foreign
securities. When we do purchase ADRs, they are
generally denominated in U.S. dollars and traded on a
U.S. exchange
We limit exposure to illiquid securities to no more than
10% of the Fund's assets.
</TABLE>
A repurchase agreement is a contract under which the seller of a
security agrees to buy it back at an agreed
upon price and time in the future.
The Fund will enter into repurchase transactions only with parties
who meet creditworthiness standards
approved by the Fund's board of directors. The Fund will not invest
more than 10% of its net assets in
repurchase agreements that mature in less 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.
High portfolio turnover (over 100%) may involve corresponding by
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 share holders, are treated as ordinary
income. The Fund's annual portfolio turnover rate is not
anticipated to exceed 110%
Year 2000
As with other mutual funds, financial and business organizations
and individuals around the world, the
Fund could be adversely affected if the computer systems used by
their service providers do not properly
process and calculate date-related information from and after
January 1, 2000. This is commonly known
as the "Year 2000 Problem". Each Fund is taking steps to obtain
satisfactory assurances that its major
service providers are taking extra steps reasonably designed to
address the Year 2000 Problem on the
computer systems that the service providers use. However, there can
be no assurance that these steps will
be sufficient to avoid any adverse impact on the business of the
Funds.
Management
How is the Fund managed?
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.
The Board of Directors
The Board of Directors meets at least quarterly to establish and
oversee procedures and review the
performance of the investment adviser, distributor and others
responsible for services to the Fund. More
than two-thirds of the directors are independent directors and are
considered advocates for shareholder
interests.
The Investment Adviser
Since the organization of the Fund in 1958, its registered
investment adviser has been Investment Research
Corporation. Investment Research Corporation is located at 110
Sixteenth Street, Suite 1400, Denver,
Colorado 80202-4418.
The Adviser provides investment advice and recommendations
concerning the purchases and sales of the
Fund's portfolio of securities. It also furnishes statistical and
analytical information and administrative and
clerical services to the Fund.
The Fund has an agreement to pay the Adviser an annual fee for its
services based on a percentage of the
Fund's average net assets.
For fiscal year ended July 31, 1999, this fee amounted to 0.83% of
the average net assets on each of the
Fund's four classes.
Portfolio Managers
Robert Brody, the sole shareholder, President and Director of the
Adviser, has primary responsibility for
making day-to-day investment decisions for the Fund. Mr. Brody has
acted in this capacity for the Fund
since 1958. He earned his undergraduate degree in business
administration with an emphasis in economics
and finance from the University of Denver. He later earned his
masters' degree in both business
administration and public administration from the University of
Denver.
Mr. Brody is also President and Director of the Fund's distributor,
American Growth Fund Sponsors, Inc.
Timothy E. Taggart, Treasurer of the Fund and Executive Vice
President of the Advisor, acts as assistant
portfolio manager and analyst to the Fund President. He joined the
Fund in 1983. Mr. Taggart has an MBA
from the University of Denver.
American Growth Fund has a Code of Ethics designed to ensure that
the interests of fund shareholders
come before the interests of the people who manage the fund. Among
other provisions, the Code of Ethics
prohibits Portfolio Managers and other investment personnel from
buying securities in an initial public
offering or from profiting from the purchase and sale of the same
security within 60 calendar days. In
addition, the Code of Ethics requires portfolio managers and other
employees with access to information
about the purchase or sale of securities by the fund to obtain
approval before executing personal trades.
Pricing of Fund Shares
The price you pay for shares will depend on when we receive your
purchase order. If we or an authorized
agent receive your order before the close of trading on the New
York Stock Exchange on a business day,
you will pay that day's closing share price, which is based on the
Fund's net asset value. If we receive your
order after the close of trading, you will pay the next business
day's price. A business day is any day that
the New York Stock Exchange is open for business. Currently the
Exchange is closed when the following
holidays are observed: New Years Day, Martin Luther King, Jr.'s
Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas. We reserve the right to reject
any purchase order.
We determine the Fund's net asset value (NAV) per share at the
close of trading of the New York Stock
Exchange each business day that the Exchange is open. We calculate
this value by adding the market value
of all the securities and assets in a Fund's portfolio, deducting
all liabilities, and dividing the resulting
number of shares outstanding. The result is the net asset value per
share. We price securities and other
assets for which market quotations are available at their market
value. We price debt securities on the basis
of valuations provided to us by an independent pricing service that
uses methods approved by the board
of directors. Any debt securities that have a maturity of less than
60 days we price at amortized cost. We
price all other securities at their fair market value using a
method approved by the board of directors.
Your Account
Investing in the Fund
You can choose from a number of share classes for the Fund. Because
each share class has a different
combination of sales charges, fees, and other features, you should
consult your financial adviser to
determine which class best suits your investment goals and time
frame. You may also consult the Fund's
Statement of Additional Information for more details.
Choosing Class A, B or C
A
* Class A shares have an up-front sales charge of up to 5.75%
that you pay when
you buy shares. The offering price for Class A shares includes
the front-end sales
charge.
* If you invest $50,000 or more, your front-end sales charge will
be reduced.
* You may qualify for other reduced sales charges, as described
in "How to reduce
your sales charge", and under certain circumstances the sales
charge may be
waived.
* Class A shares are also subject to an annual 12b-1 fee no
greater than 0.30% of
average net assets, which is lower than the 12b-1 fee for Class
B and Class C
shares.
* Class A shares generally are not subject to a contingent
deferred sales charge
unless they are sold in amounts of $1,000,000 or more at net
asset value and are
redeemed within 1 year of purchase.
B
* Class B shares have no up-front sales charge, so the full
amount of your purchase is invested in the
Fund. However, you will pay a contingent deferred sales charge
if you redeem your shares within
seven years after you buy them.
* If you redeem Class B shares during the first two years
after you buy them, the shares will be
subject to a contingent deferred sales charge of 5%. The
contingent deferred sales charge is 4%
during the second and third years, 3% during the fifth year, 2%
during the sixth year, and 1%
during the seventh year.
* Under certain circumstances the contingent deferred sales
charge may be waived.
* For approximately seven years after you buy your Class B
shares, they are subject to annual 12b-1
fees no greater than 1% of average daily net assets, of which
0.25% are service fees paid to the
Distributor, dealers or others for providing services and
maintaining accounts.
* Because of the higher 12b-1 fees, Class B shares have
higher expenses and any dividends paid on
these shares are lower than dividends on Class A shares.
* Approximately seven years after you buy them, Class B
shares automatically convert into Class
A shares with a 12b-1 fee of no more than 0.30%. Conversions
may occur as late as three months
after the eighth anniversary of purchase, during which time
Class B's higher 12b-1 fees apply.
C
* Class C shares have no up-front sales charge, so the full
amount of your purchase is invested in the
Fund. However, you will pay a contingent deferred sales charge
if you redeem your shares within
12 months after you buy them.
* Under certain circumstances the contingent deferred sales
charge may be waived.
* Class C shares are subject to an annual 12b-1 fee which may
not be greater than 1% of average
daily net assets, of which 0.25% are service fees and a
distribution fee of .75% paid to the
distributor, dealers or others for providing personal services
and maintaining shareholder accounts.
* Because of the higher 12b-1 fees, Class C shares have
higher expenses and pay lower dividends
than Class A shares.
* Unlike Class B shares, Class C shares do not automatically
convert into another class.
D
* Class D shares are offered to investors who owned Class D
shares as of March 1, 1996. They are
also available to the Fund's adviser, and the Distributors'
directors, certain institutional investors,
corporations and accounts managed by specific types of
fiduciaries.
* Class D shares have an up-front sales charge of 5.75% that
you pay when you buy the shares. The
offering price for Class D shares includes the front-end sales
charge.
* If you invest $50,000 or more, your front-end sales charge will
be reduced.
* You may qualify for other reduced sales charges, as
described in "How to reduce your sales
charge", and under certain circumstances the sales charge may
be waived.
* Class D shares which are sold in amounts of $1,000,000 or
more at net asset value and are
redeemed within one year of purchase are subject to a 1.0%
contingent deferred sales charge.
The Fund's directors have adopted separate 12b-1 plans for Class A,
B and C that allow each class to pay
distribution fees for the sales and distributions of its shares.
Because these fees are paid out of each Class's
assets on an ongoing basis, over time these fees will increase the
cost of your investment and may cost you
more than paying other types of sales charges.
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Class A and D Sales Charges
Sales charge as % of Sales charge as % of
Dealer's commission as
Amount of purchase offering price amount invested %
of offering price
Less than $50,000 5.75% 6.10%
5.00%
$50,000 but less
than $100,000 4.50% 4.71%
3.75%
$100,000 but less
than $250,000 3.50% 3.63%
2.75%
$250,000 but less
than $500,000 2.50% 2.56%
2.00%
$500,000 but less
than $1,000,000 2.00% 2.04%
1.60%
$1,000,000 and over* 0.00% 0.00%
0.00%
* As shown above, there is no front-end sales charge when you
purchase $1 million or more of Class A shares. However,
if your financial adviser is paid a commission on your purchase,
you may have to pay a limited contingent deferred sales
charge of 1% if you redeem these shares within the first year.
</TABLE>
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge
on shares. Please refer to the Statement
of Additional Information for detailed information and eligibility
requirements. You can also get additional
information from your financial adviser. You or your financial
adviser must notify us at the time you
purchase shares if you are eligible for any of these programs.
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Program How it works Share class
A & D B C
Letter of intent
Rights of
Accumulation
Reinvestment of redeemed
shares
SIMPLE IRA, SEP IRA,
SAR/SEP, Prototype Profit
Sharing, Pension, 401(k),
SIMPLE 401(k), 403(b)(7)
Through a Letter of Intent
you agree to invest a certain
amount in American
Growth Fund over a 13
month period to qualify for
reduced front-end sales
charges.
You can combine your
holdings or purchases of all
Classes in American
Growth Fund as well as the
holdings and purchases of
your spouse and children
under 21 to qualify for
reduced front-end sales
charges.
Up to 30 days after you
redeem shares, you can
reinvest the proceeds
without paying a front-end
sales charge.
These investment plans
may qualify for reduced
sales charges by combining
the purchases of all
members of the group.
Members of these groups
may also qualify to
purchase shares without a
front-end sales charge and a
waiver of any contingent
deferred sales charge.
X
X
X
Although the Letter of Intent
and Rights of Accumulation
do not apply to the Purchase
of Class B and C shares, you
can combine your purchase
of A shares with your
purchase of B and C shares
to fulfill your Letter of Intent
or qualify for Rights of
Accumulation
Not available for Class B &
Class C
Not available for Class B &
Class C
</TABLE>
How to buy shares
Through your Financial Adviser
Your financial adviser can handle all the details of purchasing
shares, including opening an account. Your
adviser may charge a separate fee for this service.
By mail
Complete an investment application and mail it with your check,
made payable to the Fund and class of
shares you wish to purchase, to American Growth Fund, 110 Sixteenth
Street, Suite 1400, Denver CO,
80202. If you are making an initial purchase by mail, you must
include a completed investment application
(or an appropriate retirement plan application if you are opening
a retirement account) with your check.
By wire
Ask your bank to wire the amount you want to invest to State Street
Bank & Trust, ABA #011000028, dda
#99041774. Include your account number, how your account is
registered and the name of the Fund Class
in which you want to invest. If you are making an initial purchase
by wire, you must call us so we can
assign you an account number.
By exchange
You can exchange all or part of your Fund Class A or D
(non-retirement) investment to one of the cash
account portfolios, a no load diversified open-end money market
account. To open an account by
exchange, call the Shareholder Service Center at 1-800-525-2406.
The money market fund is separately
managed from the Fund and is not affiliated with the Fund.
Once you have completed an application, you can generally open an
account with no minimum initial
investment and make additional investments at any time in any
amount.
Special Services
To help make investing with us as easy as possible, and to help you
build your investments, we offer the
following special services.
<TABLE>
<CAPTION>
<S> <C>
* Automatic Investing Plan -
The Automatic Investing Plan allows you to make regular monthly
investments directly from your
bank account.
* Direct Deposit - With
Direct Deposit you can make additional investments through
payroll deductions or recurring
government or private payments,
such as Social Security payments or
direct transfers from your bank
account.
* Dividend Reinvestment Plan -
Through our Dividend Reinvestment Plan, you can have your
distributions reinvested in your
account. The shares that you
purchase through the Dividend
Reinvestment Plan are not subject
to a front-end sales charge or to
a contingent deferred sales charge.
Under most circumstances, you may
reinvest dividends only into
like classes of shares.
* Systematic Withdrawal Plan -
Through our Systematic Withdrawal Plan you can arrange a
regular monthly or quarterly
payment from your account made to
you or someone you designate.
You may also have your
withdrawals deposited directly to
your bank account through our
MoneyLine Direct Deposit
Services.
</TABLE>
Retirement plans
In addition to being an appropriate investment for your Individual
Retirement Account (IRA) and Roth
IRA, shares in the Funds may be suitable for group retirement
plans. You may establish your IRA account
even if you are already a participant in an employer-sponsored
retirement plan. For more information on
how shares in the Fund can play an important role in your
retirement planning or for details about group
plans, please consult your financial adviser, or call
1-800-525-2406.
How to redeem shares
Through your Financial Adviser
Your financial adviser can handle all the details of redeeming
shares. Your adviser may charge a separate
fee for this service.
By mail
You can redeem your shares (sell them back to the Fund) by mail by
writing to: American Growth Fund,
110 Sixteenth Street, Suite 1400, Denver, CO, 80202. All owners of
the account must sign the request, and
for redemptions of $5,000.00 or more, you must include a signature
guarantee for each owner. Signature
guarantees are also required when redemption proceeds are going to
an address other than the address of
record on an account.
By wire
You can redeem $1,000.00 or more of your shares and have the
proceeds deposited directly to your bank
account the next business day after we receive your request. Bank
information must be on file before you
request a wire redemption.
If you hold your shares in certificates, you must submit the
certificates with your request to sell the shares.
We recommend that you send your certificates by certified mail.
When you send us a properly completed request to redeem or exchange
shares, you will receive the net
asset value as determined on the business day we receive your
request if we receive it before the close of
the NYSE, etc. We will deduct any applicable contingent deferred
sales charges. We will send you a check,
normally the next business day, but no later than seven days after
we receive your request to sell your
shares. If you recently purchased your shares by check, we will
wait until your check has cleared, which
can take up to 15 days, before we send your redemption proceeds.
If you are required to pay a contingent deferred sales charge when
you redeem shares, the amount subject
to the fee will be based on the shares' net asset value when you
purchased them or their net asset value
when you redeem them, whichever is less. "The Fund will use the
"first-in, first-out" method to determine
the holding period of shares redeemed so that the date of
redemption will be compared with the earliest
purchase date of shares held in the account." This arrangement
assures that you will not pay a contingent
deferred sales charge on any increase in the value of your shares.
If you exchange shares of one class for
shares of another, you will not pay a contingent deferred sales
charge at the time of exchange. If you later
redeem those shares, the purchase price for purposes of the
contingent deferred sales charge formula will
be the price you paid for the original shares - not the exchange
price. The redemption price for purposes
of this formula will be the NAV of the shares you are actually
redeeming.
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 a distribution fee
of 0.05%. Automatic conversion of Class B shares into Class A
shares will occur at least once each
month (on the "Conversion Date") on the basis of the relative net
asset values of the shares of the two
classes on the Conversion Date, without the imposition of any sales
load, fee or other charge.
Conversion of Class B shares to Class A shares will not be deemed
a purchase or sale of the shares for
Federal income tax purposes.
In addition, shares purchased through reinvestment of dividends and
distributions on Class B shares
also will convert automatically to Class A shares. The Conversion
Date for dividend reinvestment
shares will be calculated taking into account the length of time
the shares underlying such reinvestment
shares were outstanding. If at a Conversion Date the conversion of
Class B shares to Class A shares of
the Fund in a single account will result in less than $50 worth of
Class B shares being left in the
account, all of the Class B shares of the Fund held in the account
on the 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.
Account minimum
If you redeem shares and your account balance falls below the
required account minimum of $250.00 the
Fund may redeem your account after 30 days' written notice to you.
Dividends, distributions and taxes
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 or her 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.
Tax laws are subject to change, so we urge you to consult your tax
adviser about your particular tax
situation and how it might be affected by current tax law. The tax
status of your dividends from this Fund
is the same whether you reinvest your dividends or receive them in
cash. Distributions from the Fund's
long-term capital gains are taxable as capital gains, while
distributions from short-term capital gains and
net investment income are generally taxable as ordinary income.
Any capital gains may be taxable at
different rates depending on the length of time the Fund held the
assets. In addition, you may be subject
to state and local taxes on distributions.
An exchange of one of the Fund's share classes for another class or
an exchange to one of the cash account
trust portfolios will be treated as a sale of that Fund share class
and any gain on the transaction may be
subject to federal income tax.
We will send you a statement each year by January 31 detailing the
amount and nature of all dividends and
capital gains that you were paid for the prior year.
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Financial Highlights
Class A Year Ended July 31,
1999 1998
1997 19966
Per Share Operating Data:
Net Asset Value, Beginning of Period $9.49
$11.30 $ 8.84 $ 9.21
Income (loss) from investment operations:
Net investment income4 (loss) (0.05) 0.044
0.141 -1
Net realized and unrealized gain (loss) 0.21
(0.90) 2.83 (0.37)
Total income (loss) from investment operations 0.16
(0.86) 2.97
(0.37)
Dividends and distributions to shareholders:
Dividends from net investment income5 (0.08)
(0.06)5 (0.12)5 -
Book return of capital (0.04) -
- -
Distributions from net realized gain 0
(0.89) (0.39) -
Total dividends and distributions
to shareholders (0.08) (0.95)
(0.51) -
Net Asset Value, End of Period $9.57 $ 9.49
$ 11.30 $ 8.84
Total Return at Net Asset Value1 2.00% (7.6)%
34.6% (4.0)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $8,635
$14,246 $10,536 $3,838
Ratio to average net assets:
Net investment income (loss) 0.00% 0.42%
1.28% 0.13%
Expenses2 1.98% 1.77%
1.76% 2.06%
Portfolio Turnover Rate3 109.3% 103.5%
106.2% 163.1%
</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, 1999, aggregated $115,980,505 and
$159,871,400, respectively.
4 Net investment income per share is based upon relative daily
net asset values.
5 Distributions from net investment income per share are based
upon relative net asset values as of the business day following the
distribution record
date.
6 For the period from March 1, 1996 (inception of offering) to
July 31, 1996
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Class B Year Ended July 31,
1999 1998
1997 19966
Per Share Operating Data:
Net Asset Value, Beginning of Period $9.37
$11.19 $ 8.80 $ 9.21
Income (loss) from investment operations:
Net investment income (loss) (0.13) (0.02)4
0.074 (0.01)4
Net realized and unrealized gain (loss) 0.22
(0.90) 2.79 (0.40)
Total income (loss) from investment operations. 0.09
(0.92) 2.86
(0.41)
Dividends and distributions to shareholders:
Dividends from net investment income5 (0.01)
(0.01)5 (0.09)5 -
Book return of capital -7 -
- -
Distributions from net realized gain 0
(0.89) (0.39) -
Total dividends and distributions
to shareholders (0.01) (0.90)
(0.48) -
Net Asset Value, End of Period $9.45 $ 9.37
$ 11.18 $ 8.80
Total Return at Net Asset Value1 0.9% (8.2)%
33.5% (4.5)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $11,265
$15,533 $10,962 $3,417
Ratio to average net assets:
Net investment income (loss) (0.01)% (0.32)%
0.49% (0.52)%
Expenses2 2.73% 2.52%
2.46% 2.81%
Portfolio Turnover Rate3 109.3% 103.5%
106.2% 163.1%
</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, 1999, aggregated $115,980,505 and
$159,871,400, respectively.
4 Net investment income per share is based upon relative daily
net asset values.
5 Distributions from net investment income per share are based
upon relative net asset values as of the business day following the
distribution record
date.
6 For the period from March 1, 1996 (inception of offering) to
July 31, 1996
7 Less than $0.005 per share.
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Class C Year Ended July 31,
1999 1998
1997 19966
Per Share Operating Data:
Net Asset Value, Beginning of Period $9.37
$11.19 $ 8.81 $ 9.21
Income (loss) from investment operations:
Net investment income (loss) (0.14) (0.02)4
0.074 -4
Net realized and unrealized gain (loss) 0.23
(0.90) 2.79 (0.40)
Total income (loss) from investment operations. 0.09
(0.92) 2.86
(0.40)
Dividends and distributions to shareholders:
Dividends from net investment income (0.02)
(0.01)5 (0.09)5 -
Book return of capital (0.01) -
- -
Distributions from net realized gain -
(0.89) (0.39) -
Total dividends and distributions
to shareholders (0.02) (0.90)
(0.48) -
Net Asset Value, End of Period $9.44 $ 9.37
$ 11.19 $ 8.81
Total Return at Net Asset Value1 0.9% (8.2)%
33.6% (4.3)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $3,131
$4,498 $3,023 $367
Ratio to average net assets:
Net investment income (loss) (0.01)% (0.31)%
0.55% (0.63)%
Expenses2 2.75% 2.52%
2.50% 2.97%
Portfolio Turnover Rate3 109.3% 103.5%
106.2% 163.1%
</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, 1999, aggregated $115,980,505 and
$159,871,400, respectively.
4 Net investment income per share is based upon relative daily
net asset values.
5 Distributions from net investment income per share are based
upon relative net asset values as of the business day following the
distribution record
date.
6 For the period from March 1, 1996 (inception of offering) to
July 31, 1996
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class D Year Ended July 31,
Per Share Operating Data:
1999 1998 1997 1996 1995 1994 1993 1992
1991 1990
Net Asset Value,
beginning of period...... $ 9.53 $ 11.33 $ 8.85 $ 8.75
$ 9.34 $ 9.39 $ 8.50 $ 8.02 $ 7.59 $ 7.46
Income(loss) from
investment operations:
Net investment income.... 0.01
.074 .174 .034 .21 .03 .11 .10 .16
.17
Net realized and unrealized
gain (loss)............... 0.17 (.90) 2.82 .39
.88 1.00 1.51 .94 .53 .26
Total income (loss) from
investment operations.....
0.18 (.83) 2.99 .42 1.09 1.03 1.62 1.04
.69 .43
Dividends and distributions
to shareholders:
Dividends from net
investment income .......
0.10 (.08)5 (.12)5 (.12)5 (.12) (.05)
(.08) (.06) (.26) (.30)
Book return of capital (0.05)
- - - - - -
- - -
Distributions from net
realized gain............ 0 (.89) (.39) (.20)
(1.56) (1.03) (.65) (.50)
- -
Total dividends and
distributions to
shareholders............. (0.10) (.97) (.51) (.32)
(1.68) (1.08) (.73) (.56) (.26)
(.30)
Net Asset Value,
end of period........... $9.61
$9.53 $11.33 $8.85 $8.75 $9.34 $9.39 $8.50
$8.02 $7.59
Total Return1.............. 1.9% (7.4)% 35.1% 4.8%
15.2% 11.1% 20.2% 13.6% 9.6% 5.7%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands)........... $74,111
$89,364 $115,106 $100,130 $90,538 $68,209 $62,180 $55,501
$55,710 $58,574
Ratios to average net
assets:
Net investment income
(loss)................... 0.14% 0.63% 1.71% 0.47%
1.91% 0.35% 0.59% 1.14% 2.02% 2.01%
Expenses2.................
1.72% 1.54% 1.55% 1.63% 1.45% 1.34% 1.44%
1.46% 1.33% 1.33%
Portfolio turnover
rate3.................... 109.3% 103.5% 106.2% 163.1%
173.0% 87.2% 48.8% 39.8% 135.5% 92.3%
</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, 1999, aggregated
$115,980,505 and $159,871,400,
respectively.
4 Net investment income per share is based upon relative
daily net asset values.
5 Distributions from net investment income per
share are based upon relative net asset values as of the business
day following the distribution record
date.
Understanding the Financial Highlights
The tables on the next pages itemize what contributed to the
changes in share price during the period. They
also show the changes in share price for this period in comparison
to changes over the last two fiscal
periods.
On a per share basis, the tables include as appropriate:
* share prices at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to
shareholders
* share prices at the end of the period
The tables also include some key statistics for the period as
appropriate:
* Total Return - the
overall percentage of return of the Fund, assuming the reinvestment
of all distributions
* Expense Ratio -
operating expenses as a percentage of average net assets
* Net Income Ratio -
net investment income as a percentage of average net assets
* Portfolio Turnover -
the percentage of the Fund's buying and selling activity
The Financial Highlights have been audited by KPMG LLP, independent
auditors. Their Independent
Auditors' Report is included in the Fund's annual report for the
year ended July 31, 1999, which is
incorporated by reference into the Statement of Additional
Information. Both are available upon request
and without charge from the Fund's Distributor.
American Growth Fund, Inc.
110 Sixteenth Street, Suite 1400
Denver, CO 80202
800-525-2406
303-626-0600
303-626-0614 Fax
ADVISER
Investment Research Corporation
Administration Offices and Mailing Address:
110 Sixteenth Street, Suite 1400
Denver, CO 80202
DISTRIBUTOR
American Growth Fund Sponsors, Inc.
Administration Offices and Mailing Address:
110 Sixteenth Street, Suite 1400
Denver, CO 80202
(303) 626-0600
(800) 525-2406
(303) 626-0614 Fax
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
Additional information about the Funds' investments is available in
the Funds' annual and semi-annual reports to shareholders.
In the Funds' shareholder reports, you will find a discussion of
the market conditions and investment strategies that
significantly affected the Funds' performance during the report
period. You can find more detailed information about the Funds
in the current Statement of Additional Information, which we have
filed electronically with the Securities and Exchange
Commission (SEC) and which is legally a part of this prospectus. If
you want a free copy of the Statement of Additional
Information, the annual or semi-annual report, or if you have any
questions about investing in this Fund, you can write to us
at 110 Sixteenth Street, Suite 1400, Denver, CO 80202, or call
toll-free 800-525-2406. You may also obtain additional
information about the Fund from your financial adviser.
You can find reports and other information about the Fund on the
SEC web site (http://www.sec.gov) or you can get copies
of this information, after payment of a duplicating fee, by writing
to the Public Reference Section of the SEC, Washington,
D.C. 20549-6009. Information about the Fund, including its
Statement of Additional Information, can be reviewed and copied
at the Securities and Exchange Commission's Public Reference Room
in Washington D.C. You can get information on the
public reference room by calling the SEC at 1-800-SEC-0330.
Shareholder Service Center
Call the Shareholder Service Center Monday through Friday, 6:30
a.m. to 5:00 p.m. Mountain time.
* For fund information; literature; price, and performance
figures.
* For information on existing regular investment accounts
and retirement plan accounts including wire investments;
wire redemptions; telephone redemptions and telephone exchanges.
Investment Company Act File #811-825
<PAGE>
AMERICAN GROWTH FUND, INC.
110 16th Street, Suite 1400, Denver, Colorado 80202
303-626-0600
STATEMENT OF ADDITIONAL INFORMATION
November 22, 1999
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 22, 1999. 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>
American Growth Fund, Inc. was incorporated in the state of
Maryland
in August of 1958 as an open-end, diversified, management
investment
company
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 at
the time of
investment 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.
8. The Fund cannot 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.
9. 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.
10. The Fund cannot invest in companies for the purpose of
exercising
management or control.
11. The Fund cannot deal in real estate, commodities or
commodity contracts.
12. 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. 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.
13. The Fund cannot invest in puts, calls, straddles, spreads or
any
combination thereof.
The foregoing policies can be changed only by approval of a
majority of the
outstanding shares of the Fund, which means the lesser of (i) 67%
of the shares
represented at a meeting at which more than 50% of the outstanding
shares are present
in person or by proxy, or (ii) more than 50% of the outstanding
shares.
When the Fund makes temporary investments in U.S. Government
securities, it
ordinarily will purchase Treasury Bills, Notes, or Bonds. The Fund
may make temporary
investments in repurchase agreements where the underlying security
is issued or
guaranteed by the U.S. Government or an agency thereof. The Fund
will not invest more
than 10% of its assets in repurchase agreements maturing in more
than seven days, or
securities that are illiquid by virtue of the absence of a readily
available market
or legal or contractual restrictions on resale. The Fund will not
invest in real
estate limited partnership interests, other than interests in
readily marketable real
estate investment trusts. The Fund will not invest in oil, gas or
mineral leases, or
invest more than 5% of its net assets in warrants or rights, valued
at the lower of
cost or market, nor more than 2% of its net assets in warrants or
rights (valued on
the same basis) which are not listed on the New York or American
Stock Exchanges.
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. (82) 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 (60) Director Certified Public
Accountant
1400 W. 122nd Ave.
Suite 220
Westminster, Colorado
Harold Rosen (72) Director Owner of
Bi-Rite Furniture
#1 Middle Road Stores.
Englewood, CO
Timothy E. Taggart (46) 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 (52) Secretary Employee of
Adviser since
110 Sixteenth Street, Suite 1400 1977. See below
for
Denver, CO affiliations with
Adviser and
Distributor
William D. Farr (89) 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.
</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
and of AGF Holdings, Inc. which is the sole shareholder of the
Distributor.. 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 7) received total compensation of $5,900 from
the Fund in
fiscal year 1999. 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 31,1999, Messrs. Baum, Bush, 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, 1999.
Michael J. Baum, Jr. $2,000
Eddie R. Bush $1,500
Harold Rosen $1,200
</TABLE>
In addition, for the fiscal year ended July 31, 1999, Messrs.
Farr and Johns
(deceased 03/99) served as advisory board members and received fees
of $800 and $400
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 17, 1999, no person owned more than 5% of the
Fund and all
officers and directors as a group (a total of 6) owned directly
281,473.821 of its
shares or 2.9% of shares outstanding. Together, directly and
indirectly, all the
officers and directors as a group owned 300,753.579 shares or 3.1%
of all shares
outstanding.
As of September 17, 1999, officers, directors and members of the
advisory board
and their relatives owned of record and beneficially Fund shares
with net asset value
of approximately $4,000,264, representing approximately 4.2% of the
total net asset
value of the Fund.
INVESTMENT ADVISORY AGREEMENT
Since the organization of the Fund in 1958, its investment
adviser has been
Investment Research Corporation (the "Adviser"), 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.
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.
Total advisory fees paid by the Fund to the Adviser in fiscal
years 1997, 1998
and 1999 were $978,027, $1,102,795, and $918,554, resulting in
management fees of
0.80%, 0.81% and 0.83% of average net assets. In fiscal years
1997, 1998 and 1999
there were no expense reimbursements made by the Adviser to the
Fund.
The advisory agreement will continue from year to year so long as
such
continuance is specifically approved annually either by the vote of
a majority 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.
Each full share of the Fund has one vote and fractional shares
have
proportionate fractional votes. Shares of the Fund are generally
voted in the
aggregate except where separate voting by each class is required by
law. The Fund is
not required to hold regular annual meetings of shareholders and
does not intend to
do so; however, the board of directors will call special meetings
of shareholders if
requested in writing generally by the holders of ten percent or
more of the
outstanding shares of the Fund or as may be required by applicable
law or the Fund's
articles of incorporation. The Fund will assist shareholders in
communicating with
other shareholders as required by the Investment Company Act of
1940. Directors may
be removed by action of the holders of a majority or more of the
outstanding shares
of the Fund. Shares of the Fund have non-cumulative voting rights,
which means that
the holders of more than 50 percent of the shares voting for the
election of
directors can elect 100 percent of the directors if they choose to
do so, and in such
an event, the holders of the remaining less than 50 percent of the
shares voting for
the election of directors will not be able to elect any person or
persons to the
board of directors.
The Fund has entered into separate distribution agreements with
the Distributor
in connection with the offering of each class of shares of the Fund
(the
"Distribution Agreements"). The Distributor has made no firm
commitment to take any
Fund shares from the Fund and is permitted to buy only sufficient
shares to fill
unconditional orders placed with it by investors and selected
investment dealers. The
Distribution Agreements obligate the Distributor to pay certain
expenses in
connection with the offering of each class of shares of the Fund.
After the
prospectuses, statements of additional information and periodic
reports have been
prepared, set in type and mailed to shareholders, the Distributor
pays for the
printing and distribution of copies thereof used in connection with
the offering to
dealers and investors. The Distributor also pays for other
supplementary sales
literature and advertising costs.
Fund shares may be purchased at the public offering price through
the
Distributor or through broker-dealers who are members of the
National Association of
Securities Dealers, Inc. who have sales agreements with the
Distributor. 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.
Commissions and sales charges paid by investors on the purchase
of Fund shares
totaled $472,212, $634,893 and $181,649 in fiscal years 1997, 1998
and 1999,
respectively, of which $140,586, $176,388 and $45,545 were retained
by Sponsors. The
aggregate dollar amount of transactions effected through American
Growth Fund
Sponsors involving the payment of commissions represented 74% of
the aggregate dollar
amount of all transactions involving the payment of commissions
during 1999.
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, 1997, 1998
and 1999 were $156,121, $176,815, and $46,598 respectively. The
gross sales charges
for the sale of Class A shares for the period ended July 31, 1997,
1998 and 1999 was
$313,777, $458,078 and $135,051. For the fiscal years ended July
31, 1997, 1998 and
1999, for the sale of Class D shares the Distributor retained
$92,772, $89,162 and
$27,755, respectively, as its portion of commissions paid by
purchasers of the
Fund's shares after allowing as concessions to other dealers
$63,349, $87,652 and
$17,790 respectively. For the period ended July 31, 1999, for the
sale of Class A
shares the Distributor retained $29,250 as its portion of
commissions paid by
purchases of the Fund's shares after allowing as concession to
other dealers $26,680.
During the same periods no commissions were paid to the Distributor
on sales and
purchases of portfolio securities.
The following sample calculation of the public offering price of
one Class A
and Class D share of the Fund is based on the net asset value of
one Class A and
Class D share as of July 31, 1999 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) $ 9.61 $ 9.57 $ 9.45 $
9.44
(5.75% of offering price) 0.59 0.58 0.00
0.00
Maximum offering price per share $ 10.20 $10.15 $
9.45 $ 9.44
</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
values of all assets held the day an order is received which
qualify for rights of
accumulation may be combined to determine the aggregate investment
of "any person"
in ascertaining the sales charge applicable to each subsequent
purchase. For example,
if a person 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 a sales
charge of 5.75% was paid, a subsequent purchase of $80,000 of
additional Class A or
Class D shares, respectively, would result in payment of a 3.50%
sales charge.
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. A Class A or Class D shareholder may sign a
letter of intent
covering purchases to be made within a period of thirteen months
(which may include
the preceding 90 days) and thereby become eligible for the reduced
sales charge
applicable to the total amount purchased, provided such amount is
not less than
$50,000. After a letter of intent is established, each future
purchase will be made
at the reduced sales charge applicable to the intended dollar
amount noted on the
application. Reinvestment of income dividends and capital gains
distributions is not
considered a purchase hereunder. If, within the 13-month period,
ownership of the
designated class of Fund shares does not reach the intended dollar
amount, the
difference between what you paid for such shares and the amount
which would have been
paid for them must be promptly paid as if the normal sales
commission applicable to
such purchases had been charged. The difference between the sales
charge as applied
to a regular purchase and the sales charge as applied on the letter
of intent will
be held in escrow in the form of shares (computed to the nearest
full share) and can
be retained by the Fund. If the intended dollar amount is increased
during the
13-month period, 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 the revised 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 through
pre-authorized checks or automated clearing house debits, the Plan
authorizes the
Fund to charge the regular bank account of the shareholder on a
regular basis to
provide systematic additions to the account of the 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 of 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 contingent
deferred sales charge
(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 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's value or of the original purchase, whichever is
greater.
For the fiscal year ended July 31, 1999, the Distributor received
CDSCs of
$37,273, with respect to redemptions of Class B shares, all of
which was paid to the
Distributor. For the fiscal year ended July 31, 1999 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 for net asset value purchases over one million dollars, not
to exceed 1% of
the purchase amount.
The information reflected in the following table is provided in
respect to all
commissions and other compensation received, directly or indirectly
from the Fund
during the Funds most recent fiscal year.
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
American
Growth Fund
Sponsors, Inc.
Net
Underwriting
Discounts and
Commissions
Compensation
on
Redemptions
and
Repurchases
Brokerage
Commissions
Other
Compensation
$20,022
$78,394
$41,330
$261,266
$14,865
</TABLE>
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 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. Either the
owner or the Fund may
terminate the Plan at any time, for any reason, by written notice
to the other.
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.
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
capital gains distributions will be reinvested 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 of the
retirement plans offered
by the Fund. Each participant in a retirement plan account is
charged a $20 annual
service fee which is paid 50% to the Custodian of the retirement
plan and 50% to the
Distributor 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 shareholder
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.
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 was a
reasonable likelihood
that each Distribution Plan would benefit the Fund and each Class
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, 1999, the Fund paid the
Distributor $28,917
(based on average net assets relating to the Class A shares of
approximately
$11,307,203) pursuant to the Class A Distribution Plan, $26,680 of
which was paid
to other Broker-Dealers for providing account maintenance and
distribution-related
services in connection with the Class A shares and $2,569 was
retained by the
Distributor for distribution related expenses. For the fiscal
year ended July 31,
1999, the Fund paid the Distributor $142,192 (based on average net
assets relating
to the Class B shares of approximately $13,986,516) 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, 1999, the Fund paid
the Distributor
$44,323 (based on average net assets relating to the Class C shares
of approximately
$4,319,203) 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, 1999, the net
assets of the Fund
subject to the Class B Distribution Plan aggregated approximately
$11,265,053. At
this net asset level, the annual fee payable pursuant to the Class
B Distribution
Plan would aggregate approximately $35,649. At July 31, 1999, the
net assets of the
Fund subject to Class C Distribution Plan aggregated approximately
$3,131,060. At
this asset level, the annual fee payable pursuant to the Class C
Distribution Plan
would aggregate $44,525.
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
Adviser's securities order department. The Adviser does not have
any agreement or
arrangement to use any particular broker for its portfolio
transactions. The
Adviser'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 Adviser 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 Adviser
determines in good faith that the amount of such commissions is
reasonable in
relation to the value of the brokerage and research services
provided by such broker.
Portfolio transactions placed through dealers serving as primary
market makers
are effected at net prices, without commission as such, but which
include
compensation to the dealer in the form of mark up or mark down. In
certain instances
the Fund may make purchases of underwritten issues at prices which
include
underwriting fees. When making purchases of underwritten issues
with fixed
underwriting fees, the Adviser may designate broker-dealers who
have agreed to
provide the Adviser with certain statistical, research, and other
information, or
services which are deemed by the Adviser to be beneficial to the
Fund's investment
program. With respect to money market instruments, the Adviser
anticipates that
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
Adviser by a
broker-dealer. The Adviser 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 a transaction. The Adviser 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 $306,385, $364,892
and $260,228
in fiscal years 1997, 1998 and 1999, 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 $260,228
for the 1999 fiscal
year to American Growth Fund Sponsors (Sponsors), the underwriter
and an affiliate
of the Fund, which represents 100% of the total brokerage
commissions paid.
Commissions were less this year by $104,664 because of a decrease
in the Fund's
assets by $26,498,364 and a corresponding decrease in the number
and size of Fund
portfolio transactions.
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 more
sensitive to such declines may 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, 1997, 1998 and 1999 was
106.2%, 103.5% and
109.3%, 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, Martin Luther King Day, Presidents' Day,
Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
In determining net asset value, securities traded on the New York
Stock
Exchange or other stock exchange approved for this purpose by the
board of directors
will be valued on the basis of the closing sale thereof on such
stock exchange, or,
if such sale is lacking, at the mean between closing bid and asked
prices on such
day. If no bid and asked prices are quoted for such day or
information as to New York
or other approved exchange transactions is not readily available,
the security will
be valued by reference to recognized composite quotations or such
other method as the
board of directors in good faith deems will reflect its fair market
value. Securities
not traded on any stock exchange but for which market quotations
are readily
available are valued on the basis of the mean of the last bid and
asked prices.
Short-term securities are valued at the mean between the closing
bid and asked prices
or by such other method as the board of directors determines to
reflect their fair
market value. The board of directors in good faith determines the
manner of
ascertaining the fair market value of other securities and assets.
The net asset price of Fund shares will be computed by deducting
total
liabilities from total assets. The net asset value per share will
be ascertained by
dividing the Fund's net assets by the total number of shares
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.
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 shares, a shareholder will realize a
taxable gain
or loss depending upon the shareholder's basis in the shares. Such
gain or loss will
be treated as capital gain or loss if the shares are capital assets
in the
shareholder's hands and such capital gain or loss will be long-term
capital gain or
loss if the shares have been held for more than one year. Any loss
realized on a sale
or exchange will be disallowed to the extent the shares disposed of
are replaced
within a period of 61 days beginning 30 days before and ending 30
days after the
shares are disposed of. Any loss realized by a shareholder on the
sale of shares of
the Fund held by the shareholder for six months or less will be
treated for tax
purposes as a long-term capital loss to the extent of any
distributions of net
capital gains received by the shareholder with respect to such
shares.
Shareholders receiving distributions in the form of newly issued
shares will
have a cost basis in each share received equal to the fair market
value of a share
of the Fund on the distribution date. Shareholders will be notified
annually as to
the U.S. federal income tax status of distributions and
shareholders receiving
distributions in the form of newly issued shares will receive a
report as to the fair
market value of the shares received. If the net asset value of
shares is reduced
below a shareholder's cost as a 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 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 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, 1999, the average annual total
returns at
maximum offering price for the Class D shares of the Fund were
(3.9)% for 1 year,
7.7% for 5 years, 9.8% for 10 years and 9.9% for 15 years. For the
year ended July
31, 1999 and period since inception on March 1, 1996, the average
annual total return
for the Fund's Class A shares were (4.2)% and 19.1%, Class B shares
were (4.0)% and
19.6%, and Class C shares were .96% and 23.6%, respectively.
In addition to the standardized calculation of annual total
return, the Fund
may from time to time use other methods of calculating its
performance in order to
illustrate the effect of a hypothetical investment in a plan or the
effect of
withdrawing funds from an account over a period of time. Any
presentation of
non-standardized calculations will be accompanied by standardized
performance
measures as well. Calculations of performance may be expressed in
terms of the total
return as well as the average annual compounded rate of return of
a hypothetical
investment in the Fund over varying periods of time in addition to
the 1, 5, and 10
year periods (up to the life of the Fund) and may reflect the
deduction of the
appropriate sales charge imposed upon an initial investment of more
than $1,000 in
the Fund. These performance calculations will reflect the deduction
of a proportional
share of Fund expenses (on an annual basis), will assume that all
dividends and
distributions are reinvested when paid, may include periodic
investments or
withdrawals from the account in varying amounts and/or percentages
and may include
deductions for an annual custodian fee. The Fund may calculate its
total return or
other performance information prior to the deduction of a sales
charge.
The performance figures described above may also be used to
compare the
performance of the Fund's shares against certain widely recognized
standards or
indices for stock and bond market performance. The following are
the indices against
which the Portfolios may compare performance:
The Standard & Poor's Composite Index of 500 Stocks (the S&P 500
Index) is a
market value-weighted and unmanaged index showing the changes in
the aggregate market
value of 500 stocks relative to the base period 1941-43. The S&P
500 Index is
composed almost entirely of common stocks of companies listed on
the NYSE, although
the common stocks of a few companies listed on the American Stock
Exchange or traded
OTC are included. The 500 companies represented include 400
industrial, 60
transportation and 50 financial services concerns. The S&P 500
Index represents about
80% of the market value of all issues traded on the NYSE.
The Dow Jones Industrial Average is an unmanaged index composed
of 30 blue-chip
industrial corporation stocks.
The Lipper Mutual Fund Performance Analysis and Mutual Fund
Indices measure
total return and average current yield for the mutual fund
industry. Lipper 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,
1999. 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 outlined in the prospectus, which would
have produced a lower
rate of return for each of these classes. The Fund's sales loads
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 investmentsreinvested 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 18,0001,405 6,354 24,354
13,704 9,330 5,110 28,144
07/31/76 19,0001,171 7,525 26,525
16,777 10,796 7,227 34,800
07/31/77 20,0001,074 8,599 28,599
19,582 12,008 9,204 40,794
07/31/78 21,0001,017 9,616 30,616
23,726 13,984 11,894 49,604
07/31/79 22,0002,055 11,671 33,671
27,109 15,429 15,437 57,975
07/31/80 23,0002,931 14,602 37,602
37,937 22,535 24,562 85,034
07/31/81 24,0003,766 18,368 42,368
30,526 41,349 22,502 94,377
07/31/82 25,0004,235 22,603 47,603
27,829 39,477 23,846 91,152
07/31/83 26,0006,769 29,372 55,372
40,090 55,535 42,431 138,056
07/31/84 27,0005,657 35,029 62,029
35,136 58,360 41,506 135,002
07/31/85 28,0004,637 39,666 66,666
37,927 73,322 48,927 160,176
07/31/86 29,0007,330 46,996 75,996
41,252 77,925 60,054 179,231
07/31/87 30,0005,993 52,989 82,989
44,358 107,124 70,083 221,565
07/31/88 31,0003,685 56,674 87,674
31,884 105,874 52,808 190,566
07/31/89 32,0009,656 66,330 98,330
36,390 117,707 69,793 223,890
07/31/90 33,0009,004 75,334 108,334
37,969 119,759 79,838 237,566
07/31/91 34,0008,138 83,472 117,472
41,072 126,543 93,645 261,260
07/31/92 35,0001,955 85,427 120,397
44,484 151,776 101,369 297,629
07/31/93 36,0002,801 88,288 124,228
50,094 193,448 115,156 358,698
07/31/94 37,0001,910 90,138 127,138
50,782 232,061 116,467 399,310
07/31/95 38,0005,130 95,268 133,268
48,526 297,125 115,242 460,893
07/31/96 39,0006,321 101,589 140,589
50,035 311,128 122,923 484,086
07/31/97 40,0006,564 108,153 148,153
65,012 424,387 165,392 654,791
07/31/98 41,000 4,623 112,776 153,776
55,644 408,025 143,706 607,375
07/31/99 42,0006,373 119,149 161,149
57,071 411,450 151,421 619,943
</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 that withdrawals were made first from
income for the year and 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
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
0731/99 800 0 800 32,800 26,017
117,031 143,048
TOTAL $22,886 $ 9,914 $ 32,800
</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:
Mr. Greenspan and his policies seem to be able to keep the economy
on track. As I write this letter to you the inflation rate is 2.1%
and the rate of unemployment is 4.2%. All indicators seem to show
that the economy is robust and stable. We have positioned your
portfolio to take advantage of this economy.
The fund in the last year has experienced a wavering in the market.
In the first six months of the year the fund took a position that
led to less than expected growth. We've made some changes and I am
happy to report that in the period from June 30, 1999 to
September 3, 1999, our fund has substantially out-performed the Dow
Jones Industrial Average. We try to include only the largest
and most elite companies in your portfolio in keeping with our
investment philosophy of maintaining conservative growth. Some of
them are Hewlett Packard (leading manufacturer of computer
products), General Electric (one of the world's largest providers
of
financing and insurance, as well as a leading maker of jet engines,
electric utility generator and the last original member of the Dow
Jones Industrials) and Texaco (leading international oil and
natural gas company engaged in exploration, refining and marketing
operations).
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 Fund, Inc.
over the past 41 years and you have benefitted as a result.
My staff and I are always available to discuss your account with
you. Our toll-free number is 800.525.2406.
American Growth Fund wishes you A Good Future!
Sincerely
Robert Brody
9/3/99
<PAGE>
How American Growth Fund Has Its Shareowners' Money Invested
STATEMENT OF INVESTMENTS
July 31, 1999
<TABLE>
<CAPTION>
Market
Description of Security Shares
Value
COMMON STOCKS 87.08%
<S> <C>
<C>
Commercial Bank Industry 17.45%
City National Corp.. . . . . . . . . . . . . . . . . . .197,800
$6,774,650
(Owns City National Bank, largest independent bank in
southern California.)
SouthTrust Corp. . . . . . . . . . . . . . . . . . . . .135,000
4,961,250
(The 33rd largest bank in the U.S.)
Royal Bank of Canada . . . . . . . . . . . . . . . . . . 70,000
3,045,000
(Canada's largest bank.)
Bank America Corp. . . . . . . . . . . . . . . . . . . . 32,624
2,165,418
(The 3rd largest bank in the United States.)
16,946,318
Computer & Peripherals Industry 9.20%
Hewlett Packard Company. . . . . . . . . . . . . . . . . 73,500
7,694,531
(A designer and manufacturer of precision
electronic products.)
Cisco Systems Inc.*. . . . . . . . . . . . . . . . . . . 20,000
1,242,500
(The leading supplier of high-performance internet-working
products.)
8,937,031
Household Products Industry 8.93%
Procter & Gamble Company . . . . . . . . . . . . . . . . 50,000
4,525,000
(#1 manufacturer of household products in the U.S. and the
world's largest advertiser.)
Colgate Palmolive Company. . . . . . . . . . . . . . . . 84,000
4,147,500
(2nd largest domestic maker of detergents, toiletries and
other household products.)
8,672,500
</TABLE>
Market
Description of Security Shares
Value
<TABLE>
<CAPTION>
Electronic Equipment Industry 6.73%
<S> . . . . . . . . . . . . . . . . . . . . . . . . <C>
<C>
General Electric Company . . . . . . . . . . . . . . . . 60,000
$6,540,000
(One of the largest and most diversified industrial
companies in the world.)
Drug Industry 5.38%
Amgen Inc. . . . .
68,000 5,227,500
(Utilizes biotechnology to develop human pharmaceutical
products.)
Semiconductor Industry 5.22%
Intel Corp. . . . . . . . . . . . . . . . . . . . . . . 60,000
4,140,000
(A leading manufacturer of integrated circuts.)
Micron Technology Inc.*. . . . . . . . . . . . . . . . . 15,000
931,875
(Manufactures semiconductor components used in the
computer, telecommunications, and office automation industries.)
5,071,875
Aluminum Industry 4.93%
Alcoa Inc. . . . . . . . . . . . . . . . . . . . . . . . 80,000
4,790,000
(The world's largest aluminum producer.)
Petroleum (Integrated) Industry 4.63%
Texaco Inc. . . . . . . . . . . . . . . . . . . . . . . 72,200
4,498,963
(A major integrated international oil company.)
</TABLE>
Market
Description of Security Shares
Value
<TABLE>
<CAPTION>
<S> . . . . . . . . . . . . . . . . . . . . . . . . <C>
<C>
Telecommunications Services Industry 3.74%
AT&T Corp. . . . . . . . . . . . . . . . . . . . . . . . 70,000 $
3,635,625
(Operates in the global telecommunications and information
management industry.)
Machine Industry 3.62%
Caterpillar, Inc.. . . . . . . . . . . . . . . . . . . . 60,000
3,517,500
(The world's largest producer of earthmoving equipment.)
Insurance Industry 3.31%
Equitable Companies, Inc. (The). . . . . . . . . . . . . 50,000
3,212,500
(Parent holding company of the Equitable Life Assurance
Society of the United States.)
Financial Services Industry 2.75%
Citigroup Inc. . . . . . . . . . . . . . . . . . . . . . 60,000
2,673,750
(A diversified financial services company.)
Precision Instrument Industry 2.14%
Eastman Kodak, Co. . . . . . . . . . . . . . . . . . . . 30,000
2,073,750
(The world's largest producer of photographic products.)
Oilfield Services Industry 1.90%
Schlumberger Limited . . . . . . . . . . . . . . . . . . 30,500
1,847,156
(Operates in two segments: oilfield services, measurement
& systems.)
</TABLE>
Market
Description of Security
Shares/Face Value
<TABLE>
<CAPTION>
<S> . . . . . . . . . . . . . . . . . . . . . . . . <C>
<C>
Steel (Integrated) Industry 1.76%
USX - U.S. Steel Group . . . . . . . . . . . . . . . . . 66,000
$1,711,875
(The largest U.S. steelmaker.)
Auto Industry 1.51%
General Motors Corp. . . . . . . . . . . . . . . . . . . 20,000
1,218,750
(The world's largest auto manufacturer.)
Delphi Automotive Systems Corp. . . . . . . . . . . . . 13,978
251,604
(A supplier of components, integrated systems and modules
to the automotive Industry.)
. . . . . . . . . . . . . . . . . . . . . . . .
1,470,354
Telecommunications Equipment Industry 1.34%
Lucent Technologies Inc. . . . . . . . . . . . . . . . . 20,000
1,301,250
(One of the world's leading designers, developers and
manufacturers of telecommunications systems, software and
products.)
Paper & Forest Products Industry 1.13%
Fort James Corp. . . . . . . . . . . . . . . . . . . . . 30,000
1,095,000
(The second largest paper goods producer in the United
States.)
Building Materials Industry 1.12%
Ameron International Inc. . . . . . . . . . . . . . . 25,500
1,085,344
(The largest supplier of high-performance marine and
offshore coatings in the U.S.)
</TABLE>
Market
Description of Security
Shares/Face Value
<TABLE>
<CAPTION>
<S> . . . . . . . . . . . . . . . . . . . . . . . . <C>
<C>
Food Industry 0.29%
Fresh Del Monte Produce Inc.* . . . . . . . . . . . . . 20,000 $
283,750
(Produces, distributes and markets fresh produce.)
Total Common Stocks (cost $63,893,510) (87.08%). . . . .
84,592,041
U.S. GOVERNMENT OBLIGATIONS 0.69%
U.S. Treasury Bond, 6.00%, 02/15/26 . . . . . . . . . .
673,204
Total U.S. Government Obligations (cost $715,812). . . .
673,204
MONEY MARKET INSTRUMENTS 10.33%
LIR Government Money Fund, (cost $10,035,189). . . . . .
10,035,189
Total Money Market Instruments (cost $10,035,189) . . .
10,035,189
Total Investments, at Value (cost $74,644,511). . . . . 98.10%
95,300,434
Cash and Receivables, Less Liabilities . . . . . . . . . 1.90%
1,841,659
Net Assets . . . . . . . . . . . . . . . . . . . . . . .100.00% $
97,142,093
</TABLE>
Financial Statements
AMERICAN GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES, JULY 31, 1999
<TABLE>
<caption
<S> . . . . . . . . . . . . . . . . . . . . . . . .
<C>
ASSETS:
Investments, at value (cost $74,644,511)-see accompanying
statement. . $ 95,300,434
Cash . . . . . . . . . . . . . . . . . . . . . . . . . .
2,835,585
Receivables:
Shares of beneficial interest sold. . . . . . . . . . .
15,783
Dividends . . . . . . . . . . . . . . . . . . . . . . .
100,098
Interest. . . . . . . . . . . . . . . . . . . . . .
. . 59,473
Total assets . . . . . . . . . . . . . . . . . . . . . .
98,311,373
LIABILITIES:
Shares of beneficial interest redeemed . . . . . . . . .
222,855
Investments Purchased. . . . . . . . . . . . . . . . . .
946,425
NET ASSETS
. . $ 97,142,093
COMPOSITION OF NET ASSETS:
Paid-in capital. . . . . . . . . . . . . . . . . . . . .
$ 72,886,825
Accumulated net realized gain from investment transactions
. . . . 3,599,345
Net unrealized appreciation of investments . . . . . . .
20,655,923
Net assets . . . . . . . . . . . . . . . . . . . . . . .
$ 97,142,093
NET ASSET VALUE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (based on
net assets
of $8,635,193 and 902,062 shares of beneficial interest
outstanding). . . . $ 9.57
Maximum offering price per share (net asset value plus
sales charge of
5.75% of offering price). . . . . . . . . . . . . . . .
$ 10.15
Class B Shares:
Net asset value, redemption price and offering price per
share (based
on net assets of $11,265,053 and 1,191,841 shares of
beneficial interest outstanding) . . $ 9.45
Class C Shares:
Net asset value, redemption price and offering price per
share (based
on net assets of $3,131,060 and 331,804 shares of
beneficial interest outstanding). . . . $ 9.44
Class D Shares:
Net asset value and redemption price per share (based on
net assets of
$74,110,787 and 7,713,320 shares of beneficial interest
outstanding). . . . $ 9.61
Maximum offering price per share (net asset value plus
sales charge of
5.75% of offering price). . . . . . . . . . . .
. . . . $ 10.20
</TABLE>
<PAGE>
Financial Statements
AMERICAN GROWTH FUND, INC.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JULY 31,
1999
<TABLE>
<CAPTION>
<S> . . . . . . . . . . . . . . . . . . . . . . . . . .
. . <C>
INVESTMENT INCOME:
Interest. . . . . . . . . . . . . . . . . . . . . . . .
$ 971,881
Dividends (net of $12,912 foreign withholding tax). . .
1,000,312
Total investment income. . . . . . . . . . . . . . . . .
1,972,193
EXPENSES:
Investment advisory fees (Note 5) . . . . . . . . . . .
918,554
Administration expenses (Note 5). . . . . . . . . . . .
472,411
Transfer agent, shareholder servicing and data processing
fees (Note 4) . . 216,882
Custodian fees (Note 4) . . . . . . . . . . . . . . . .
137,358
Professional fees . . . . . . . . . . . . . . . . . . .
30,450
Registration and filing fees:
Class A. . . . . . . . . . . . . . . . . . . . . .
4,596
Class B. . . . . . . . . . . . . . . . . . . . . .
5,461
Class C. . . . . . . . . . . . . . . . . . . . . .
1,648
Class D. . . . . . . . . . . . . . . . . . . . . .
34,434
Shareholder reports . . . . . . . . . . . . . . . . . .
17,189
Distribution and service fees:
Class A. . . . . . . . . . . . . . . . . . . . . .
28,917
Class B. . . . . . . . . . . . . . . . . . . . . .
142,192
Class C. . . . . . . . . . . . . . . . . . . . . .
44,323
Directors fees. . . . . . . . . . . . . . . . . . . . .
4,700
Other expenses. . . . . . . . . . . . . . . . . . . . .
64,825
Total expenses . . . . . . . . . . . . . . . . . . . . .
2,123,940
Less expenses paid indirectly (Note 4). . . . . . . . .
(94,209)
Net expenses . . . . . . . . . . . . . . . . . . . . . .
2,029,731
Net Investment Loss. . . . . . . . . . . . . . . . . . . . . . .
(57,538)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments. . . . . . . . . . . .
7,359,974
Net change in unrealized appreciation on investments. .
(4,734,232)
Net realized and unrealized gain. . . . . . . . . . . .
2,625,742
Net Increase in Net Assets Resulting From Operations . . . . .
. $ 2,568,204
</TABLE>
<PAGE>
Financial Statements
AMERICAN GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
<TABLE>
<CAPTION>
<S> <C>
<C>
1999
1998
OPERATIONS:
Net investment income (loss) . . . . . . . $
(57,538) $ 637,948
Net realized gain (loss) . . . . . . . . .
7,359,974 (3,209,919)
Net change in unrealized depreciation . .
(4,734,232) (8,201,493)
Net increase (decrease) in net assets resulting from
operations. . . . 2,568,204
(10,773,464)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class A. . . . . . . . . . . . . . . . . .
(56,534) (75,567)
Class B . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,505) (14,141)
Class C . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5,179) (3,850)
Class D. . . . . . . . . . . . . . . . . .
(474,946) (790,735)
Book return of capital:
Class A . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . (48,726) -
Class B . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 0(7,296) -
Class C . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . (4,441) -
Class D. . . . . . . . . . . . . . . . . . (409,627)
-
Distributions from net realized gain:
Class A . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1,120,917)
Class B . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1,258,568)
Class C . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (342,696)
Class D. . . . . . . . . . . . . . . . . . -
(8,796,922)
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net assets resulting from
beneficial
interest transactions (Note 2):
Class A. . . . . . . . . . . . . . . . . .
(5,837,113) 5,962,986
Class B. . . . . . . . . . . . . . . .
. . (4,497,280) 7,163,360
Class C. . . . . . . . . . . . . . . . . .
(1,423,013) 2,200,744
Class D. . . . . . . . . . . . . . . . . .
(16,293,908) (8,137,343)
NET ASSETS: . . . . .
Total decrease . . . . . . . . . . . . . .
(26,498,364) (15,987,113)
Beginning of period. . . . . . . . . . . .
123,640,457 139,627,570
End of period (including undistributed net investment
income of $0 and
$331,075 respectively) . . . . . . . . . . $ 97,142,093
$ 123,640,457
</TABLE>
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
Year Ended July 31,
<S> <C> <C> <C>
<C>
1999 1998 1997
19966
Per Share Operating Data:
Net Asset Value, Beginning of Period . . . $9.49 $11.30 $
8.84 $ 9.21
Income (loss) from investment operations:
Net investment income (loss) . . . . . . . (0.05)
0.044 0.144 -4
Net realized and unrealized gain (loss). . . . . 0.21
(0.90)2.83 (0.37)
Total income (loss) from investment operations . . . 0.16
(0.86)2.97 (0.37)
Dividends and distributions to shareholders:
Dividends from net investment income . . . (0.04)
(0.06)5 (0.12)5 -
Book return of capital . . . . . . . . . . (0.04)
- - -
Distributions from net realized gain . . . -
(0.89) (0.39) -
Total dividends and distributions
to shareholders. . . . . . . . . . . . . . (0.08)
(0.95) (0.51) -
Net Asset Value, End of Period . . . . . . $9.57 $9.49
$11.30$8.84
Total Return at Net Asset Value1 . . . . .
2.0%(7.6)%34.6%(4.0)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) . . . . $8,635
$14,246 $10,536$3,838
Ratios to average net assets:
Net investment income (loss).. . . . . . . 0.00% 0.42%1.28%
0.13%
Expenses2. . . . . . . . . . . . . . . . . 1.98% 1.77%1.76%
2.06%
Portfolio turnover rate3 . . . . . . . . . 109.3%
103.5% 106.2%163.1%
</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.
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, 1999, aggregated $115,980,505 and $159,871,400,
respectively.
4. Net investment income (loss) per share is based upon relative
daily net asset values.
5. Distributions from net investment income per share are based
upon relative net asset values as of the business day following the
distribution record date.
6. For the period from March 1, 1996 (inception of offering) to
July 31, 1996.
Financial Highlights
Class B
Year Ended July 31,
1999 1998 1997
19966
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C>
Per Share Operating Data:
Net Asset Value, Beginning of Period . . . $9.37 $11.19 $
8.80$9.21
Income (loss) from investment operations:
Net investment loss. . . . . . . . . . . . (0.13)
(0.02)40.074 (0.01)4
Net realized and unrealized gain (loss). . . . . 0.22
(0.90)2.79 (0.40)
Total income (loss) from investment operations . . . 0.09
(0.92)2.86 (0.41)
Dividends and distributions to shareholders:
Dividends from net investment income . . . (0.01)
(0.01)5 (0.09)5 -
Book return of capital . . . . . . . . . . -7 -
- -
Distributions from net realized gain . . . -
(0.89) (0.39) -
Total dividends and distributions
to shareholders. . . . . . . . . . . . . . (0.01)
(0.90) (0.48) -
Net Asset Value, End of Period . . . . . . $9.45 $9.37
$11.18$8.80
Total Return at Net Asset Value1 . . . . .
0.9%(8.2)%33.5%(4.5)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) . . . . $11,265
$15,533 $10,962 $3,417
Ratios to average net assets:
Net investment income (loss).. . . . . . . (0.01)%
(0.32)%0.49% (0.52)%
Expenses2. . . . . . . . . . . . . . . . . 2.73% 2.52%2.46%
2.81%
Portfolio turnover rate3 . . . . . . . . . 109.3%
103.5% 106.2% 163.1%
</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.
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, 1999, aggregated $115,980,505 and $159,871,400,
respectively.
4. Net investment income (loss) per share is based upon relative
daily net asset values.
5. Distributions from net investment income per share are based
upon relative net asset values as of the business day following the
distribution record date.
6. For the period from March 1, 1996 (inception of offering) to
July 31, 1996.
7. Less than $0.005 per share.
Financial Highlights
Class C
<TABLE>
<CAPTION>
Year Ended July 31,
1999 1998 1997
19966
<S> <C> <C> <C>
<C>
Per Share Operating Data:
Net Asset Value, Beginning of Period . . . $9.37 $11.19 $
8.81 $ 9.21
Income (loss) from investment operations:
Net investment income (loss) . . . . . . . (0.14)
(0.02)4 0.074 -4
Net realized and unrealized gain (loss). . . . . 0.23
(0.90) 2.79 (0.40)
Total income (loss) from investment operations . . . 0.09
(0.92) 2.86 (0.40)
Dividends and distributions to shareholders:
Dividends from net investment income . . . (0.01)
(0.01)5 (0.09)5 -
Book return of capital . . . . . . . . . . (0.01)
- - -
Distributions from net realized gain . . . -
(0.89)(0.39) -
Total dividends and distributions
to shareholders. . . . . . . . . . . . . . (0.02)
(0.90) (0.48) -
Net Asset Value, End of Period . . . . . . $9.44 $9.37
$11.19$8.81
Total Return at Net Asset Value1 . . . . .
0.9%(8.2)%33.6%(4.3)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) . . . . $3,131
$4,498 $3,023 $367
Ratios to average net assets:
Net investment income (loss).. . . . . . . (0.01)%
(0.31)%0.55% (0.63)%
Expenses2. . . . . . . . . . . . . . . . . 2.75% 2.52%2.50%
2.97%
Portfolio turnover rate3 . . . . . . . . . 109.3%
103.5% 106.2% 163.1%
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.
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, 1999, aggregated $115,980,505 and $159,871,400,
respectively.
4. Net investment income (loss) per share is based upon relative
daily net asset values.
5. Distributions from net investment income per share are based
upon relative net asset values as of the business day following the
distribution record date.
6. For the period from March 1, 1996 (inception of offering) to
July 31, 1996.
</TABLE>
Financial Highlights
Class D
<TABLE>
<CAPTION>
Year Ended July 31,
<S> <C> <C> <C> <C>
<C>
1999 1998 1997 1996
1995
Per Share Operating Data:
Net Asset Value, Beginning of Period . . . $9.53 $11.33 $
8.85 $ 8.75 $ 9.34
Income from investment operations:
Net investment income. . . . . . . . . . . 0.01 0.074 0.174
0.034 0.21
Net realized and unrealized gain (loss). . . . . 0.17(0.90)2.82
0.39 0.88
Total income (loss) from investment operations . . . 0.18
(0.83)2.99 0.42 1.09
Dividends and distributions to shareholders:
Dividends from net investment income . . .(0.05) (0.08)5
(0.12)5 (0.12)5 (0.12)
Book return of capital . . . . . . . . . .(0.05) - -
- -
Distributions from net realized gain . . . -
(0.89) (0.39) (0.20) (1.56)
Total dividends and distributions
to shareholders. . . . . . . . . . . . . .(0.10) (0.97)
(0.51) (0.32) (1.68)
Net Asset Value, End of Period . . . . . . $9.61$9.53$11.33$8.85
$8.75
Total Return at Net Asset Value1 . . . . . 1.9% (7.4)%35.1%
4.8%15.2%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) . . . . $74,111
$89,364 $115,106 $100,130 $90,538
Ratios to average net assets:
Net investment income. . . . . . . . . . . 0.14%0.63% 1.71%0.47%
1.91%
Expenses2. . . . . . . . . . . . . . . . . 1.72%1.54% 1.55%1.63%
1.45%
Portfolio turnover rate3 . . . . . . . . .109.3% 103.5%
106.2% 163.1% 173.0%
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.
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, 1999, aggregated $115,980,505 and $159,871,400,
respectively.
4. Net investment income (loss) per share is based upon relative
daily net asset values.
5. Distributions from net investment income per share are based
upon relative net asset values as of the business day following the
distribution record date.
</TABLE>
<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 adjusts the classification of distributions to
shareholders to reflect the differences between financial statement
amounts and distributions
determined in accordance with income tax regulations.
Accordingly, during the year ended July 31, 1999, amounts have been
reclassified to reflect a
decrease in accumulated net investment loss of $271,627 a
decrease in accumulated net realized gain from investment
transactions of $246,660 and a
decrease in paid-in capital of $24,967.
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, 1999
Year Ended July 31, 1998
Shares Amount
Shares Amount
Class A:
Sold 253,536 $ 2,388,808
837,941 $ 8,739,433
Dividends and distributions reinvested 10,544 98,900
124,601 1,193,679
Redeemed (863,218) (8,324,821)
(393,818) (3,970,124)
Net increase (decrease) (599,138) $
(5,837,113) 568,724 $ 5,962,988
Class B:
Sold 171,341 $ 1,617,151
843,318 $ 8,810,905
Dividends and distributions reinvested 1,577 14,680
129,536 1,231,569
Redeemed (639,257) (6,129,111)
(294,805) (2,879,114)
Net increase (decrease) (466,339) $
(4,497,280) 678,049 $ 7,163,360
Class C:
Sold 72,340 $ 690,740
218,226 $ 2,295,012
Dividends and distributions reinvested 780 7,253
35,910 341,141
Redeemed (221,264) (2,121,006)
(44,447) (435,409)
Net increase (decrease) (148,144) $
(1,423,013) 209,689 $ 2,200,744
Class D:
Sold 159,048 $ 1,506,344
394,322 $ 4,226,052
Dividends and distributions reinvested 85,582805,335
969,644 9,308,601
Redeemed (1,913,434) (18,605,587)
(2,144,192) (21,671,996)
Net decrease (1,668,804) $(16,293,908)
(780,226)$ (8,137,343)
</TABLE>
3. Unrealized Gains and Losses on Investments
The identified tax cost basis of investments at July 31,
1999 was $74,644,511. Net unrealized appreciation on investments of
$20,655,923, based on identified
tax cost as of July 31, 1999, was comprised of gross
appreciation of $22,985,947 and gross depreciation of $2,330,024.
4. Fund Expenses Paid Indirectly
For the year ended July 31, 1999, fees for transfer
agent/data processing services and custodian services totaling
$28,377 and $65,832, 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>
Notes to Financial Statements
excess of $30 million. The Fund pays its own operating
expenses.
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, 1999 commissions and sales
charges paid by investors on the purchase of Fund shares totaled
$181,649 of which $45,545 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 $72,264. For the year ended
July 31, 1999, Sponsors
received contingent deferred sales charges of $37,273 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 $260,228 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, 1999 the Fund paid directors'
fees and expenses of $4,700.
For the year ended July 31, 1999, under an agreement with
IRC, the Fund was charged $310,686 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 $76,932 by an
affiliated company of IRC for the
rental of office space.
6. Federal Income Tax Matters (unaudited)
On December 2, 1998, per share dividends from net
investment income and in excess of net investment income were
declared as follows: Class A: $0.08,
Class B: $0.01, Class C: $0.02 and Class D: $0.10 respectively.
The dividends were paid December 18, 1998. For the Fund's year
ended July 31, 1999, all
ordinary income dividends have been determined to qualify for
the dividends 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 statement of assets and
liabilities of American Growth Fund, Inc., including the statement
of investments, as
of July 31, 1999, 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 four-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 the year ended July 31,1995 were audited by other auditors,
whose report dated
August 18, 1995 expressed an unqualified opinion on those financial
highlights.
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, 1999, 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, 1999, 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 four-year period then
ended, in conformity with
generally accepted accounting principles.
KPMG LLP
Denver, Colorado
August 27, 1999
TRANSFER AGENT and DIVIDEND PAYING AGENT: Boston Financial Data
Services, Inc., Two Heritage Drive, North Quincy, MA 02171
CUSTODIAN: State Street Bank & Trust Company, Two Heritage Drive,
North Quincy, MA 02171
RETIREMENT PLAN CUSTODIAN: State Street Bank & Trust Company, Two
Heritage Drive, North Quincy, MA 02171
INDEPENDENT AUDITORS: KPMG LLP, 707 Seventeenth Street, Suite 2300,
Denver, CO 80202
UNDERWRITER/DISTRIBUTOR: American Growth Fund Sponsors, Inc., 110
Sixteenth Street, Suite 1400, Denver, CO 80202
AMERICAN GROWTH FUND, INC. BOARD OF ADVISORS:
William D. Farr
President and Director of Farr Farms Co.
Chairman of the Board of Northern Colorado Water Conservancy
Past President of the National Cattleman's Association
Board Member of the Greeley Water Board
OFFICERS AND DIRECTORS INVESTMENT ADVISER
Robert Brody President and Director Investment
Research Corporation
Timothy E. Taggart Exectutive Vice President 110
Sixteenth Street, Suite 1400
D. Leann
Baird Secretary Denver, CO 80202
Michael
J. Baum Director OFFICERS AND
DIRECTORS
Eddie R. Bush
Director Robert Brody
President, Treasurer, and
Director
Harold Rosen
Director Timothy E. Taggart
Executive Vice
President and
Director
D. Leann Baird
Secretary and Director
AMERICAN GROWTH FUND, INC.
PART C - OTHER INFORMATION
Item 23. Exhibits:
(a) Articles of Amendment and Restatement (6)
(b) Registrant's By-laws, as amended. (2)
(c) Instruments defining rights of shareholders:
See Article 4, 6 & 8 of Incorporation and Article 1, 4 & 7 of
the Bylaws. (6)
(d) 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) Underwriting contracts, selling group agreement between
American Growth Fund
Sponsors, Inc. And dealers as amended. (6)
(f) Not applicable
(g) Custodian agreement between state Street Bank and Trust
Company and
registrant. (1)
(h) Transfer agent agreement between State Street Bank &
Trust Company and
Registrant. (1)
(i) Legal opinion.
(j) Not applicable
(k) Not applicable
(l) Financial Data Schedules filed as Exhibit 27 for
electronic purposes.
(m) 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 24. Person Controlled by or Under Common Control
None
Item 25. Indemnification. Reference is made to Article IX of
the registrant's
By-Laws (Exhibit 2 to this registration Statement) and Article 7(c)
of the
registrant's Articles of Incorporation
(Exhibit 1 to this 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 26. 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, 1999.
Name & Position With
Principal Business
Investment Adviser
Robert Brody
President, Treasurer and
Director
Timothy E. Taggart
Vice President, Director
D. Leann Baird,
Secretary, Director
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 27. Principal Underwriters
(a) None
(b)
<TABLE>
<CAPTION>
<S>
<C> <C>
(1)Name and
Principal (2)Position & Offices (3) Position & Offices
Business Address with Underwriter with Registrant
Robert Brody
110 16th Street
Suite 1400 President,
Treasurer
Denver, CO 80202
Director President, Director
Timothy E. Taggart
110 16th Street
Suite 1400
Exec. Vice president Treasurer
Denver, CO 80202 Secretary,
Director
</TABLE>
None
Item 28. 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 29. Management Services
None
Item 30. Undertakings.
None
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 effectiveness
of this Registration Statement pursuant to Rule 485(a) 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, there unto duly
authorized, in the City and
County of Denver, State of Colorado, on the 28th day of September,
1999.
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
09/30/99
Robert Brody
(b) Principal Financial and Accounting Officer:
/s/ Timothy E. Taggart Treasurer
09/30/99
- ----------------------------------
Timothy E. Taggart
(c) Majority of the Directors:
/s/ Michael J. Baum, Jr.
09/30/99
- ----------------------------------
Michael J. Baum, Jr.
/s/ Eddie R. Bush
09/30/99
- ----------------------------------
Eddie R. Bush
/s/ Harold Rosen
09/30/99
- ----------------------------------
Harold Rosen
<PAGE>
